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footwear industry

footwear industry

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06/17/2015

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THE FOOTWEAR INDUSTRY BRANDED SPORTS SHOES

Presented By: GORKY PURI NADIR ALI QURESHI VIKAS TOLANI SHVETA KAUSHAL GROUP NO. 22

Proposed Vision Statement

Continue to bring inspiration to present and future athletes, while maintaining the company's standard of quality for its products.´

Company Overview

Reebok¶s principal business activity is to design & worldwide marketing of high quality footwear, apparel & equipment. Distributed around the world: (Asia, Australia, Canada, Europe, Latin America, and the United States) Reebok is 3rd largest seller of athletic footwear and athletic apparel in the world. Remain market leader in India since 1999

Product in Offer
Running Pink Ribbon Sports equipments Men's Styling Women Sportswear

REEBOK'S POSITIONING
Celebrate Individuality in Sport and Life 
Reebok understands that people are, above all, unique. Reebok s positioning reflects this; celebrating the distinct qualities that make people who they are - their unique points of view, their individual style and their remarkable talents and accomplishments.  Reebok celebrates their individuality, their authenticity and the courage it takes to forge their own path to greatness.

Athletic Wear Global Market Share

COMPETITIVE SCOPES
ADIDAS 

ADIDAS is in the sportswear, apparel and sports accessories industry. The main competitors of ADIDAS in the industry are NIKE, and PUMA since it acquired REEBOK in January, 2006. NIKE 

Nike is currently the world leader in Sports goods industry with a brand value of $12,672 million. The company concentrates on style and technology with a high price range of the products. PUMA AG 

A German based company best known for its football shoes and athletic shoes. The competition from Puma has become stronger after the 2008 Olympics in which the Jamaican sprinter Usain Bolt broke records and won 6 gold medals. Bolt was wearing Puma shoes!

SWOT ANALYSIS

Strengths : Weaknesses 
Research and development Marketing Outsourcing Name recognition Y2K+ Readiness Financials Dependency on Footwear sales Inefficiencies within Management Rely on Retail sales stores to sell.

CONTD.

Opportunities : Threats 
Asia College/Pro Sports Emergence of more Sporting events Women¶s Marketplace Competition Sweat Shop Issues Manufacturing Capacity Global/Domestic Economies

Contribution to Energy Conservation
Shopping Bags

Energy Audits

Optimum Utilization of Energy in stores

Transformation of a 113 year Old Company

Consumer Behavior
Cultural Factors Social Factors Economic Factors Product Factors Demographic Factors

Readiness to Pay

37.07 40 35 25.86 30 25 20 15 10 5 0
500-999 1000-1999 2000-2999 3000-3999 4000 +

19.83

7.76

9.48

Strategies

Target Women Kids Targeting developing countries Offering variety of products

MARKETING STRATEGY ADIDAS 
People purchase products or services for

three basic reasons:  To satisfy basic needs.  To solve problems.  To make themselves feel good.

MISSION OF THE MARKETING PLAN 
To devise a marketing plan and formulate strategies which would

help in the achievement of the marketing objectives of the company which are, 
Market penetration gaining market share across all markets in

which we compete 
Market development expanding into new markets and addressing

new consumer segments 
Awareness - increasing awareness and visibility across all brands,

providing clear and consistent messaging and supporting product initiatives at the point-of-sale.

MARKET INDUSTRY 
Comfort  Durability  Style  Price  Brand

ADIDAS Strategy in India 


Adidas strategy in India has been consistent over the past few years. The broad elements of the strategy are to target the brand to urban youth with our brand proposition from competition to lifestyle using the authentic sports platform and build and reinforce credibility through relevant brand ambassadors and grassroots sports marketing programs. It would target principal consumption centres, namely metros and build significant stand-alone exclusive store presence in significant locations. The strategy would be to play to our strengths, i.e. in apparel and mid to high priced footwear. 



CONTINUED
Multi-Brand Approach 

There is a natural limit a brand can achieve given the diverse tastes and expectations of a highly fragmented consumer market. Thus, a multi-brand approach will provide the firm with a major competitive advantage and significant additional commercial opportunities compared to a single brand strategy. It can leverage the power of its brands in a more precise and meaningful way, utilizing the combined strengths of each to compete for a higher percentage of the market, covering a greater number of consumer needs, price points and demographics.

