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Bata India Company Analysis And Breakdown Marketing Essay

Introduction / Back Ground
Bata India is the leading and largest manufacturers of footwear in India, which is a part of Bata Shoe
Organisation (BSO). Initially footwear was produced in handicrafts and small segments before the entry of Bata in
Indian market. Bata Shoe Company Private Limited was incorporated as a small operation unit in 1931 in Konnagar,
India. It built its first manufacturing unit in the start of 1934. The company expanded in the years followed in its size
and the township was known as Batanagar. It was the first company to receive ISO: 9001 certification for its
manufacturing unit in the Indian shoe industry. The company went public in 1973 and changed its name to Bata India
Limited. It has its manufacturing units and tannery in five specialised location across the country. The company has
more than 1200 stores in its retail network in the metros, mini-metros and towns. The retail concept includes four
types of stores across the country. They are City store, Large store format, Family store and Factory store. These four
types were introduced by company in-order to reach all segments of customers from Tier1 to Tier3 locations. It also
operates in non retail distribution with 12 depots across the country, which sells its products through more than 160
distributors and 20,000 independent shoe dealers. The company collaborates with corporate customers to design
various shoe lines under both international and national brands such as Hush Puppies, Marie Claire, Mocassino,
Ambassador, Comfit, School, Quovadis, North Star, Scholls, Weinbrenner, Bubble Gummers, Baby Bubble, Power
and Sparx. The collaboration is done in order stay in-line with latest technology and industry specification to meet the
customer requirements. It also focuses on army, police forces and mining industries with canvas shoes, hunter shoes
and miners shoes. It currently employs more than 6800 people. The company sells more than 45 million pairs of
shoes every year and also serves 120,000 customers every day.

Macro Analysis
It is very important for an organisation to consider its environment before initiating a marketing process. This must be
a continuous process and should help in the positioning the organisation in the market. The factors that are
considered are Political, Economical, Social and Technology.

POLITICAL FACTORS
Rules and regulations for tannery wastes.
Government stability.
Fewer sports events apart from cricket to attract the customers.
Merging of Adidas and Reebok
Market pressure on sales.

ECONOMICAL FACTORS
Seasonal Issues: Sports is more encouraged in summer.
Increasing buyer power makes the customers to look at branded shoes.
Lack in targeting the women and kid segments.

Huge consumer market.

SOCIAL FACTORS
Change in the lifestyle of the people (buyer).
Increasing fashion trends.
Advertising, publicity and media.
Change in buyer behavior.

TECHNOLGICAL FACTOR
Increase in competing technology development.
Up-ward shift in innovation and manufacturing maturity.

Micro Analysis
Customers The products of Bata targets a wide range of customers which also includes Army, Police Force and
Mining industries in all locations. This is mainly due to the wide range of products made available in market by the
company. The company has two types of customers they are the final users and the It offers good quality products
with best price in market, which means that the price-quality ratio is excellent for the Bata products.
Competitors The competitors for Bata India in the market are Puma, Nike, Reebok, Adidas, Woodlands,
Liberty and Action. The arrival of local and international brands in the Indian market has created a highly
competitive environment in the footwear industry market. The products from the competitors serve as
substitutes to the customers.
Suppliers The raw materials for the company is PVC soles and the animal skin, the
people or organization which supplies these raw material are known as the suppliers.
Batas suppliers are Chinese raw material holders and the local cottage industries that
supplies raw materials to the company.

SWOT ANALYSIS
Strength
Availability of raw materials and other inputs for the companys operations.
Manufacturing units in various places helps in distribution.
Subsidiaries and Tax incentives on machineries.
Established links with buyers from Europe and US.
Friendly government policies for export.
The brand name is immediately identified with footwear by the consumers.

Weakness
Facing challenges to move to new production technology, because of its existence for more than seven decades.

High labour costs, as the company has large number of employees.

Opportunities
There is a good scope for diversification into other products like leather wallets, seat covers and other types of leather
garments.
Growing National and International market.
Developing fashion consciousness globally.
Being in a large developing market which offers a demand for footwear, the company finds its potential in leveraging
the Bata brand for marketing other merchandise consumer products.

Threats
Changing fashion trends is hard to adopt for the Indian Leather Industries.
Entry of global competitors into National market brings heavy competition in the market.

