Marketing Management Application exercise - Footwear Industry India.
Marketing Management
APPLICATION EXERCISE
Footwear Industry
presented to
Prof. S. Ramesh Kumar
on
August 26th, 2003
in
partial fulfillment of the requirements for the
Marketing Management
by
Group 8
Soumitra Bhattacharya Shankar Chandrasekar
Tenzing Yangdo Bhutia R. Chethan Kumar
Raghav Bihani Padam Chhabra
Sainag Chakravarty
INDIAN INSTITUTE OF MANAGEMENT
BANGALORE
TABLE OF CONTENTS
EXECUTIVE SUMMARY 3
REPORT 8
. Industry Overview 9
1.1 Introduction 9
1.2 Market Structure 10
1.3 Industry Segmentation 12
1.3.1 Geographic Segmentation 12
1.3.2 Demographic Segmentation 14
1.4 Consumer Behaviour 14
1.4.1 Consumer Preferences (urban organized market) 15
1.4.2 Consumer Preferences (Rural Market) 17
1.5 Positioning 21
1.6 Five Force Porter's Analysis 23
1.7 Key players in Domestic Footwear Segment 24
1.7.1 Most Popular Footwear Brands 24
1.7.2 Comparison of Business Profiles of top companies 24
1.7.3 Production Figures of top 7 footwear companies 26
1.8 Detailed Analysis of the Top brands 27
.8.1 Bata India Ltd. 27
.8.2 Liberty 32
.8.3 Reebok 36
.8.4 Adidas 40
.8.5 Nike 45
.8.6 Red Tape 48
.8.7 Woodland 51
.8.8 Regal Shoes 55
.8.9 Lakhani 58
.8.10 Phoenix 60
.8.11 Metro Shoes 62
.8.12 Action Shoes 65
1.9 Gap Analysis 67
.9.1 Positioning Maps 69
.9.2 Gap Analysis 71
.9.3 Positioning Maps 76
2. Brand Failure/Success Analysis 82
2.1 Framework used to analyse the Brand Failure 82
2.2 Puma Carona - Analysis of Failure 83
2.3 Conclusion 88
2.4 Framework used to analyse the Brand Success 89
2.5 Reebok Sports - Analysis of Success 91
2.6 Conclusion 95
2.7 Comparison between Puma Carona & Reebok 96
3. Analysis of MNC Brand 98
3.1 The rationale behind this choice 98
3.2 The framework used for analyzing Bata Power 98
3.3 Analysis of Bata Power 98
3.4 Conclusion 103
3.5 Latest developments in the Power scene 103
APPENDIX 105
PRINT ADVERTISEMENTS 112
BIBLIOGRAPHY 114
REFERENCES 115
EXECUTIVE SUMMARY
. INDUSTRY OVERVIEW
.1 Introduction
The Indian footwear industry at approx. Rs 9300 crores is one of the largest in the world. According to estimates, nearly 1 Billion pairs of footwear were sold in the country during 1997-98, accounting for 13% of the world sales by volume. Hence, the interest showed by a number of Multinational brands in the Indian market.
Of late the Indian consumers have gradually moved from a value-for-money attitude towards a desire for quality and choice at the right price. This is a result of an increase in the purchasing power of the populace in the post-liberalization period as well as an increase in the awareness levels brought about by globalisation. In spite of this, the per capita purchase of shoes has stagnated at around a pair per person per year in the recent past. This is due to the fact that the Indian consumer tends to buy a fresh pair only when the previous one gets worn out or lost.
The changes in the Indian economic scene in the past decade have dramatically changed the outlook of the industry for the future. With increasing media proliferation, higher health awareness and higher incomes the future for the industry is bright.
.2 Market Structure
The Indian footwear industry comprises:
> Organized Sector
o Large Indian players
o Multinationals producing in India/importing from abroad
> Unorganized Sector
o Small-scale semi-organized sector
o Cottage industry
The Indian footwear market is worth approximately Rs 9300 crores. Of this, by value the organized sector is worth close to Rs 3100 crores while the unorganized market contributes to the remaining Rs 6200 crores. Another classification for the industry is in terms of whether the products are branded or unbranded. Contrary to popular perceptions, even the unorganized sector has branded offerings. The total branded shoes category accounts for a sale of a whopping Rs 4000 crores.
.3 Segmentation
.3.a) Geographic segmentation
> Domestic
o Urban
o Rural
o Semi-urban
> Exports
.3.b) Demographic segmentation
> Gender
> Income
> Age groups
.4 Consumer Behaviour
Consumer Behaviour in India has undergone major changes due to liberalization, globalisation and increased purchasing power. There has been a gradual shift in preferences from whites (sports shoes) to browns (semi-formals and casuals). This shift can be attributed to the following:
> Semi-formal shoes are considered to be multi-purpose.
> Dress code in offices has become more casual.
> MNCs have increased their offerings in the semi-formal segment.
> Semi-formal branded shoes available at lower price points compared to branded sports shoes.
.5 Key Players
o Bata
o Liberty shoes
o Action shoes
o Nike
o Reebok
o Adidas
o Lakhani
o Mirza Tanners
o Woodland
o Regal shoes
o Metro shoes
.6 Gap Analysis
We analyse the gaps in the Gents shoes market, Ladies footwear, Gents Slippers and Children's footwear using perception analysis. The gaps in the market that have been observed are:
> Men's semi-formal footwear - moderate price range
> Ladies Sports shoes - moderate price range
> Children's footwear - Premium range
2. BRAND FAILURE / SUCCESS
2.1 Choice of Category
For the comparison of brand failure and success, we have chosen the sports footwear category. The brands chosen are:
> Failure : Puma Carona
> Success : Reebok Sports
2.2 Reasons for Puma Carona's Failure:
> The company didn't have a wide product range
> The customers couldn't really gauge the benefits of the new features
> The colours of the shoes didn't really match the tastes of the Indian customer
> The brand didn't associate itself with Cricket, nor did it have any Cricketers endorsing its products - a crucial mistake in the Indian context
> The brand was positioned as a premium product, but Carona's image was far from being premium
> Didn't project itself as a sports lifestyle brand
> Its products were overpriced
> The technology was ahead of its time
> The quality of the products may not have been up to the required standards
> Rigid Government policies could also have led to Puma Carona not being able to use its facilities to the maximum.
2.3 Reasons for Reebok's Success:
> Effective segmentation of the footwear market. They have a number of offerings in a wide range of segments.
> Appropriate brand positioning
> Well thought-upon distribution mechanism to augment positioning
> Association with Cricket and effective endorsement by cricketing superstars
> Apparel lines helping the brand to develop a sports lifestyle image
3. ANALYSIS OF MNC BRAND
We chose Bata Power as the MNC brand in the sports shoes category. It was evaluated on the same lines as Reebok and Puma Carona. The following observations were made:
> Power has immense reach due to Bata's strong distribution and retailing network
> A number of variants are available
> It has the advantage of a trustworthy image - being under the Bata brand umbrella
> Products are priced at both economy and semi-premium levels
REPORT
. INDUSTRY OVERVIEW
.1 Introduction
The footwear industry is hardly new to the Indian context. History tells us that even in ancient times the "mochis" had an important role to play in the Indian society. From these modest beginnings, the footwear industry has scaled great heights. Today, the Indian footwear industry at approx. Rs 9300 crores1 is one of the largest in the world. According to estimates, nearly 1 Billion pairs of footwear were sold in the country during 1997-98, accounting for 13% of the world sales by volume. This explains the interest showed by a number of Multinational brands in the Indian market.
A nationwide survey conducted by Central Leather Research Institute (CLRI) in 1997, suggests that the concept of footwear has among the highest penetrations in the Indian market context. 80% of the rural populace and 94% of urban India are in the habit of wearing footwear. This demand is primarily met by the domestic footwear manufacturers. The unorganized sector accounts for 85% of the sales by volume. The remaining market is divided between MNCs and the domestic organized companies. A detailed analysis of the dynamics of both these sectors is undertaken in the forthcoming sections.
If there was one term that best described the Indian footwear market, it was "Value-for-Money". But of late there has been a marked change of attitude among the Indian consumers. They have gradually moved towards a desire for quality and choice at the right price. This is a result of an increase in the purchasing power of the populace in the post-liberalization period as well as an increase in the awareness levels brought about by globalisation. In spite of this, the per capita purchase of shoes has stagnated at around a pair per person per year in the recent past. This is due to the fact that the Indian consumer tends to buy a fresh pair only when the previous one gets worn out or lost.
The changes in the Indian economic scene in the past decade have dramatically changed the outlook of the industry for the future. With increasing media proliferation, higher health awareness and higher incomes the future for the industry is bright. Whether or not the footwear companies can capitalize on this trend remains to be seen.
.2 Market Structure
The Indian footwear industry comprises:
a) Organized Sector
Large Indian players
Multinationals producing in India/importing from abroad
b) Unorganized Sector
Small-scale semi-organized sector
Cottage industry
The Indian footwear market is worth approximately Rs 9300 crores. Of this, by value the organized sector is worth close to Rs 3100 crores while the unorganized market contributes to the remaining Rs 6200 crores. Another classification for the industry is in terms of whether the products are branded or unbranded. Contrary to popular perceptions, even the unorganized sector has branded offerings. The total branded shoes category accounts for a sale of a whopping Rs 4000 crores.
The following table gives the breakup of the footwear industry2 based on the branded/unbranded classification,
2000-2001 *
2001-2002 *
Growth Rate
Branded
3500
4000
14-15 %
Unbranded
5000
5300
6-7 %
Total
8500
9300
10 %
* all figures are in Rs Crores
The proliferation of brands in the footwear business as a result of the deluge of foreign players, coupled with the migration of unbranded players (from the unorganized sector) to the branded segment has resulted in the Branded segment growing faster than the Unbranded segment. In fact, the premium branded sportswear category is growing at a much higher 20-25% rate.
As per the Images Retail Report 2002, the average price per pair in the footwear industry is increasing at the rate of 7.5% per annum.
We conducted a survey among the unorganized footwear sellers in the Majestic area of Bangalore city (details provided in the Appendix). The highlights of the survey are presented here:
* Brands exist in the unorganized sector also
* Heavy customer loyalty towards specific shops (not brands!)
* Profit margin is variable, and usually higher than the organized players
* Customers feel that bargaining adds to the 'shopping experience'
* Large variety of designs. Very few units having the same design.
* Designs are very trendy and go down well with the urban youth
* Very low stock of inventory
* Total dominance of the children's footwear market
A similar survey was undertaken among the organized sellers in the Brigade Road and Commercial Street area of Bangalore city. The sector is characterized by the following:
* Fixed prices, lower profit margins
* Limited variety in design. Heavy replication of the same design.
* Most sizes and colours available for all designs unlike unorganized sectors
* Occasion-specific models are available
* Lower footfall in Exclusive stores than in Multi-brand outlets
* Dominance in the premium and super-premium footwear segments
* Stores concentrate on Lifestyle rather than only footwear
.3 Industry Segmentation
.3.1 Geographic Segmentation
On the basis of geography the market is divided into the following segments:
> Domestic
o Urban
o Rural
o Semi-urban
> Exports
We shall look into the each of these in detail.
Domestic:
The domestic organized market in India is concentrated in the top metros. As per research conducted by IMAGES Research, Mumbai and Delhi account for 40-50% of the turnover in the premium and sports footwear market. They are followed by Kolkata, Bangalore, Pune, Ahmedabad, Hyderabad and Chennai. The top 10 cities, as of today, are generating 92% of organized retailing turnover. This figure is expected to decrease to 86% in the next two years as a result of the percolation of planned retailing to the rural and semi-urban markets. Consequently, it is estimated that 82% of organized retailing that is contributed solely by the six major Indian cities namely Mumbai, Delhi, Kolkata, Chennai, Bangalore and Hyderabad would be slashed to a meager 66% by year 2005.
Exports:
Exports account for 4% of the Indian footwear market by volumes but a sizeable 16% in value terms in 1997-98. Indian footwear exports is dominated by Leather products which account for 95% of footwear exports by value. Leather footwear still accounts for 50% of the total footwear market in the world which is placed at 8.32 billion pairs per annum. India is well placed to leverage its strength in this market.
India's fundamental advantage in the global market lies in processing of leather and key raw materials. Further India can benefit from two key trends in the international manufacturing of footwear. Firstly, manufacturing of all footwear is being shifted to low cost economies due to rising labour costs in some western countries. Secondly, tanning of leather, which is an environmentally sensitive process, is being moved out of countries with stringent environmental standards. These factors are likely to divert many of the footwear production activities towards India.
Indian footwear exports increased at a CAGR of 1% in volume and 6% in value terms during 1993-983.
.3.2 Demographic Segmentation
On the basis of demographics , the market is divided by :
o Gender
o Income
o Age groups
Gender :
According to research findings, women footwear market is about 45% of the total market in terms of value whereas the men's market covers the rest of the market. This could be because of the fact that even though women have a larger number of footwear in their wardrobe, the price of their footwear is considerably less. This may be the reason that men's footwear accounts for a larger market share.
Income :
The major market in the country which accounts for nearly 73% of the total sales comes from the Rs 10000-50000 monthly income group. The high-income group (above Rs 50000 per month) accounts for only 16% of the total sales even though they buy more expensive footwear.
Age Group :
When we divide the market on basis of age, the single largest buying group is formed by people in the age group of 21-25 years both in men's and women's market. This age group accounts for nearly 28% of the total market. Also another major group in the women's market is the middle-aged group (31-40 years) which accounts for about 45% of the total women's market. Men's market is evenly spread over the age groups.
.4 Consumer Behaviour
Consumer Behaviour in India has undergone major changes due to liberalization, globalisation and increased purchasing power. There has been a gradual shift in preferences from whites (sports shoes) to browns (semi-formals and casuals). This shift can be attributed to the following :
o Semi-formal shoes are considered to be multi-purpose.
o Dress code in offices has become more casual.
o MNCs have increased their offerings in the semi-formal segment.
o Semi-formal branded shoes available at lower price points compared to branded sports shoes.
.4.1 Consumer Preferences4 (urban organized market)
Women
The average woman's wardrobe consists of 12 pairs of footwear. The price range starts at Rs 150 (chappals, sandals) and goes upto a few thousand (branded sportswear). Frequency of purchase varies from three to six months and is largely influenced by social occasions. The most preferred colour in sportswear remains white. However for other footwear black and cherry are the popular shades. Present and future brand preferences as per the research are given below.
Men
A man's average wardrobe consists of 10 footwear pairs. Though they have a smaller wardrobe size, they are willing to spend more than women on a pair of footwear. The main difference is in formal and party wear segments where men are willing to spend much more than women. Frequency of purchase amongst men is similar to that of women and is again influenced by social occasions. The most preferred colour in sportswear is white. However, in other footwear the popular shades are black and brown. Present and future brand preferences as per the research are given below.
.4.2 Consumer Preferences5 (Rural Market)
As urban markets reach their saturation levels and become increasingly competitive, many companies, especially those selling consumer durables, are focusing on rural markets for growth. The footwear industry in India is no exception.
The top 10 cities in 2002 contributed 92% of the sales by value in organized footwear retailing. This figure is expected to decline to 82% by 2005. The figure for the top 6 cities is expected to fall from 86% to 66%. It is thus obvious that the growth will come from the semi-urban and rural segments, where the organized sector is dominant.
