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Market entry for European Footwear Market

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Market entry for European Footwear Market

  1. 1. EUROPEAN FOOTWEAR MARKET AND MARKET ENTRY STRATEGY PGDM-IB GROUP-MARKETING
  2. 2. FACULTY GUIDES <ul><li>HARSH SHAH (03) </li></ul><ul><li>PRACHIRANJAN SWAIN(14) </li></ul><ul><li>ALLEN SANGEETH(15) </li></ul><ul><li>VISHAL SHARMA(20) </li></ul><ul><li>SUDDEPT KUMAR SINGH(33) </li></ul><ul><li>PROF ISTVAN ESZES </li></ul><ul><li>(ESSCA-BUDAPEST) </li></ul><ul><li>PROF SUDIPTO CHAKRABORTY </li></ul><ul><li>(ITM-NAVI MUMBAI) </li></ul>GROUP MEMBERS
  3. 3. CONTENTS <ul><li>Footwear market in Europe </li></ul><ul><li>Porters five forces analysis </li></ul><ul><li>Market access requirements for EU </li></ul><ul><li>EU’s protective measures </li></ul><ul><li>SWOT Analysis. </li></ul><ul><li>Possible market entry strategies </li></ul><ul><li>Market entry strategy-Recommendation </li></ul><ul><li>Major Hurdles </li></ul><ul><li>Conclusion </li></ul>
  4. 4. Footwear market in Europe <ul><li>Largest market for footwear in the world. </li></ul><ul><li>Supplier of high quality footwear. </li></ul><ul><li>High volume items outsourced to Asia. </li></ul><ul><li>Market affected by recession in 2008 . </li></ul><ul><li>Consumer focusing on low cost footwear. </li></ul><ul><li>Markets expected to grow by 2011. </li></ul>
  5. 5. Footwear market in Europe <ul><li>Market Size & Consumption </li></ul>Source-Euromonitor-Mintel 2010
  6. 6. Factors contributing to the growth <ul><li>Growing economies of Eastern Europe countries </li></ul><ul><li>Accession of new member states. </li></ul><ul><li>Emerging middle classes, higher aspirations, and disposable incomes in EE countries. </li></ul><ul><li>Projected population increase. </li></ul>
  7. 7. Market Segmentation <ul><li>User </li></ul><ul><li>Men </li></ul><ul><li>Women </li></ul><ul><li>Children </li></ul><ul><li>Lifestyle </li></ul><ul><li>Dreamers </li></ul><ul><li>Homebodies </li></ul><ul><li>Settled </li></ul><ul><li>Adventurers </li></ul><ul><li>Rational </li></ul><ul><li>Realists </li></ul><ul><li>Open-minded </li></ul><ul><li>Organics </li></ul><ul><li>Demanding. </li></ul><ul><li>Price & Quality </li></ul><ul><li>Luxury, € >300 </li></ul><ul><li>Fine, € 100-300 </li></ul><ul><li>Medium, € 25-100 </li></ul><ul><li>Economical, € <25 </li></ul>
  8. 8. Production
  9. 9. Trends <ul><li>Outsourcing in China, Vietnam and India </li></ul><ul><li>Innovation and added value </li></ul><ul><li>Attention to workmanship </li></ul><ul><li>Environmental challenges and opportunities </li></ul><ul><li>Cost reduction in the supply chain </li></ul><ul><li>Keep an eye on retailers </li></ul><ul><li>Wider sales network in the EU </li></ul>
  10. 10. Trade channels for market entry
  11. 11. Main Distribution channels <ul><li>Importers / wholesalers </li></ul><ul><li>Agents </li></ul><ul><li>Buying Groups </li></ul><ul><li>Local suppliers </li></ul><ul><li>International suppliers or fashion houses </li></ul><ul><li>Retailers – footwear specialists </li></ul><ul><li>Footwear chain stores </li></ul><ul><li>Independent Footwear shops - Boutiques </li></ul>
  12. 12. <ul><li>Retailers – non-specialists </li></ul><ul><li>Department stores </li></ul><ul><li>Sports retailers </li></ul><ul><li>Hypermarkets, supermarkets and discounters </li></ul><ul><li>Street markets and factory outlets </li></ul><ul><li>Internet sales </li></ul>
  13. 13. Imports <ul><li>World’s largest importer of footwear. </li></ul><ul><li>Value: 26.7 billion € (2008) </li></ul><ul><li>Volume: 3.1 billion pairs (2008) </li></ul><ul><li>Countries: China, Vietnam, India, Indonesia, Brazil and Thailand </li></ul>EU Imports of footwear 2004-2008, € million / million pairs Source: Eurostat 2009