Financial & Marketing Aims and Objectives

Bata India has around 13.7 percent of the market share and the company has decided to increase its market share by
introducing a new product under the brand Power in the market. Power brand is exclusively meant for sports wear.
The company expects to have an increase of 3.25 percent in its market share by introducing this product. The product
to be launched is named as Power - Lite. It sells around 45 million pairs every year and has decided to increase its
sales by introducing Power- Lite. The decision to introduce a new product was made in-order to compete with the
global brands like Nike, Adidas, Reebok, Puma etc in the Indian market. These global brands were the suppliers of
specialised sports shoes and thus Bata is trying to capture its position in the market for the specialised sports shoes.
The company identified some issues and customer needs with respect to their product. Their product was lagging
behind in latest design (style) and the customers comfort when wearing the shoe. The company has invested in huge
amount in changing its store appearance and has also taken steps to incorporate the new technology involved in
manufacturing specialised shoes. The company forecasted the sales of specialised sports shoes for the up coming
years and will have an increase by 14 percent in its revenue, after the launch of the new product. The new specialised
sports shoes targets the people involved in sports and all segments of customers from children to adults. Thus the
marketing, financial aims and objectives are discussed.

Market Segmentation & Target Segment/s

The process of grouping the market is known as Segmentation. The market segmentation is done based on the
demographic and psychographic factors for Bata. The demographic factors are age, sex
and occupation. Personal Activities like hobby, social events (marathon), sports,
shopping and Personal interests like fashion, styles were considered in psychographic
factors and buyer behaviour which includes the changing trend in buying pattern for the
segmentation of market [ref-module book]. The foot wear industry market falls under the
ideal type market, as it covers all segments of customers. The customers share their
needs in this market. The target segments are classified into three categories namely
Display Buyers, Knowledge Buyers and Fashion/Stylish Buyers. The customers who
come under these buyer categories are children, students, adults, elderly people and
sports people. The diagrammatic representation of three buyer categories is given in
Figure 1.

Figure 1: Possible Segments in the Footwear Industry Designed by Author.

Positioning
Positioning is done in-order to locate the brand in the minds of the customers, which in-turn increases the benefits of
the company. Positioning results in customer-focused value proposition. The positioning is done with respect to the
brand and product portfolio. Positioning strategy is done by identifying the possible competitive advantages through
which a company can attain sustainable position in the market. Bata always aims to be sustainable in the market and
it has proved it over years. The company has taken various steps to increase its market share, some of them are
renovating its already existing stores, opening new stores in sub-urban places and the main strategy which is
followed by the company is high quality and low price. This has made the company sustainable for more than seven
decades in India. The company will follow the same strategy for the new product Power-Lite. On the other hand when
looking into the market for the products from Nike, Puma, Adidas and Reebok, they charge a huge amount for their
sports products. The cost of shoes from Bata is relatively low, when compared to others.

Figure 2: Positioning Map of Batas Product in Footwear Industry Designed by

Author.
There are few local manufacturers who produce the replica of the branded products with low quality and low costs.
This makes the customers feel unsatisfied. Bata is already filling the positional gap in the market following low price
and high quality strategy. This new product also comes under the same category, which adds value to the impression
given to the customers in relation with the competing product. The low price and high quality strategy works well in the
Indian market as it is a developing market.

Product
A product/service is anything that a firm or an individual sells, which satisfies the customer needs. The new product
will replace an existing product named Life-Line under the same brand Power. The core, formal and augmented
products are explained below using Figure 3.

Figure 3: Core, Formal and Augmented Products.

The core product is the Power Lite, the formal products are its comfort, style, brand name and features. The
augmented product is something which is offered after sales, in this case free repairing service is offered by the
company for about 6 months from the time of sale. The product should have the following features wearing comfort,
styling and latest design to compete with the competitors product.

Developing a new product involves the following processes.

Innovation of new ideas: A research done by the company among its employees, customers, competitors and
other sources using feedback, surveys and other questionnaire in-order to generate a
new idea.
Screening the ideas: In this stage all the feasible idea are selected from the bunch of
idea that is generated with the help of the footwear industry checklist.
Testing the concept: The new product is tested conceptually with the help of selected
customers (eg athletes) for any changes or improvements, before it reaches the
market.
Planning a strategy: Marketing and Financial objectives for the new product is set, which helps the company to face

the success and further development or failure of the product.

Market Test: The new product is made available in the selected places and tested with selected customers and their
feedback is got on the product.

Life Cycle of the Product

The product life cycle of a shoe is short, when compared to many other products. The shoe seemed to have a short
introduction period, a little bigger growth period where it reaches its maturity stage. It stays in the maturity stage for
longer time and then decline stage starts when a new product or a replacing product is launched in the market.

