SEGMENTATION OF THE INDIAN LEATHER IDUSTRY PRESENTED BY S.

RAMYA (138010106) LEATHER INDUSTRY Leather industry is one of the oldest industries known to mankind. In ancient days people used skins of animals to protect themselves from cold. They used a process called tanning which preserves the skin from decay. Today the products are improved through latest technology. This industry involves products like footwear, furniture, accessories, clothing; etc.Major share of the leather produced goes to footwear, a quarter into clothing, 15% into upholstery and the rest into other products. Leather industry in India: Leather industry is a major export earner for many countries Leather Industry in India, occupies a place of prominence in the Indian economy, in view of its massive potential for employment, growth and exports. India is the third largest producer of leather goods in the world after China and Italy. It gives employment to 2.5 million people and earns $ 2.4mn through exports which constitutes 7% of India s exports. For decades leather industry was opened to small scale sector in India. But the post liberalization has opened a plethora of opportunities for the leather industry in India. In India around 60-655 of the production is done by small & cottage industries. Production is centered in southern, eastern and northern India. Production is done in TN, West Bengal, Uttar Pradesh, Punjab, Karnataka, and Andhra Pradesh. Tamilnadu is the major contributor with 43%. Features of Leather Sector in India
• • • • • •

Employs 2.5 million persons. A large part (nearly 60-65%) of the production is in the Small/Cottage Sector. Annual export value poised to touch about 2 billion US dollars. Amongst top 8 export earners for India. Endowed with 10% of the world raw material and export constitutes about 2% of the world trade. Has enormous potential for future growth.

Export of Leather and Leather Products from India
140000 120000
Rs. Million

117223.4 110343.2 101143 81520.38 61570.61 69557.8

100000 80000 60000 40000 20000 0 1993-94

1994-95

1995-96

1996-97

1997-98

1998-99

MAJOR PLAYERS IN THE INDIAN LEATHER INDUSTRY • • • • • • • • • MIRZA INTERNATIONAL TATA INTERNATIONAL LAKHANI INDIA BATA INDIA CHEVIOT INTERNATIONAL SEAX LEATHER EXPORTS SUPERHOUSE LEATHERS LTD BHARTIYA INTERNATIONAL OTHERS

MIRZA INTERNATIONAL: It was incorporated in the year 1979 by Mirza Tanners group to produce leather shoes. The company has plants in Kanpur Nagar (UP) to produce leather shoes and uppers, at Unnao (UP) to produce bags, finished leather, shoe uppers and shoes. It also has plants at Ghaziabad and Shahjahi (UP).its revenue for the year 2004-2005 stood at USD 57mn.It is the largest shoe exporter from India. The latest varieties are oak tree and red tape. TATA INTERNATIONAL: Tata International’s Stryde, a footwear brand has recently introduced a new range of leather products. The gamut of shoes and leather products includes men’s dress shoes, men’s casual shoes, ladies dress shoes, ladies casual shoes, floaters, sandals, ladies vanity bags, belts, wallets, portfolios and apparels. Tata international’s DEWAS is the first company in leather industry to receive the ISO 9001 award. They mainly concentrate on aesthetics, craftsmanship and functionality. LAKHANI INDIA: Lakhani India was formed in by the Lakhani group to produce leather shoes. The company has plants at Haryana. The revenue for the year 2004-

2005 was US$ 28 mn.They have separate shoes for men, women and kids ranging from Rs 200-3000. BATA: Bata India was incorporated in 1931 as a private limited company mainly to produce leather shoes. They have plants at Batanagar (west Bengal), Tamilnadu, Bangalore which produces finished leather from hides. It also has separate tanneries at Batanagar and Bihar. It is the first Indian shoe manufacturing unit to receive ISO 9001 certificate. BATA India is an affiliate of Toronto based BATA International. Bata India recorded revenue of USD158mn in the year 2003-2004.It is selected as one of the super brands in India. BATA India started with models like Hush puppies, Marie Claire which comes out with vibrant colors for conscious women, Bubble gummers for kids. CHEVIOT INTERNATIONAL LTD: It mainly deals in the manufacture of jackets, trousers and dresses made of goat suede for both men and women. They also produce travel bags, hand bags and wallets. They produce around 1, 20,000 garments and 60,000 bags and wallets every year. They work for brands like Pierre Cardin, Daniel Hechter, Joop!, Red skin and Zara. It is recognized as the top 20 leather exporters in India. They have got a profit of 2.72 crores in 2005. SEAX LEATHER EXPORTS: Seax leather export was incorporated in 1994. SLEL deals in leather goods of all varieties including leather garments, gloves, belts, industrial leather products, domestic leather goods and all other allied products. Their sales for the year 2005 was 84 lakh rupees. SUPERHOUSE LEATHER LTD: From a single tannery in the 80’s producing finished leather, Super house Group has emerged as one of the biggest players in the industry. A US $50 million group, Super house Group has 15 units, with workforce of over 3000 and has its presence in over 35 countries. They are approved vendors to world-wide brands such as Wal-mart, Filanto, Auchan, Andre, Shoe Fayre, Hudson Bay, Heckel Securite, Secura and many more. They have shoe varieties like fashion shoes, safety shoes, cowboy boot and comfort boots. They have accessories like wallets, handcuffs, bags and belts. They also have leather garments separately for men and women. Their sales for 2005 was 221 crores and they secured a profit of 5.65 crores. BHARTIYA INTERNATIONAL: This Company was incorporated in the year 1987. It mainly deals in leather apparel and clothing. The company has a plant in Karnataka. The revenue of the company in 2004-2005 was US$21 mn.They have separate collection for men and women. Women s collection consists of 20 varieties and men s collection consists of 30 varieties. OTHERS: Apart from these brands there are a lot of small-scale exporters who are engaged in the sale and export of leather handbags, pouches and wallets, belts,

fashion accessories and garments. Some of them are Super tannery ltd, Euro leder fashion, Crew B O S products, etc.

