Essay, Pages 32 (7982 words)
1. About the Company:
Bata Shoe Private Limited was incorporated in Calcutta, India in 1931. Bata was originally promoted as Bata Shoe Co Pvt Ltd by Leader AG, Switzerland, a member of the Toronto-based multinational, Bata Shoe Organization (BSO). The company had initially setup a small operation facility in Konnagar (near Calcutta) in 1932. In January 1934, the foundation stone for the first building of Bata’s operation now called the Bata was laid. By 1936 this plant commenced the manufacturing of shoes. In the years that followed, the overall site area proliferated.
This township is today popularly known as Batanagar. It is also the first manufacturing facility in the Indian shoe industry to receive the ISO: 9001 certification. This company went public in 1973 and it was then that the company was rechristened as Bata India
Limited. This company operates as a subsidiary of Bata (BN) B.V., Amsterdam, Netherlands. With a foothold in Batanagar, the company thereon expanded into many other states.
Currently it has five factories located at Batanagar, (West Bengal); Bataganj, (Bihar); Faridabad (Haryana), Peenya (Karnataka) and Hosur (Tamil Nadu).
Today, Bata India is the largest retailer and leading manufacturer of footwear in India. Bata India is primarily engaged in the business of manufacturing and trading of footwear & accessories through its retail and wholesale network. Its stores offer a range of footwear for men, women, and kids, as well as school and sports shoes. The company also offers various accessories, such as socks, polishes and brushes, belts, school bags, and ladies handbags; and foot care products.
It has approximately 275 distributors and 1250 retail outlets across 500 cities in India which is a formidable match for any other footwear company in India. The Company also operates a large non retail distribution network through its urban whole sale division and caters to millions of customers through over 30,000 dealers.
Bata India manufactures shoes of various qualities like leather, rubber, canvas and PVC. It operates various brands like Mocassino, NorthStar, MarieClaire, Bubblegummers, Ambassador, HushPuppies, Scholl, Comfit, Power, Sparx, Weinbrenner, Naturalizer and Wind India under its umbrella. Its manufacturing unit at Batanagar (West Bengal) has recently commenced manufacturing of shoes for industrial uses. Bata India intends to sell these shoes directly to industrial houses and not via retail stores. Bata India currently sells over 50 million pairs of footwear every year. More than 95% of company’s revenue comes from domestic operations. Bata India commands approximately 13% market share in the footwear industry comprising both organized and unorganized sector and approximately 35% market share in the organized sector alone.
2. PEST Analysis:
100% FDI in leather and footwear sector since 2002.
However, India has not been able to attract significant FDIs in this sector owing to labor laws, stringent import and export policies, fewer tanneries producing leather required for manufacturing sports shoes. The exemption limit available to non-leather footwear is being increased to MRP Rs. 500.
For footwear exceeding Rs. 500, the applicable duty would be 12%. Central Excise duty exemption for non-leather footwear of Rs 500 per pair is likely to benefit the leather sector. The increase in excise duty and service tax might lead to increase in the prices of leather products like footwear, bags etc. on the back of passing the prices to the end users. Tax holidays for period of 10 years on full excise duty and income tax and a subsidy on sales tax, land/building and plant/machinery was given by state government of Himachal Pradesh, Uttaranchal, Jammu & Kashmir and Assam to promote domestic manufacturing of footwear. 2.2 Economic:
India is the second largest producer of footwear in the world with 2.06 million production capacity and accounting for 13% of global footwear production. Exports account for 115 million pairs and remaining 1991 million pairs account for domestic consumption. With the depreciating rupee, manufacturers in India are bound to benefit through increasing exports. Exports too constitute 5% of Bata India’s earnings and with the current economic instability in the European countries which happens to be Indian footwear industries’ and Bata India’s major trading partners, export might suffer. Low cost labour, low tanning costs and availability of raw material are few of the strengths conducive to Bata India and the footwear industry as a whole in India.
