PROJECT WORK

ON
STUDIES ON THE MERCHANDISING PROCEDURE OF
FOOTWEAR INDUSTRIES IN BANGLADESH

A DISSERTATION FOR THE PARTIAL FULFILLMENT OF THE

REQUIREMENTS FOR THE DEGREE OF

B.Sc. IN FOOTWEAR ENGINEERING

SUBMITTED TO:

UNIVERSITY OF DHAKA

INSTITUTE OF LEATHER ENGINEERING & TECHNOLOGY

Hazaribagh, Dhaka-1209.

SUBMITTED BY:
A B M Rafiqul Hasan Khan
EXAM ROLL # 56
REGISTRATION NO. # 2012-815-434
SESSION: 2012-2013

SUBMITTED TO:
DEPARTMENT OF FOOTWEAR ENGINEERING
INSTITUTE OF LEATHER ENGINEERING AND TECHNOLOGY

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 Dedicated To
My Beloved Parents
Who Give Me The
Light of Hope
&
All the Legend who sacrifice their lives
on the Independent war 1971

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 ABSTRACT

A project work titled “STUDIES ON THE MERCHANDISING

PROCEDURE OF FOOTWEAR INDUSTRIES BANGLADESH” is selected as for a
dissertation for the partial fulfillment of the requirements for the Bachelor of Science in
Footwear Technology.

The Footwear Industry in Bangladesh is at its early stage of development. 'there

was no mechanized Footwear Industry in the country until early 1900's and the footwear
manufacturing was limited to cottage and family level small factories. The first
mechanized industry, Bata Shoe Co. (Bangladesh) Ltd., a multinational enterprise, start
into being in the then East Pakistan in 1962.Followed by Eastern Progressive Shot
industries (LPSI) and Bengal Leather which used to produce mainly for domestic supply.
Indeed, the shoe industry started featuring in Bangladesh in 1990 with the introduction of
encouraging Government policy measures of granting fiscal and financial incentives for
production of leather footwear in the country for export. There has been a rapid growth in
footwear production capacity. Both complete leather shoes and sports shoes
manufacturing for export during last decade. 'there arc now about 42 mechanized and
over 4.500 non-mechanized small and cottage level units in Bangladesh producing
various types of footwear for both domestic market and export. Most of the mechanized
units are export oriented

So, there is a great opportunity to develop a merchandising procedure for

footwear in Bangladesh.

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 ACKNOWLEDGEMENT

Starting by the name of almighty Allah who has sent me in earth and alive me and whose
blessing directed me for the accomplishment of this project work.
Firstly, thanks to my honorable teacher and the Director of Institute of Leather
Engineering & Technology, Md. Aftab Ali Sheikh, Ph.D. for offering me such a useful
and interesting project in my project work.

I would like to express my deepest sense of gratitude and thanks to my guide teacher
Sobur Ahmed, Chairman of Leather Engineering department, for his invaluable guidance
during this study and also for his kind help with many information and ideas.

I also thank to honorable teacher Amal Kanti Deb Head of the department, Department
of Footwear Engineering for his invaluable guidance during this study and also for his kind help
with many information and ideas.

I wish to express my hearth reverence and gratitude to my other respectable teachers who taught me
through their valuable lecture and personal contact except which we cannot reach this stage
promoting different years.

Finally, I want to express my heartiest thanks to all of my friends who has inspired me to carry out
this project work by giving their valuable tips.

A B M Rafiqul Hasan Khan

October, 2017

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 AIM OF THIS PROJECT WORK

Footwear sector has its draw backs due to some invaluable facilities and tremendous
prospect. This sector has the potentiality of earning a lot of foreign exchange after the
fulfillment of local demand. But the sector needs careful handling as well as proper
directions and guidelines to heading towards the foreign market to deserve the best
among the Shoe exporting countries.

With the partial fulfillment of my study part, the thesis is to survey the merchandising
procedure of our footwear industries, market trend, present condition of local and
overseas market of Shoe of Bangladesh which represents the present condition of this
sector.

As a student of Footwear engineering it is much more important to know about the

merchandise and its procedure. It is high time for necessary steps which should be taken
to expand the market demand.

Finally, my thesis work will help the student as well; as the entrepreneurs who have the
tendency to come forward to work such type of sector of great prospect.

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 Acronym Used

ILET Institute of Leather Engineering and Technology.

BBS Bangladesh Bureau of studies.
BFLLFEA Bangladesh finished Leather, Leather Goods and
Footwear Association
EPB Export Promotion Bureau.
EPZ Export Processing Zone.
GTC German Technical Cooperation.
ITC International Trade Centre.
LFMEAB Leather Goods and Footwear Manufacturer and
Exporters Association of Bangladesh.
RSMA Raw hides & Skins Merchants Association.
R&D Research and Development.

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 Table of contents

CHAPTER PAGE

CHAPTER1……...………………………………… 10
1.1. Introduction....................................................................10
1.2. Background of the study................................................11
1.3. Footwear: The inside story............................................12
1.4. Flowchart of footwear manufacture.............................28
1.5. Design and pattern development..................................29
1.6. Graph of world Footwear 33

CHAPTER 2..............................................................................34
2.1. Definition of merchandising..........................................34
2.2. Merchandising Specialist...............................................35
2.3. The Role of a merchandiser..........................................35
2.4. Merchandising play in today's advertising..................36
2.5. Is merchandizing part of a sales man’s job?...............38
2.6. Responsibilities of a merchandiser...............................39
2.7. Merchandising and interdepartmental relations........40
2.8. Tools & Techniques of Merchandising:.......................43

CHAPTER 3..............................................................................44
3.1. Marketing trends............................................................44
3.2. Concept of market..........................................................46

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 3.3. Export Market of Bangladesh.......................................47

Chapter 4.............................................................................
4.1.Footwear Merchandising in Bangladesh..............................
4.2.Objects of Merchandising in a footwear industry...............
4.3.Qualities of Merchandiser in a footwear industry...............
4.4.Function of Merchandisers in a footwear industry.............
4.5.Retail merchandising management.......................................
4.6.Bangladesh as a Developing Country in Leather footwear Industry

4.7.Merchandising strategies for footwear industries...............

