HISTORY

The Bata Shoe Organization (BSO) was founded in August 1894, by Tomas Bata, in Zlin, a
small town in the erstwhile nation of Czechoslovakia (now the Czech Republic). In less than two
decades, this company was celebrated for its expertise in mass manufacturing of footwear.
Today, it is the undisputed global champion in the shoe business with its products having a
significant share of the world market. In India, the Bata Shoe Company was set up initially as a
small operation in Konnagar, near Calcutta, in 1932.Two years later, it culled together a 155 acre
plot purchased partly from the Calcutta Port Trust and the rest bought from adjacent landowners.
The foundation stone for the first building of Bata's operation – now called the Bata Clinic – was
laid on 28th October 1934. In the years that followed, the company bought into other adjoining
plots of land and doubled the area of the original site. It was now fondly
called Batanagar. Later this pioneering manufacturing facility became the first company
in the shoe industry in India to receive the ISO: 9001 certification. In the years that followed, the
company blossomed. Its shoes now sell in more than 400 cities catered to by one of the five
manufacturing facilities that Bata has since put up.

Bata's strength lies in its worldwide brand. Bata today serves 1 million customers per day,
employs more than 40,000 people, operates 4,600 retail stores, manages a retail presence in over
50 countries, Moreover, it also runs 40 production facilities across 26 countries. Bata has divided
its business into 4 Business Units: Bata Europe, Switzerland, Bata Asia Pacific-Africa,
Singapore, Bata Latin America, Mexico and Bata North America, Canada

The main objects of the Company as detailed in its MoA are:

 To carry on business as boots and shoes manufacturers and dealers, leather merchants and
manufacturers, leather dressers, tanners, dealers in hides and skins and other materials,
manufacturers of and dealers in rubber goods.

 To carry on the business of manufacturers and dealers in machinery for the production of
boots and shoes and other leather and rubber goods and to carry on all business connected there
with.
 To establish and maintain shoe-repair shops and/ or orthopedically departments
Industry Overview

 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.
 Presently, the Indian footwear market is dominated by Men’s footwear market that
accounts for nearly 58% of the total Indian footwear retail market.
 By products, the Indian footwear market is dominated by casual footwear market that
makes up for nearly two-third of the total footwear retail market.
 As footwear retailing in India remain focused on men’s shoes, there exists a plethora of
opportunities in the exclusive ladies’ and kids’ footwear segment with no organized
retailing chain having a national presence in either of these categories.
 The Indian footwear market scores over other footwear markets as it gives benefits like
low cost of production, abundant raw material, and has huge consumption market.
 The footwear component industry also has enormous opportunity for growth to cater to
increasing production of footwear of various types, both for export and domestic market.

MARKET POSITION of BIL

BIL is the largest player in the footwear industry with around 9-10% volume share and a 60%
market-share in the organized segment. BIL has a market share of 70% in canvas shoes segment
while it has a share of 60% in leather shoes. BIL manufactures about 10% of the total Hawaii’s
sold in the country. BIL competes in manufacturing low priced Hawaii’s with the unorganized
sector with its price ranging from Rs35-Rs110 with unorganized sector's pricing in the range of
Rs25-Rs50. Leading competitor in the popular segment of the organized market Liberty Shoes.
Other organized sector players are Phoenix International, Action Shoes, Lakhani Shoes,
Woodland, Paragon and Relaxo. Most global players like Adidas India, Reebok, Nike, etc are
operating through their Indian subsidiaries with main focus on premium sports shoes segment,
which has an insignificant volume share. Competition is hotting up in the domestic market due to
popular brands such as Gaitonde, Red Tape, Lotus Bawa. These brands are gaining market

share especially in the premium segment

SEGMENTATION
Over the years of existence in the footwear industry BIL has catered to all segments of the
society. BIL redefined its segmentation and now it focuses on the Middle & the Upper class of
the society. The caselet below describes how BIlL streamlined its segmentation.

BATA – Wrong Target

In the early 1990s, Bata decided to embrace the high-end segments of the Indian shoe market as
a part of its target market. It launched quite a few brands for this segment with higher price tags.
The move landed Bata in trouble. This segment was not meant for Bata. In the first place, this
segment was not sizable for a company like Bata. Second, the segment did not gel with Bata’s
distinctive competence. The segment constituted a mere 5 to 10 per cent of the footwear market
in India. It could not provide the volumes that Bata was used to at the mass end and high volume
was essential for Bata for having a healthy bottom line. Worse still, the adoption of the segment
misdirected Bata’s entire strategy. The top end of the market suddenly became the main focus of
the company and it forgot its bread-and-butter shoes that had given the company its identity.
And, small regional players started nibbling away at Bata’s mainstay. Actually, Bata was
squeezed at both ends. At the lower end, smaller competitors attacked Bata’s mass range in
canvas shoes, school shoes and Hawaii chappals – slots, which the company had practically
vacated on its own by ignoring them completely. At the high end, niche players, who were better
prepared, were challenging Bata. From a market share of around 15 per cent in the mid-1980s,
Bata found its share slide down to 10 per cent of the footwear market in mid-1990s. The year
1995 saw the company running a loss of Rs. 42crores.