India’s economic growth in the last few years has augmented the purchasing power of the people. Therefore, the demand for quality footwear at premium prices has also proliferated. With 50% of India’s population falling under the age group of 25 years, the footwear industry has a remarkable potential to grow, for it is this demographic segment whose wants and desires fuels a significant percentage of the footwear industry’s growth. Also, the growing financial independence of women has also expanded the consumer base of women posing a further stimulus to the footwear industry. 2.4 Technological:
In accordance with an agreement, Bata India was engaged with Bata Ltd, Toronto, Canada for absorbing the technical know-how of the footwear industry, the product design and development, brand development, information systems etc. for a period of ten years from 2001. Thus Bata India is technically well equipped. It also has an exclusive R&D wing which is perpetually engaged in using its technical expertise to impart better features and comfort into its product. It also has a fluidized bed combustion boiler at its Batanagar factory to help conserve energy. 3. Current Market Analysis:
Bata India is a well-established footwear brand in India. Let us analyze this brand based on the following parameters. 3.1 Market Share:
The company enjoys the highest market share of 35% in India. This is evident from the fact that the total retail presence of the company currently is more than thrice that of its closest competitor. Around 98% of the revenues come from the domestic operations. 3.2 Market Size:
It retails through over 1300 Bata Shoe Stores located in over 500 cities across India. It also operates a non-retail distribution network through its urban wholesale division and caters to customers through over 30,000 dealers. 3.3 Market Segmentation and Target:
INDIA A (14%, includes high disposable income group)
INDIA B (50%, includes people middle class and middle class group) INDIA C (36%, lower income class group)
Fig. 3.1 Market Segmentation 3.3.1 Demographic Segmentation:
The target market for Bata is all the class of the society i.e. lowers, middle and the upper. Though, Bata is minimizing itself in selling footwear to lower segment, as Chinese products have taken over the market completely. The in-house brands make it possible for Bata to cater to its upper and middle class segment. Bata cater to the needs of male, female and children in equal proportion. The school shoes which Bata sells are most prominent and sell the most. All Bata stores reflect the new ideology like selling premium brands like hush puppies and Marie Clarie etc. As for now, ladies’ shoes is the main revenue earner, contributing 30% to the company’s revenue, followed by men’s shoes, children’s shoes, school shoes and sports shoes. The stores offer fresh collections and are visually stimulating. Thus we can say presently their target customer base is the entire market segment. 3.3.2 Geographic Segmentation:
Bata products are made keeping in mind people & their choices from different parts of India as it has positioned itself as a truly Indian footwear brand which caters the needs of all Indians all across the country. Bata is present across the country through more than 1200 stores. It has successfully placed itself as an Indian product. Stores are well available throughout the country. It sells footwear according to the season as well. They have specialized shoes for monsoon, summer, winter etc. Bata stores are spread throughout the country. This means Bata is a product for all Indian. 3.3.3 Psychographic Segmentation:
Bata’s target group includes all the three sections of the society .They like the brand because it’s aptly priced and has got a variety of products under its name. Bata offers quality products at reasonable rate which makes it a clear favorite among the mass. Shoes for all seasons, age groups and gender.
Bata has a 13.7 per cent market share. It also has to face tough competition from many organized and unorganized sectors. Bata has overcome all the competitors and well sustained with a good market share .it has to watch the other manufacturers and make a counter move to match the competitors move.
Fig. 3.2: Competitors of BATA
Leading competitors are Lakhani Shoes, Liberty Shoes, Action Shoes, Woodland, Paragon and Relaxo in organized sectors.
Unorganized Sectors: it has to face a major competition from Chinese footwear market which is imported from china .because Chinese footwear entered Indian market , Bata has to change its policy and also had to face major financial loss. Which also led to fall of Bata’s market share to 10%.which was a major setback for Bata India. Bata then stopped concentrating on lower segment (in which Chinese had an edge: low price) which led Bata to concentrate on other segments like on premium brands also. Bata faces the most competition from the ladies footwear division and that too from the local unorganized shoe manufacturers and Chinese shoe makers.
3.5.1 Financial comparison with peers:
Financial performance in the year 2012:
We see that though Bata India’s Quarter on quarter profits are increasing, its year- on- year profits have decreased considerably. Also from the financial performance we can see that Bata India and Relaxo are the leading brands of footwear in the lower and upper middle class segment. 4. Current Consumer Analysis:
Consumer Buying Behaviour refers to the buying behavior of the ultimate consumer. A firm needs to analyse buying behaviour for: Buyers’ reactions to a firms marketing strategy has a great impact on the firm’s success. The marketing concept stresses that a firm should create a Marketing Mix that satisfies customers, therefore need to analyze the what, where, when and how consumers buy. Marketers can better predict how consumers will respond to marketing strategies. Though the influencers might vary, the consumer arrives at the purchase decision after going through the following procedure which is common for all the products:
Fig. 4.1: Consumer Buying Behaviour In terms of the behavioral aspects Bata’s target customers could be quite price sensitive, demanding value for money, looking for utilitarian needs to be met, and not excessively conscious about the shoe lasting for ages and being very sturdy, yet at the same time demanding adequate quality footwear which they can trust to last for a season or two. Bata may also be categorized as a store where usually entire families visit together because of the various offerings that Bata has to offer to them. 4.1 Value Proposition:
The customer value proposition is substantial as Bata offers value for money along with the trust which its customers have because of the established Bata brand. In terms of access, functionality and selection options it always fulfils its promises of being a family outlet where each member of the family can buy something. The service standards is strictly monitored and hence an experience fit will be provided to the customers and these customers for this will be willing to pay a bit of premium because of Bata’s brand. If analyzed for the value that Bata was providing to its customers their value proposition may be categorized as follows: Reasonable quality at low or reasonable price
Footwear for the entire family
Footwear catering to various functional needs e.g. sports, casual footwear, formal-semi formal Conveniently accessible outlets in various parts of the country Prior to entry of local players and the Chinese imports, some sort of social visibility could also be associated with Bata, as it was one of the two major brands in the country then. 4.2 Consumer Characteristics:
The following chart describes the characteristics of the consumers who are catered by the footwear industry in India. These are organized according to the pricing strategies of the shoes in the industry.