Figure 4: Product Life Cycle of Shoe.

Pricing
The price for a particular product is determined through break even analysis and the pricing model as given in Figure
5 and 6. The company operates with low price market penetration strategy. The main advantages of this strategy is
increased sales growth, builds strong market position and high product awareness in the market. The price of the
Power-Lite is determined to be Rs 2799 (Indian Rupee - INR) considering variable, fixed costs and the market floor,
ceiling price. The company gets its contribution (profit) after selling 20,000 units of Power-Lite.

Figure 5: Pricing Model help in determining the price of Power-Lite.

The pricing level of Nike, Adidas, Puma and Reebok are higher than Bata, they must follow this during the launch of
the product in-order to sell their product initially. The break even analysis determines the point at which the
contribution is made with respect to he number of products sold.

Figure 6: Break Even Analysis of product Power-Lite.

Place
The company will launch its new product in all the Tier 1 and Tier 2 locations of the market. This is done because of
the demographic factors, psychographic factors and the target segments (wide range of customers). These are the
changes that the company must do instead of launching the product in all the locations of the market. The firm a good
distribution channel, they sell their products directly through their factory retail stores, franchise merchants,
wholesalers, distributors, independent dealers and also in online. Hence they cover all the locations of the market in
different ways.
Figure 7: Marketing Channels of Bata.

Promotion
As this is a new product the company must advertise in media such as newspaper, TV, Banners and internet. They
should follow the push and pull promotions in the initial stage which can be later changed to pull promotions, if the
product is success in the market. The push and pull promotions include discounts to the wholesalers, staff incentives,
advertising, display at point of sale. This should be done in consideration with the estimated budget for promotion
purpose.

Physical Evidence
The company has taken steps to change the buying experience of the customers by renovating and expanding

its stores in all the location, initially in Tier 1 location and it has started slowly to continue in Tier 2 location which
makes the customers to have good shopping experience. The lay out the old and new
stores are given in Figure 8 & 9.
Figure 8: Store Layout source from Bata India website.

Figure 9: Store Layout source from Bata India website.

The company has four types of stores that opened in recent years, they are City store,
Large store format, Family store and Factory store. They must also expand and
renovate stores in tier 3 locations of the market.

Marketing Strategy Communication

The main objective of the strategy communication is to create the awareness and interest in customers of the new
product, which in-turn benefits the organisation to capture the market share and increase its contribution (profit). This
is done by the AIDA model, where attention, interest, desire and necessary action is done for the demand in the
market.
Figure 10: AIDA Model for BATA.
Awareness of the new product: Generating awareness is done through advertising in media like TV, newspaper,
magazines, banners and internet. When this is done, the customers will be aware of the new product in the market.
Creating Interest: Done through advertising by emphasizing the formal products such as brand name, features,
comfort and latest design. Thus creating an interest in the customers mind for the new product.
Arousing Desire: This can be done through sales promotions, word of mouth from the customers, who have already
used the product.
Actions: When all the above strategic plans are done, the product must be made available in the market. If in case the
product is not available, the customer gets disappointed and they find a substitute for their needs, which decrease the
reputation of the brand and the companys profit.

Sales Strategy
This explains how the new product (Power-Lite) is sold in the market. The plan involves two types of promotions Push
and Pull. During the introduction stage the product can be pushed into the market by promotional offers such as
discounts to the wholesalers, distributors when ordered in bulk numbers. Another type of pushing is done by giving
incentives to the employees who the sell the new product in more numbers when compared to other employees.
Pulling promotion influences the customers to buy it. The wholesalers, distributors and customers can be pulled by
giving credit when ordered in bulk, displaying at the point of sale (stores), and complements when purchased the
Power-Lite.

Profit and Loss Forecast

The below given is the profit and loss account of Bata India, this an assumption made by the author considering that
the product is success in the market. The P&L forecast very clearly shows that the company will have profit
(contribution) from the Power-Lite product which is launched.

Timing

The product will be launched during the Indian Premier League, this is done because of the because of the influence
of cricket among the people. The products result will be known in six weeks of time from the date of launch.

Contingency
Few sports shoes of Bata are already available in the market, however most of the customers were unsatisfied
with the medium quality and comfortless products. Hence Bata has decided to launch
the Power-Lite, with low price and good quality feature which is well suited for the
developing Indian market. This would replace many global brands product with its high
quality, new style, comforts, latest design and technology used in the sole of the shoe.
The product Power-Lite would be big success, if no competitors are providing such a
good quality product at low price.

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