4.8.Strategies to upgrade and integrate the production process into
modern lines in footwear..............................................................
4.9.Contribute of Leather sector to GDP in Bangladesh

CHAPTER 6 (Costing)………...……………………

CHAPTER 7.......................................................................
CONCLUSION.............................................................................
BIBLIOGRAPHY.........................................................................

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 CHAPTER 1

1.1. Introduction

From time immemorial, the arts and crafts of Bangladesh are closely linked to our culture
and heritage. Leather and Footwear have always been a part of that heritage and after the
emergence of an independent Bangladesh in 1971; the industry received a fresh impetus.
Today the country earns a sizeable amount of foreign exchange every year through export
of leather and Footwear to a number of overseas markets. The Leather Industry of
Bangladesh has been given particular attention by the government for developing its
infrastructure. By combining the latest leather technology with the abundant raw
materials and inexpensive skilled labor, Footwear industry is now playing an important
role in earning foreign exchange for the country. Export of leather and Leather goods
(including Footwear) earned US1 billion dollar for Bangladesh in the fiscal year 2013-
2014.

Bangladesh Government has earmarked Leather sector as one of the thrust sectors. By
and large the sector has been registering steady progress. But it is still a long way to be
traversed to attain desired level of performance. As of today (2014) 70 – 75% output in
the sector is crust leather while 25 – 30% output is reportedly by coursed by finished
leather. Global trade in leather sector is learnt to be around US $ 65 billion yearly.
Bangladesh share only 0.70 % (US $ 1 billion) while is by improving finished leather
output say by 20% additionally the export in leather trade is expected to be within the
region of US $ 16 billion. This means, the potentials in the leather sector is enormous.
But the concentration of the tanneries in Hazaribagh location is certainly a hole up in
further improving the tannery operation at large. Government in association with the
trade bodies has to cover this hole up to make this sector more prosperous for our
country.

The raw materials leather industry of Bangladesh produces the world's finest quality
goatskin of a very fine and smooth grain pattern. Country's cow leather has excellent
natural compact fiber structure with a round feel and touch. More than eighty percent of
the country's annual production is exported worldwide as semi finished/finished Leather,
footwear and accessories.

Over 250 manufacturers are producing various Leather items such as travel goods,
suitcases, briefcases and fashion accessories, along with belts, wallets, hand bags, case
holders etc. for overseas export. Bangladesh has also entered the field of Leather fashion
garments with items of distinction and prestige. Now it is the high time we started taking

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action to improve our merchandizing strategies to make our leather products more
attractive to the world market. The objective of this study is to explore the current
merchandizing strategies for export and local market and to find some way forward to
improve it to increase the annual income of the country from this resourceful sector.

1.2. Background of the study

Bangladesh earns a sizeable amount of foreign exchange every year through export of
leather and leather products to international markets. As a part of these Merchandising is
one of the most important part. Merchandiser plays an important role for leather and
footwear sector business. Endowed with a strong stream of local supply of quality hides
and skins and a large, skilled, and low-wage work force, Bangladesh has all the potentials
to increase export earnings and employment in the leather sector. Taking into
consideration the importance of leather sector as an option to backup RMG sector in the
post MFA era it is considered to carryout a value-chain assessment for this sector.

Background and profile of Bangladesh leather sector

# Types of enterprises including value-chain analysis of leather and its sub-sector
activities of relevant private and public institutions
# National and international leather market situation and trend
# Value additions in different stages of value-chains

This study is to identify the relevant value chain actors (enterprises/institutions) and their
functions, sub-sector constraints that limit each of the actors from reaching their full
potential and to analyze the domestic and export market situation of leather and its sub-
sectors.

1.3. Footwear: The inside story

Shoes both protect feet as well as, when incompatible in size and shape, present exciting
factors in inflammatory conditions e.g. bunion. Despite the presence of pain, people are
reluctant to change their footwear styles. The main function of modern footwear is to
provide feet with protection from hard and rough surfaces, as well as climate and
environmental exposure. To the wearer the appearance of their footgear is often more
important than its (mis)function. Consumer resistance to change style is common.
Informed decisions of shoe styles are thought to occur when the benefits of alternative
shoe styles are carefully explained and footwear habits discussed in a culturally sensitive
manner. The author, in the interests of intellectual exchange, explores the world of shoe
making in an attempt to inform both lay person and health professional.

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1.4. Flowchart of footwear manufacture

Figure 12: Footwear manufacturing process

1.5. Design and pattern development

In the processing and marketing of leather goods, design & development (pattern
development is the off – shoot of design & development) is of utmost importance.
Without proper conception or grasp of functional value, no design could be converted
into a fabricated product and such as the work relating to the design and pattern
development aspect of footwear manufacture cannot be over emphasized.

As the sole intention of design is to meet the requirements of its basic functions, its
performance could be better built around its generic character rather than its additive
character. A good designer has to foresee the fashion trend / change and style in the
coming seasons usually a year ahead and form an idea of what things are in store for the
market.

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 Figure 13: Shoe Designing

Another important aspect of design and pattern development is that the design should be
easily translated or transformed into production schedule. Further productions and
productivity are the key factors for a successful commercial venture. So, in design and
development of footwear (the above is only in illustration to drive home the point) a
judicious blend of production technique and productivity, cost saving, value addition and
quality control aspects should be taken into consideration.

The pattern maker, next to the designer should have sound knowledge about the design
chosen, the various materials of construction that are to be used.

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Undoubtedly, pattern cutting is an art, but it is scientific in the sense that it required
elementary mathematics and geometry as symmetrical (sometimes odd) shapes of pattern
are to be fitted in the area of leather judiciously to get the maximum advantage of cutting.
The art of pattern cutting requires anticipation, sound judgment, cultivated style of
approach with a sense of quality control.