Fig. 6.1: Consumer Characteristics for Footwear Industry
As Bata caters to middle and lower middle class segment of the society we can say that Bata falls under Economy segment. Thus, people buying Bata shoes will look for feel of the product.
These people are less brand conscious. Also they look for best quality at affordable price.
Fig. 4.2: Influencing Factors Thus, as we can see, Bata is more popular in casual shoes segment wherein comfort and longevity influence the consumer’s buying decision. 5. Bata India’s Objectives:
To grow towards dynamic, innovative and market driven manufacturer and distributor, with footwear industry while maintaining commitment to the country, culture and environment in which the company operates. Mission:
To be successful as the most dynamic, flexible and market responsive organization, with footwear as its core business. Introduction of a strong shoe line targeted to various market segments to maintain leadership through increased market share. Corporate Objectives:
Bata India, today, wishes to reposition itself market driven, fashion conscious lifestyle brand. Catering to a wide variety of customer groups, Bata will provide its products and services to all the groups in the community.
Also, it aims to provide the finest quality through customer involvement. Financial Objectives:
1. Achievement of 100% estimated business in each category.
2. Maintain a shoe line with 700 lines of which 200, 300, 150 & 50 lines for Men, Women Children & Plastic respectively. 3. Achieve an average 55% margin in each category Innovate ideas or system for better management of merchandise distribution by maintaining 4 times stock turn.
1. According to a study by Assocham, the Indian footwear market is estimated to be around Rs. 22000 crore. The study also says that this market is estimated to grow by around a staggering 75% to Rs. 38500 crore. 2. Thus Bata India has a stupendous opportunity to garner a greater market share by not only increasing the sales of its current line of products but by also introducing a new range or product line.
1. With the increasing purchasing power and the proliferation of the premium class, the demand for trendy, fashionable and quality footwear is drastically thriving. 2. Almost 50% of India’s population is below 25 years of age, this demographic statistic consolidates the estimation that the demand for footwear encompassing (stylish, trendy, fashionable) features conducive to this young generation will burgeon in the years to come. 3. This engenders the need to expand this line of footwear and penetrate more into sectors like sports shoes to cater to the aspirations of this growing class. 4. The ladies segment of footwear has not been tapped to its full potential by the Indian footwear industry as a whole and also by Bata India in particular. 5. Almost 80-90% of the demand of ladies footwear is met by the unorganized sector.
Thus expanding the ladies line of footwear to tap this colossal uncatered segment should be one of the prime objectives of Bata India.
6. Summary of Situational Analysis:
6.1 SWOT Analysis:
6.2 BCG Matrix of Footwear Industry:
BATA, Liberty, Khadims, Paragon, Relaxo cater to the masses whereas Woodland, Adidas are the premium brands catering to high income class and hence are targeting niche market. BATA is right now in Question Marks sector in BCG where it has opportunities with the footwear market on its growth but lacks market share and needs to understand changing needs to tap the opportunities. Though it caters to middle class families, their tastes have changed over the period and so has their buying capacity and hence these changes have to be leveraged on. Adidas and Woodland are selling fewer shoes at premium prices and have captured a huge market share in this high category niche market and are also tapping the market growth opportunities and hence are in the STAR position currently. Fig. 8.1: Bata BCG Matrix
6.3 Bata Product Life Cycle (PLC):
Fig. 8.3: Bata PLC
BATA has reached Maturity stage and hence it needs to revamp its strategies to survive in the ever competitive market. It does have a strong customer base because of the value it offers at reasonable prices but the ever-changing needs of the market have to be coped up with. BATA had traditionally positioned itself as a brand for middle-class families and a one stop solution for the entire family. It was successful in positioning itself as a brand having stores with products to meet the needs of almost all members of the family since it had product range for children, men and women etc. BATA enjoyed monopolistic position till 1980’s in organized footwear industry. Its brown-leather sandals and blue-white rubber slippers were instantly recognizable. It was a choice for everyone in family child,
elderly, parents and for different purposes- monsoon, school shoes, and formal, informal. Leveraging on this competency and popularity of BATA it should enhance its services and offerings. Main concerns about the brand are as follows:
1. BATA should stick and is right in sticking to its USP of Best Quality at Affordable prices but at the same time it should try and increase its visibility in the market and analyze the fashion trends as well as the changing affordability levels of the public. 2. People trust BATA as a brand but comparable to females males have more inclination to BATA. The main reason being women now-a-days prefer fashionable shoes even for regular wear. They need more variety and durability is not the only concern. People change shoes more often than before. So variety and fashion is need for the hour. 3. Now-a-days premium brands are considered to be a status symbol and to be offering higher value and hence presumed to carry a higher price. Premium brands like Nike, Woodland, Adidas targeting niche high income people have become a competition for BATA as they are moving beyond the niche market and even the middle and upper middle class families can now afford to buy these brands. 4. Shopping today has become an experience and hence the
1. Physical evidence
4. Service Provided
5. Customer Care
All play a major role in influencing the buying decision of a customer. BATA has been there for long and has to try to cater to all these needs and change with the changing expectations of customers. 5. BATA is a very popular brand and almost all can relate to BATA – as Good Quality Footwear but it is necessary to increase its visibility by communicating to its target audience what exactly unique value they have to offer. Promotions and advertisements are a key to drag people to your stores 6. BATA is viewed as an “Out Of Fashion” brand and a company that focuses on selling what it manufactures rather that manufacturing what sells. It’s necessary to change
this perception and image about it. They need to concentrate on “products that customer wants rather than products that they produce”.