After learning the lesson the hard way, Bata did an about-turn from its adventure with high-end
segment and returned to the mass segment. The new strategy was to get back to the original
customers at the low end and keep that part of the market as its core focus. The company, of
course, did not totally give up the new segment it had got into in the early 1990s. Brands like
Hush Puppies, for example, continued to be sold by Bata, but in a selective way and through
select stores only.
4P’s Of BATA

Product

Bata has something for everyone. Variety, new designs, quality and a pulse on changing fashion
mores. In 1970s, private labels were created to be marketed to new customer segments:
Bubblegummers, Power, Marie Claire, North Star.

In 1980s, Retail excellence became even more important. Bata developed a variety of retail
concepts such as Bata city stores, large format stores and sport concept stores Customer
predilections monitored by continuous market feedback dictate the company's ever-evolving
product lines. Bata's quality-to-price ratio remains the envy of the industry. Using cutting edge
technology and research, Bata India produces a slew of fashion, athletic, casual and formal
shoes. The brands presented by Bata have become statements for millions of satisfied customers.

For men, Bata offers its famous Ambassador and Mocassino range of classic and formal dress
shoes. For the modern youth, Bata presents a choice of high technology, smart shoes in the new
Wind and Flexible range; for the adventurous, it has on offer the stunning and comfortable
Weinbrenner collection. Bata's fast growing range of smart,comfortable sandals under its Comfit
collection is now the choice for the comfort seeker. Hush Puppies, the premium Bata brand
offers a complete range to the customer looking for a city casual style.

Bata's popularity in the ladies segment continues to grow with the Marie Claire range of shoes in
patent, metallic and ethnic styles. They recently launched range of trendy hand bags for ladies,
The North Star brand is a favourite with the youth, while Power remains the pick for the sports
lover. For children, other than the original Bata School Shoes, there is Bubblegummers – the new
fun footwear range. Bata Lite and Sandak, along with the new label of Sunshine, provide a vast
range of trendy, comfortable and light-weight slippers.
Recently in the year 2009 when the Football fever was in air Bata launched an exclusive
collection of the stylish looking soccer shoes that cater to the sporty and comfort needs of the
gamer population.

Current shoe brands are:

Bata (Baťa in former Czechoslovakia)

Bata Premium (handcrafted dress shoes)
Bata Industrials (safety footwear)
Bubble gummers (children)
Power (athletic shoes )
Marie Claire (women

PLACE

DISTRIBUTION NETWORK
It reaches its customers through two channels, retail and wholesale. In retail, BIL operates
through a chain of exclusive own and franchise stores. BIL's stores are located in prime locations
countrywide. 70% of Bata's sales are from its own retail outlets. Besides there is a network of
300 exclusive wholesalers who service 30,000 retail stores all over the country. In total it has
over 1600 showrooms, 27 wholesale depots and 8 distribution centres across the country.

BIL's major thrust is on middle-class and upper class customers. The concept of `budget stores`
has been introduced to remove apprehension in the minds of customers who viewed Bata outlets
as being expensive. The company is focusing on the rural markets for volume growth in the low-
priced footwear segment.
Promotion

Bata has optimised its product range to include exciting and innovative designs at knock-out
prices. It is the company's belief that value, comfort and quality are the three imperatives that sell
footwear.To bring this message home to consumers, Bata launched the 'Be Surprised – New
Range, Great Prices' advertising and promotions campaign in the year 2009. This effort has
already coursed across the country riding on bus and metro stations, billboards,TV, print and
point of purchase (POP) materials. In a first-of-a-kind initiative in the footwear retail industry,
India's leading retailer has also introduced Bata Gift Vouchers. Ideal for corporate gifting,
employee incentives and consumer promotions, these vouchers can be used in place of cash and
are available in various denominations.

Bata India had appointed Promodome Communications as its creative and media planning and
buying partner in June 2009 to plan an advertising campaigns to help BATA reposition its
“BRAND” . The decision follows a multi-agency pitch which saw incumbent creative agency
Saatchi & Saatchi and media agency ZenithOptimedia miss the cut. Also in the running was
Rediffusion Y&R. The campaign focuses on BTL which includes heavy in-shop presence as well
as on-ground activation.