Figure 14: Pattern Cutting

After going through the scientific system of designing pattern development, one feels
inclined that the principles of designing are based purely on mathematical calculations
and geometrical drawings.

1.8 Graph of world Footwear

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Source: https://www.worldfootwear.com/news/worldwide-footwear-exports-in-
decline/2628.html

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Source: http://getfilings.com/sec-filings/110211/Europa-Acquisition-II-Inc_8-K/

CHAPTER 2

2.1. Definition of merchandising

Merchandising is the business art of matching goods to the needs and preferences of
customers to ensure shelf off take. How a product is presented, how much is displayed,
and in what form, size shape, color, etc. can determine the rate of speed at which a
product is bought. In other words, merchandising is the marketing activity responsible for

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ensuring a product’s “desirability”, both qualitatively and quantitatively. This means that
at the store end, your product has to be perceived as “just right” by your market. It is a
whole lot of psyche satisfaction.

• Sometimes, people will and do change their minds about buying a certain product for
the simple reason that a competitor’s goods were displayed better.

• Reasons can vary. They seem logical to you. And then again, they may not.

• But, being able to satisfy the needs of your average market is what will finally make
those cash registers ring.

It’s as simple as taking the product (or merchandise) from a company, and selling it to the
customer. To make sure that the merchandise actually sells, companies take great pains to
make sure their products are visible in stores and presented in an appealing fashion.

2.2. Merchandising Specialist

This person actually represents the company in retail stores. By seeing the store layout,
they make sure the product is located in an obvious and visible location, also known as
product placement. The merchandising specialist also insures that the product is
presented in an appealing way. This person must have strong sales and negotiating skills,
as well as initiative and an eye for proper placement.

Merchandiser

The merchandiser coordinates with the design team to effectively present the product or
product line. He or she develops colors and specifications, and performs market research
to determine the most effective ways to sell and promote the product. This person needs
strong communication and negotiation skills and visual and analytical abilities. He or she
also needs to be a creative and innovative thinker.

2.3. The Role of a merchandiser

Think of it this way, a product is manufactured and then sold to the public.

1. Manufacturers are the ones who physically make the products that will be later sold.

2. Merchandisers or Retailers are the ones who buy those manufactured products and
sell them to their customers.

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3. Merchandisers are the middle man between the buyer and manufacturer – buyer
wants the product > to produce and select the raw material > the total cost of product – all
work is to be carried and handled by only one person, he is the merchandiser.

2.3.1. Role of a merchandiser in an export house

There are 2 types of merchandisers in export houses – buyer and production

merchandisers. Buyer merchandisers act as a link between the buyer and the
manufacturer. They have the responsibility of ensuring that the product is developed as
per the requirements of the buyer so in between they have the responsibility of sourcing,
sampling and communication with the buyer. The production merchants on the other
hand are a link between production and buyer merchants. They have the responsibility of
ensuring that the production goes as per the schedule and as per the requirements

2.3.2. Role of merchandiser in footwear industry

In footwear industry, merchandiser is the BRIDGE between the management(or)industry

and the buyer.

He has to look after every job like buying the raw material (which is required to finish the
product), making the footwear, finishing the footwear, documentation (over all view),
finally shipping. He is the responsibility person to make the product. The person who
creates a good relationship in between exporter & buyer is called Merchandiser.

2.4. Merchandising play in today’s advertising

It is undoubtedly assuming an increased and even new importance. This is in large

measure due to the self-service trend in more and more retail stores. This trend has
reached the point where “take-it-off-the-rack-at-Klein’s” type of selling dominates the
food and variety stores and is growing in drug stores and hardware stores. Self-service
increases the importance of merchandising. Why? Because now the purchaser is
influenced more by point-of-sale material, special deals and offers, position of stock in
store and displays etc. It is the job of merchandising to have all these factors in favor of
your brand, and to achieve superiority to competitive brands.

One surefire piece of strategy is to make sure that the point-of-sale material is a close,
direct tie-in with the basic theme and main appeal in the product’s consumer advertising.

Nowadays, with the growth of shopping centers and the variety of products carried in
these supermarkets, the housewife can emerge with a full line of cosmetics from the food
store. Certain marketing facts are assuming a new importance. Suburbs are growing in

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population. As automobiles grow more common, shopping centers are luring the
customer away from former sales haunts by providing ease of parking. For example,
about twelve years ago, 90 per cent of proprietary articles in the drug field were sold
through conventional drug outfits, i.e., retail drug stores, drug wholesalers, etc. Today, 70
per cent of many of these items are now sold through food stores, supermarkets, etc.

With this trend, the factor of merchandising in the sense of getting display for your
merchandise in these supermarkets is of paramount importance. No longer is there a clerk
whose loyalty to your sales appeal could assert itself to the customer in your behalf. No,
the pay-off nowadays is on the rack in the supermarket; there is where appeal in behalf of
your products must pay off. The case for advertising prior to the store visit is being put to
the acid test.

How about marketing research? In these dynamic, changing days, research in the
marketing area is more important than ever. It can provide much to check the accuracy of
your direction, as well as the accuracy of the results. Figures can be misleading, so be
sure this matter of marketing research and the interpretation of its findings are entrusted
to the minds of professionals and not to the amateurs.

Should one be concerned with trying to save advertising dollars? I interpret your question
to mean the withholding of money from advertising. This will soon prove a false
economy. Obviously, a person should make every dollar spent in advertising go further,
especially he should make it go further than his competitor’s dollar. But never, as long as
you have a formula that is working, withhold any possible available money that is
earmarked for advertising. Remember, advertising is fundamentally a spending operation,
not a withholding one.

2.5. Is merchandizing part of a sales man’s job?

 It definitely is.
 Consider that many salesmen who have never made it to the top probably never
realized how much merchandising can help them.

 They probably saw it as extra work.

 Merchandising should not be perceived as “going that extra mile”. Rather it

should be viewed as the last leg of the selling mile.