SEGMENTATION: Segmentation mainly refers to the division of markets based on the common needs and preferences of consumers. Leather industry comprises of products like shoes, garments, accessories like wallets and pouches, belts, etc. The following are the various bases on which the Indian leather industry is segmented: GEOGRAPHIC SEGMENTATION: In India, leather goods have great demand in North and North-eastern regions where the temperature goes even below zero during winter season. The use of leather jackets and shoes is comparatively high in these regions. Major leather garment manufacturers in India are Bhartiya international, Chevoit international, superhouse leather industries. They manufacture gloves, jackets, trousers, blazers etc. Major shoe manufacturers are Bata India, Mirza tanneries and Tata International. DEMOGRAPHIC SEGMENTATION: Indian leather goods market offers a wide variety of goods in varies price ranges. Bata has shoe varieties ranging from Rs 399 to Rs1199.Low rang varieties like mover, Bata are priced between 399 – 599. medium range varieties like Jackson,flexible,Deer are priced around Rs 700 Rs 800.Bata has wide varieties for r both men and women. Men have varieties like Jackson, Deer, wind, Mover,.massigio, flexible are some of the varieties for women. They also have separate varieties for kids under the name ‘Bubble gummers’. High range varieties starts at Rs 1199.Mirza international has shoes starting from Rs 450.Leather boots range from Rs 1500. Garment manufactures are also offering wide varieties for men and women ranging from Rs 2500. Tata international is one of the major players in the accessories sector. They have a wide variety of leather products. Key holders are priced at Rs 75, passport cases at Rs 180, coin purses at Rs100, cross shoulder handbags for ladies Rs 2300, gents Rs 2700 and pencil cases at Rs100.Superhouse leather ltd also manufactures leather accessories which starts from Rs.100.Other prominent players in this segment are Seax Exports and Cheviot International Ltd. The general price range for this category is Rs 75 – Rs 1500.Accessories are targeted towards both men and women and it includes all income groups. India has a large and growing consuming class (with an annual income of US$ 449 or above), that constitutes the largest segment of the population today. This segment is estimated to constitute nearly 90 million households by 2006-07,

up from just 32.5 million households in 1997-98 – a CAGR of over 12 per cent. Coupled with relatively lower penetration levels - penetration levels for footwear has been estimated to be about 60 per cent – this represents a large and growing market for leather goods.

BEHAVIORAL SEGMENTATION: Here the market is divided the basis of consumer response to benefits, use occasions, brands, etc. Leather products are categorized into formals, casuals and stylish ones with handworks based on the use occasions of the consumers. BRAND POSITIONING MATRIX: PRODUCT Handbags Trousers and Jackets Belts Boots CONCLUSION:Indian leather industry has a number of advantages. So the future prospects for this industry is very bright. Competitive Advantages The leather industry can benefit from several characteristics of the Indian market and the corresponding advantages they offer. Some of these advantages are: 11. Supply side advantages 22. Demand and side advantages 0 3. Regulatory / Policy related advantages 1 Supply side advantages • • • Availability of low cost, skilled labor Availability of Raw Materials - India is the largest livestock holding country with 21 per cent of the large animals and 11 per cent of small animals in the world. Availability of supporting institutions like NIFT, CLRI, etc in product development, design and R&D. TARGET USERS Working executives All categories Formal & casual Formal usage GENDER Women Men & women Men Men CATEGORY Utility Garments Accessories Shoes

Demand side advantages

Large domestic market - a large and growing consuming class (with an annual income of US$ 449 or above) Government Regulation & Support The Government of India has announced various initiatives to make the leather industry more competitive. Key policy initiatives include: 1 De-licensing of integrated tanneries that convert raw hides and skins into finished leather. 2 Several leather goods have been de-reserved from the Small Scale sector. 3 Free import of raw hides & skins, semi-finished and finished leather. 4 Concessional duty on imported machinery and chemicals. 5 Free export of raw hides & skins, semi-finished and finished leather and leather products. 6 7Questions and answers:8  What are typically the methods used for segmenting the markets? Which of these have already been exploited in the watch market? Which are some of the typical segments left open? The typical methods used for market segmentation are: • • • • Geographic segmentation: Here the market is divided into different geographical units like nations states, regions, cities, etc. Demographic segmentation: The market is divided into various groups on the basis of age, family size, gender, income, occupation, education, etc. Psychographic segmentation: in psychographic segmentation, buyers are divided into different groups on the basis of personality traits, lifestyles or values. Behavioral segmentation: Buyers are divided into groups on the basis of their knowledge, attitude, use and response towards the product. • Watch market typically expresses the demographic segmentation of the market as there are various price ranges, separate watches for men, women and kids.

1  How does one ensure that the segment chosen does not overlap with the existing segments? They can conduct a market research and find out the existing brands, tastes and preferences of consumers .They can also get a better idea of varieties existing in that segment. Based on this the manufacturer can make his decisions.  How does one assess the viability of a segment?

The viability of the segment is assessed by understanding the buyers’ needs and preferences, targeting the right type of consumers and positioning our product in the right market. Once the product is launched, they should constantly watch the consumer behavior and make changes in the product if needed.  Are there novel ways of segmenting the watch market? What are they? The watch industry is mainly segmented on the basis of demographics. They can take into consideration the behavioral pattern of consumers i.e. they can introduce watches based on usage like formal ones, normal casual ones and trendy ones for parties, etc. They can have different ranges for all these categories.

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