COMPETENCE
Broader distribution 
Close cooperation with retailers can significantly improve the in-

store experience for the product. Establishing shop-in-shop formats (e.g. with JJB and Dick s Sporting Goods) or retail partnerships (e.g. with INTERSPORT) are examples where the company is leading the industry. Such co operations can be particularly effective in markets that have become dominated by price and lack of differentiation. Cost leadership 
The acquisition of Reebok has created significant opportunities to

reduce and optimize costs, through scale benefits, back office consolidation and combined capital expenditure planning.

PUMA
BRAND PERSONALITY 
Passion  Openness  Self-belief  Entrepreneurship

SUCCESS FACTORS 
Strong Presence: Sports and lifestyle fashion     

market Products meeting market demand Big distribution network High innovative and qualitative products Harnessing resources and experiences Ample knowledge in R&D

4 P s of Marketing Mix

PRODUCT 
It has wide range of footwear, sportswear,

sports goods, fashion accessories.  Black label include collboration with renowned designers such as Alexander  Puma group owns Puma, Tretorn, Hussein, Chalayan.

PRICE 
Puma s pricing is designed to be competitive

to the other fashion shoe retailers. The pricing is based on the basis of premium segment as target customers. Puma as a brand commands high premium.

PLACE 
Puma shoes are distributed to Multi-Brand

store front and the exclusive Puma stores across countries. It allows Puma to offer a such wider selection than any of the competition.

PROMOTION 
Location, targeted advertising in the

newspaper and strategic alliances serves as the foundation of Puma advertising and promotion effort. The athletes and other famous sports personalities are always taken as brand ambassadors. They form the prime building blocks of their portion strategy.

SWOT ANALYSIS
STRENGTHS Branding Management International Strategy Experience in R&D WEAKNESS Missing sports segment Distribution system Comparable lower financial resources OPPORTUNITIES Technology Acquisitions Sponsorships Fitness hype THREATS High competition Limitation of products Actual economic situation

PORTER S FIVE FORCES
Many providers on market Build up healthy brand image
Threat High Competition of new Permanent threat : entrants same sector
Bargaining power of buyers

Bargaining power of suppliers

Rivalry

Vulnerable sports market Own retail store network

Threat of Big retail chains substiut Fragmented Market es

Own distribution

COMPETITORS 
NIKE. Inc
Number one sports brand in the world 

ADIDAS SALOMON AG
Focus on core sports like soccer, tennis, athletics, skiing 

PRADA SPORTSWEAR
Well known luxury brand 

DIESEL
Major fashion brand including: sunglasses, footwear, watches, fragrances and writing tools

NIKE 
Nike is a global sports shoe giant company. It

is the largest seller of athletic footwear in the world, holding the lion share of 33% of the global market.  The company has production facilities in Asia, sales facilities in almost 200 countries, and customer service and other operational units worldwide

THE 4 P s OF MARKETING

PRODUCT 
Nike offers a wide range of shoe, apparel and equipment products,

all of which are currently its top-selling product categories. 

Nike started selling sports apparel, athletic bags and accessory items in 1979. Their brand Cole Haan carries a line of dress and casual footwear and accessories for men, women and children. 

They also market head gear under the brand name Sports

Specialties, through Nike Team Sports, Inc. 

They sell small amounts of plastic products to other manufacturers

through Nike IHM, Inc. Bauer Nike Hockey Inc. manufactures and distributes ice skates, skate blades, in-roller skates, protective gear, hockey sticks and hockey jerseys and accessories.

PRICE 
Nike s pricing is designed to be competitive to the other fashion

shoe retailers. 

The pricing is based on the basis of premium segment as target customers. Nike as a brand commands high premiums. Nike s pricing strategy makes use of vertical integration in pricing wherein they own participants at differing channel levels or take part in more than one channel level operations. This can control costs and influence product pricing. 

PLACE 
Nike shoes are carried by multi-brand stores and the exclusive Nike

stores across the globe. 

Nike sells its product to about 20,000 retail accounts in the U.S. and in almost 200 countries around the world. 

In the international markets, Nike sells its products through

independent distributors, licensees and subsidiaries. 

Independent distributors need not adapt to local pressures because the 4Ps of marketing are managed by distributors.