It is necessary for BATA to take up REPOSITIONING on Priority.
6.4 New Segmentation Targeting and Positioning for BATA:
14% of Indian Population – High Income Group
15% of Indian Population – Upper Middle Class
35% Of Indian Population – Middle Class Group
36% of Indian Population – Low Income Group
BATA has been targeting middle class and lower class population and should now become a brand for upper middle class as well. The lower class segment is completely taken over by Chinese markets and hence BATA has to stretch its reach upwards. TARGETING: BATA has to target male, female and children and focus more on female and youth footwear in order to regain its market share. Women spend lot of time buying footwear as they seek quality, durability along with fashion. They also buy more often than men, children or elderly people. Hence it’s necessary to win their loyalty. Youth comprises of majority of the population today and hence it’s not affordable for any company to let go of this customer base.
At the same time it needs to target Sportsmen as they are also form a major chunk of footwear customer base. POSITIONING: It has to change its image of production oriented old fashioned company to value for money, fashion conscious , market driven, lifestyle brand for all members of the family as well as a trustworthy sportswear. It should reposition its image from a manufacturing company to a marketing company. Repositioned Product’s Attributes:
1. Versatile products to suit each occasion
2. High Quality at affordable prices
3. Contemporary Styles with International Know-How
4. Easy to Maintain
5. Comfortable and Trendy Footwear
Fig. 8.4: New STP for Bata
Fig. 8.5: Positioning of Bata
In order to target and penetrate in middle and upper middle class BATA should introduce more variety in the range of products. It should promote itself aggressively to make itself more visible. A proper marketing mix is required for strengthening its position in the market.
7. Product Mix for Bata:
Footwear for children of age group 0-9 that assure healthy growth of childs foot
For running, basketball, cricket and other outdoor activities
Leather shoes and boots of low, mid. high cut designed for outdoors and known for ruggedness.
Footwear for women who like contemporary shoe styles
Casual shoe – very breathable, comfortable shoe known for technology
Very comfortable, stylish, double stitched, massage soled shoes.
Comfortable, flexible , light and beautifully designed shoes made just for woman
Bold and bright fashion footwear for men and women
Range of shoes with lace-up and flip on for formal occasions. A gentleman’s choice. Light comfortable and sturdy
Shoes with ribbed insole for massaging the feet. Recommended for diabetic patients. Improves blood circulation and promotes god health.
Street style shoes to cater to young at heart.
Bridging the gap between formals and casuals. Extra comfort for after work errands.
8. Marketing Strategies:
A complete line of quality accessories ranging from handbags, purses, belts and more for both men and women.
BATA currently has these 12 brands of shoes under it catering to women, men, children, youth, and patients for different occasions like formal, informal, and casual but its visibility is very low. BATA has worked on creating new products but it has to be communicated well to the target audience. Female footwear is a growing market and ever evolving. Women buy footwear often and love to collect good shoes. It’s necessary to get such women audience to the stores. BATA has Neutralizer and Marie Claire to cater to female footwear but the range and variety offered is quite limited. They have very few options for elderly shoes and the North Star catering to the youth should be funky and trendy and should be promoted well to get the youth to buy them. Though BATA has range of products catering to various customers it has to increase the product base to increase sales and penetration.