However, rural consumer buying behaviour is quite different from that of that of urban consumers. For rural customer, brand appears to be less important than perceived quality and price, when it comes to footwear. In a survey on rural buying behaviour, 41% of respondents considered 'quality of footwear' to be the main factor in purchasing. However, more than one-third also considered price before making their choice. In fact more than 60% percent actually purchased footwear priced below Rs 50.
Rural customers prefer to shop only at one place. Most consumers buy chappals from a nearby town and visit only one shop. Moreover, they buy a fresh pair only when the last one wears out or is lost, indicating than utility and longevity are prime factors in purchase decisions. Thus, most rural sales are replacement sales rather than additional sales to existing customers.
Consumers in rural India tend to prefer Hawaii chappals and slippers over leather footwear. This is because they are less costly and more weather tolerant. The average rate of purchase in the rural market tends to be 6 months. 75% consumers surveyed reported that they themselves took the purchase decision regarding the footwear they use. Some others however, consulted their spouses, parents, friends or relatives for buying footwear.
.5 Positioning
Sports Footwear
The sales in this category have always been restricted by the lack of an active sports culture in he country. Major players in this segment have moved away from associating their brands with sports to a more lifestyle-led positioning to appeal to a larger segment. Also associations were made with various sporting icons of the country.
In recent years, various MNCs like Adidas, Nike and Reebok have entered this segment and have tried to cater to a wider customer base by entering the sub-Rs 1000 category. Although these companies met with initial success, they have now move away from this segment to avoid falling into a low-quality trap.
Semi-formal/Casual Footwear
This segment is most associated with lifestyle and this is why most companies try to position their brands in this segment as lifestyle products. Very few brands like Woodlands have been positioned themselves using functionality as positioning point.
Fig. Price Pyramid6
Formal Footwear
The segment characteristics are determined by the consumer category and he focus tends to be either on price or on comfort. Celebrity endorsements are used to position the brand in the premium segment.
Utility Footwear
This is a very price-sensitive segment and therefore price and durability are major positioning factors. The key challenge for the brands is to upgrade consumers from this level to premium segment. The increase in the premium segment is largely driven by sales at exclusive outlets and key MBOs. Non-key MBOs continue to sell lower-end shoes.
.6 Five Force Porter's Analysis
a) Barriers to entry: Entry is easy as there are very few barriers such as
> Only low cost technology required.
> Low setup cost required
> Large existing market
b) Bargaining power of the suppliers: Very low bargaining power of suppliers due to
> Large number of suppliers
> Large number of companies possessing internal manufacturing capacity-Backward Vertical Integration
> Most suppliers (farmers) operate on a small-scale compared to shoe/slipper manufacturers
c) Bargaining power of buyers: High bargaining power of the buyers, since
> Large variety of brands to choose from
> Presence of low cost unorganized sector
> Invasion of cheap counterfeits from neighbouring countries
> Very little brand loyalty, high brand awareness
d) Threat of substitutes: Low threat of substitutes, since
> There is no generic substitute for footwear
e) Intensity of rivalry: Very high intensity of rivalry due to
> Large no of players in the organized sector
> Low cost unorganized sector contributes to 85% of the market
> Low brand loyalty- can be easily attracted
.7 Key players in Domestic Footwear Segment
1.7.1 Most Popular Footwear Brands
.7.2 Comparison of Business Profiles of top companies7
Company
Business Profile
Adidas India
* Has launched estimated 70 sports shoe models in India.
* Major brand - Adidas
Aero Group
* Manufactures casual and formal footwear for men, women and kids.
* Estimated sales of Rs 800 million in FY99
* Major brand Woodland is also positioned as fashion and lifestyle accessory.
API Polymers
* 10 companies under Action flag all engaged in footwear.
* Turnover of Rs 2000 million and production of 8.4 million pairs per annum.
* Best known for its sports shoes range. Also manufactures leather shoes and children's shoes.
* Leader in mid and low priced shoes
* Major brand(s)-action
Carona
* Manufacturing and marketing of canvas and rubber footwear.
* Major brand(s)-Carona
Lakhani India limited
* Manufacturing and marketing of sports (PVC injected and cold cemented) shoes, canvas shoes, hawai-chappals and slippers and leather shoes
* Exports of leather shoes accounted for 29% of its gross sales in FY99
* Major brand(s)-Lakhani
Liberty Shoes Limited
* Manufacturing, marketing and trading of shoes both in the domestic and export markets
* Major brand(s)-Liberty
Mirza tanners Limited
* Manufacturing and marketing of finished leather, full shoes, shoe uppers and other leather goods both in India and overseas.
* Derives its sales primarily from exports and is also largest shoe exporter in India
* Major brand(s)-Oakridge, Red tape, Ozark
Phoenix International Limited
* Export and domestic sales of manufactured and outsourced footwear
* Contract manufacturing for leading international footwear players
* Marketing products of leading international players through its distribution network
* Major brand(s)-Madame Phoenix, Tuffs, Rug sac
Reebok India
* Estimated sales of Rs 700 million
* Was earlier focused on premium sports shoe segments and has recently launched casual footwear
* Major brand(s)-Reebok, Rockport
Nike
* Mainly into running shoes for men, women and children
* Attained break even in 1999-2000 and grew by 50% in 2000-2001
* Contracts manufacturing and concentrates on marketing of its products
* Major brand(s)-Nike
.7.3 Production Figures of top 7 footwear companies8 (Listed)
.8 Detailed Analysis of the Top brands in the organized footwear sector
.8.1 Bata India Ltd.
Background
Bata is the leader in the Indian footwear market. It has a 9-10% volume share and a 35-40% market share in the organized segment. Bata has become a household name in the country during the period that it has been here.
Bata has mostly been a Value-for-money brand over the years. But of late it has been trying to change strategy and become more of a marketing company than a manufacturing company. The company now focuses on 'quality sale' with stress on consumer satisfaction.
Marketing Mix
Product
Bata has 1100 SKUs in the market making it one of the widest ranges for the consumers. It caters to a number of segments through its offerings under the brands like Power, North Star, Bubblegummers, Marie Claire, Hush Puppies and Dr. Scholls.
Bata's rubber footwear branded 'Sandak' and its slipper range 'Bata Hawai' provide a bulk of the volume when it comes to sales by units. An interesting case of sub-branding is observed as the low-end offerings of Bata all carry the 'Bata' name. The company very effectively leverages the power of the Bata brand name to sell its slippers and chappals. This is very important since product differentiation is not possible in these categories. So people would buy Bata slippers because they get the assurance of Bata's quality and value-for-money.
On the other hand, Bata consciously stays away from sub-branding its premium products. Hush Puppies, the premium offering in collaboration with Wolverine Germany is sold under its own brand name - 'hush puppies'. This ensures that the premium segment consumers don't associate Hush Puppies with Bata, since that would cause the brand to be perceived as a value or low-end product which is what the Bata brand name conveys.
Bata sells formal footwear under the labels Ambassador and Signor. The labeling is important since the names convey importance and formality, fitting the theme of the formal shoes perfectly.
Bata has often been criticized as not having too many offerings in the casual footwear segment. After North Star this range was almost empty. Recently Bata has launched its mid-range casual brand Weinbrunner and retails them through its Lifestyle stores in upmarket areas. The idea behind this launch is that Bata is trying to upgrade its low-end customers to this mid-range segment. These shoes are targeted towards the middle-class segment who so far didn't have too much of a choice in the Bata range than the low-end footwear.
In 2001, Bata entered into an agreement with Reebok shoes to sell the Reebok and Rockport brands in its retail stores. The timing of the launch was postponed to match the Dussehra festival. This ensured that the stores started off with a huge amount in sales as a result of the festival-buying spree.
Bata has traditionally concentrated on selling its footwear through its own exclusive Bata showrooms. But of late, to increase market penetration it has started leasing space in large shopping malls to gain better visibility in the shopping experience.
Bata has learnt the hard way that a strong Brand Equity and strong market penetration are not enough to counter the challenge posed by the unorganized sector. It has indulged in frequent product line extensions to adjust to the changing preferences of its customers. They have been keen on introducing global footwear trends such as Hush Puppies and Dr. Scholls for the domestic market.
As Bata gets into the premium segment in the market, it has necessitated the launch of lifestyle stores to match the offerings. This upmarket stretch has been necessary as Bata is losing its share in the economy segment as other players introduce offerings in these segments and as families move away from the metro stores.
Another important threat for the Bata is the inexpensive offerings from China. To counter this threat Bata went in for Line modernization in the year 2000. This improved the value-proposition of the Bata brands. In addition to this Bata pruned its product offerings from 1000 designs to about 800 offerings in 2001. At the same time, it reduced its ad spend to ensure that the products with mass appeal can be manufactured at minimum prices.
Bata also has special product offerings such as Dr. Scholls which has a medicinal value. Dr. Scholl is prescribed for Backache and other medicinal properties. This is an almost empty segment, having a good outlook for the future.
A profile of the products under the Bata umbrella on the basis of segmentation9 is as follows:
Demographic Segmentation
Men
Signor, Ambassador, Quo Vadis, Westminster, Hush Puppies
Women
Marie Claire, Urvashi, Sundrop, I Love Comfort, Dr Scholl
Children
Bubblegummers, Ballerina, Naughtyboy
Functional Segmentation
Sports/Lifestyle
Power, North Star, Nike, Lotto
Rubber, Plastic Chappals, Sandals
Sandak, Hawai, Maxage, Impulse, Soft Top, Cross-Strap and Sandwich
Price
Bata has always been a leader in the economy segment in the footwear market. The offerings range from a mere Rs 50 for Bata Hawai to almost Rs 3000 for the premium brands like Westminster.
A brief price listing follows:
Product
Price Range
Mocassino
Rs 650 - ...
This is a preview of the whole essay
Women
Marie Claire, Urvashi, Sundrop, I Love Comfort, Dr Scholl
Children
Bubblegummers, Ballerina, Naughtyboy
Functional Segmentation
Sports/Lifestyle
Power, North Star, Nike, Lotto
Rubber, Plastic Chappals, Sandals
Sandak, Hawai, Maxage, Impulse, Soft Top, Cross-Strap and Sandwich
Price
Bata has always been a leader in the economy segment in the footwear market. The offerings range from a mere Rs 50 for Bata Hawai to almost Rs 3000 for the premium brands like Westminster.
A brief price listing follows:
Product
Price Range
Mocassino
Rs 650 - Rs 900
Power Sports
Rs 600 - Rs 1900
Marie Claire (Ladies)
Rs 250 - Rs 800
Dr. Scholls (Ladies)
Rs 1000
Dr Scholls (Gents)
Rs 1200
Hush Puppies
Rs 800 - Rs 2000
Ambassador
Rs 800- Rs 900
Promotion
Bata historically has among the highest brand recalls in the Indian market. Bata launched the women's range in 1999. The range called 'Sundrops' is endorsed by noted film actress Rani Mukherjee10. This choice of endorser actually balances the Bata family image as well as the new age Fashion and style theme. Bata possibly didn't choose a fashion model for endorsement to be able to balance this family image.
Bata also used occasion advertising to the maximum when it launched a heightened advertisement campaign in March 98 just before the elections. This took full advantage of the heightened TV viewership during the elections.
Bata has always associated itself with festivals to pull out new product launches and brand campaigns.
Place
Bata has started using the concept of Category management for the various stores to cater to the needs of the people in the vicinity of the store. This is crucial to ensure that the stores keep more of the products which are demanded in the particular region.
It has 1600 EBOs and about 30000 MBOs to sell its footwear. Bata also has 300 wholesalers and 8 retail distribution centers. Bata has the brand 'Tiger' to cater to the wholesale segment.
There are four types of stores: the Flagship store offers Bata's international range and imported brands; the City Store caters to the needs of fashion conscious, middle and high income group consumers; the Family Store has footwear for the value-conscious customers; the Bazaar Store in high traffic and densely populated markets offers basic and volume brands for price-sensitive customers and has merchandise on clearance and discounts.
SWOT
Strengths
Weaknesses
> Established brand name
> Extensive Retail and Distribution network (1600 EBOs & 30000 MBOs)
> Market Leader
> Widest range (1100 SKUs)
> Category management
> Medicinal value shoes product range
> Trustworthy
> Stereotyped brand image (Value-for-money)
> Labour problems plaguing manufacturing units
> Marketing inertia
> Perceived as an orthodox, old fashioned and unsporty
> Lacking in styles and designs
Opportunities
Threats
> Children's segment
> Projection as a lifestyle brand
> Cost cutting through outsourcing
> Shifting from manufacturing to marketing outlook
> Inexpensive footwear from Chinese manufacturers
> From unorganized sectors having low costs of production
> Customers are moving away from Bata with increasing purchasing power
> Competition from international brands for its semi-formal and formal offerings
Product Mix
Children's
Men's Leather
Women
Sports
Casuals
Bubble-gummers
Signor
Marie Claire
Power
Hawai
Slippers
Naughty Boy
Ambassador
Sandak
Rubber footwear
Hush Puppies
Quo Vadis
sandals
.8.2 Liberty
Marketing Mix
Product
Liberty is a time-tested brand standing second only to Bata in its popularity as per Images Fashion Report 2003. In 1973, Liberty entered the footwear manufacturing and selling market. Liberty Shoes Limited went public in 1987.
Force 10 is LSL's flagship brand. It is sub-branded further into super deluxe, deluxe, luxury and superior. LSL's other sub-brands are Windsor and Fortune (for men),
Senorita and Tiptopp (for women), Footfun (for kids) and Glider and Cooler (sandals and chappals).
Maximum sales is recorded in the formal segment in terms of value, but in terms of number of pairs sold, the kids segment takes the cake.
Geo Sport, a range of cricket shoes was launched in 1996. At Rs1,000-1,600 it did not click; LSL brought the prices down to Rs450-1,600.
Incidentally it is the first Indian footwear company to get ISO 9002 certification.
Product segments
% of total sales (by value)
Gents Formal
25 %
Gents Sports
5 %
Gents Casual/Leisure
20 %
Ladies Casual/Leisure
20 %
Ladies Sports
2 %
Children
0 %
Any other category(Home wear)
8 %
Total
00 %
Price
The brand image of the company is that of 'Footwear for the masses' as its dominant presence in the lower end of the market reveals. Price ranges from Rs30 - Rs2499. It introduced Force 10 sub-brand in 1992-1993 at Rs575-670. Realising that the price was high, it reduced the price to Rs450 in 1993-1994, and it was a runaway success.
Price segments
% of total sales
< Rs 500
41 %
Rs 500 - Rs 1000
35 %
Rs 1000 - Rs 1500
3 %
Rs 1500 - Rs 3000
1 %
> Rs 3000
Total
00%
Promotion
Liberty uses the Delhi-based advertising agency Montage for its promotions. It spends roughly Rs 60 million towards publicity. It also sponsors lifestyle programmes on national networks like DD Metro (reaching out to the masses).
The company is planning to spend about 250 million in launching 10 company owned concept stores named 'Revolution Stores', to further enhance the shopping experience and thereby brand recall.
Place
Liberty has 8 branch offices to coordinate its supply chain to its 400 exclusive outlets and 100 distribution channels feeding close to 6000 multi brand outlets throughout the country.
It is also targeting major retail stores in India for shop-in-shops kind of selling.