PROMOTION 

Promotion is largely dependent on finding accessible store locations. It also avails of targeted advertising in the newspaper and creating strategic alliances. Nike has a number of famous athletes that serve as brand ambassadors such as the Brazilian Soccer Team. Nike also sponsors events such as Hoop It Up and The Golden West Invitational. Nike s brand images, the Nike name and the trademark swoosh, make it one of the most recognizable brands in the world. Nike s brand power is one reason for its high revenues. Nike s quality products, loyal customer base and its great marketing techniques all contribute to make the shoe empire a huge success.    

SWOT ANALYSIS

STRENGTHS
‡

Nike is a globally recognized for being the number one sportswear brand in the World.

‡

Nike being a competitive organization has a healthy aversion towards its competitors i.e. during Atlanta Olympics, Reebok expensed on sponsoring the games; Nike however sponsored the top athletes and due to this step, it gained valuable coverage.

‡

Nike has no factories; rather it uses contract factories to get the work done which makes it quite a lean organization. It has contracts with above 700 shops globally in about 45 different countries.

STRENGTHS
Nike is quite strong regarding its research and development; quite evident regarding its evolving and innovative product range. They manufacture high quality at the lowest possible price, if prices rise due to price hike then the production process is made cheaper by changing the place of production. It belongs to the Fortune 500 companies. Nike employs about more than 30.000 people worldwide. It has a strong sense of marketing campaign by sponsoring top athletes. It uses linarite foam and fly wire materials in order to make the manufactured shoes lighter and more controllable.

WEAKNESSES
Even though the organization has a diversified range for sportswear, the income of the business, however, is still heavily dependent upon its share of the footwear market which leaves it at a quite vulnerable spot if for any reason its market share erodes. The retail sector is price sensitive; retailers usually tend to offer a very similar experience to the consumers with another cheaper product, which in return tends to get squeezed as retailers try to pass some of the low price competition pressure onto Nike. Nike was for quite some time unwilling to disclose any type of information concerning its partnering companies.

WEAKNESSES
‡ It was charged with the violation of overtime and

minimum wage rates in Vietnam, 1996, that was seen as having poor working conditions, and that it was also charged for exploiting cheap workforce overseas. Pakistan and Cambodia to produce soccer balls.

‡ Nike was also reported to have applied child labor in ‡ It was positioned as a subject of criticism by anti-

globalization groups due to its unruly and exploited manner that was quite a disaster for its reputation.

OPPORTUNITIES
‡

The brand is sternly defended by its owners who believe that Nike is not a fashion brand, however, a large number of consumers wear Nike Product because they derive a fashion trend rather than to participate in a sport. It is mostly argued that in youth culture, Nike is a fashion brand which also creates opportunities for Nike since its products would become outdated before even the product wears out i.e. consumers will feel the need to replace the product with a newer trend.

‡

‡

There are many international regions that still need tapping and there is need for sportswear and with Nike s strong global brand recognition, it can initiate in many markets that have the disposable income to spend on high value sports goods. Nike gives a lot of effort on its corporate marketing mainly through the promotion of corporate brand and sponsorship agreements.

‡

THREATS
Nike is exposed to the international nature of trade so it sells its product in different currencies which destabilizes the costs and margins for profits over long periods of time. The market for sports shoes and sportswear is quite competitive; the competitors are constantly developing alternative brands and techniques to take away Nike s market share.

THREATS
Consumers are constantly shopping around for a better deal that conveys a good quality and if one store charges a higher price for the products, the consumer would try to seek a better deal of the same product in the premises that delivers the same value but cheaper of the two, this type of price sensitivity among the consumers is a potential threat to Nike. The textile industry unpleasantly upsets the atmosphere, and therefore the organization is constantly struggling to retain its eco-friendly reputation. A recession may lead to job shortages in most of Nike s worldwide branches. The organization has experienced many adverse publicity feedbacks due to its widespread advertising.

THE PORTER FIVE FORCES

Rivalry among current competitors in the industry 
The first part is analyzing the current treat or rivalry among

the existing firms. In the footwear industry, the level of rivalry is high. There are several competitors such as Reebok, Adidas, New Balance, Puma and of course Nike. The competition between these companies is so intense because they are dealing with short-life cycles products. 