BATA has to start manufacturing more trendy & fashionable shoes to connect to today’s customers who are becoming very brand conscious. Adopting and introducing international styles to Indian business can help attract more customers. BATA having a worldwide reach is aware of trends and fashions in markets all over the world. By introducing a different technology and starting off a new trend picked from some international market or their own innovation can help increasing sales of the Company. BATA should adopt Product-Positioning Strategy:
Position product in market so that it stands apart from competing brands. To
position the product so that it communicates well to the customers about 1. What BATA stands for
2. What it has to offer
3. Which customers is it targeting
To change the public perception of BATA being “Out of Fashion” footwear To seek growth by offering varied products in differing segments of the market. BATA should go for Product Development and introduce footwear meeting the current needs of the customers and matching up with their style quotient. In order to be the preferred brand it should understand the changing fashion of the market and cater to the needs wisely. People now-a-days have become very brand conscious. They don’t see footwear just as a means to cover their legs but as an accessory that suits their personality. So it’s necessary to understand the psyche of the customer. From the current position of BATA it’s clear that it needs to go for product development & enhancement to become the most preferred brand. ANSOFF Matrix for Bata:
Fig. 10.1: ANSOFF Matrix
Changes that they can come up with in the footwear range
1. BATA can start a new range – A festive range that would offer ethnic footwear for men & women for various occasions like weddings, parties, festivals. These shoes need to be colorful, vibrant, intricately made. They can be priced at a premium rate. The focus on such shoes should be on beauty rather than durability and ruggedness. 2. BATA should come up with shoes for Industrials for sectors like automobiles, petroleum, construction, agriculture, metal etc. The workers working in mines, fields, near furnaces, power stations, construction sites, airports require special kind of shoes. BATA has its industrial website to cater to some of the sectors like automotive, chemicals, construction, electricity, transport etc.
BATA should leverage on this opportunity and try to acquire bulk orders for the same. BATA should invest more in technology for making such customized shoes and should rope in an effective sales team to foster the B2B business. It’s necessary to publicize their efforts. 3. Making Defense – Army shoes: The total market size for footwear used by the defense personnel is about 12 million pairs a year. “The country has roughly three million defense and paramilitary personnel and each buys four pair of shoes per year, totaling 12 million pairs a year which is a big market. Defense authorities currently source most of its footwear requirement from unorganized players.
So it is necessary to establish contacts with them and offer good value for money to them 4. BATA can come up with a premium sports shoes category with customized shoes for different sport activities. Every sport has different requirements. Mountaineering, running, basketball, cricket, football, tennis, skating all require specific kind of shoes. BATA can invest in analyzing the sports market and offering the necessary requirements of each sport. It should tie up with various sports clubs, schools, colleges, teams and coaches for acquiring bulk orders. 5. BATA can tie-up with a famous designer like Manish Malhotra or Neena Lulla for exclusive and specially customized designs for selective high income group customers.
They can have an online portal where customers can choose from the size, color, fabric and shape given on the site and order for the same. BATA can then in collaboration with the designer arrange for the manufacturing of such customized shoes. 6. BATA can start a new range of Bathroom and Home slippers – Now-a –days many people prefer wearing slippers at home. Initially according to Indian tradition the footwear were placed outside the house but now many Indians prefer wearing comfortable and cozy slippers at home to protect their legs from rashes and dirt. BATA can introduce new range of flexible, comfortable, peppy colored slippers for men, woman and children. 7. BATA should bring in some of their international brands like PATAPATA slippers, Sundrops, Safari, Toughees to India. Leveraging on its successful brands in other countries they can be introduced in India. 8. Catalogues of shoes should be printed. The catalogue should be attractive and should include all the varieties and ranges.
The customers should be given catalogues at the entrance and they can choose their style & range and there is less probability that they would miss on viewing something. The salesperson then can make it available. 9. Bata can introduce the new line for Dance shoes. Now that dance being considered as one of the career options, a lot of dance academies are starting up. If Bata can capture this new market, they can wipe out their old image and can then be recognized as the company which provides shoes with style as well. 10. BATA should popularize the accessories provided by it. BATA bags & belts are of good quality but are not that popular due to lack of awareness. It should come up with more accessories like 1. Pouches for men and woman
2. Mobile holders
“It doesn’t matter at all that you make the best shoes in the world if there is no one around to afford them” – TOMAS BATA BATA is aptly priced and has got a variety of products under its name. Bata offers quality products at reasonable rate which has been its USP for years together. It has always believed in manufacturing quality shoes that almost all can afford. The Company has always endeavored to break the myth of the price factor, by introducing an economy range of products that will encompass both style and quality. The price is considered as the most dominant “P” in the product mix.
The pricing of Bata has been very nominal and user friendly for the customer which Bata targeted. As Bata has product for all segment of the market. they came up with the strategy called “ 95 paisa price tag” It was a strategy to begin sales talk with buyers curious about price like Rs 299.95.the reason behind it was it fell short of an amount that might have looked like a high price. There is a sale going on Bata almost throughout the year if not almost (few products are always on sale).
With respect to pricing BATA should stick to its USP of “Good Quality at affordable prices” but it should work on the changing affordability levels of the middle and lower income economic groups. It should focus on Value for money and Perceived value strategy rather than just offering products at lower or cheaper prices. People today have a perception that branded high cost premium goods are better in quality and are a status symbol.