Given below is a city-wise breakup of the Liberty sales.
Location-wise Sales data
% of total sales
Mumbai
2 %
Delhi
8 %
Chennai
3 %
Jaipur
3 %
Bangalore
3 %
Other cities
81 %
As is evident from the data, the sales from all the major cities put together is less than 20%. The company has its stronghold in semi-urban and suburban areas.
SWOT
Strengths
Weaknesses
> Excellent supply chain of 400 EBOs , 100 distributors and about 6000 MBOs
> 1000 styles every month to meet the ladies and children's market's
> Could not provide international shopping experience
Opportunities
Threats
> Launch of 10 company owned concept showrooms called "Revolution Stores"
> Targeting major retail chains for shop in shops
> Sales distribution is not restricted only to the cities.
> The Liberty Group is planning to set up exclusive boutiques targeting
the higher-end of the consumer segment. The boutiques will aim at
spreading the brand within the rich and fashion- conscious class
> Very thin Margins
Product Mix
Gents
Ladies
Leather
Sports
Kids
Coolers
Gents Slippers (21)
Senorita
(4)
Warrior
Semi-formal
Force 10
Footfun
Casual wear
(6)
Gliders
Floaters (8)
Tiptopp
(12)
Windsor (4)
Prefect
School Shoes
Fortune (12)
.8.3 Reebok
Background
Reebok entered the Indian market in late 1995 through a Joint Venture with Phoenix shoes. Phoenix was to create a chain of retail stores to sell Reebok footwear. However Phoenix backed out of the arrangement after setting up 10 stores. This drove Reebok to identify franchisees and partners to carry on the marketing for Reebok.
Marketing Mix
Product
Reebok shoes are positioned as sportswear and fitness brand. The target consumers are the youth in the age group of 12-25 who are keen on fitness. Other than footwear and apparel, Reebok is also into making cricket equipment. This strategy reinforces the Sporty image that the brand has built over the years.
Reebok is also the first among the 3 large international brands to enter the School shoes segment. It has entered into agreements with schools to manufacture customized footwear for their students. This is a part of a larger objective of latching on to prospective customers very early - as they say, "Catching them young".
But the walking shoes priced at the low-end of the premium segment are still Reebok's best bet in the Indian market context. At the higher end of the premium market Reebok has the Rockport range of formal and casual footwear. A number of other brands are also a part of the Reebok repertoire as can be seen from the product line.
Reebok has been involved in a constant endeavour to add new features to its products. New product development has resulted in a number of specialized offerings such as the High technology Traxtar shoes with an embedded microprocessor that allows young athletes to fine tune their performance. Reebok has also concentrated on segmenting its offerings very clearly. It has a separate brand of specialized shoes which cater to specific segments of people (either functionally or cognitively eg: the "Rail" shoes).
Reebok has of late been attempting a word association to counter the Nike Air commercials. It has developed a high technology 3d shoe brand. This brand has the advantage of a dynamic cushioning making it extremely comfortable for the wearer. Reebok plans to launch this technology as 3d shoes.
Price
Product
Price range
School shoes
Starting at Rs 490 - Rs 690
Basic walking shoes
Rs 1290
Rockport
Rs 2090 - Rs 4090
NFL
Rs 4490 - Rs 5490
Proton (walking, aerobics)
Rs 1290
Umbwe Trail (Rockport super premium)
Rs 10000
Traxtar (hitech)
Rs3490
Kids Segment
Rs 290 - Rs 1990
New challenge collection (Kids)
Rs 790 - Rs 990
Specialist shoes
Rs 2990 - Rs 3990
Reebok has a large number of offerings across price ranges starting from the Premium segment upto the Super premium segment. This conforms to its image of being a high-quality product.
Promotion
Reebok uses Cricketing superstars Rahul Dravid and Yuvraj Singh as its brand ambassadors. This is a very important ploy, considering that cricket is a religion in India. This association with the stalwarts of the cricketing arena gives the brand tremendous acceptance in the minds of the Indian consumers.
Besides cricket, Reebok also spends heavily on sports promotions (tennis, running and golf). It is regularly involved in sponsoring sports events such as walkathons, golf tourneys, cricket practice sessions, aerobics sessions and so on. All this reinforces the 'fit and sporty' brand image Reebok has built for itself.
Reebok has also been into region-specific promotion. For the eastern region Reebok has signed an agreement to sponsor the East Bengal Soccer club. Knowing the amount of fanaticism that exists for Soccer in the eastern region of the country, Reebok is certainly sparing no efforts to get into the good books of the customers.
Place
Reebok has 85 exclusive outlets across the country and over 2500 MBOs which carry its products. Reebok is planning to open RBK model showrooms. This is to serve as a guideline for the retailers who will be stocking Reebok products.
SWOT
Strengths
Weaknesses
> High growth rate
> Strong brand image
> Strong distribution of network of 2500 MBO's and 85 EBO's
> Leveraging on sports (Rahul Dravid & Yuvraj Singh)
> Failed alliance with phoenix
Opportunities
Threats
> The present growth of over 25% in the sports segment makes India the most rewarding market
> It was the first of 3 sportswear MNC"s to enter the kids school segment
> Reebok is planning to launch promotional strategies termed, 'Otto
Peltzer' involving Indian athletes and a new consumer plan named `Click
for Kicks' targeting retail sales.
> Threat from low priced well entrenched Indian brands
> High risk from counterfeit footwear which are sold at dirt cheap prices
Product Mix
Weebok (kids)
New challenge
o Inferno
o Zambezee
Rock Port
- Umbwe Trail
- Vitalogy
o Humanity
o Virtuosity
o Ubiquity
Traxtar (Smart Technology shoes)
Greg Norman range
Premier running series
NFL
School shoes
Proton (Walking, jogging)
New challenge collection
Specialist shoes
- Interval
- Big Hurt
- Bump and run
- Fortius
- Blast
- Rail
.8.4 Adidas
Marketing Mix
Product
Adidas first entered the Indian footwear market in 1989 through an exclusive retail license agreement with Bata, till 1995, when the tie-up was discontinued. It re-entered India for the second time in 1996 through a joint venture with Magnum International Trading Company Ltd with an initial investment of $2.5 million to form Adidas (India) Trading Pvt Ltd. Its aim was to become the leader in the organised sports footwear and sportswear market. There was no change in its tag line 'Forever Sport'. Initially only the premium segment was targeted. About 600 and 800 new designs in footwear and between 1,500 and 2,000 new designs in apparels were launched every six months.
In 1999, Adidas developed a new range of shoes and apparel at lower price points, designed specially for the Indian markets. The new products were among the cheapest Adidas products available anywhere in the world. The new range comprised men's, women's and children's products.
At the same time Adidas continued to cater to the niche segment of sports athletes and professionals. It launched three new models of soccer shoes-Predator Accelerator, Predator Rapier Traxion and Special Traxion in 1998. The Predator Accelerator had the predator technology, traxion outsole technology and 'Feet you Wear' design. It also introduced seven new shoes for training and adventure
In 1999 two new shows-Equipment Hardcourt for tennis and Sorcerer, a training shoe ere introduced. In 2000 its Speed 2000, available in a combination of colours was a runaway hit at Rs999. Its imported upper makes for dry feet (through breathable mesh), while its EVA mid-sole makes for extra-cushioning.
Adidas gained momentum through the years due to its quality, styling, technological innovation and reputation. It now introduces almost 200 styles per season. The company has sought approval of FIPB for importing top end sports equipment and other specialised products.
The segmentation in the footwear market at present is as shown below:
Product segments
% of total sales
Gents Formal
Gents Sports
94%
Gents Casual/Leisure
3%
Ladies Casual/Leisure
Ladies Sports
2%
Children
%
Any other category
Total
00 %
Price
Adidas initially catered only to the premium segment of the market. But to increase profitability through volumes, there was a downward stretch of its products. At present, its range of footwear begins at Rs 1199 and goes up to Rs7500. The price range of footwear and apparel it offers is as shown below:
Price segments
% of total sales
< Rs 500
Rs 500 - Rs 1000
5%
Rs 1000 - Rs 1500
2%
Rs 1500 - Rs 2000
7%
Rs 2000 - Rs 3000
32%
Rs 3000 - Rs 4000
22%
> Rs 4000
2%
Total
00%
Promotion
Adidas was very much conscious of the cricket crazy Indian culture as it roped in India's top cricketing stars Sachin Tendulkar11 and Virender Sehwag as brand ambassadors in addition to tennis stars Leander Paes and Mahesh Bhupati. Adidas India Trading Pvt Ltd (AITPL) sponsored soccer teams in the country in addition to focusing on tennis and cricket for promotional activities.
The choice of the two aggressive Indian openers for endorsing the brand clearly reflects Adidas' brand personality of being powerful, stylish and most importantly dominating. These attributes come through very well with the way the Indian consumers identify with Sachin and Sehwag.
Its range of sports shoes conveyed that the brand was not limited to sportspersons but was extended to the sports-minded who could wear the brand as a lifestyle statement. In 2000, the company joined hands with contests2win.com, a contest web site in India, for online promotion of its products. The company set aside Rs2,70,000 prize package for promotional activities, which included five pairs of Adidas Iridescent shoes and 500 gift vouchers worth Rs500 each.
Adidas was one of the big advertisement spenders among other companies to cash in on the millennium shopping frenzy. The company launched a nationwide Consumer Promotion Scheme during 8- 31 Oct 1999 offering discounts, redeemable reward coupons and a chance to travel to Australia. Buyers of Adidas products at select retail outlets were given Reward Certificates on sales worth Rs500 or more.
Adidas India Trading Pvt Ltd (AITPL) doubled its advertising and marketing expenditure for 1998. The increased ad spend was aimed at competing with Nike and Reebok who had consolidated their hold in the Indian market.
Place
Adidas has maximum consumer patronage from Delhi and Mumbai (45% of sales come from these cities). It has over 85 exclusive showrooms and over 95 multi brand stores spread throughout the country. It also has tie-ups with national Multibrand outlets like Planet Sports, Lifestyle and Metro shoes. It also has a distribution alliance with Woodland by which it retails its shoes through 22 of the 55 EBOs of Woodland. Its Salomon range is sold only through exclusive Adidas showrooms.
Location-wise Sales data
% of total sales
Mumbai
25 %
Delhi
21 %
Chennai
5 %
Kolkata
2 %
Bangalore
9 %
Hyderabad
5 %
Punjab
0 %
Other key locations
23 %
SWOT
Strengths
Weaknesses
> Growth rate of 30% which is higher than the segment growth rate
> Strong Distribution Network of 28 distributors, as well as MBO's and EBO's comprising nearly 2 lac sq feet of floor space
> It launches almost 200 styles per season in its range of sports wear
> It has a tie up with Planet Sports Lifestyle and Metro Shoes to market its products
> Sales are highly concentrated geographically. Over 45% of Adidas sales come from only two cities of Bombay and Delhi
> Its lacks presence outside the men's section. 94% of its sales are in the men's sports footwear and apparel.
Opportunities
Threats
> It has earmarked an extensive project to enter the Indian women's footwear and apparel segment in the next six months
> Taking advantage of the distribution tie up with Woodlands for retailing in Woodland's EBO s across the country
> Adidas is also tapping segments such as the Indian Army to
provide equipment for the rough terrain
> Threat from low priced well entrenched Indian brands
> High risk from counterfeit footwear which are available at dirt cheap prices
.8.5 Nike
Product
Nike entered the Indian market through a 5-year licensing arrangement in 1995 with Sierra Industrial Enterprises (SIE), an Indian trading house. It handled retailing operations through an affiliate company, Sports Station, Nike's master franchisee in India. It is the only one out of the top three sports shoes MNCs still operating through a licensing agreement.
Nike has a clear positioning in sync with its core values of 'a sports authentic brand '. Its strength is its technological innovations in footwear, apparel and accessories segments targeting the younger generation as a sporty fashion brand. For instance, in 2001 it introduced Presto, its new range of shoes claimed to be `T-shirts for the feet' as they stretch to accommodate the feet. The shoe was a product of modified V Notch technology. It is available in 3 categories - Presto, Presto Cage and Presto Chango. It came in 6 styles and 8 colours for men, women and children priced Rs6,000-10,000 a pair.
Like the other sports shoes MNCs, Nike also had its prices to suit the premium segment.
From 2000, the share of Nike's local manufacture rose to 75% making Nike products cheaper. It was now priced from Rs999 to Rs7,999 to exploit the Indian middle class in a downward stretch. The company also associated itself with cricket.
Nike carved a niche market for itself in golf. In 2000 it launched a new golf range for the consisting of footwear, apparel, eyewear, precision technology golf balls, bags and gloves, designed for the Indian conditions. In 2001, the company reinvented apparel as performance gear and launched the Fall '01 Apparel Line, a branded athletics range of apparel meant for alternative sporting activities.
In 2002 Philips India Ltd (PIL) tied up with Nike to launch wearable
electronics, in a step towards co-branding. As per the agreement, the company would introduce a new range of co-branded portable MP3, MP3-CD and FM digital radio
players.
As of now footwear contributes about 50% and apparel another 40% to Nike's turnover in India. Fitness equipment and other accessories make up the rest 10%. Nile also offers a range of watches under the Nike Timewear range (Rs1600-12500) sold through specialty watch stores.
Product segments
% of total sales
Gents Formal
Gents Sports
75%
Gents Casual/Leisure
Ladies Casual/Leisure
Ladies Sports
20%
Children
5%
Any other category
Total
00 %
Price
Nike initially catered only to the premium segment of the market. But to increase profitability through volumes, there was a downward stretch of its products. At present, its range of footwear begins at Rs 1199 and goes up to Rs7500. The price range of footwear and apparel it offers is as shown below:
Price segments
% of total sales
< Rs 500
Rs 500 - Rs 1000
Rs 1000 - Rs 1500
37%
Rs 1500 - Rs 2000
4%
Rs 2000 - Rs 3000
8%
Rs 3000 - Rs 4000
41%
> Rs 4000
Total
00%
Promotion
Nike, in an effort to bring an international shopping experience to Indian customers has built several flagship stores in select cities. In 2001, Nike initiated promotional activity on the Internet to encourage consumers to order through the website. The company also added special offers-Nike Killer deal, Nike golf shop and Nike Gift shop. It even offered Nike T-shirt worth Rs375 with name or choice of message on it.
Retail stores carry contemporary and relevant products through attractive visual merchandising displays. The displays project the company's "Just Do It" brand image, of being sporty and energetic. Inside stores, there are ozone footwear walls that highlight shoe sections, and there are tech talkers to educate and persuade the customer to buy the products.
Place
Nike commands maximum consumer patronage from Delhi, Mumbai, Bangalore, Chennai and Hyderabad in the age group 18-35 years. It has over 175 exclusive outlets and 8 distributors across the country. It is also selling through select Bata showrooms and a few departmental stores. Nike also has an exclusive arrangement with www.rediff.com to sell its products to expatriates and other untapped markets. In 2000, it inaugurated its biggest showroom in Bangalore equipped with touch screen kiosks and large plasma televisions which would run the Nike story.
