In this total market demand, about 42% are brand-driven. And bata is covering about 12% of the organized footwear segment. Industry environment- Threat of new entrants- •There are many barriers to entry preventing new entrants from capturing significant market share. Large footwear producer enjoy economy of scale that create cost advantage over any new rival. •BIL differentiated it’s product from rivals product like Comfort (using dynamic spring pad that acted as cushion on the feet for women’s footwear), Wind (in build air technology that allowed feet to breath fresh air) etc.
The capital requirements are a high entry barrier to a new firm to the industry. However, an existing shoe manufacturer may enter the athletic shoe industry simply by re-tooling their manufacturing plant. •Switching cost is very low for footwear industry because shoes are relatively inexpensive personal goods that are frequently replaced. •Access to distribution channel is barrier to entry because it is really difficult for a startup firm to get shelf space at major shoe retailer.
But existing firm may use their existing connections to easily access shoe distribution channel.
Bargaining power of buyer- •Bata is largest player in industry with 9-10%volume share and 60% market share in organized segment. It had a market share of 70% in canvas shoe segment and 60% in leather shoe segment. Their dominant market share give them power over buyer. •Bata is a big buyer of raw material who buys significant part of suppliers’ revenue. This in a way provides good bargaining power over suppliers. •As a part of its strategic decision Bata set up a rubber/canvas factory in Faridabad, Haryana in 1951. So it can threaten it’s supplier to integrate backward.
Bargaining power of supplier- •Shoes are made of leather, rubber, nylon etc. These materials could be classified as commodities, where the manufacturing process adds the value. For this reason supplier have limited bargaining power over buyers. Threat of substitute product- •Consumer switched from one product to another if alternatives are available in same quality and performance range and have competing price or lesser price. BIL produces 10% of total hawai ranged from Rs. 35-110 while competing local brands were selling at Rs. 25-50.
Again when global trade open then market flooded with many international brands having variety and competing price. Rivalry among existing firms- •Mostly numbers of competitors are stable, especially because of high entry barriers. This adds to the rivalry among existing firm. Manufacturers watch each other carefully and make appropriate countermove to match the competitors move. Leading competitor of BIL are Lakhani shoes, liberty shoes, action shoes, woodland, paragon and relaxo in organized segment. General environment- Demographic- •Indian market is highly fragmented between rural and urban market.
Thus with the implementation of Marketing plan the company’s profit are expected to rise by 100. 30 crores compared to the actual profit that it will have without the implementation of marketing plan. Implementation controls: The progress can be measured on quarterly basis by comparing the company’s growth rate with that of the industry for that quarter The Capital Asset Pricing Model van be used where R(b) = R(i) + beta(R(i)) Here R(b) is the expected growth (here sales) for Bata India Ltd and R(i) is growth of the Industry. Beta is the equating factor that tell by how much the company has grown with respect to the industry.