They differentiate you from the crowd so low cost and mass penetration brand like BATA may be seen as common and not class apart. Hence it is necessary to change this image by offering premium products at premium prices catering to brand and class conscious customers while offering good fashionable footwear for price-sensitive customers too to retain them. BATA should follow competitive pricing. Currently it has various products in various ranges. Sport & Outdoor shoes – Rs 500 – Rs 2000
Formal shoes – Up to 3600
Casuals — Rs 1000 to Rs 2500
Kids — Rs 200 to Rs 800
Women Footwear: Marie Claire, Neutralizer Rs 500 to Rs 1800
Hush Puppies premium brand of BATA ranges up to Rs 5000
Recommendations for Pricing:
1. For the designer collections suggested above in products section it can have premium pricing. 2. Shoes customized as per sports have to be of best quality and at competitive prices with respect to other prominent sports brands like Adidas, Nike etc. 3. Industrial products have to be discounted in order to get bulk orders and maintain long-term relationships. 4. Perceived value pricing should be adopted for men, women and children formal, informal footwear. 5. 62% of the footwear market is unorganized sector especially ladies footwear which has to be tapped by lucrative offers and discounts 6. Seasonal sales and effective communication of the same to the target audience. 7. Discount coupons to regular members
8. Membership card to regular customers in order to receive discounts and information on the same. 9. Business Gifting, Gift Vouchers on special occasions to regular customers and stock clearance sales help attracting customers. 10. Positioning accessories at affordable and low rates in order to gain customers. 11. Bata has a sizeable brand advantage and a presence across price points because of economies of scale and international exposure in terms of fashion, style and technology that it should make most of. 12. Outsourcing non-core activities can help in cost reduction and hence more profits to the company.
BATA should consider increasing efficiency by employing advanced technology and minimizing wastage. Bata is dwelling on its international presence which is its competitive edge and importing its best practices from abroad to be able to handle the manufacturing requirements for slightly trendier lines with lesser volumes. It is also utilizing its regional expertise e.g. in Malaysia for rubber based shoes and in China for artificial leather shoes. Backward integration has also helped BATA in reducing costs.
BATA has more than 1250 stores across the country. The Company also operates a large non retail distribution network through its urban wholesale division and caters to millions of customers through over 30,000 dealers. They have been working on providing a better shopping experience to the customers. 1. Presence of 10,000 sq ft Mega Store at Vadodara.
2. Renovation of 30 existing retail stores.
3. 2,000 sq ft stores for tier-II and III cities.
4. 11 Hush Puppies Stores
5. Bata stores are now spacious with over 3,000 sq. ft. of retail space; some are even larger than 10,000 sq. ft BATA has made itself accessible in cities by setting up stores in prime locations but expansion is necessary. Measures that can be adopted are as follows: 1. New stores should be opened in a four-tiered retail format under a new retail model – Up-market Flagship Stores, Smart and Trendy City Stores, Super Stores and Traditional Family Stores, Malls. This will help the company service better in places where currently it does not have presence. 2. RETAIL SHOPS: These are the places where majority of the purchasing decisions are made. Making BATA visible there is important. 3. BATA should expand its retail footprints in major metro and other big cities to increase visibility and accessibility 4. Closing unviable stores : Low profit giving stores must be closed down
5. Reaching out rural markets through dealer network – Though footwear purchases are more in urban areas, 70 % of India’s population lives in rural areas and hence it is necessary to reach out those people by setting BATA merchandise stores there. All rural residents are not necessarily poor. There is a large footwear market potential that exists there too. The products may vary like formal shoes might not have a big market in rural areas but sandals, chappals, ladies footwear markets can be explored. 6. Franchisees at prime strategic locations should be encouraged to enhance sales. 7. Easy accessibility and Visibility is the key
Bata does not promote much by advertising. Bata mainly promotes by providing “sale” in their existing product lines .It also promotes itself by keeping international/premium brands like hush puppies ,Marie Claire etc. Though BATA has taken steps to enhance product design, strategically place prices and improve shopping experience by better layout and designing of shops the message has not been communicated to the target audience well. There is a need to create more awareness amongst the public regarding BATA products and their offers.
Only then can they change their image of being an Out of Fashion – common brand. Companies spend crore on promotional activities as lack of awareness makes all the other efforts futile. In the past 10 years, Bata has not come up with any effective promotional campaigns. They haven’t advertised for any of their products for a long time now. But considering the rising competition and changing demographics and behavioral patterns of people, it is necessary for Bata to get into advertising which is more focused on exposure and building familiarity with the brand.