 It is not enough for a salesman to sell to the store.

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  After acquiring an outlet for your product, you’d naturally want to secure it.
You’d want future orders, of course.

 Helping the store merchandise your product to ensure smooth turnover and steady
sales becomes mutually beneficial for you and your customer.

 We’ve said that merchandising is the clincher to a sale.

 Therefore, merchandising is an integral part of marketing and selling products.

2.6. Responsibilities of a merchandiser

 Costing and quoting.

 Sample control.

 Leather, fabrics and accessories sourcing, purchasing and tracking.

 Factory scheduling and production tracking.

 Customer liaison during design, sourcing, production and shipping.

 The merchandiser has to be a winner.

The Winner Vs the Loser:

• The winner is always part of the answer;

– The loser is always part of the problem.

• The winner always has a program;

– The loser always has an excuse.

• The winner always says, “let me do it for you”;

– The loser says, “That’s not my Job”.

• The winner sees an answer for every problem;

– The loser sees a problem in every answer.

• The winner says, “it may be difficult but it’s possible.”

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– The loser says, “it may be possible but it’s too difficult.”

2.7. Merchandising and interdepartmental relations

o Merchandiser Vs Designer Vs product development.

o Merchandiser Vs Work study department

o Merchandiser Vs Production planning department

o Merchandising Vs sample management

o Merchandiser Vs Store

o Merchandiser Vs cutting room

o Merchandiser Vs Sewing floor

o Merchandiser Vs finishing room

o Merchandiser Vs Quality management.

o Merchandiser Vs commercial

o Merchandiser Vs Shipping department

2.8. Tools & Techniques of Merchandising:

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 Fig 18: The merchandizing work flow

Required Details & Information

# PO / Order Sheet

# Price

# Quantity

# Color & Size break-down

# Ex-Factory / final inspection date

# Leather / trim details – colors, quality, requirement, etc..

# Size-spec

# Sample, sketch & color ways

# Sample requirement

# Workmanship details

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# Packing & shipping instructions

Opening the Master File

• Should be very neat and tidy.

• Should always divide in to cages (with separators) for easy reference.

• Should always have a file label with the relevant details.

E.g. for Cage separation

# Reports

# Sample follow-up

# Buyer in-out

# Suppliers in-out

# Order details

# Leather

# Trim

# Po’s, PI’s, & Requirements

# Lc’s & Documents

# Costings & Pre-booking correspondence

Leather Suppliers

# Confirmation of delivery date and issue of Performa-Invoice

# Lab-dip approvals

# Leather quality approval

# Wash standard approval

# Leather Shade-bands

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# Leather sample requirement

# Pre-shipment test reports

# Bulk leather shipment

# Payments

The flow (leather):

Fig 19: The flow for leather products

Trim Suppliers

# Confirmation of delivery date and issue of Performa-Invoice

# Color / Quality / Design approvals

# Trim sample requirement

# Pre-shipment test reports (If required)

# Bulk shipments

# Payments

The flow (Trims):

Fig 20: The flow for trims

Ordering (Leather & Trims)

# Consumptions & requirements

# Requirement break-downs & workings

# Price quotations

# Required quality standard / test reports

# Purchase orders

# Performa-invoices

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# Payment terms / Lc terms

Important

All approvals – Before cut-date

Leather – In-house before cut-date

Sewing trims – In-house before cut-date

- i.e. Thread, labels, zippers, etc.

Packing trims – In-house before packing starts

i.e. Tags, Work tickets, poly-bags, box, cartons, etc.

Trim Cards

• Details – Buyer, Po no., Style, Quantity, Manufacturing unit, Del date, etc.

• Leather – Swatch & thread (Color, Composition, & Consumption)

• Pocketing / Contrast / Trimming – Swatch & Thread if any (Color, Composition, &
Consumption)

• Lining (Woven / leather)

• Buttons – Buttons and attaching thread

• Marketing – Labels & Tickets

• Trims – Zippers, ornaments, buckles etc. (Length per size, width, etc.)

• Extras & Comments

Trim-card distribution:

Tech Files

• Latest tech-spec

• Copy of order sheet

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• Approved trim-card

• Approved wash standard

• Sample comments / alterations

• Special important comments / messages

• Copy of T&A

Tech-file distribution:

Commercial:

Suppliers that provides a Service

• Printing

• Embroidery

• Appliqué

• Washing & blasting

• Special hand work

** Above too have a flow, most importantly these are done on the garment while the
garment is on production, hence we should get all approvals in hand before the cut-date.

Remember

• All requirements have to be double checked, since there is no roam for mistakes.

• Be extremely cautious when giving information to relevant departments.

• Should always do your best to execute the order in the proper manner, since short-cuts
and assumptions might be costly.

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 CHAPTER 3

3.1. Marketing trends

A trend is a direction or sequence of events that have some momentum and durability.
For example, one major trend is the increasing participation of women in the workforce,
which has spawned the child day-care business, increased consumption of microwavable
foods, office-oriented clothing lines for women, and other business opportunities.
Identifying a trend, ferreting out the likely consequences, and determining opportunities
are critical marketing skills. Trends are more predictable and durable than fad such as Pet
Rocks or Cabbage of the future. Friedrich von Schiller said; “In today already walks
tomorrow.” According to futurist Faith Popcorn, a trend has longevity, is observable
across several market areas and consumer activities, and is consistent with other
significant indicators occurring or emerging at the same time.

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Marketing is not like Euclidean geometry, a fixed system of concepts and axioms. Rather,
marketing is one of the most dynamic fields within the management area. The
marketplace continually throws out fresh challenges, and companies must respond.
Therefore, it is not surprising that new marketing ideas keep surfacing to meet the new
marketplace challenges.

Here are several emphasizes in current marketing thinking:

a) A growing emphasis on quality, value, and customer satisfaction.