The growth the athletic footwear industry has experienced

over the past twenty years is beginning to stabilize. This forces firms to differentiate using marketing, advertising, fashion and technology to steal market share away from their competitors.

Threat of new entrants to the industry 
The next part is the threat of new competition entering to the

sport footwear industry. The threat in this area is low because many of the powerful companies in this industry are benefit from the economic of scale. Since they are producing, marketing, selling and innovating more, they are saving money because their fixed costs are spread out over a larger volume. 

Another factor which affects the new companies to enter this

industry is product differentiation. Big companies such as Nike, Reebok and Adidas own their brand identity that differentiates their product to others and they have established their own loyal costumers.

Bargaining power of buyers 
The costumers have low bargaining power

because the customers cannot affect the profitability of the industry or the company. Each pair of shoes is a very small percentage of overall sales and consumers usually do not buy shoes in large quantities.

Bargaining power of suppliers 
The bargaining power for the suppliers is

medium. The product is unique, and the switching costs are high. It is also possible for the suppliers (especially in foreign manufacturing) to integrate forward into the industry's business (in overseas markets) and become a rival to the industry. the sport shoes is very important to the companies, supplier cab gain bargaining power. 

Since the raw materials and equipment to make

Threat of substitutes 
This factor is low in the sport footwear

industry, because there are already few substitute products for it, such as the specific performance shoes like for basketball, soccer, baseball, tennis, etc. 
The sport footwear industry is constantly

innovating and adapting to the new trends and costumers needs that can decrease the treat of substitute products

RECOMMENDATIONS 

Nike should be more aware of their bad reputation in the labor practice and try to come out with solution for the unethical business. Nike is a well known for their product all over the world. However, Nike must be more careful in releasing the advertising because such big reputation Costumer price sensitivity is a potential treat to Nike, thatâ s why Nike need also to consider their product price in order to compete with the other sport brand products. Try to think solution in case for the big treat of the merger of other sport brand. Focus on their product development is very good, but they have to consider also what are the costumer really needs    

FOOTWEAR INDUSTRY: PEST ANALYSIS 
POLITICAL 
Recent merger between Adidas and Reebok  

Home market lobbying/pressure groups Very few sporting events apart from cricket fixtures to attract customers

ECONOMIC
Marginal share of 2.44 percent in global trade worth US$ 97.606 billion Estimated target of 12 bn $ (7bn $ export + 5 bn $ domestic) trade by the year 2012 overseas economies and trends. The Indian footwear retail market is expected to grow at a CAGR of over 20% for the period spanning from 2008 to 2011. Footwear is expected to comprise about 60% of the total leather exports by 2011 from over 38% in 2006-07. Growing middle class and growing buyer power leading customers to look for branded shoes. seasonality issues sports is more of a rage in summers. Lack of targeting of market segments for kids and women .

SOCIAL 
      

Lifestyle trends upward shift Demographics Consumer attitudes and opinions changing favorably towards branded shoes Media views Consumer buying patterns Fashion and role models Buying access and trends Advertising and publicity

SUPPLY CHAIN IN FOOTWEAR 

In nutshell the supply chain in footwear starts from the farmers end and ends with finished goods in the customer s hand. The farmers who tame the animals send the skins to skins & hides collector in their respective area, then these raw materials are sent to the tannery which transforms these skins into raw material for the shoe manufacturing companies, which in turn convert this into finished goods in the form of footwear. 

Further these footwear are sent to warehouse of the manufacturing companies, after that these goods are supplies to customers through various channel members like retailers, wholesalers, retail chains, department stores. The diagrammatic illustration is shown below:

SUPPLY CHAIN IN FOOTWEAR

CONSUMER S PREFERENCE 
Globally, Nike is the market leader and has

captured the major share of the footwear industry. It is known for its excellent quality, designs and the brand name. It is widely accepted and preferred at a global level.

INDIAN PERSPECTIVE 
In India, Reebok and Nike are mostly

preferred by men as they are priced competitively and has a fairly good reputation.  Puma is the first choice among girls due to their feminine designs and colors. They are even reasonably priced.