PRICING

Bata pioneered the concept of psychological pricing in India. It follows the “odd number
pricing” concept eg. 299, 399.1999 etc.. Bata founder,T omas Bata,was a ninth generation
shoemaker. This explains why the numeral “9”appears in all Bata pricing – not as is commonly
believed to be a psychological sales ploy.
SWOT Analysis

STRENGTHS
The brand Bata is closely identified with footwear by consumers.
An extensive retail network of owned and franchised stores enables the Company to reach out
to consumers across the length and breadth of the country. The Company’s own tanneries located
in Batanagar and Mokamehghat ensures uninterrupted supply of raw materials.
Six manufacturing locations enable the Company to schedule production to meet demand for a
large number and varied categories of footwear
.Being a part of the Bata Shoe Organization gives the Company access to new designs, brands
and production technologies.

WEAKNESSES
The Company has a large labour force resulting in high employee costs.
The Company has been in existence for more than seven decades and faces a challenge in
switching to new production technologies
No focus on latest fashion and trends as compared to its competitors.

.OPPORTUNITIES
India is a very large market and offers good demand potential for footwear which is an item of
mass consumption Low per-capita footwear consumption in India provides opportunity to the
Company which has large production capacity spread over six locations The Company sees
potential in leveraging the Bata brand for marketing other merchandise consumer products
.
THREATS
The Company faces competition from the unorganized market which is able to sell footwear at
low cost due to lower overheads and manufacturing costs.
Opening of the Indian market to imports has resulted in the Company facing competition from
cheap imports.
Bata - Transformation Strategy

BATA had been a market leader in the Indian market for years. Since 2002 the market share of
BATA had been eroding to tough competition from its competitors.Bata's revamped business
strategy is aligned towards addressing a larger pie, introducing newer product lines and a
resurgent brand on the front-end and curtailing costs at the back end. The front end strategy
is focused on higher footfalls, higher value retailing, driven by a new-look store layout and a
resurgent brand and back-end strategy of process rationalization in form of raw material cost and
manpower cost reduction.

Some of the measures taken by the company

 Plans to add 70 stores per year for next 3 yrs. Extension of shopping hours and
modernization of old stores. All this led to presence of Bata Stores near the consumer
both in terms of location and time, Swanky international looks will attract higher footfalls
 Reposition brand 'Bata' - High brand recall for consumer led to higher footfalls and
better conversions
 Target new market (ladies and kids) - Filling the missing 45% pie of footwear market
 Improving shoe line - Launching international brands, focus on style will attract new
young customer class

Bata was long known for its strong presence in the men's footwear range. However, the global
and Indian experience shows that ladies and kids are the driving factors for larger footfalls. The
company roped in Rani Mukherjee for its ladies brand, Marie Claire, which saw increased sales
subsequent to the campaign.

The brand Bata essentially had a feel and appeal for the value-for-money class of consumers.
The company's strategy to replace its older and slow-moving footwear lines with newer designs
and styles paid back. It now retails footwear upto as high as Rs 5,000. This coupled with its
newly launched range of accessories (school bags, socks, fashion bags, etc) would help the
company in cutting across customer classes.
Future Plans of BATA

Focus on Industrial Selling

Bata is currently focusing on manufacturing shoes for defence and paramilitary personnel, as
well as airlines and hospitals to increase institutional selling. The company has already set up a
dedicated team headed by a retired defence man to secure contracts. The total market size for
footwear used by the defence personnel is about 12 million pairs a year. "The country has
roughly three million defence and paramilitary personnel and each buys four pair of shoes per
year, totalling 12 million pairs a year. That's a big market," Sinha says. Defence authorities
currently source most of its footwear requirement from unorganised players. After eyeing the
defence segment, Bata is also moving aggressively into the safety footwear market as a new
thrust area for growth. Parent group Bata Worldwide would be providing technology sourced
from the Safety and Industrial Centre at Holland.

Bata plans to open 240 new outlets in India by 2012

Bata India Ltd., a subsidiary of Canadian shoe major Bata Shoe Organisation, plans to expand its
national footprint by setting up 240 new outlets across the country over the next 3 years with an
investment commitment of up to USD 96.7 million. Forty of these stores are likely to come up in
the first quarter of 2009. These stores are to be based on Bata's international format and are to
have an average size of 3000 sq ft. The new stores are to be located primarily in Tier I and Tier II
cities apart from the metros. The company also plans to use the surplus cash for expansion and
upgradation of 60 to 80 existing outlets. Bata is one of the largest footwear retailers in India with
more than 1,200 stores. The Indian footwear market is pegged at roughly USD 2 billion in value
terms and is growing at the rate of 10 percent, annually
 BRAND AUDIT
Of
BATA SHOES

Submitted to: Prof. Sonal Dabke

Submitted by: Abha Yadav
P- 57