Different buying motivations (convenience, status, style, features, service, etc.) play a
strong role at different times and places. Today’s customers are placing greater weight on
quality and value in making their purchase decisions. Some remarkable companies are
managing to increase their quality greatly while bringing down their costs. Their guiding
principle is to continuously offer more for less.

b) A growing emphasis on relationship Building and customer retention.

Much marketing theory in the past has focused on how to “make a sale.” But, what good
is it to make a sale and not know much about the customer and whether he ‘or she will
ever buy again? Today’s marketers are focusing on creating lifelong customers. The shift
is from transaction thinking to relationship building. Companies are now building
customer databases containing customer demographics, lifestyles, levels of
responsiveness to different marketing stimuli, past transactions-and orchestrating their
offerings to produce ‘pleased or delighted customers who will remain loyal to the
company.

c) A growing emphasis on managing business process and integrating

business functions.

Today’s companies are shifting their thinking from managing a set of semi-independent
departments, each with its own logic, to managing a set of fundamental business
processes, all of which impact customer service and satisfaction. Companies are
assigning cross-disciplinary personnel to manage each process. Marketing personnel are
increasingly working on cross disciplinary teams rather than only in the marketing
department. This is a positive development that broadens marketer’s perspectives on the
business and gives them the greater opportunity to broaden the perspective of workers
from other departments.

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d) A growing emphasis on global thinking and local market planning.

Companies are increasingly pursuing markets beyond their borders. As they enter these
markets, they must drop their traditional assumptions about market behavior and adapt
their offerings to other countries’ cultural prerequisites. They must place decision-making
power in the hands of their local representatives, who are much more aware of the local
economic, political, legal, and social realities facing the firm. Companies must, think
globally, but plan and act locally.

e) A growing emphasis on building strategic alliances and networks.

As companies globalize, they realize that no matter how large they are, they lack the total
resources and requisites for success. Viewing the complete supply chain for producing
value, they recognize the necessity of partnering with other organization. Companies
such as Ford, McDonald’s, and Levi Strauss owe their success to having built a set of
global partners who supply different requirements for success. Senior management is
spending an increasing ‘amount of time designing strategic alliances and networks that
create a competitive advantage for the partnering firms.

f) A growing emphasis on direct and online marketing.

The information and communication revolution promises to change the nature of buying
and selling. People anywhere in the world can access the Internet and companies’ home
pages to scan offers and order goods. Via online services, they can give and get advice on
products and services by chatting with other users, determine the best values, place
orders, and get next-day delivery. As a result of advances in database technology,
companies can do more direct marketing and rely less on wholesale and retail
intermediaries. Beyond this, much company. Buying is now done automatically through
electronic data interchange links among companies. All these trends portend greater
buying and selling efficiency.

g) A growing emphasis on service marketing.

The US. population today consists of only 2.5% farmers and about 15% factory workers.
Most people are doing service work: field salespeople, retailers, craftspeople, and
knowledge workers such as physician engineers, accountants, and lawyers; Because
services are intangible perishable variable, and inseparable, they pose additional
challenges not found in tangible-good marketing. Marketers are increasingly developing
strategies for service firms that sell insurance, software, consulting services, and other
services.

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h) A growing emphasis on high-tech industries.

Much economic growth is due to the emergence of high-tech firms, which differ from
traditional firms. High-tech firms face higher risks, slower product acceptance, shorter
product life cycles, and faster technological obsolescence. High-tech firms must master
the art of marketing their venture to the financial community and convincing enough
customers to adopt their new products.

i) A growing emphasis on ethical marketing behavior.

The general public is wary of ads and sales approaches that distort or lie about product
benefits or that manipulate people into hasty purchases. The marketplace is highly
susceptible to abuse by those who lack scruples and are willing to prosper at the expense
of others. Marketers, in particular, must hold to high standards in practicing their craft.
The American Marketing Association has promulgated a code of ethical marketing
behavior, and marketers need to act as watchdogs to preserve a trusted and efficient-
mark.

3.2. Concept of market

Over the ages the concepts of selling the product to the customer have been changed with
enormous impact in the marketplace. Here we discuss some major concept of market:

The Production Concept:

The production concept is one of the oldest concepts in business. The production concept
holds that consumers will prefer products that are widely available and inexpensive. The
marketer assumes that consumers are primarily interested in product availability and low
prices. The Product Concept: At the same time other business are guided by the product
concept, which holds that consumers will favor those products that offer the most quality,
performance, or innovative features. The marketer assumes that buyers admire well made
products and can evaluate quality and performance.

The Selling concept:

The selling concept is another common business orientation. The Selling concept holds
that consumers and business, if left alone, will ordinarily not buy enough of the
organization’s products. The organization must therefore undertake an aggressive selling
and promotional effort. The marketer assumes that the company has a whole better of
effective selling and promotion tools to stimulate more buying.

29
The Marketing Concept:

The marketing concept emerged in the last century and challenged the preceding
concepts. Instead of a product centered “make and sell” philosophy, it shifted to customer
centered “sense and respond” philosophy. The marketer believes that the consumer has
the right to choose the product feature and the manufacturer must produce the product
according to the consumers need.

The Customize Marketing Concept:

This is the latest concept of marketing, where the manufacturers customize their product
according to the consumers’ desire, it is some kind of made to measure tailoring concept.
The marketer believes that each person has his own test and choice and they must
customize their product to satisfy each customer individually.

3.3. Export Market of Bangladesh

Suppose the economy in which you go about your business is run by export revenue and
remittances from migrant workers. Suppose further that one can reasonably suppose that
remittance revenue will soon dip. In that circumstance, export revenue matters, doubly.

Consider then the long run impact of the Icelandic volcano mess on the import and export
market in Europe and Asia. Flights to and from Continental Europe have been erratic, at
best, even admitting the cataclysmic impact on the European imports and exports for that
week when Europe was nothing but a shuttered island. Consider, more specifically that
even if the macro-level economy is elastic to that terrible disruption, the micro-level
impact of grounded planes, contracts unfulfilled, tenders unsigned was surely life-
changing for the worse for many tradesmen, small business owners and service providers.