Such brand salience or top-of-mind awareness does not only get new customers, but is also extremely helpful in main existing customers buy a particular brand even more frequently. For example, even if a person is a usual Bata customer, he might want to try a Relaxo slipper just because of the way it is shown in advertisements or the models/actors used to display it. To alter such purchase behavior, Bata needs to put in more on repeated exposure; it can take advantage of various mediums to do the same Promotional campaign has to be designed only for the original and classic brand “Bata”, which is about finding STYLE – that agrees with the consumers’ tastes, meet their diverse needs, meet their budget, and fulfills their well-being. Steps that can be taken are as follows for ATL:
1. Sales Promotion- TAG-LINE: Bata taglines meant for individual products are the key components of advertising. These tag-lines must be modified according to demographic profile of consumers. These should appear on hoardings at every crucial & congested part of the cities in which Bata retail stores are operating. Everybody should understand and be able to connect easily with the taglines.
2. PRINT ADS: Bata should adopt aggressive advertising of its products just before launch of any new scheme, offer or product. This helps in setting up a platform for the new products brand in the minds of customers. The ads should be displayed on a full page in the leading newspapers which again is based on the preference of the people. They should attach pamphlets of their ads along with catalogues for
their products along with the newspaper. 3. TV-ADS- Television is one of the best platforms to advertise one’s product. Bata being a family brand, the ads should be shown during the prime time slot so the entire family can see it together.
The advertisements should be able to connect to the target audience. Brands positioning and Value offering should be clear through the advertisement. Bata Shoes lies in the category of High Involvement, Feeling Product where customers usually follows the pattern of FEEL-LEARN-DO, i.e. first they feel about the product or brand, then learn about it features and benefits and then take action (purchase/no purchase).For making the customer “FEEL” the brand/product, we need to make and execute the advertisement in a way that the consumer is able to associate positive feelings to the brand and an identity is created around the brand 4. CELEBRITY ENDORSER: BATA should decide on a Brand Ambassador for their brand who would suit the personality of the brand and would help in roping in more customers.
5. ROAD SIDE ADVERTISING: Bata bill- boards should be displayed on prime locations in various cities as a brand building exercise. 6. BATA has an online website with an online buying option but the varieties of products on display on the site are very few. They should upgrade their sites with more range and variety. 7. Educating customers about the good quality of BATA products through various campaigns such as Contests held in Malls, Exchanging old shoes for Bata shoes, etc. 8. In – store advertising is also of significance. The store should have advertisements of various in house brands on the walls. New Arrivals and popular shoes photographs can be displayed. 9. Public Relations through CSR activities, press releases, organizing or sponsoring some sports event or fashion shows that would help promote BATA will help in attaining more visibility. 10. Bata can think of sponsoring Sport Marathons which will boost up their image amongst the consumers.
People can relate the shoes to the sporty look and good quality. Thus this would help Bata to reposition them. BTL activities like discount pricing, offers, sales, introducing schemes, lucky coupon can help promote the brand. SOCIAL MEDIA MARKETING: BATA should have an online presence at major networking sites in order to connect directly to its customers as also to get feedback on the products and to know the requirements and expectations of customers. In this Internet era it is important to make its presence felt online. Being active on facebook and twitter like sites is bimportant to get a deep insight on what the customers feel. Customers should be involved in contests and other games to get them to know the brand better and hence increase the Brand Recall. Campaigns like “BATA Moments” where entire family got what they wanted at BATA, sharing experiences and rewarding winners would increase customer involvement and probability of purchase. 8.5 People:
The Human Resources is the driving force of any organization or Company. BATA has had a strong leadership which has driven the company to give a good and consistent performance but in cut-throat competitive market more of an aggression is required. BATA ruled the footwear market in 1980’s but its inability to scale and change with changing requirements and demands lead to reduction in its market share and losses. BATA has realized this and is planning its future moves strategically. BATA has always given intensive training to BATA employees to deliver excellent performance but constant up gradation of training modules is essential. Steps that should be taken are as follows:
1. The salesperson should be trained to handle all client queries. They should be adept with all the products offered by BATA and should know about BATA as an organization. They should be groomed in etiquettes, presentation skills, vocabulary and speaking skills. They should be available to serve the customers whenever required but should not act pushy and should let the buyer decide on his buy. 2. Management should hire young and energetic individuals with bent of innovation at senior positions. They would bring in a stream of fresh & contemporary ideas to work on. 3. Good customer service during and after the buy helps leave a good impression on the minds of the customers. 4. Redressal of customer grievances should be immediate. Repairs of faulty products should be prompt. 5. Exchange policy can be extended to 15 days
8.6 Physical Evidence:
The look of the store has become a prime factor in attracting customers. Along with prime location the look and feel of a place, its vibrant colors, lighting, posters, attractive interiors makes a customer wants to step in
and check the offerings. BATA has definitely made an effort to breakthrough from its old traditional simplistic look to well-lit colorful and elegant showrooms.