The location-wise sales data is shown below:
Location-wise Sales data
% of total sales
Mumbai
23 %
Delhi
25 %
Chennai
0 %
Kolkata
5 %
Bangalore
0 %
Hyderabad
0 %
Other key locations
7 %
SWOT
Strengths
Weaknesses
> Strong global brand image
> Diversified into apparel and accessories. Projected as a lifestyle brand
> Very strong network of exclusive showrooms along with sales through BATA showrooms
> Apparel sourcing is done from only one unit
Opportunities
Threats
> Take advantage of an alliance with rediff.com to enter the internet market
> It has entered the kids school shoes segment like Reebok
> The present growth of over 25% in the sports segment makes India the most rewarding market
> They aim to provide an international shopping experience by opening flagship stores
> Low priced well entrenched Indian brands are their major competitors
> It faces high risk from counterfeit footwear of its brand which are available at dirt cheap prices
.8.6 Red Tape
Background
Red tape is Mirza Tanner's flagship brand for the domestic market. Mirza Tanners Ltd. is a basically export-oriented company.
Marketing Mix
Product
In India Red Tape is positioned as a premium fashion brand targeting at the upwardly mobile Indian consumers in the age range of 16 - 25 years. In the domestic market the product range of Mirza Tanners comprises Oaktrack, Oakridge and Ozark besides Red Tape. In 2001 they went in for a product line extension entering the sports footwear with a new range called Sports Collection for men.
Price
The Red Tape range of shoes is available from Rs 1300 onwards.
Promotion
Red Tape is not a heavily promoted brand. They have had a few TV commercials for the formal wear and sports collection, but no extensive advertising has been undertaking.
Place
Red Tape has at present sells its products through 4 EBOs. It is planning to increase this number to another 4 by September 2003. Most of its sales, though, come through MBOs across the country.
SWOT
Strengths
Weaknesses
> Strong distribution network through MBOs and a large presence in the export market.
> Very large production capacity of 16 lac units of footwear
> Small presence in domestic market as exports account for 85% of sales
> Too much concentration of the sales (80%) in Delhi and Mumbai
> No brand image for the company unlike competitors
> Very small number of exclusive outlets for its brands
Opportunities
Threats
> Tremendous scope for growth in the domestic market. The company is increasing number of styles in the men's range in an effort to boost domestic sales
> It has launched a new sports collection for men
> The company is setting up a new factory in Noida, doubling its production capacity
> It is in the process of doubling its exclusive outlets
> Entry of well known MNCs into the premium segment
> Impending cow hide ban in western countries will affect exports
Product Line
Red Tape
Oak Ridge
Oak Track
Ozark
Sports Collection for men
.8.7 Woodland
Marketing Mix
Product
Aero Club launched its footwear and Casual wear brand Woodland in late 1992 catering to the top and mid-end price segments (Rs 995 to Rs 2995) in the footwear market. The rationale behind this choice of segment was a wide gap in the mid-price range in the early 90's (Rs 1195 to Rs 1995). Woodland entered the market when the trend was shifting to stylish but comfortable casuals. Indian customers were also becoming quality conscious and market savvy in addition to having increased buying capacities.
After steadily increasing its presence in the semi-formal shoes category (to the extent of having almost no competition), Woodland launched its formal shoes under the brand name Woods in 1997-98. This was the first significant product extension undertaken by the company. The company didn't extend its brand name with the view that the image-fit was not appropriate. Consumers associated the Woodland name with high quality semi-formal or casual shoes. Using the same brand name for the formal shoes category could have been detrimental to the prospects of the new product since the customers would have been confused.
The final addition to the Woodland stable came in the form of the Woodland apparels. This was a useful brand extension since the brand was projecting itself as a lifestyle brand. Woodland show rooms became hubs for procurement of high-end wardrobes. Moreover, the apparel brands lured more and more customers to the showrooms giving more visibility to the shoe brands.
The footwear products are divided into a number of segments as shown in the following table:
Product segments
% of total sales
Gents Formal
5 %
Gents Sports
Gents Casual/Leisure
50 %
Ladies Casual/Leisure
30 %
Ladies Sports
Children
5 %
Any other category
Total
00 %
As is evident from the above table, a large share of the Woodland sales comes from the Gents Casual shoes market. The share of the ladies market has increased with the launch of the new Ladies Casuals division. The aim is to increase the ladies wear to 40% of the total production. Of the remaining 55% is to be men's merchandise and the remaining 5% in the children's category.
Woodland was involved in seasonal variations of its product lines in 1999-2000. In December 1999 Woodland launched its Winter Collection for both apparel and footwear. This was followed by a Summer collection in early 2000. This variation in the offering was its first attempt to take into account the climatic changes that are so important to the Indian context.
Price
Woodland entered the market as the only player in the premium price range (Rs 1195 - Rs 1995). As of today it has a number of offerings in this price range, as shall be clear from the following table:
Price segments
% of total sales
< Rs 500
Rs 500 - Rs 1000
20%
Rs 1000 - Rs 1500
20%
Rs 1500 - Rs 2000
40%
Rs 2000 - Rs 3000
20%
Rs 3000 - Rs 4000
> Rs 4000
Total
00%
Though Woodland has offerings in the lower end of the premium segment as well, most of its sales still come from the Rs 1500-2000 range.
Promotion
Woodland moved towards All-terrain footwear in 1996. The caption adopted for this launch was "Leather that Weathers". The concept was pushed through with an intensive advertising campaign portraying the attributes of the new product, namely durability under extreme conditions. Variants of the advertisement were launched projecting the "cool" image of Woodland shoes. They stuck to the base line for a number of years. During the year 2000-2001 Woodland consciously kept away from advertising in the electronic media. But after that it again launched its advertisement programme with huge investments. The commercial was launched with a theme revolving around nature, macho and adventure. This theme reinforces the brand image of Woodland in the minds of the urban youth.
Place
Woodland is sold through Exclusive Woodland stores (EBOs) as well as Multibrand Outlets (MBOs). The EBOs stock 65% in footwear and 35% of apparel while the MBOs stock 90% in footwear and just 10% of apparel.
Woodland presently has 60 EBOs (as of 2002). Besides the brand also sells through distributors at over 2200 MBOs across the country. MBO's at present stock just 25% of the entire Woodland range but contribute about 75% of the total turnover.
A large proportion of the total sales for Woodland comes from the urban areas, more specifically the class A cities in the country. A distribution of the location-wise sales data is as follows:
Location-wise Sales data
% of total sales
Mumbai
8 %
Delhi
35 %
Chennai
2 %
Kolkata
5 %
Bangalore
0 %
Hyderabad
8 %
Other key locations
22 %
New Market Development:
Of late (July 2003) there has been stagnation in the sales of Woodland in the urban areas. This has driven the brand into considering entry into the smaller markets, now that it has proved its presence in the metros. Therefore the future outlook of the place factor for Woodland could see a radical change in the distribution of sales.
SWOT
Strengths
Weaknesses
> Very strong distribution network of close to 3000 MBOs and 60 EBOs
> High Inventory turnover due to good inventory management
> First mover advantage in to the semi formal segment
> Stayed away from the electronic media for over one year
> Too much concentration of the retailing outlets in north India
Opportunities
Threats
> A film has been made with a theme which gels with the brand image of the company for promotion
> A new ladies casuals division is being set up to increase the market share of this segment
> New trendy range is being developed for the MBOs which contribute to the majority of sales
> Has recently entered non-metros
> Increased competition from the other companies which are entering this segment
> Increased threat from counterfeit shoes sold at a relatively low rate.
.8.8 Regal Shoes
Marketing Mix
Product
Since its entry into the Indian footwear market, Regal shoes has concentrated on generating a cross-functional image. Consequently they have offerings in almost every segment of the footwear market. This has given them a great competitive advantage over the other players most of whom concentrate on a single segment. Regal shoes claims to provide a complete footwear solution rather than satisfy the needs of only a particular segment of consumers.
Among all its offerings Regal is most popular for its men's footwear range. It also is the leading player when it comes to Ladies footwear designs. A number of designs are available based on occasion of usage viz. women's classic, bridal, evening, work and leisure time footwear. Regal shoes also has a number of offerings in the oft-neglected children's footwear segment.
The marketing strategy used by Regal shoes for its product range concentrates on collaborating with foreign players. This gives Regal a chance to project itself as an international quality footwear provider and at the same time the foreign brand which otherwise would have found it difficult to enter the market can also do so. Regal has depended on a number of such collaborations with foreign brands. Regal also indulges in frequent product line extensions. The market for women's footwear is highly dynamic and fashions and styles change rapidly making it essential to keep developing new offerings for the women's segment. The company also customizes exclusively for women's footwear since it understands that ladies' may have very particular demands and these need to be satisfied specially to ensure that they remain loyal consumers.
Regal is also into apparels. It is moving towards becoming a complete wardrobe solution. INC 5 is the lifestyle store started by Regal which pushes the targeting of fashion conscious women a step further.
Price
As mentioned before Regal has an offering across a number of segments. The same holds true for the premium and super premium segments. The price range of the offerings of Regal for the women's footwear is around Rs 1100 to Rs 4000.
Promotion
Regal believes in Celebrity endorsing specially for its women's footwear range. Since the target customers are the fashion savvy urban women, the choice of personality has to obviously be either a film actress or a fashion model. Regal uses the latter approach as it is endorsed by former Miss India Neha Dhupia. The company is also involved in sponsorships for brand building. It is associated with mega fashion events such as Femina Miss India contest and other fashion shows.
The company also uses Mediagraphics quite extensively. To reach its target audience it advertises in high society magazines like Cosmopolitan, Elle and Femina which are traditionally read by the fashion conscious urban ladies.
Place
Regal shoes is distributed through 6 retail stores in Delhi, Bangalore and the other metros. A lot of effort goes into ensuring that the customer's buying experience is enriched. For this purpose Regal uses different display concepts, trying to ensure maximum visibility and attractiveness for each brand. The sales people are specially trained to be able to help the customers make their choices easily.
SWOT
Strengths
Weaknesses
> Strong hold in the women's segment for party, bridal, evening and work footwear
> Strong and Proactive product design development department
> Weak distribution network primarily selling through a small number of EBOs in few cities
> Low Brand recognition
Opportunities
Threats
> The company has started customizing exclusively for the women's category
> Company is targeting fashion conscious women through its newly developed lifestyle stores
> Targeting Upper class consumers in the B class cities who generally shop from the metros
> Increased competition from High quality- unbranded footwear
.8.9 Lakhani
Marketing Mix
Product
Lakhani's range in footwear includes canvas shoes, Hawai slippers, sports shoes and leather shoes for the whole family. Lakhani also subcontracts for Reebok and Adidas. During 1996-97, Lakhani entered into a joint venture with New Balance of the US to launch sports shoes. It has a royalty agreement with Walt Disney India for printing Disney characters on children's shoes.
Lakhani offers canvas shoes for men and women under the brand name of comfort and princess respectively. Pace is the sports shoe offering of the company. The firm's first leather sports shoe, Lakstar, was a failure and is now off the shelves. In the leather segment, shoes are sold under the name of L4U. Kids footwear is called Hungama series and the company also makes school shoes for kids. However most of its sales by volumes is accounted for by its Hawai slippers and Breezers sandals.
Price
Lakhani has launched over 200 models of footwear for men, women and children under the umbrella brand name, Shoe World. With this new range Lakhani again targets the value segment of the market with footwear priced between Rs30 for slippers and Rs1350 for casual shoes
The new range of male footwear is priced between Rs550 and Rs1054, casuals priced between Rs1050 and Rs1350, leather chappals and sandals from Rs135 to Rs449 and sports shoes from Rs625 to Rs725. The ladies' fashion shoes are priced between Rs275 and Rs695 and casuals were priced from Rs800 and Rs999. Hawaii slippers are sold at Rs30 to Rs80 per pair. Its canvas shoes are in the Rs60 to Rs200 range, casual shoes are priced between Rs325 to Rs600 and its leather shoes, Baron, are in the Rs500 to Rs1200 price range.
Place
The group has a network of over 25000 distributors over India , which is being routed through its 300 wholesalers. Lakhani has launched a new footwear series under the brand name, Shoe World. The range will be sold through exclusive outlets and counters at up-market departmental stores. It has opened 500 exclusive franchise outlets and 300 sales counters in department stores for selling the new range. The company also wants to set up franchisee outlets which will house not only Lakhani footwear but also accessories like socks, shoe horns, shoe trees and school bags. It is setting up showrooms in Delhi, Bangalore, Bombay and Calcutta as a part of its growth plans.
Product Mix
Canvas
Sports & Leather
School shoes
Kids shoes
Slippers & Chappals
Comfort casual shoes for men (10)
Pace
Jogging shoes (12)
Goodluck
Hungama series (9)
Breezers
Sports Sandals (11)
Princess for Women (9)
L4U
Leather shoes (3)
Student
Hawai
Chappals (29)
Excellent
Super Tennis
Kiran
Toppers
Easy Wear
Champion
Comfort 999
*figures inside brackets indicate number of models of each product
.8.10 Phoenix
Marketing Mix
Product
Phoenix used to be a well-known brand name in the Indian footwear market. However, Phoenix's market share of India's organised footwear market has fallen to 5% from 25%. The Phoenix group produces a wide range of footwear, which includes Madame Phoenix sandals, Phoenix Sahib shoes, Cactus shoes and Saheb rubber slippers. It is marketing new products under the Madame Phoenix and Mallika brands on a grand scale. Phoenix is also manufacturing for Adidas in India and exports to Decathlon in France.
Phoenix brand is mostly associated with sports shoes despite having non-sport shoes like Phoenix Sahib, Cactus and Madame Phoenix. Phoenix has launched two new shoe brands, Tuffs in the sports segment and Rugsac in the casual wear segment. Tuffs synthetic shoes are different from other synthetics as its sole and other peripherals are stitched into it instead of being stuck on to the upper. Rugsac uses heavy grained leather uppers which gives its a rugged finish. To reinforce its personality, it is sold in jute bags.
Phoenix is also negotiating with American and Italian footwear majors to launch their brands in India. It plans to introduce international brands like New Balance, Converse, Fila, Sketcher and Hitech of the US and Francaschetti and Pompelli of Italy, in both the formal and casual segments. The company introduced a range of sports shoes, exclusively for ladies for the first time in India. The assorted ladies sports shoes are marketed under the Flora brand name. Phoenix has extended its Cactus range of casual
shoes and Rucksac range of work boots and sandals.
Price
Tuffs is positioned in the mid and lower sports shoe segment. It is priced between Rs350 and Rs750 and Rugsac in the casual wear between Rs1300 and Rs1600. Phoenix has also launched a range of its own shoes which include BNW sports shoes, priced between Rs300 and Rs700. Its Cactus range of casual shoes and Rucksack work boots and sandals are priced between Rs1300 to Rs1700.
Phoenix follows a three-tier system for its footwear. Phoenix Shoes is a chain of shops covering B, C and D category cities. It markets shoes in the range of Rs500 or lower. Phoenix Plus includes a network of bigger outlets marketing shoes in the range of Rs1800 or more. Sports Plus markets imported leather shoes in the price range of Rs1800 and above and also sports apparel and equipment.
Place
Phoenix has an all India three tier distribution system consisting of over 40 distributors, 200 sub-distributors, and 6500 retailers. It plans for an exclusive countrywide network of retail outlets for shoes, sports apparel and equipment. It has acquired 12 mega shops in prime locations of the country. Full outlets have been opened in Delhi, Bangalore and Bombay in October 1995. It further set up around 400 retail outlets in the next 3 years. In addition it has acquired rights to 469 retail outlets of DCM Shriram.