  14. 14. Role of developing countries <ul><li>In 2008 imports were: </li></ul><ul><li>43% of total value (€ 11.4 billion) </li></ul><ul><li>71% of total volume (2.2 billion pairs) </li></ul><ul><li>The top four importers (UK, Germany, Italy, France) accounted for 61% (50% by volume). </li></ul><ul><li>Rise of Imports from 36% in 2004 to 61% in 2008. </li></ul>
  15. 15. Porter’s five forces analysis Competitive Rivalry -High Bargaining Power of Consumers- Moderate Bargaining power of suppliers High Threat of Substitutes -High Threat of new entry Moderate
  16. 16. Market access requirements for EU <ul><li>Packaging </li></ul><ul><li>Environmental legislation( REACH) </li></ul><ul><li>Intellectual Property rights </li></ul><ul><li>Size marking </li></ul><ul><li>Labeling </li></ul><ul><li>Anti-dumping </li></ul><ul><li>Anti-fraud policy </li></ul>
  17. 17. EU’s protection of local manufacturers <ul><li>EU has imposed a 10% anti-dumping duty on China & India specifically. </li></ul><ul><li>European manufacturers have started a campaign of “origin marketing” to boost their marketing in Europe as well as overseas market. </li></ul><ul><li>EXAMPLE:- “I love Italian Shoes”, “Made in Spain” etc. are some of the campaigns to promote creativity, fashion ability, origin & craftsmanship at different points. </li></ul><ul><li>European manufacturers have joined with colleagues, designers and trade associations. </li></ul>
  18. 18. <ul><li>To still be competitive in the market the Indian manufacturers can cash on upon following factors:- </li></ul><ul><li>  </li></ul><ul><li>Indian Core Competency </li></ul><ul><li>Cheap labor </li></ul><ul><li>Direct marketing strategy </li></ul><ul><li>Past experience </li></ul>
  19. 19. SWOT Analysis <ul><li>Strengths: </li></ul><ul><li>Ready availability of skilled & cheap manpower. </li></ul><ul><li>Availability of raw material. </li></ul><ul><li>Government incentives. </li></ul><ul><li>Ability to assimilate new technology & handle mass production requirements. </li></ul><ul><li>Emphasis on product development & design upgradation. </li></ul><ul><li>Weaknesses: </li></ul><ul><li>International price fluctuation. </li></ul><ul><li>Lack of warehousing support. </li></ul><ul><li>Lack of strongholds in global fashion market. </li></ul><ul><li>Unawareness of international standards required. </li></ul>
  20. 20. SWOT contd. <ul><li>Opportunities: </li></ul><ul><li>Rising potential in domestic market. </li></ul><ul><li>Utilization of Information Technology & Decision Support Software to optimize the production cycle. </li></ul><ul><li>Use of e- commerce in direct marketing. </li></ul><ul><li>Threats: </li></ul><ul><li>Major part of industry is unorganized. </li></ul><ul><li>Stricter international standards. </li></ul><ul><li>Difficulty in obtaining bank loans. </li></ul><ul><li>Limited scope for mobilizing funds. </li></ul><ul><li>High competition from Eastern European & Asian countries. </li></ul>
  21. 21. Possible market entry strategy <ul><li>Importers/wholesalers </li></ul><ul><li>Agents </li></ul><ul><li>Buying groups </li></ul><ul><li>Retail chain stores and department stores </li></ul><ul><li>Direct sourcing </li></ul>
  22. 22. Why should we enter with leather product <ul><li>Slowdown in Europe leading to customers to go for lower price footwear. </li></ul><ul><li>  Chinese producers are facing serious problems due to rising labor cost, which has risen by around 40% since January 2008, and currency appreciation. </li></ul><ul><li>Chinese products, which used to be cheaper by around 10% compared to the Indian products, are no longer cheaper.  </li></ul><ul><li>Implementation of the European Union (EU) anti-dumping duty. </li></ul><ul><li>India’s expertise and skilled labour force in leather industry. </li></ul>