It can adopt the following steps
1. Revamping key stores: More store space, better ambience, attractive lighting, regular cleaning of stores and placing more mirrors should be incorporated to make shopping an experience. 2. Visual Merchandising: Visual merchandising is the activity and profession of developing the floor plans and three-dimensional displays in order to maximize sales. It’s the key to attract customers. BATA has to focus on strategically placing its products in order to drag customers to the stores. Products should be displayed to highlight their features and benefits. The purpose of such visual merchandising is to attract, engage and motivate the customer towards making a purchase. Adopt Effective visual merchandising in order to: Make it easier for the customer to locate the desired category and merchandise. Make it easier for the customer to self-select.
Make it possible for the shopper to co-ordinate and accessorize. Recommend, highlight and demonstrate particular products at strategic locations. Educate the customer about the product in an effective & creative way. Make proper arrangements in such a way to increase the sale of unsought goods.
3. Theme Based Interior Designing should be focused on.
4. The Products of the store should be visible from outside the store. Posters of various brands should be highlighted using neon lights. 8.7 Process:
The process followed by BATA is systematic, well organized and in place since years together. They have a strong distribution network and a strong chain of dealers. BATA has maintained good relationship with its suppliers, dealers and buyers. Their current distribution strategy of Bata is that it has two departments Retailer and Wholesaler. Retail department place the products in countrywide company owned outlets.
On the other hand wholesale department give the products in local markets who has the dealership from the company. Bata used the extensive distribution strategy for their products. Their purpose is to maximum market coverage. In store processes also need to be handled well with efficiency. BATA has always ensured smooth running of activities and processes within the store right from choosing the product from the shelf, trial sessions, assisting with different brands and finally deciding on the product. Bata has launched direct distribution channel – Bata Direct. It has been set up to provide branded footwear at the doorstep of consumers. A minimum start-up cost with no inventory expenditure, direct marketing is a business relationship that enables Bata to give the consumers the benefit of quality products with the Bata warranty and trust.
Steps that BATA can take:
1. Bata can improvise by tying up with more wholesalers and retailers to promote the product. 2. Focus on Bata-Direct as well to cut costs, increase contact base. 3. BATA should also work on providing various options in catalogue for BATA-Direct 4. E-commerce development will also enhance the process by making it convenient and easy to shop. All products should be displayed very systematically and website should be easy to browse through. 5. The overall process of browsing — Choice —Payment should be easy and without any hassles in order to retain customers. 9. Financial Budget:
9.1 Industrial safety shoes:
In the previous year almost 1.5 crore units of industrial safety shoes were sold in India. In India this sector is largely dominated by local players. Assuming that the average price of the industrial safety shoes of Bata India is Rs. 1750 and this with a 10% margin we arrive at a cost price of Rs 1600 per unit. Also assuming that initially around 10 % of the market demand in terms of volumes is produced by Bata India, we arrive at a cost of approximately Rs. 200-240 crores per year. 9.2 Ethnic footwear:
Ethnic footwear is handcrafted and hence its manufacturing requires skilled labourers. Since the number of such skilled labourers is not abundant, hiring of such workers will not only be a tall order but will be expensive too. Hence, manufacturing of ethnic footwear must either be outsourced or
Bata India must tie up with local manufacturers like Maco, Catwalk, Elina, Senorita etc. Through these tie-ups Bata India can sell the ethnic footwear of these local companies under its brand. 9.3 Shoes for Defense forces:
In the defense forces, orders for shoes are given to manufacturers on contractual basis. Thus, if Bata India has its own manufacturing facility for such shoes, it might incur losses if it fails to bag the contract. Therefore, outsourcing the manufacturing as per the order would prove financially viable than setting up its own facility for the same.
9.4 Sports Shoes:
Bata India manufactures canvas and leather shoes and sells the sports shoes of different brands like Power, Weinbrenner etc. under its umbrella. So, if Bata India wants to introduce its own line of sports shoes it will have to set up a manufacturing facility for it. Bata India already has a leather tanning factory at Mokameghat, Bihar. Also, let’s assume that Bata India initially starts with shoes for common and popular sports like cricket, football and hockey. In addition to this the running shoes line can also be introduced. Later it can gradually upgrade to manufacturing shoes for other sports like basketball, tennis etc. The budget estimation is under the following assumptions:
The machines are estimated to run at an efficiency of 60% in the first year. From this estimation, the following volumes (per annum) of the above mentioned varieties can be produced. Cricket shoes: 30,000 units
Football shoes: 20,000 units
Hockey shoes: 7500 units
Running shoes: 15,000 units
Leather which is the prime raw material is expensive thus the high costs of raw material. Machinery constitutes one unit each of Upper clicking swing-arm hydraulic press, leather splitting machine, leather skiving machine, toe lasting cum side lasting m/c, Thermo-plastic upper cementing and folding m/c; two each of cylinder-bed single needle m/c, post-bed single needle m/c, Seat lasting m/c and 4 units of Air-cementing press-4 bed.