It has set up a three-tier distribution network called Phoenix Shoes, Phoenix Plus and Sports plus. Phoenix Shoes covers B, C and D category cities. Phoenix Plus is a network of bigger outlets, while Sports Plus is into sports segment. Tuffs is distributed through its 11 branch offices across India spanning 800 retail outfits.
Product Mix
Madam Phoenix (Ladies party wear): 14 models
Kids & Clogs: 10 models
Canvas Casuals: 10 models
Tuffs joggers
Hitech Sports Shoes
.8.11 Metro Shoes
Background
Metro shoes is India's largest fashion footwear and leather accessory retailer with outlets in all major cities and catering to customers of all age groups.
Marketing Mix
Product
Metro shoes has a wide range of footwear catering to a number of segments. It retails Reebok, Nike and Adidas sports shoes through its outlets. In December 2000 it started selling Provogue footwear through its 29 shops. The same happened with retailing of Florsheim shoes through 40 of the Metro shoes outlets.
Metro shoes has also entered into a technical collaboration with Bally's of Switzerland to manufacture shoes in the premium segment.
Market Segments
% of total
Gents Formals
36
Gents Sports
4
Gents Casual/Leisure
25
Ladies Casual/Leisure
20
Ladies Sports
Children
3
Ladies Formals
1
Total
00
Price
Metro shoes has offerings across all price-ranges - from economy to premium. It hasn't forayed into the super-premium segment.
Price Range
% of total sales
< Rs 500
4
Rs 500 - Rs 1000
38
Rs 1000 - Rs 1500
5
Rs 1500 - Rs 2000
22
Rs 2000 - Rs 3000
2
Rs 3000 - Rs 4000
6
> Rs 4000
3
Total
00
Promotion
The promotion strategies of Metro shoes are based on the maxim of 'Selection, Service, Speed and Teamwork'. The strategies change as per the changing needs of the customer. At Metro, the satisfaction of the customer is top priority.
Place
Metro shoes has a number of retailing outlets in select cities across the country. The following table shows the Location-wise sales data:
Location-wise sales data
% of total sales turnover
Total no. of outlets
Mumbai
31.78
8
Delhi
7.89
3
Chennai
9.54
2
Kolkata
6.63
Bangalore
3.86
2
Hyderabad
3.26
Chandigarh/Ludhiana
6.6
2
Gujarat
6.02
6
Pune
4.42
2
Product Mix
Gents
Ladies
Children
Metro
in-house brand
Metro
in-house brand
Boys
Da Vinchi
Exclusive at Metro
Princess
Girls
Florsheim
American brand
Ashley
GenX
Casuals
Sets
Activ
Sports
.8.12 Action Shoes
Marketing Mix
Product
Action has been in the footwear industry for over three decades. It offers quality footwear, shoes for the whole family - ranging from casuals to formals; from daily wear to sports wear and from an elegant collection for ladies to a fun range for kids.
The ladies range, Liza is according to the liberal attitude of today's teens. They are manufactured through direct injection process. These shoes have finest fabric upper and PVC soles. Florina is a complete range of casuals, stylish and party wear for ladies. Other ladies footwear like Chanchal, Easy fit, Sweetline comes with PVC soles, which provide durability and comfort.
Action offers a trendy collection of shoes for children who want try out crazy designs and sporty shades from rebellious reds to calm blues and soothing whites. This range comprises of Comic, Funtime, Radial, Rockers jr, School Time and many more.
Action's range of sports shoes are light and yet tough, made from imported components. They have the latest styles, designs and colours that are making the waves. The soles are made of PVC and PU giving durability, stability and comfort. The sports shoes are sold under a number of sub-brands like Campus, Jogger, Time etc. The main features of Campus shoes include weather-proof uppers and stone-resistant soles.
Action Shoes has introduced a series of Flotter sandals under the brand name Fly Float. The sandals have been designed for summer, for both indoor and outdoor use. The new range is available in 20 colours. Fly Floaters are made of synthetic material to make them affordable, cool and casual.
The group is a regular exporter of footwear in European markets as well as Middle East nations. It is also dealing with international Super Market Chains and Hyper Market Chains.
Price
The Campus range is priced at Rs800 onwards. The flotter sandals sold under the name of Fly Float are targeted at youngsters and priced between Rs354 and Rs394.
Promotion
Action got its Campus range of shoes promoted by none other than Sachin Tendulkar. It has been associated for a long time with Kapil Dev, the living legend, who has been their brand ambassador. The company has roped in television stars Renuka Sahani and Pallavi Joshi to advertise their ladies collection while Amrish Puri promotes the men's casual footwear brands Mausam and Fly Float.
Place
Action has a network of more than 20000 retail outlets all over India to sell its footwear. This is distributed through more than 500 distributors appointed by the group. The company also has around 20 exclusive showrooms to sell its brands. This gives the company enough muscle to fight the competition from Indian and foreign brands.
Product Mix
Women
Children
Leather
Sports
Casuals
Florina
Party Wear (9)
School Time (6)
Leather Line (8)
Time (5)
Mausam Chappals (5)
Liza Shoes & Boots (10)
Sandals
Slippers & Sandals (4)
Synergy (8)
Flyfloat Floaters (7)
Sweet Line Value for money (7)
Disney
Milano formal wear (6)
Xtreame Zone (2)
Chanchal (8)
Stabiliser Jogger (6)
Jogger (6)
Trekking (4)
Campus
* figures in the brackets denote the number of models in each product
.9 Gap Analysis
The Indian footwear market is a Rs. 9300 crores market (as of 2002), with almost 85% of sales in the unorganized sector. For drawing positioning maps and evaluating the gaps in the market, only the organized market has been considered.
We first analyse footwear as a product based on branding concepts.
The customer value hierarchy for footwear is as shown below:
Core benefit
Foot care
Basic product
Shoes, Slippers
Expected product
Comfort, Durability, Value-for-Money
Augmented product
Air cushioning, Odour-free, Lighting systems, Brand image
Potential product
Medicinal footwear
Footwear would come under the category of Shopping goods i.e. the consumer, in the process of selection and purchase, compares on the following bases:
> Quality
> Price
> Style
> Suitability
Some years ago, specifically before the 90s, footwear was a Homogenous shopping good, i.e. price was the distinguishing feature as the offerings were all of the same quality. But post 90s, it has become a Heterogenous shopping good. Differentiation on the basis of features and quality has become more important than price.
Now for a typical footwear company we look at the classification of the various products:
> Core product - High sales volume, High sales promotion. Shoes and Slippers in the economy or moderate range in terms of pricing
> Staples - Lower sales volumes, High promotion. Shoes and slippers in the premium price range
> Specialties - Low sales volumes, Maybe highly promoted. Sports equipment, 'special' shoes for golf
> Convenience items - High volume, Negligible sales promotion. Belts, Leather accessories
Why Market Gaps in India?
Before we move on to the actual analysis of the various market gaps in terms of position maps, there is a need to analyse why gaps arise in the Indian market. In the Indian context there are two main factors which have been responsible for creating gaps and new markets in the consumer goods industry. One is the fact that India as a developing country has been continuously influenced by Western culture. Consequently, lifestyles and consumer preferences have been slowly changing over the years, opening new markets, closing obsolete ones and creating market gaps. A specific example would be the 'high heel' shoes for women which has been a success primarily thanks to Western influence. Second is the LPG policy of Liberalisation, Privatisation and Globalisation post 1991 has literally opened the floodgates in the Indian market. Foreign players have rushed in and competition has increased tremendously. Owing to the variety of offerings the consumer has gone from being extremely price-conscious to quality-conscious. An example would be the success of Reebok, Adidas or Nike which have managed to upgrade consumers and create a market in the premium segment by emphasizing on quality.
An example
A product that has recently filled a gap in the footwear market is the semiformal shoes. We examine how the gap was created.
A recent consequence of the LPG policy has been the IT boom, and the proliferation of MNCs in the country over the past decade, which has had a great impact on the Indian industry, especially the footwear market. It has created a segment of high achievers with a drive to succeed, and money to boot and an average age of 21-30 years - we call it the 'young executive'. The two important characteristics of this segment are:
> Enhanced purchasing power
> Modern outlook and lifestyle
Hence they opt for only the best that is available in the market, be it footwear or fairness cream. They need a dress code which strikes a balance between casual and formal. It is this segment which was targeted by Allen Solly when it launched its range of semiformal clothing, and by Woodlands when it launched its range of semiformal shoes in the premium segment. Thus the semiformal shoes was born.
.9.1 Positioning Maps
Positioning maps have been drawn up based on the major brands in the organized market in the Indian footwear industry. The various brands are plotted on 2 criteria:
> Price- Ranging from economy to premium
> Lifestyle - Ranging from casual wear to formal wear.
Sports shoes, chappals worn at home or informally come under casual wear. Shoes and slippers worn for formal occasions come under formal wear. Semiformal shoes and daily wear slippers and floaters come in between the extremes of casual and formal wear.
Segment Analysis
The Indian footwear market has been broadly divided on the basis of demographic segmentation for the convenience of drawing positioning maps into
> Kids (aged 2-7 years)
> Children (aged 7-15 years)
> Men (Above 16 years)
> Ladies (Above 16 years)
Positioning maps have not been drawn for kids. This is because there is no concept of a formal wear in this segment. Given below is an analysis of the segments, which has been transferred on to the position map.
. Kids (aged 2-7 years) - The users of footwear are kids while the buyers and decision-makers are parents. There is no formal wear in this category as all footwear belong to the casual wear category. The major brands in this segment are Bubblegummers from Bata and Footfun from Liberty. The price range is Rs. 200-400. There is no premium branded footwear in this category which is a gap.
2. Children (aged 7-15 years) - Here, too the users are children while buyers are parents. There is no purchasing power with the users, though they might be the decision-makers. The casual wear consists of chappals for home use like Hawaii from Bata, which are in the economy range only. Consumers would not go for high priced ones. Then there are sports shoes, floaters and slippers for casual wear. Formal wear is school shoes which are again not too premium-priced. There are no gaps in this market.
3. Men (above 16 years) - They have a huge purchasing power and are the decision-makers. College-going youngsters in the age group 16-23 years form a part of this segment. The 'young executive' also forms a part of this segment. As regards slippers, casual wear consists of chappals (Hawaii) for home use, floaters and slippers for daily wear and formal wear. As for shoes, there are sports shoes which are for casual wear, and formal shoes for office wear. Semiformal shoes (used mainly by the 'young executive'), come in between casual and formal wear. At present there are no semiformal shoes in the moderate or economy range. There is a demand for this category in the age group of 16-22 year old youngsters. These consumers have limited purchasing power but at the same time they are very conscious about looks. Emphasis is on fashion, style and brand image. Opinion leadership has a major influence in this segment. These youngsters would be the right target for semiformal shoes in the moderate price range.
4. Ladies (above 16 years) - They have purchasing power (either direct or indirect) and are the decision-makers. Casual wear consists of chappals for home us, sports shoes. Then we move on to daily wear slippers and floaters. On the other extreme are formal slippers and shoes for ladies. Here we notice that there are no sports shoes exclusively for ladies in the moderate or economy range which is a gap.
.9.2 Gap Analysis
Thus, based on the positioning maps, 3 gaps have been identified:
. Semiformal shoes for men in the moderate range
2. Footwear for kids (aged 2-7yrs) in the premium range
3. Sports shoes exclusively for ladies in the moderate range
The gap analysis has been done in the following format:
> Target segment - The target segment is identified
> Four Ps - The 4 Ps required for successful marketing are identified
i. Product
ii. Price
iii. Promotion
iv. Place
> Best bet - The companies most suited to launch the brand in the current Indian context are identified
Men - Semiformal shoes in the moderate range
Brands like Woodlands, Lee Cooper and Red Tape have semiformal shoes in their product line. The price range is Rs 1800 upwards. These shoes are targeted at the premium end of the market at young executives with high purchasing power. There are no semiformal shoes available in the moderate range.
Target segment
Youngsters in the age group 16 - 23 years who need a branded, stylish product at an affordable price.
Product
The product would be a semiformal shoe based on a V-F-M (Value for Money) proposition. Price alone does not help in selling products. There has to be good quality at an affordable price. At the same time, the shoes cannot be priced too low, as there has to be a reasonable profit margin. The target would have to be to skim the low-end market, which is at present turning to the unorganized market to fulfill its needs. A product positioned a little below the premium market would be able to cater to the aspirational needs of youngsters who need a branded product at an affordable price. Present users in the premium would be unlikely to downgrade to this product. So the strategy would be to upgrade the target consumer.
Price
The present price range of a Woodlands semiformal shoe is somewhere around Rs. 1800 upwards. The new product would be priced at somewhere around Rs. 1000-1200. Consumers who are now using unbranded shoes at Rs. 500-Rs. 900 would have to be upgraded to this price range. There is a remote possibility of penetrating the Rs. 1800 and upwards market as that segment would view a low price as low quality.
Promotion
The product would have to be promoted and advertised on the basis of its emotional appeal. Looks and style would have to be highlighted in the promotions along with an appropriate brand image. The young achiever, which is the aspirational group should be targeted.
Place
Since this is a product with a value for money proposition, spatial convenience becomes a very important factor. The product should be made available in MBOs (Multi Brand Outlets) as well as EBOs (Exclusive Brand Outlets) located in suburban areas and low profile urban centres.
Best Bet
Analysing the current brands in the leather industry, Indian brands like Bata, Liberty or Action would be the best bet to launch such a product as it would suit their brand image. Brands like Woodlands or Lee Cooper would find it difficult to tap this market as they already have a premium brand image. If they do launch such a product they would have to ensure that the sub brand has no brand association.
Kids - Footwear (shoes and slippers) in the premium range
The brands, which currently cater to kids aged 2-7 yrs, are those like Bubblegummers from Bata and FootFun from Liberty. They are priced in the range Rs.100-400. There is gap in the premium segment of Rs. 600 upwards which has not been targeted as yet. Consider the increasing segment of 'young executives' in the age group of 28-40 years, who are affluent and married young. It is such a group of parents who feel the need for premium priced branded footwear for their kids aged 2-7years. Reebok has recently launched a product to target precisely this segment using its brand Weebok. Note that the brand name contains association of Reebok, and at the same time an association with kids (wee is a synonym for tiny which refers to kids).
Target Segment
Young affluent parents who require high quality premium priced branded footwear for their kids.
Product
The product would be kids footwear. This would have shoes and 'squeakies' which are colourful and eye-catching. Comfort and safety would be very important attributes as in any kids footwear, since any harm done to kids would lead to adverse publicity and bad word-of-mouth.
Price
The product would be priced at around Rs.600 upwards. This would ensure that the product has the brand image of a high quality, premium priced product.
Promotion
The promotion would have to be targeted at young affluent parents who are the buyers (and not at the actual users, the kids who obviously do not have any buying power). There should be a functional appeal followed by an emotional appeal. Functional attributes would be comfort, softness and safety. Emotional attributes should focus on how important it is for good parents to get their child the best money can buy.
Place
Such a premium priced product should be placed in EBOs(Exclusive Brand Outlets), located in the posh cities and metros of the country. The launch should preferably take the order Bangalore, Mumbai, and then Delhi and then go on to other places.