But Bangladesh’s economy isn’t elastic to that kind of shock. Its economy is buoyed by
the garment’s export market and for those few days– even now given the disruptions in
Ireland and so on– the Bangladeshi export market had been crippled, flung back into a
circumstance where it was and remains hostage to nature’s whims. This is not unfamiliar
territory for Bangladeshi’s. But since 1947 seldom have Bangladesh’s problems so
obviously and unremittingly emanated from European skies.

3.3.1. Export Opportunities

# Leather

# Textile

30
#Investment Incentive

#Industry Outlook

#Industry Outlook

#Agro-based Industry

#Industry Outlook

#Ceramic

#Industry Outlook

#Light Engineering

#Sector Highlights

#Industry Outlook

#Natural Gas-based Industries

3.3.2. Some extract of export policy of Bangladesh

Acceleration of production and expansion of trade result in growth of national wealth.

Increased production in export sectors may become the prime mover in the development
cycle in a densely populate of Bangladesh like our as this will generate employment
opportunities which in turn will generate savings and investment on consequent flow of
capital. The prime national objective of poverty alleviation will thus be materialized. As a
first step towards reaching this goal we need to look at the country’s production
infrastructure.

Our export trade is featured by the dominance of a few commodities in a narrow market.
Such dependence on at limited number of export items targeted a limited market is not
desirable for economic development. We must, therefore, aim both at product and market
diversification or else our export trade will become stagnant in the near future.

Our export trade must keep pace with the projected GDP growth @ 7% and make due
contribution through increased export earning. In this exercise, it is imperative to identify
new thrust sectors, increased export of higher value-added items, diversify product wise,
ensure products quality, improve packaging, attain efficient productivity. We should aim
at marketing quality products at competitive price at the correct time.

31
The Export Policy 2013-2014 has been designed to operate in the imperatives and
opportunities of the market economy with a view to maximizing export growth and
narrowing down the gap between import payment and export earning.

3.3.3. The principal objectives of the export policy

The principal objectives of the export policy are:

Ø To achieve optimum national growth through increase of export in regional and

international market.

Ø To narrow down the gap between the country’s export earning and import payment
through achievement of the export targets.

Ø To undertake timely steps for production of exportable goods at a competitive price

with a view to exporting and strengthening existing export markets and making dent in
new markets.

Ø To take the highest advantage of entering into the post Uruguay liberalized and
globalizes international market.

Ø To make our exportable items more attractive to the market through product
diversification and quality improvement;

Ø To establish backward linkage industries and services with a view to using more
indigenous raw materials, expand the product base and identify and export higher value
added products.

Ø To simplify export procedures and to rationalize and solidify export incentives

Ø To develop and expand infrastructure

Ø To develop trained human resources in the export sector

Ø To raise the quality and grading of export products to internationally recognized levels.

Considering the local high quality raw material and cheap labor cost, Government of
Bangladesh declared Leather Sector as one of the most important sector in Bangladesh
with enormous potentiality. Although there is a lack of concentration from the
Government’s side but this declaration will inspire both the community: inside and
outside of leather sector.

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Footwear Sector, as a sub sector of Leather Sector gets also priority from Government
but this sector as well was ignored by the Government for many years. Now in the era of
globalization, nobody can find an alternative of product diversification (export
diversification). For this reason, government is now started looking after Footwear Sector
rather then Jute and Tea.

In spite of declaring Leather Sector as a thriving sector the preparation of government is

not sufficient enough to nurse this sector. As an example: we can mention the case of
shifting the entire sector to Hemayetpur, Savar. Though it was planned to begin the
shifting process from 2008, but now it’s a sign of hope that the shifting process has
already start ever to hope and pray that this time will not extend further.

But above all Government should look after some other matter to increase the Footwear
Production and export in world market.

We can easily understand the necessity of developing the leather sector for our overall
development if we just take a look on the following statistics of world footwear export
and compare our footwear export:

List of exporters for the selected product

Product: 64 Footwear, gaiters and the like; parts of such articles

Table 2: World Footwear Export

Unit: US Dollar thousand

Exported Exported Exported Exported Exported

Exporters
value in 2012 value in 2013 value in 2014 value in 2015 value in 2016

World 117,798,597 129,171,038 142,101,734 134,158,401 133,661,475

China 46,811,268 50,761,328 56,248,574 53,509,469 47,202,913

Viet Nam 7,515,321 8,721,913 10,690,489 12,438,847 17,935,755

Italy 10,835,142 11,788,762 12,290,849 10,494,224 10,707,969

Germany 4,504,501 5,137,252 5,815,306 5,231,008 6,036,408

Belgium 4,306,440 5,130,632 5,584,602 5,415,641 5,967,638

Indonesia 3,524,592 3,860,394 4,108,448 4,507,024 4,639,859

Netherlands 3,225,673 3,703,780 3,870,826 3,307,453 3,492,972

33
France 2,679,770 2,933,247 3,215,640 3,172,570 3,396,740

Hong Kong, China 5,182,029 4,688,789 4,341,253 3,916,285 3,139,030

Spain 2,771,944 3,148,885 3,689,282 3,420,928 3,089,709

India 1,958,290 2,609,804 2,990,733 2,771,020 2,747,900

United Kingdom 1,594,825 1,899,789 2,104,166 2,211,092 2,178,199

Portugal 2,115,082 2,361,753 2,523,549 2,117,759 2,178,049

Romania 1,611,555 1,771,201 1,879,864 1,463,504 1,448,138

United States of America 1,332,305 1,391,432 1,455,212 1,463,618 1,365,830

Poland 724,872 940,700 1,023,193 1,046,558 1,211,561

Brazil 1,286,474 1,263,257 1,237,604 1,114,316 1,164,794

Slovakia 1,024,996 1,261,681 1,369,904 1,137,422 1,081,771

Czech Republic 725,024 817,241 894,321 818,747 902,596

Bangladesh 348,980 429,333   696,816 899,288

Austria 865,745 980,745 1,067,987 893,279 850,489

Cambodia 277,981 346,061 418,604 637,000 781,779

Sources: ITC calculations based on UN COMTRADE and ITC statistics.