  23. 23. Contd…. <ul><li>India has state-of-the-art manufacturing plants.  </li></ul><ul><li>Export of footwear from India increased manifold over the last four decades. </li></ul><ul><li>Today, India’s footwear export is valued at US$ 1507.51 million, constituting 44.33% share in total export of leather & leather products </li></ul>
  24. 24. Mode of Entry <ul><li>Europe is a highly competitive market as it is home to many major fashion houses. </li></ul><ul><li>Being a new player, a pre-established channel of distribution is ideal to minimize risk factor. </li></ul><ul><li>An ideal market entry channel could be through Retail Chain & Departmental Stores . </li></ul><ul><li>Local retailers like Shoezone, Stylo, Vivarte, Deichmann etc. are some of the potential retailers in EU footwear market. </li></ul><ul><li>These retailers require & search quality oriented & reliable suppliers. </li></ul><ul><li>After the global slowdown, consumers are more price sensitive & are increasingly looking at non-specialist retailers for buying all the stuff. </li></ul><ul><li>Super/Hyper markets & Departmental stores have become the obvious choice for shopping. </li></ul>
  25. 25. Entry Segmentation
  26. 26. Branding Strategy <ul><li>Multi branding strategy, focusing on a wide array of fashion leather shoes, dress shoes, fashion lady dress shoes, casual leather shoes, winter boots, women leather sandals, women’s ballet flats etc. </li></ul><ul><li>Focus on obtaining greater shelf space outnumbering the competition. </li></ul><ul><li>Saturating the market by filling all price & quality gaps. </li></ul><ul><li>Focusing on Brand Switchers who like to experiment with different brands. </li></ul><ul><li>Generating internal competition to keep Branding managers on their toes </li></ul>
  27. 27. Major hurdles <ul><li>Indian manufacturers will face tough competition </li></ul><ul><li>Major competitors according to segment are:- </li></ul><ul><li>Luxury (>300 €)- Dolce & Gabanna, Prada & Gucci etc. </li></ul><ul><li>Fine-euro (100-300€)-Bally, Burberry Boss, Chloe etc. </li></ul><ul><li>Medium- (25-100€)- Converse, Dr. Martin, Nike, Adidas etc. </li></ul><ul><li>Economical- >(Euro 25€) -Imitations of successful brands and non branded. </li></ul>
  28. 28. Conclusion <ul><li>EU being largest importer has got great opportunities. </li></ul><ul><li>Main concern is that we have to differ our products according to different culture in different countries of Europe. </li></ul><ul><li>During recent times due to recession these European countries are trying to cut its cost and innovate. </li></ul><ul><li>After detailed study and analysis we selected best possible solution and product that a developing country like India can export. </li></ul><ul><li>Keeping countries like china in our mind as a tough competitor we have tried to find out the deficiency and the way we can seize this window of opportunity to our advantage. </li></ul>
  29. 29. Recommendation <ul><li>On the basis of study of European footwear market few suggestions can be brought out. </li></ul><ul><li>Detailed study of the market before entry. </li></ul><ul><li>Keeping in mind the environmental, consumer health and safety & social concerns in mind before exporting. </li></ul><ul><li>To recognize our own competitiveness and efficiency and to focus on technology & innovation. </li></ul><ul><li>To follow the European standards and regulations for exporters. </li></ul>
  30. 30. References <ul><li>http://www.cbi.eu/marketinfo/cbi/docs/the_luggage_and_leather_accessories_market_in_hungary </li></ul><ul><li>http://www.powerhomebiz.com/vol136/shoe.htm </li></ul><ul><li>http://www.cbi.eu/marketinfo/cbi/docs/the_footwear_market_in_the_eu </li></ul><ul><li>http://www.ehow.com/way_5831822_strategic-economic-trends-shoe-industry.html </li></ul>

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