Best Bet
At present the only brand in this category is Weebok, a subbrand of Reebok. Even this was launched only recently. Brands like Nike and Adidas would find it very easy to move into this category as they are already in the premium priced segment for men and ladies. Brands like Action, Liberty and Bata would have to remove any brand associations if they launch a subbrand in this category.
Ladies - Exclusive sports shoes in the moderate range
At present there are exclusive sports shoes for women only from three brands - Nike, Reebok and Adidas. These are all in the premium segment. In the moderate range there are no shoes exclusively for ladies.
Target segment
Youngsters in the age group 16-25 years for casual wear, Middle class ladies (above 35 years of age) who need exclusive sports shoes at a moderate or economical price.
But there is are several reasons as to why such a gap exists in the market. They are as follows:
* The concept of ladies playing sports is not very popular in the Indian culture. This is a trend which is slowly changing due to Western influence.
* There is not much differentiation between men's and ladies sports shoes, compared to slippers. A need is not felt in the ladies segment for exclusive fashionable sports shoes. Men's sports shoes do quite well as substitutes.
* Indian ladies, traditionally do not take too many decisions. It is the men who have the power and authority. Consequently, the concept of 'exclusiveness' doesn't come into the picture, that too in an offering with so less differentiation as sports shoes
* A ladies sports shoe (like any other ladies footwear) would have to be available in a wide variety of designs, and new designs would have to be introduced periodically. This would make it difficult to price it in the economy range of Rs. 400-800.
We cannot at once conclude that there is no market in this gap. It would take some more years to change the mindset of Indian women. Trends are changing, women's liberalization is gathering steam, and cultures are getting modernized. Given some more time of a couple of years, conditions would be suitable to launch such a product. Therefore we do not analyse on launching a product to fill this gap, as of now.
Description:
Shown above is a perception map of the men's shoe market in India. The y-axis ranges from economy to premium. The x-axis goes from casual to formal. There is a sports segment, which is mainly casual, followed by a semiformal segment, and finally, a formal segment.
In sports shoes, the economy price region is dominated by Indian brands like Bata's Power, Liberty's Campus, Action's Force 10. These brands typically have an image of shoes for the masses or for the family. The premium players in this segment are Tuffs from Phoenix, Joggers, Bata's North Star. Even above these are Nike, Reebok and Adidas.
At the other end, in the formal range are again Bata, Liberty and Action with their respective brands. In the premium segment are brands like Rockport and Florsheim.
There is a segment in between the casual and formal range, which has emerged recently, the semiformal range. This is made up of brands such as Lee Cooper, Gaitonde, Woodlands and Red Tape, which are all targeted at the premium segment.
There are no semiformal shoes in the moderate or economy range. This is the gap in the market. There are youngsters who cannot afford semi formal shoes at a premium price, and so turn to the unorganized market to fulfill their needs.
Description:
Shown above is a perception map of the children's footwear market in India. The y-axis ranges from economy to premium. The x-axis goes from casual to formal. There is a Hawaii chappal segment, which is mainly for home use. This is followed by sports shoes, floaters and sandals which are for casual wear. Then there are school shoes, which form a formal segment.
The Hawaii chappals are available at economical prices with brands ranging from Lakhani to Bata. Then there are sports shoes in the economy range like Footfun, Hungama to those in the premium range, Nike, Adidas and Reebok.
For daily wear again there are floaters from brands like Gliders and Sandak in the economy and midpremium segment. The premium segment once again has the brands Adidas, Nike and Reebok.
The formal segment consists of school shoes. Again it is crowded with brands such as Naughty Boy, School Time and Good Luck. At a premium range is the Reebok(kids) range.
Description:
Shown above is a perception map of the ladies footwear market in India. The y-axis ranges from economy to premium. The x-axis goes from casual to formal. There is a Hawaii chappal segment, which is mainly for home use. This is followed by sports shoes for casual wear. Then there are floaters, sandals and shoes for both formal and casual wear.
The Hawaii chappals are available at economical prices with brands ranging from Lakhani to Bata. Then there are sports shoes exclusively for ladies in the premium range, Nike, Adidas and Reebok.
For daily wear again there are floaters from brands like Sweet Line, Khadims, Tiptopp and Princess in the economy and midpremium segment. The premium segment once again has the brands Adidas, Nike and Reebok.
The formal segment is again crowded with brands like Ashley, Madam Phoenix, Senorita, Madam Claire and Florina. At a premium range there are designer boutiques catering to a niche segment of ladies.
One more gap in the market is sports shoes exclusively for ladies at a moderate or economical price.
Description:
Shown above is a perception map of the men's slipper market in India. The y-axis ranges from economy to premium. The x-axis goes from casual to formal. There is a Hawaii chappal segment, which is mainly for home use. This is followed by floaters and daily wear segment for both casual and formal wear. Then there are school shoes, which form a formal segment.
The Hawaii chappals are available at economical prices with brands ranging from Lakhani to Bata.
For daily wear again there are floaters from brands like Coolers, Gliders, Lee Cooper and Red Tape. Then there are premium floaters from Nike, Reebok and Adidas.
The formal footwear market has brands like Lakhani, Mausam (Action), Sandak and Quo Vadis. For those who want made to order slippers at a premium price there are designer boutiques catering to this niche market.
2. Brand Failure/Success Analysis
For the comparison of brand failure and success, we have chosen the sports footwear category. The brands chosen are:
* Failure : Puma Carona
* Success : Reebok sports
The criteria used for choosing these two companies is as follows:
* Both are foreign companies, which entered the Indian market through joint ventures with Indian companies.
* Both entered India during the post-liberalization period
* Both faced the same restrictions and rigid government policies during their expansions.
* Both had a well known brand image in the foreign countries, and had to work on building their brand in India
* Both entered in the higher end of the sports shoes category
Given these commonalities, we can say that the major difference between the two brands was the branding and positioning strategy adopted. We shall analyse these strategies over a time-line to reason out the reasons for Puma's failure and Reebok's success in the same situations.
2.1 Framework used to analyse the Brand Failure12
The following framework has been used for analyzing Puma Carona's failure:
* Lack of product range
* Unrealistic offerings
* Cultural aspects
* Wrong positioning
* Stage in the product-life cycle
* Lack of Quality
* Downmarket Stretch
2.2 Puma Carona - Analysis of Failure
Fig. Time-line of Puma Carona's life Cycle
Description of the events:
991: Puma entered into a contract with Carona India Ltd. As per the contract Carona would sell Puma shoes through its outlets. It was to pay Puma AG Germany a royalty for using the Puma brand name.
Oct 1995: Puma decided to renew its contract with Carona Ltd. Subsequently, Carona was to undergo Line modernization at its Aurangabad plant to meet the quality requirements set by Puma.
Oct 1996: Puma tried to re-enter the Indian market with another collaboration with Carona Ltd. it launched specialized sports performance shoes for tennis, running, badminton, squash, golf and cricket.
Dec 1996: Carona launched exclusive Puma Showrooms. Actually it converted 25 out of 300 Carona outlets into Puma showrooms, to enhance its lifestyle brand image.
Apr 1998: Puma made a last-ditch attempt at surviving in the Indian market by launching Puma Pace (Walking, jogging shoes) at a price of 895. This downmarket stretch, they hoped, would entice mid-range customers to come towards Puma.
Dec 1998: Carona Ltd was referred to BIFR (Board for Industrial and Financial Reconstruction) following a string of losses. Subsequently, though, BIFR recommended the winding up of Carona Ltd. since the promoters of the company did not seem to be interested in reviving the brand.
Jul 2002: Puma attempted a relaunch in the Indian market. This time it entered into an agreement with Planet Sports. The idea was to use the Planet Sports outlets to sell premium-range footwear from Puma. Puma was launched the Predator-II model as a sports and lifestyle brand. However, we don't consider this part of the time-line since we are concentrating on Puma Carona. Puma Carona can be considered to be dead as a brand in 1998.
Analysis:
) Lack of product range
Puma Carona launched its range of footwear in India in 1991. However, it has concentrated heavily on a single segment, viz. the premium segment. It didn't have a range of offerings, nor did it enter any other segment. This narrow outlook could have been the undoing of the brand. It was not able to skim the mid-price market nor could it develop its own customer base. Even in the premium segment, there were hardly any variants or models available, to take into account varying tastes of the customers.
2) Unrealistic Features
In 1996, Puma launched a new sports shoe model equipped with new air-cushioning technology called Trinomic. Air-cushioning was a rather new concept for the Indian consumers in the 90's. The company should ideally have gone in for Concept selling before introducing the brand. The brand was received as having features that didn't really command the premium price demanded. This product was priced at Rs 3000. This was considered too high a price to pay for the features offered, since most sports shoes around that time period were priced below Rs 1000.
For a product there are three qualities possible:
* Search Quality
* Experiential Quality
* Credence Quality
Shoes usually come into the Experiential Quality category, as in customers would not decide on their purchases merely by observing some features. They would like to try out a shoe before finally purchasing it (This of course is not true for concepts such as "Light shoes" where a customer can observe the benefits of the feature). In case of a concept such as 'Air-cushioning' the customers don't really know the benefits of the feature since it is new to the market. So the concept is not going to sink in until they purchase the shoes. But then at a price point of Rs 3000, too many people can hardly be expected to buy a shoe just to try out its benefits.
3) Cultural Reasons
a) Tastes and Preferences of the customers
Colour of the shoe is something that is very particular in the Indian context. In the 1990's an Indian customer wouldn't think of a sports shoes of any colour but White. In 1998, when Puma launched its Puma Pace model, the colour shades offered were: Blue, Black, Green, Maroon. These unconventional colours didn't go very well with the Indian customers.
Indians use sports shoes as a casual wear rather than for sports purposes alone. Shoes that go with a variety of clothing are appreciated by the customers. In this context, green, maroon and the other colours aren't exactly ones that are likely to catch the fancy of the Indian market.
This is a clear case of the company not aligning itself with the tastes of the customers.
b) Association with Sports
As a footwear brand, Puma Carona should have associated itself with sports popular in the Indian context. As far as Indian consumers are concerned, there is one sport that captures the imagination of the entire country - Cricket. The best way for any brand to gain acceptance in the minds of the Indian consumers is to associate the brand with Cricketing events as well as Cricketing personalities.
Puma's logo portrays the brand as being related to athletics. The advertisements shown on Television also showed an athlete competing with a puma. The brand association was clearly with athletics. In the early 90's athletics hardly had any place in the minds of the consumers. The Indian masses could not relate to this brand association, causing further problems for the proliferation of the brand.
Puma would have done better to rope in some endorsers from the cricketing world. This would have done the brand a world of good. They went some distance in October 1996, when they launched specialized offerings for Cricket shoes. But then there still was no association with any cricketers or cricketing events. (eg. Action shoes are endorsed by Kapil Dev and Sachin Tendulkar; Adidas is endorsed by Sachin Tendulkar and Virender Sehwag; Reebok is endorsed by Rahul Dravid and Yuvraj Singh)
4) Wrong positioning
Puma was known to be a high-end product in the market. However, their collaboration with Carona didn't really fit this image. Moreover, the brand naming strategy was to put both Puma and Carona together as the name of the product. However, Carona's image in the Indian market was that of a low-end footwear manufacturer. They were the market leaders in the school-shoes segment and hawai chappals. This image didn't really help Puma's cause, because customers didn't see Puma as a premium brand.
Puma got its pricing strategy also all wrong. The product was priced at a price point of Rs3000. Now the economy customers could not really afford the price, whereas the premium segment customers associated the brand with Carona and would not buy it thinking that didn't suit their image.
Moreover, initially Puma Carona shoes were sold through Carona outlets. Again Carona outlets were traditionally meant for economy consumers. The high-end consumers would not want to visit a Carona showroom even if they had to buy Puma shoes. Basically the 'Shopping Experience' factor that is so important for the premium offerings was totally inexistent. The company actually worked on this and converted 25 of the 300 Carona showrooms into exclusive Puma Lifestyle outlets.
5) Stage in the product life-cycle
The dynamic cushioning concept introduced by Puma Carona in 1996, was a little too early for the times. They should have waited until they had gained some foothold in the Indian market before launching the product. The customers weren't up to the new technology, nor were they introduced to the benefits of the features. Moreover, Puma Carona did not have a brand image that could ensure that the customers buy the new technology out of loyalty. The same technology, if it has been introduced a couple of years later, could have been an altogether different story.
6) Lack of Quality (as compared to the price point suggested)
In the 90's the agreement between Carona and Puma was that the soles of the footwear manufactures were imported, and the uppers were manufactured by Carona in its factories. The Carona plants were basically set up to manufacture canvas shoes, and these had been spruced up to undertake production of the uppers for the Puma Carona range.
Shoes from these plants in Jogeshwari and Aurangabad were exported to Puma AG. But in 1998 Puma rejected three consignments of shoes from Carona Ltd. A possible reason for this could be that the shoes manufactured were not up to the mark as expected of a brand that was placed in the premium segment. This low-quality could possibly have been a factor resulting in low sales for the Puma Carona shoes in India.
7) Downmarket Stretch
After its second relaunch in India, Puma Carona launched shoes starting at a price point of Rs 895. This appeared to be a last ditch attempt to gain some volumes in the sales of shoes. But this downmarket stretch also backfired as the brand got into a Low quality trap. The brand had been positioned in the minds of the customers as a premium brand. Reducing the price to economy levels could have caused people to think that the price drop was being compensated by a slack in quality standards.
2.3 Conclusion
We can conclude that some of the factors that led to the exit of the Puma Carona brand from the Indian footwear scene are:
* The company didn't have a wide product range
* The customers couldn't really gauge the benefits of the new features
* The colours of the shoes didn't really match the tastes of the Indian customer
* The brand didn't associate itself with Cricket, nor did it have any Cricketers endorsing its products - a crucial mistake in the Indian context
* The brand was positioned as a premium product, but Carona's image was far from being premium
* Didn't project itself as a sports lifestyle brand
* Its products were overpriced
* The technology was ahead of its time
* The quality of the products may not have been up to the required standards
* Rigid Government policies could also have led to Puma Carona not being able to use its facilities to the maximum.
2.4 Analysis of Reebok Sports - a success
2.4.1 The framework for the analysis of Reebok
* Range of products
* Brand extensions
* Positioning
* Cultural aspects
* Quality
* Brand building - Social involvement
* Stage in product lifecycle
Description of events in the lifecycle of Reebok in India:
Dec 96: Reebok entered the Indian market through an agreement with Phoenix Ltd.
Dec 97: Reebok has unveiled six varieties of specialist shoes. The ranges include the Interval brand, Big Hurt, Bump n Run and Fortius. The range also includes Blast and Rail.
Nov 98: Reebok highlights the dynamic cushioning and 3-D technologies used by Reebok. Reebok starts developing a 3-D shoe brand which will be
sold at Rs1,400 by 1999
May 00: Reebok launched its New Challenge Collection for adults and children
in India. The collection comprises a range of casual and sports footwear
that are both stylish and comfortable.
Jun 00: Reebok India Ltd introduced 25 products for the children segment in
India in about 3 months. The range has everything for children-footwear,
apparel and accessories. The prices range from Rs290 to Rs1,990.
Oct 00: Reebok launched a smart technology shoe called Traxtar
targeted at the age group of seven to fourteen years. This is the first
shoe with a computer chip, placed on the tongue of the shoes.