http://www.trademap.org

Table 4: Country wise Footwear exports statistics of Bangladesh

Value 2010 US$ Value 2011 US$ Value 2012 US$ Value 2013 US$
Export to
’000 ’000 ’000 ’000
France 4,721 5,298 8,227 6,156
Italy 1,719 1,955 4,646 5,774
Japan 14,413 18,398 17,433 5,625
Germany 2,056 1,738 1,576 5,407
United Kingdom 6,134 4,000 2,240 2,641
Belgium 4,160 4,547 5,867 2,488
Austria 1,218
Netherlands 780 1,263 1,304 1,008
Spain 978 363 697 930
Sweden 540 260 1,026 675
Denmark 25 14 99 427
United Arab
52 82 31 335
Emirates

34
Saudi Arabia 78 3 70 334
United States of
700 4,128 46 173
America
Finland 19 92 35 167
Norway 13 4 155
Hong Kong 142 215 335 143
Portugal 96 7 89
Fiji 64 60 74
Canada 13 114 121 44
Australia 49 60 44
Greece 51 114 150 38
Poland 29 25 15
Malawi 13
Cyprus 21 11
World 38,454 45,272 45,776 34,018
source: http://intracen.org/leatherline/tradestatistics/footwear

Table 5: Bangladesh’s share in world footwear trade

Year 2009 2010 2011 2012 2013 2014
World Footwear export 1054300 234,339 333,702 432,687 543,573 105,155
Bangladesh footwear export 38 45 46 34 48 63
Percentage 0.08% 0.09% 0.09% 0.06% 0.08% 0.09%

We should keep in mind that 0.01% of world footwear trade is equivalent to 6.16 million
dollars.

Table 6: Footwear Export in Bangladesh (value in Thousand Taka)

Name of July-April 2011- July-April 2012- April 2016-17 % of
commodities 2012 2013 2014 (July-June) total
Footwear (leather) 5366096 7370951 2075248
Footwear (jute) 694504 648329 117204
Footwear (sports) 3483609 924071 71164
1.13%
Footwear
442631 792012 45153
components
Footwear (all sorts) 7486840 7735363 860769
Source: Export Promotion Bureau

35
Leather is the sector with major added value for the Bangladeshi economy-calculated at
about 80% of the value chain, ad quality few materials are available locally and the
industry has developed from hides and skins to finished products. The expansion of
exports of finished products.

Table 7: The consumption “top 10”

#Region Q2013 Share2013 Growth19932013 ∆13/93

WORLD 16.940 100,00% 3,21% 4.683
1 INDIA 3.688 21,77% 4,69% 1.283
2 CHINA 2.935 17,33% 7,73% 1.569
3 USA 1.950 11,51% 2,15% 342
4 JAPAN 601 3,55% 0,59% 68
5 BRAZIL 425 2,51% 0,67% 37
6 INDONESIA 373 2,20% 6,50% 268
7 GERMANY 333 1,97% -1,92% -62
8 UK 330 1,95% 1,36% 65
9 FRANCE 325 1,92% -0,39% 2
10 ITALY 315 1,86% 2,46% 67

36
Figure 21: World footwear consumption Trade

3.4. Strategies to raise the market share of Bangladesh

· Introduce modern management techniques and professional marketing.

· Train worker for better quality production and productivity.

· Create market image and brand name

· Allow easy import of auxiliaries and machines.

· Adopt ISO 9000 standards, improve quality control procedures for process and inputs,
provide training for shop floor management, and modernize production system.

· Start joins ventures with buy back arrangements.

· Arrange for market intelligence its dissemination and market development.

· Keep stable competitive prices make prompt delivery on schedule.

· Develop design

· Manufacturing leather goods components, machinery, tools, and spare parts

indigenously.

· Remove export trade bottlenecks provide export finance, incentives, exports high price
range products.

· Create tie ups for sales network, diversified markets, increase number of products.
Small unites to participate in international trade fairs.

3.5. Understanding the international merchandising strategy

Two key themes emerged from this month’s Shop.org seminar, Going Global:
Merchandising for an Overseas Customer: 1) make sure that differences in international
consumer behavior drive international merchandising strategies and 2) ensure that a well-
defined, yet flexible org structure facilitates the division of labor between corporate and
local countries/market teams.

37
Angela Kapp, Sr. VP – CRM & New Initiatives, The Estee Lauder Companies
highlighted numerous examples of how consumer behaviors differ in respective global
markets and showed how incorporating these differences into international
merchandising plans can help shape successful brand strategies.

George Hanson, Sr. Manager of International Strategy at Lands’ End, emphasized the
need for global collaborative planning and organizational alignment as the foundation of
a successful international e-commerce expansion strategy.

Hanson also cautioned internationally-ambitious online merchants to resist their natural

instinct to run. Instead they must balance the desire to run fast with the need for an
organizational structure that balances corporate and local market expertise. By dedicating
the time and resources necessary to align international organizations, retailers can build
international merchandising and assortment plans that are more measurable and more
easily adjusted as the business evolves.

Chapter 4
4.1. Footwear Merchandising in Bangladesh

Merchandising is the vital aspects for the Bangladesh footwear. Production of footwear in
Bangladesh being primarily for export purpose. All the efforts being made by the
manufacturers are presented in the foregoing analysis. Of course, there are few units
which rely on domestic market. They are also contacted and their views have been
complied.

As regards to domestic marketing of footwear, it is being done by nearly one fourth of

total footwear. However, it does not mean that these units solely rely on domestic market.
Good number of units in Dhaka undertakes domestic sales. Such local sales units are very
less in other Divisions.

The domestic supply orders for the units are largely through direct contacts as well as
from the corporate business groups for complimentary.