SWOT ANALYSIS OF FOOTWEAR INDUSTRY

STRENGTHS 
Existence of more than sufficient productive

capacity in Tanning  Easy availability to Export Market  Export Friendly government policies  Well established linkage with buyers in EU and USA

WEAKNESSES 
Environmental Problem  Delay in delieveries  Uneconomical size of manufacturing units  Non availability of quality footwear

components  Little Brand Image

OPPORTUNITIES 
De-reservation of the footwear sector  Growing fashion consciousness globally  Growing international and domestic market  Use of modern technology  Exhibit strengths in manufacturing ,eg.

strength in classic shoe manufacturing

THREATS 
Entry of multinational in domestic market  Stiff competition from other countries  Limited scope for mobilising funds through

private placement and public issues,as many business are family owned

CONCLUSION 
The athletic footwear industry is a strong, market driven industry.

From the five forces, four are favorable in this industry. 

The threat of the potential entrants is low, the bargaining power of

buyers is low because each pair of shoes sold in very small percentage, the bargaining supplier is medium, and the only weaknesses to this industry is the current rivalry. 

The competition is very intense and the increase of the research

development and the advertising can be very highly expensive.

Q1.Do you prefer wearing sports shoes

Q2. WHICH BRAND DO YOU PREFER

Q3.HOW DO YOU CONSIDERED THE IMPORTANCE OF SPORT SHOES?

Q4. WHAT FACTORS INFLUENCE YOU TO GO FOR A PARTICULAR BRAND

Q5. ARE YOU SATISFIED WITH THE QUALITY OF PREFERD BRAND

Q6. ARE YOU SATISFIED WITH THE PRICE RANGE

Q7. IF PRICES OF YOUR PREFERED BRAND INCREASES WILL YOU PURCHASE AGAIN

Q8. DO YOU NORMALLY SWITCH OVER THE BRAND

Q.9 IS THERE ANY EFFECT OF ADVERTISEMENT ON SELECTION OF BRANDS

Q10. WHAT KIND OF PROMOTIONAL TOOL YOU PREFER

Q11. WILL YOU BUY PREFERED BRAND AT LOW COST OF NEGLIGIBLE QUALITY

Q12. IS THERE ANY IMPACT OF CELEBRITIES ON YOUR PURCHASING

Q13.DO YOU THINK WEIGHT IS A FACTOR FOR CHOOSING BRAND

Suggestions & Recommendation 
Research finding  AFTER ASSESSING THE OVERALL  MARKET SCENARIOS WHAT CAME IN PICTURE WAS  AS FOLLOWS:  CONSUMER REACTIONS SUGGESTS THAT NIKE IS THE MARKET LEADER AMONG ALL ITS CLOSE COUNTERPARTS IN THE SPORTS SHOE AND APPAREL SEGEMENTS.  AFTER ITS SPONSERSHIP TO MAJOR SPORTS EVENTS AND TEAMS LIKE SOCCER IN EUROPE AND CRICKET IN INDIA GIVE IT AN EXTRA EDGE.  PEOPLE ARE STILL EXPECTING SOME THING MORE FROM NIKE  ADIDAS IS CHASING ITS POSITION MOST AGGRESIVELY SO NOW IT REQUIRES MAINTAINING ITS POSITION WITH NEW STUFF. 

Nike has been the major competitor for adidas.  The new stuff of the adidas is attracting the consumers more which might led adidas at the top spot in the pack in coming financial year  CONSUMERS ARE NOT SHOWING THAT KIND OF CRAZE IN REEBOK FOR PAST FEW YEARS .  PROBABLY IT COULD BE BECAUSE OF THE AGGRESSIVE ATTENTION SNATCHED BY BRANDS LIKE ´NIKEµ AND ´ADIDASµ SPECIALY IN INDIA . 

ONLY 8% MARKET HAS BEEN COVERED BY REEBOK IN RECENT PAST. THAT IS MISERABLE AS PER ITS STANDARD 

REASONS BEING ITS RESTRICTIVE MANUFACTURING IN INDIA, AND THE COST OF THE PRODUCTS ARE NOT AFFORDABLE AS COMPARED TO EUROPEAN AND U.S MARKET 

Suggestion
THE BOTTOM LINE OF THE MARKET RESEARCH SPEAKS THAT BRANDED SHOES IN INDIA HAS BEEN INCREASINSG ON DAY BY DAY BASIS. THAT SOUNDS GOOD FOR INTERNATIONAL AS WELL AS DOMESTIC MARKET.

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