Nov 00: Rockport launches super-premium segment shoes 'Umbwe Trail' at Rs 10000 a pair. Upmarket stretch for Reebok.
May 01: Rockport introduced its Vitalogy range of footwear. The range comes
in three types, Humanity, Virtuosity and Ubiquity.
Jul 01 : Reebok India Company launched a new lightweight sports shoe called
Proton, designed for walking, jogging and casual wear. Proton's new
all-mesh design was developed at the Reebok International Design Centre.
The mesh provides ventilation to the foot and prevents heat, sweat and
odour development. Proton is available in white, navy blue and grey
colours for men and in grey and pink for women.
Aug 01: Reebok draws on the school shoe segment. The Reebok initiative involves supply of customised school shoes under tie-ups with schools.
Nov 01: Reebok launched its fitness programmes across the country.
Dec 01: Reebok launched the Replica Cricketing apparel. This contained all items of apparel used by the Indian cricket team.
It also entered into an agreement with the Indian cricket team to be the official sponsor of the team's apparel.
Following up on the brand association, Reebok apparel got into an agreement with Vandana Luthra Curls and Curves (VLCC) to market its fitness wearline for women.
2.5 Analysis:
) Range of products
Reebok has always concentrated on having a wide range of products to accommodate the variations in preferences of the customers. As is observed from the lifecycle of the Reebok brand in India, they have been involved in a constant effort to introduce new models in different segments in the market.
Reebok started off with its offerings in the basic sports shoe segment. This was immediately followed up with specialized shoes for various sports like cricket, soccer and others. This added an extra dimension to the Reebok product range, making it the ideal place to shop for sportswear.
Reebok took full advantage of the children's footwear segment and launched 25 new products in this segment in 2000. The price range for these products was Rs 290 to Rs 1190. This wide range in prices ensured that the products catered to all kinds of buyers in the children's footwear segment. The hitech shoe 'Traxtar' was also launched in the children's segment. The kid's range named Weebok was designed to take this segment by storm. To improve its brand image in this segment Reebok launched a number of mentorship programmes to young budding athletes, becoming their official sponsor to ensure that the brand grew along with these players. Reebok also entered the School shoes segment in 2001. This was a new market for its products. It signed contracts with a number of schools to supply customized shoes.
Reebok was also among the first of the international brands which came up with special offerings for the Ladies segment. Ladies sports shoes were introduced in the sub-Rs 1000 range to cater to the special needs of the ladies sportswear segment. Even when it launched its Proton range of shoes, there was a separate colour combination for the ladies' shoes. The ladies' shoes were available in Grey and pink, as against white, grey and navy blue for men.
To sum it up, Reebok had a number of products for each segment of the market in terms of the age of the customers, gender as well as for different functional segments. Effective segmentation can be considered to be a very big reason for the success of Reebok in India.
2) Brand Extensions
Reebok moved from being simply a manufacturer of footwear to a Lifestyle brand. For this purpose Reebok apparel range was launched in the Indian market. This was a very effective brand extension (image-fit) since now customers had a one-stop solution to all their sportswear needs. Moreover, the apparel products lured more customers into the Reebok showrooms increasing the footfall in these stores ensuring a higher sale of footwear products.
In line with its apparel products, Reebok entered into an agreement with VLCC, a well-known fitness center to sell Reebok's ladies' fitness wearline at VLCC outlets. This association fit with Reebok's personality of being a fitness brand.
3) Positioning
Reebok positioned itself as a premium sportswear brand outset. The brand was positioned to portray the image of impeccable quality, dependability and style. This was well-supported by the brand-naming decision. The range was called only 'Reebok'. This ensured that the Reebok brand name was leveraged to the fullest. The consumers didn't have any preconceived notions about the brand association (as in the case of Carona being a low-end player).
The brand image was further reinforced by the launch of a number of high-quality Exclusive Brand Outlets in plush areas in the metropolitan cities. When Reebok launched its low-end offerings in the sub-Rs 1000 range, it entered into an agreement with Bata to retail these shoes through its retail stores throughout the country. This helped to upgrade the erstwhile economy customers to its product line. People didn't have any notions about Reebok being too high-class since it was being retailed in the Bata showrooms. The premium customers could use the EBOs for all their sportswear shopping. This way Reebok very effectively tuned its distribution mechanism to cater to the needs of the different segments in the market, and ensured that it positioned itself properly in the minds of the customers in each segment.
4) Cultural Aspects
a) Tastes and Preferences of the customers
Reebok introduced a number of colour shades for each of its offerings and most importantly each model had a White variant. This went down very well with the Indian customer. Reebok also used a two-prong strategy for its offerings in the adults segment. Every model offered always had a basic version (which was also low cost). This ensured that the conservative customers always had an option to buy the plain shoes.
Another aspect important in the Indian context is that Indians are not comfortable with sweating feet. This was taken care of by the Reebok Proton range of non-sweat odourless shoes.
b) Association with Sports
Reebok has always associated itself with a number of sports. Most importantly it has entered the customer's mind as being closely associated with Cricket. India being a cricket-crazy nation, Reebok gained immense acceptability in the minds of the customers.
Reebok is the official sponsor of the Indian cricket team's apparel, and the brand's logo is printed on the team's T-shirts. This ensures that Reebok is closely associated with the Indian team. Moreover, Reebok is endorsed by cricketing superstars Rahul Dravid and Yuvraj Singh. These endorsers beautifully reflect the brand's personality of being reliable and stylish. They are also household names across the country, ensuring that each commercial takes Reebok straight into the drawing rooms of millions of families across the country.
Reebok doesn't stop at cricket. It is sensitive to the differences in the sporting preferences across the regions of the country. For instance, the people in the Eastern states are soccer fanatics. Reebok has signed a 2-year contract with the East Bengal Soccer club for official kits. This ensures that it is a hit in the eastern regions of the country as well.
5) Quality
Reebok products are put through stringent quality control checks before they are circulated in the market. Moreover, Reebok specifically trained workers in the manufacturing units in the country to ensure that maximum quality standards were maintained during the manufacturing process. These measures ensure that Reebok products are of impeccable quality. This adds to Reebok's reliability image in the minds of the customers.
6) Brand Building - Social involvement
Reebok has been conscious about its brand building activities over the years. . It conducts Reebok fitness programmes in India through Reebok Instructor Alliance. Following this, it now plans to set up fitness advice centres in all its showrooms in India. Reebok will appoint a health and fitness expert for each showroom to advise on various Reebok fitness programmes and products to customers. Reebok has set up a Reebok University to develop research-based programmes and educational material.
7) Stage in Product Lifecycle
Reebok has always followed a careful strategy when it comes to proliferation of its product lines. They started with a product in the Rs 1000 - Rs 1300 range. The Rs 3500 range offerings were introduced only after the first models entrenched into the market. This strategy has been used extensively over time. Reebok has hardly ever launched new products in different segments at the same time. Over time, they seem to have concentrated on one segment at a time.
2.6 Conclusion:
We can conclude from the above analysis that some of the factors that have been responsible for the success of Reebok are:
* Effective segmentation of the footwear market. They have a number of offerings in a wide range of segments.
* Appropriate brand positioning
* Well thought-upon distribution mechanism to augment positioning
* Association with Cricket and effective endorsement by cricketing superstars
* Apparel lines helping the brand to develop a sports lifestyle image rather than that of a mere shoe manufacturer
2.7 Comparison between Puma Carona & Reebok
Puma Carona
Reebok
Brand Association
Endorsement
Product Line
Colours
Positioning
Distribution channels
Brand Extension
Pricing
Quality
Product Life cycle stage
Associated with Running and Athletics in general. The Indian customer had not come to terms with the Jogging culture
There was no celebrity endorsement, specially Cricket personalities
The Puma range has always been narrow. There was no range of products or variants of models to cater to different tastes of its customers
Mostly unconventional colours were offered
Positioned as a premium offering. However its association with Carona didn't fit this image.
Puma Carona shoes were sold through Carona outlets. These didn't match the premium image positioning.
Puma didn't lend its name to any substantial extensions. Apparel was launched but was not publicised effectively
Its products were overpriced initially at Rs 3000. After its second launch they entered a downmarket stretch which caused further damage to their image
Puma Carona's quality was suspect
The technology provided was ahead of its time
Associated with sports like Cricket, Hockey and Soccer which have a high acceptability among the masses
Reebok is endorsed by Rahul Dravid and Yuvraj Singh. It is also the official sponsor of the Indian cricket team's apparel
Reebok has a wide range of offerings for each segment. It caters to the men's, ladies' and children's segment separately.
A wide choice of colours was available. Special colours were available for the Ladies' footwear keeping in mind the feminine tastes
Positioned initially in the Rs 900 - Rs 1200 range. Stuck to the 'Reebok' brand name. Forayed into premium segment only after entrenching itself in this market.
Reebok higher range shoes are sold through EBOs whereas the mid-range shoes are available at various MBOs
Reebok launched Reebok Apparel. Helped make Reebok a Lifestyle brand.
The product was initially launched at Rs 900 - Rs1200 to skim the moderate segment. Later they upgraded their customers to premium offerings
Reebok has always provided impeccable quality
Reebok is careful about launching new products, ensures that the concept has acceptability before it is launched
3. Analysis of MNC Brand
For the analysis of MNC brand in the Sports shoes category we have chosen Bata Power
3.1 The rationale behind this choice as follows:
> Though an MNC Brand, Bata has acceptability across households in the country
> The Power brand is available in many countries across the world
> The branding strategies used by Bata in India are significantly different from those used by the other international brands like Reebok, Nike and Adidas partly because it has been in the Indian market for a real long time
3.2 The framework used for analyzing Bata Power is as follows:
> Positioning
> Designs
> Segmentation
> Pricing
> Usage pattern
> Brand Extensions
> The 'Bata' factor
3.3 Analysis of Bata Power
> Positioning
In the late 1980's, Power had to share the non-formal footwear market with North Star - another offering from the Bata stable. This made positioning extremely important for the brand, since it had to ensure that there was no cannibalization between itself and North Star. Since North Star was being touted as "the shoes for an easy living", Power was positioned towards catering the needs of the fitness-inclined customers.
With this concept in mind, the Power Jogger was launched in 1988 with the tagline "Birth of the Fitness cult". This punch line went down very well with the new breed of customers who were inclined towards fitness and sports. At the same time Power launched another 2 models in the same range. Again to avoid Cannibalization it had to target these offerings to separate segments.
The first shoe was targeted as being the specialist tennis shoe. It was called Power Ultimo and extended Power's tagline of "makes the DIFFERENCE" to "See what a difference this makes to your tennis". This again was to cater to the new breed of consumers who were fitness-inclined; who spent weekends at tennis clubs.
The second shoe was targeted towards the athletes who take their workouts seriously and for whom physical training is a must. Power also identified a secondary segment as those customers who had a serious goal of keeping their body in shape. This segment had a much wider appeal among thousands of sports fans who idolize sports stars and identify themselves with an athletic lifestyle.
This shift towards lifestyle products didn't really work as a strategy for Power in the early 1990's. In 1996, Power changed its strategy to go back to 'Value-for-money' concept. This called in for a large-scale product-line management. Brands that didn't perform were clipped from the line. The Power Cricketing shoes line was dropped consequently.
Power has come a long way from the Jogger. In 2002, the Power International range was launched. This range provided contemporary designs in the sports shoes category at a very economical price. The basic range was priced at Rs 699.95. The product was positioned as being one with impeccable quality and design and having the traditional Bata assurance of being value-for-money.
The names of the models in the Power International Range are Volcano, Revenge and Astro. These names clearly reflect the aggression that the company is trying to associate with the brand. The Bata Power Station Range has models named Mercury, Ozone and Neon. These names reflect the futuristic designs of these models.
The advertisements also position the range as having perfection, trying to shed the image of not being very particular about quality that Bata has developed over the years. The positioning strategy for these new ranges of Power is basically aimed at getting back the attention of the urban youth who presently perceive Bata products to be old fashioned.
> Designs
The international range launched by Bata has a number of models with contemporary designs. These shoes have been designed at the Bata R&D center in North America. This was to take care of the usual perception that Power shoes are functional, without too much to say about style. All this is likely to change with this new range.
These new age designs have been responsible for pulling Power back into the minds of the trendy youth customers.
> Segmentation
As mentioned before, Power had a range of shoes targeted at different segments right from its inception. In the 1990's Power launched a number of specialized sports shoes targeted towards the athletic and sporty customers. These included football shoes, cricket shoes and more. The cricket shoes, however, were withdrawn in 1996 as part of a cost-cutting exercise.
Besides these, Power has always had the basic canvas shoe offering, which is touted as being a rugged and 'made to last' footwear. This model is basically inexpensive, available in the sub-Rs 500 price range. This is targeted towards youngsters who are likely to use shoes roughly, either for playing or for general outdoor usage.
The next set of offerings is a part of the international range of footwear. The shoes in this range start at around the Rs 700 mark, catering to the high-end of the economy segment and there are premium offerings at around Rs 1500 to cater to the premium customers.
So Power, in itself, has evolved to a stage where it has a number of offerings across segments. This holds it in good stead as compared to the other footwear brands that don't really have an offering for every segment of customers.
> Pricing
Power's pricing strategy is consistent with Bata's psychological pricing ploy. The products are always priced with a 95ps extension. This ensures that the product catches the eye of the customer.
Power's pricing strategy clearly reflects its objective of having offerings for different segments of the market. The international range launched in 2002 has shoes ranging from Rs 699.95 to Rs 1499.95. There are a number of models at various prices within this range, giving a customer ample opportunity to make a choice that suits his budget. The high price on the premium offerings in the International Range ensure that the customers don't perceive the offerings to be low quality.
> Usage patterns
Power shoes have traditionally been used for rugged usage. Consumers are of the opinion that Power shoes are great for everyday use specially jogging and walking. Power is planning to enter the minds of the customers as a high-end sports shoe brand as well, which can be used as casual wear. The launch of the international range, and the subsequent print advertisements have been targeted at achieving this particular objective.
> Brand extensions
Power introduced T-shirts and apparels to supplement its footwear range. This gives the impression of providing a lifestyle solution to the customers. Customers inclined towards sports can get authentic Power apparel and cricketing gear from Sports goods shops. Power specially makes cricket bats that are very popular in India. The bats sport the Power logo, thus increasing the brand's association with sports in general and cricket in particular. This association helps in reinforcing Power's theme of being a sports shoe rather than being a rugged shoe for rough-and-tough wear. There, however, is one problem with associating Power with a lifestyle brand on the lines of Reebok and Adidas. Power doesn't have any exclusive showrooms where it can merchandise its products. It has always been under the Bata umbrella when it comes to distribution. The accessories are sold separately through sports goods stores. It would help the brand association a great deal if all Power products are sold under the same roof.
> The 'Bata' factor
One of the biggest advantages that Power has, is the umbrella branding of Bata. Bata has been in the footwear market for the last 70 years. It has gained the trust and respect of the market, making Power's task infinitely simpler. Power does not have to struggle too hard to enter the minds of the customers, since the brand recall for Bata is already very high. So it does not require too much expenditure on advertisements. However, of late, Power has been trying to shake off the stigma associated with Bata (and Power) being a strictly value-for-money brand. Bata in itself is trying to move away from being a manufacturing company to becoming a marketing company. This change in strategy has required that Power come up with an aggressive marketing strategy for the International Range.
Moreover, Bata has entered into an agreement with Reebok and Nike to retail their products in Bata showrooms. So these high-end shoes are sold under the same roof as the Power shoes. This gives Power an added visibility among the customers who are lured to the showrooms by the high-end products. This factor is turning out to be very important in the context of the international range, because the designs of the products in this range are of the same quality as those of Nike and Reebok. Moreover the Power international range is imported from Canada, ensuring that the quality is pretty similar to the international brands (since both would have been sourced from some shoe manufacturer in Malaysia). And most importantly, the Power International Range has offerings both above and below the basic range of footwear in the Reebok and Nike collection. So when the customers visit the Bata showroom to look at the Reebok and Nike collections, they can also see the Power International Range. This way, Power can net some of the customers who would otherwise have not purchased Reebok or Nike due to budget constraints.
3.4 Conclusion:
> Power has effectively segmented the market over the years
> It has a top of the mind brand recall in the Indian context
> It ran into rough waters in the 1990's but has successfully revived its brand image
> Traditionally Power shoes are perceived as meant for rugged use. But the recent launch of the International Range of shoes is changing this perception
> It is not perceived as a lifestyle brand because of the lack of effective marketing of its accessories
3.5 Latest developments in the Power scene:
> Power shoes were being imported from China in the recent past. But in the last couple of months Bata has changed its outsourcing strategy. The shoes are now imported from manufacturers in Malaysia. This change has substantially improved the quality of the products.
> A lot of new models have been released in the last fortnight under the Express and Explore ranges. The models in these ranges are:
o Jogging
o All-Terrain
o Suede Leather shoes
o Sports shoes
> Power has launched a new Sportswear line. These products will be made available in only the top Bata showrooms in the city. (In Bangalore city, the apparel line is available at the Bata main store Koshy's near Brigade Road)
> New models have been released in the floaters category in the Rs 300 - Rs 500 price range
> Power has also introduced shoes in the semi-formal category
> Sales of the new Power shoes range have shot up in the last two weeks.
APPENDIX
Market Survey
Research Methodology
We felt that it would be appropriate to support our analysis of the footwear industry which is based on secondary information with primary information based on the research of the customer and seller perspectives.
The survey took into consideration both the organized and the unorganized sectors. The market places for the survey were chosen based on the concentration of organized or unorganized players in the market. The different areas covered under the survey are Majestic,Commmercial street, Jayanagar and Brigade road.
The main objective of the survey was to get information regarding the
(1) product-price range
(2) product-brand preference among the various age groups
(3) Factors affecting the demand for footwear.
Questionnaire Used for the Retail outlets in the organized Sector
. What are the different brands that you house?
2. What are the brand preferences of the customers amongst different age groups?
3. Please name one brand failure in the footwear market.
4. Is the customer willing to pay an extra price for the footwear if he likes the model?
5. Is the demand for footwear occasion based or is it uniform throughout the year?
6. What proportion of sales come from the different segments?
7. How much bargaining leeway do you give to the customer?
8. What effect do the discount sales have on your brands?
9. How good is the availability of models across colours and sizes?
0. Do you think multi brand outlets attract more customers than the exclusive brand outlets?
We surveyed various retail outlets in the Commercial Street and Brigade Road which includes the likes of Metro Shoes, Khadim's, Florsheim, Regal Shoes, Woodland, Adidas, Bata, Nike etc.
Metro Shoes
Metro Shoes is a multi-brand outlet housing various brands like Floresheim, DaVinchi, Red Tape, Lee Cooper, Marco Ricci, Adidas, Fila, Nike, Reebok and their in-house Metro brand of footwear for ladies and gents.
Adidas, Nike, Reebok etc. are the brands in the sports section which attract the young aged people. Floresheim, DaVinchi, Red Tape and Lee Cooper are in the formal and semi-formal category along with Metro's own brand. Red Tape and Lee Cooper are for the younger customers and the others are for relatively older people. In the ladies category, Metro has its own brand which caters to the wide variety in latest fashions as required by its women customers.
Metro has strong customer loyalty and its maximum sales are through repeat customers.
Khadim's
Khadim's outlet houses their own in-house brand which primarily caters to the needs of consumers who demand high quality products at low prices (value for money). They house all categories of shoes. The outlet not only tries to promote its popular, fast moving products but also actively pushes its not-so-popular stock.
Inc. 5
Inc. 5 is a multi-brand outlet. It houses Floresheim, Lee Cooper, Red Tape, Nochi, Magnanni, Marco Ricci, Rosberry, Classic, Cinderella, Naf-Naf, Avenue, Intimate, Inc 5.
Cat , Red tape and Lee Cooper are shoes which are primarily targeted at the young people and carry a semi formal kind of an outlook. They are the fast moving and highly dependent on the model variation. Floresheim, Magnanni, and Marco Ricci are shoes which are targeted at the gents market and are in the Formal range of shoes. Magnanni and Marco Ricci are the super premium and premium range of shoes. Inc 5 and Avenue are shoes in the premium segment of the formal range. Cinderella, Rosbeery and Naf-Naf are the shoes for women in the informal designer wear range. The store hosts tremendous variety of shoes in all the price ranges. Its sale is mainly dependent on word of mouth publicity and repeat customers.
Regal Shoes
Regal shoes hosts the Brands of Red Tape, Lee Cooper and Swagger apart from its own brand of footwear in the Casuals range. Regal shoes gets half of its business from its regular customers and then half from its new customers.
Woodland
Woodlands and Woods are the brands of Aero group n the Semiformal and Formal category respectively. The outlet gets almost 60\% of its sales from the male customers, 30% from its female customers and 10% from its child customers. Joggers is one model which contributes maximum to the sales. The outlet incharge feels that the company faces no competition in the semi formal category of shoes. The customers who come to these outlets are primarily looking out for comfort, and hence it has customers from all age groups. Its has a men's range of 100 models and a women's range of 30 models.
Adidas
Adidas has a model range which includes running, soccer, tennis, basketball, badminton and training shoes in the men's category. In the women's category it offers joggers, running and aerobic shoes. It also offers a variety of lifestyle and adventure shoes in both the men's and women's category. Its customers mostly comprises of youngsters who are inclined towards fancy looks in combination with comfort. They also tend to be slightly price insensitive as they would not want to compromise on comfort and looks for price. The story also uses a wide variety of Reebok's apparel and accessories.
Bata
Bata houses the brands of Reebok and Nike apart from its own stable of brands of Hush Puppies, Ambassador, Mocassino, Power, Marie Clair and Dr.Scholl's. Power is the sports brand of Bata. Mocassino and Ambassador are the brands which are for the elderly people. Hush puppies are shoes for ladies as well as gents which fall under the formal category. Dr.Scholls is an innovative product in Bata's stable, which is a shoe which can give medicinal benefits to the users. Bata also has a very good range of chappal and floaters range. The Hawai chappals of Bata are not doing as well as their competitors.
Brand Failure
When asked about what they perceive to be a brand failure in the recent times, most of the people in-charge of the retail outlets responded that "Gaitonde" was one brand which failed in spite starting off with a big bang. Some of them feel that this was mainly due to lack of proper supply chain management. The person incharge of "Woodlands" outlet feels that Mescos brand of shoes was a failure.
Occasion based sales
Most of the people said that the sales were occasion dependent. There are two important seasons during the year when the sales are really at high level, otherwise they are more or less stable throughout the year. The two important time periods being, school re-open season(may-july) and the marriage season(oct-jan).
MBOs and EBOs
It is commonly accepted that Multi Brand Outlets attract more customers than an exclusive brand outlets. This they primarily attribute to the availability of a large variety of products. But the EBOs retain they advantage by housing few models which are exclusively available only in their outlets. They also count on their loyal customers coming for repeat purchasing.
Discount sales
The common perception among the sellers is that Discount sales don't really damage much of their sales as most of the models which are put at these sales are out of fashion or stock which is not moving.
Questionnaire for Consumers
. What is your preferred category of footwear?
2. On what basis do you choose your footwear?
3. Which is your favourite brand?
4. What price point do you buy your footwear at?
5. How many pairs of footwear are in your wardrobe?
6. Are you willing to pay extra for branded footwear and how much?
7. Which outlet do you prefer to shop at : Exclusive Brand Outlet or Multi Brand Outlet?
8. Name one brand which has been a success.
9. Name one brand which has been a failure.
This survey was conducted in two areas of Bangalore : the Majestic area and the Commercial Street area. These two areas gave a good view of the total market as the Majestic area has mostly shops selling unorganized goods whereas the Commercial Street area has shops of the organized sector. Thus the tastes and preferences of customers visiting both kind of areas was covered.
In Majestic area, people were there to buy all kinds of footwear - from leather formal shoes to normal slippers. The basis for most people to come to the various unorganized shops in this area was to find footwear of latest fashion at very nominal prices. Quality took a back-seat over style in most cases. Maximum selling footwear there was Semi-Formal shoes. This could possibly be attributed to the very high prices of branded shoes in this category. In Commercial Street area, all kinds of shoes are available. The customers there were looking for branded, high quality footwear and compromise on quality was not acceptable to the customers.
In both the areas surveyed, there was no most preferred brand but most people mentioned Bata and Liberty as the first brand that came to mind. The top-of-the-mind recall for these brands shows the strength of these brands in the minds of the Indian consumer.
The expected price of the shoe provided us with a great contrast as far as the two surveyed areas were concerned. Customers in the Majestic area were on the look for bargain shoes which provided them with style even though they may lack in quality somewhat. The price limit for most customers was around Rs 500 for a semi-formal pair and lower for other categories. In the Commercial street area, most customers were looking for good quality and style and hence price was not much of a criteria.
As far as the footwear wardrobe for the various customers goes, the survey yielded varying results. A large number of men talked about the multi-functionality of shoes and how a very limited number of shoes served their purpose. Hence, men's footwear wardrobe was approximately 5 in number with male customers in up-market locations like Commercial Street out-performing those in the Majestic area. Women on the other hand went totally after style and hardly used a pair for multiple purposes and hence, they possessed a larger number of footwear. Across the various markets, women on an average possessed about a dozen different pairs of footwear. The number here takes into account the various shoes, slippers, floaters etc. that one may customer may possess.
Most customers attached high value to the brand name but the cost that a customer is willing to pay for the brand varies across markets. Customers in the Majestic area were brand conscious but were not too impressed by the high costs of the branded products. They felt that a brand was not worth that much and that lower-end products of these brands should also be launched to make them more affordable. People in Commercial Street area were very loyal to their brands though there were others who were loyal to the shops rather than a specific brand. Shops like Khadim's have their loyal clientele who are satisfied with the quality and pricing of the various in-house brands of the establishment.
Most people laid stress on the quality of products offered at an outlet rather than number of brands offered by it. But the more variety offered at multi brand outlets lured more customers to these shops. Commercial Street area offered both MBOs and EBOs for the various customers that visit the area whereas the Majestic area had hardly any exclusive showroom. The outlets there majorly offered multiple brands as the customers there are not that fixed on brand and they prefer variety to choose from.
According to most of the customers, one brand that can be categorized as a success is Liberty as it has really gained market goodwill with its good, consistent quality and pricing to suit all budgets.
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BIBLIOGRAPHY
* Philip Kotler," Marketing Management", Eleventh Edition, Pearson Education, Thomson press (I) ltd
* Harsh V.Verma," Brand Management", Excel books
* Subroto Sengupta," Brand Positioning ", Tata McGraw -Hill book publishing company ltd
* Harvard Business Review," Brand Management", Harvard Business school press
* Al Ries and Laura Ries," The 22 Immutable Laws of Branding ",
* Dr. S. Ramesh Kumar, "Managing Indian Brands", Vikas publishing house pvt ltd
* Dr. S. Ramesh Kumar," Conceptual Issues in Consumer Behavior" in the Indian context, Pearson education
* Dr. S.Ramesh Kumar," Marketing Nuggets",
* Working paper by Dr. S.Ramesh Kumar and Y.L.R.Moorthy," Brand Failures - Concepts and Causes"
* David Mercer, Marketing, Blackwell Publishers
* Dr. K. Shivakumar and G. Arun, Buying Behaviour in the Hinterland, Indian Management Journal, October 2002
* Narayan Krishnamurthy, For That Perfect Size, Advertising & Marketing Journal, 15th May 2000
* Ratna Bhushan & Vinay Kamath, High Steppers, Urban Pulse, Business Line, February 2000
* Dr. S.Ramesh Kumar," Mass Markets and Branding",
* Tulika Sen and Atul Monga, Images Research - Pristine Ventures Study on Indian footwear market
REFERENCES
* Mashud Ahmed, Metro Shoes, Commercial Street, Bangalore
* Salina, Boots & Boots, Commercial Street, Bangalore
* Sujay Ghosh, Khadims, Commercial Street, Bangalore
* S. K. Zohali, Inc. 5, Commercial Street, Bangalore
* Sajid, Regal Shoes, Bangalore
* Keshav, Woodlands, Bangalore
* Mani, Adidas, Bangalore
* Natesh, Bata, Bangalore
* Shivakumar Krishna, Bata, Jayanagar, Bangalore
* J. P. Shettty, District Manager, Bata
* Saurabh Agarwal, Ernst & Young India, Auditors of Bata India Limited
* Brian Scholfield, The McKinsey Quarterly, 1994, Number 2
* Santosh Desai, Strategic Brand Management
* ICRA report on Bata India Limited
* Bata India Limited - Annual Report 2001-02
* Liberty Shoes Limited - Annual Report 2001-02
* Advertising & Marketing Journal, 30th September 1998
* Indian Express Newspapers (Bombay) Ltd.
* Rubber India. Jan, 1998; pg 44
* Advertising and Marketing. Aug 15, 1995; pg 5
* EBSCO database
* IBID Database
* Business Line, Internet Edition
* www.imagesfashion.com
* www.actionshoes.com
* www.libertyshoes.com
* www.bataindia.com
* www.lakhanishoes.com
* www.phoenixindia.com
* www.indianshoebazaar.com
* www.indiainfoline.com
* www.ibid.informindia.com
* www.magindia.com
* www.search.epnet.com
* www.retailyatra.com
* www.searchindia.com
* www.siadipp.nic.in
* www.rubberfootwear.com
* www.indiaprofile.com
* www.metroshoes.com
* www.mouthshut.com
* www.regalshoes.freeservers.com
* www.hinduonnet.com
* www.bengalonthenet.com
* www.ifcomaonline.com
* www.economictimes.com
Images Research - Pristine Ventures Study by Tulika Sen and Atul Monga
2 Images Research - Pristine Ventures Study by Tulika Sen and Atul Monga
3 ICRA Report on Bata India Ltd.
4 Images Research - Pristine Ventures Study by Tulika Sen and Atul Monga
5 Dr. K. Shivakumar & G. Arun, 'Buying Behaviour in the Hinterland', Indian Management Journal, Oct 02
6 Images Research - Pristine Ventures Study by Tulika Sen and Atul Monga
7 ICRA Report on Bata India Ltd.
8 Annual Report 2002, Bata India Limited
9 Annual Report 2002, Bata India Ltd
0 Source: Economic Times. Mar 4, 2000; pg 9
1 Refer Appendix - PA4 : Sachin's advertisement for Adidas
2 Working paper by Dr. S.Ramesh Kumar and Y.L.R.Moorthy," Brand Failures - Concepts and Causes"
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