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4.2. Objects of Merchandising in a footwear industry
Merchandising denotes all the planned activities to execute and dispatch the merchandise
on time, taking into consideration to replenish the customer.

. Right Quantity: To dispatch right quantity of product what buyer ordered.

 Right Quality: It should be with right quality as accepted both parties.
 Right Cost: Everybody wants more from what they are paid.
 Right Time: No one wants to wait idle even in a Restaurant. Keeping delivery schedule
is mandatory.

4.4. Qualities of Merchandiser in a footwear industry

1. Communication Skill: The communication is very much important to promote the

business activity. The merchandiser should remember that communication must be lurid
and should having face to face conversation with the buyer.
2. Planning Capability: Merchandiser should be capable of planning, based on the
planning the order is to be followed. If the planning is not done properly it will directly
affect the delivery time of the order.
3. Decision making: For a Merchandiser, decision making power is most important. He
should think about the decision to be taken and to act in a right way.
4. Loyalty: Loyalty is an essential character of human beings. Especially for the
business people like merchandiser it is a must.
5. Knowledge about the field: Merchandiser should have adequate knowledge about
the garments, Computer knowledge, and technical knowledge to communicate with
different people in the business is a must.
6. Co-ordinate & Co-operate: Merchandiser is the person who is actually co-ordinate
with the number of departments. To Co-ordinate with different people in the industry he
should be co- operative.
7. Monitoring ability: Merchandiser should monitor to expedite the orders.
8. Other qualities: Education, Experience, Situational Management, Ability to
Evaluate, Dedication, Knowledge of expediting procedures.

4.5. Function of Merchandisers in a footwear industry

 Developing new samples, execute sample orders
 Costing
 Programming
 Raw materials / Accessories arrangement
 Production scheduling (or) route card drafting

39
 Approval of various Process, Pattern and size set
 Pre-production follow up
 Meet Inspection Agencies
 Production controlling
 Identifying shortages and make arrangement for the shortages
 Buyer communication
 Communication with sub-contractors, processing units & other 3rd parties
 Proper reporting
 Placement of orders to suppliers
 Taking measures for consistent production
 Taking preventive action to maintain the targeted performance in all areas of
activities
 Attending meeting with superiors and furnishing the required details about
merchandising

4.5.1. Important Duties

1. Costing or Calculating Footwear Price
In many companies, costing is done by costing officer & CEO. But in some places, it is
done by the Merchandisers.

Some important terms in costing:

 Yarn cost
 Process cost
 Process loss
 CMT (Cutting, Making & Trimming)
 Negotiation (getting the best out of a deal)
 Commission percentage (%) for Middle man
 Shortage
 Buyer specification (It is buyer’s responsibility to specify the quality required)
 Quantity
 Currency
 Mode of Shipment (sea, air)
 FOB (Free On Board)
 CIF (Cost, Insurance and Freight)
 OH (Over head)
 Quota(Not applicable nowadays)
 Profit (level of %)

2. Quality Control

40
One of the Major responsible jobs handled by Merchandise department is Quality
Control.

3. Leather Testing & Inspection

4.5.2. Testing 

(1) Analyzing
(2) Testing

Analyzing is one time process, which takes place at the time of confirming the order with
the Buyer as well as the raw material quality. Total cost of the garment is definitely based
on the raw material quality & composition. Ex: Count & Construction of the yarn used in
the fabric or garment, Fibre composition of the raw material, Type of Dye or print used in
the garment, etc.

Testing is a process to understand, the quality of the produced item meets the
requirement of the buyer. Testing is done on every lot or selected lots or wherever buyer
asked.

4.5.3. Inspection

Inspection is the visual examination or review of raw materials partially finished

components of garments and completely finished garments in relation to some standards,
specifications, or requirements as well as measuring the garment to check if they meet the
required measurement

Types of Inspection:
1. Incoming material inspection:
After fabric is received, the same should be inspected for the following purpose:                                             

A. GSM
B. Dia
C. Shrinkage
D. Color Streaks
E. Color matching

2. In - process Inspection:
Inspection done in between any process or in between any sewing operations, this may be
on partially finished (or) semi finished garments.

41
3. Flip checking:
Inspection done in between by the operators or by is assistance during the sewing
operations before the garments are bundled.

4. Patrol inspection:
Inspecting activities of a particular area or line. It is called as line supervision.

5. Pre-Final Inspection:
It is done to the final inspection merchandiser or QC or both can do pre-final Inspections.
After pre-final inspection if garment are passed. It will send to final Inspection. After
final inspection only, the decision of passing or rejecting is made.

6. 100% Inspection:
Inspection should be done in 100%. In the inspection center.

7. Original of final Inspection:

First time inspection of the packed merchandise goods is called original inspection. If QC
are gratified with the quality of merchandise. We can pass a lot, if quality of merchandise
is not up to the standards, rechecking should be done. Again it should be produced for re
inspection.

8. Final Random Inspection:

It is random inspection done according to the customers individual requirements.
Standard after the shipment have been completed, packed and ready to ship. Colour
appearance, workmanship, style etc will be checked against the customer’s specification. 
Inspection Parties:
a)    Internal Quality Controller:
Inspection done by the Company internal quality control to check the quality parameters
before to Final Inspection.

b)    Quality represented by buying Agencies:

Inspection done by buying Agencies quality control to check the customer    requirement.

c)    Third Party Inspection:

Inspection done by third party like SGS or ITS.

4.6. Retail merchandising management

42
Generally, if a retail store manager is to be successful, sales and inventory should be
reviewed periodically to:

 See how many units of an item should be stocked and how much space should be
given to them
 Determine what should be done about slow-moving items in inventory, and

 Lay plans for sales, promotions and selection of new merchandise.

Two basic tools of merchandise management, which can help to determine how much of
an item should be carried in stock, use gross profit as a basis for the calculations. They
are:

 Gross profit per square foot (or, profit/sq. ft.), and

 Gross profit on investment (or, profit/investment)

Both of these tools help determine the average inventory which will bring the highest
profit for each item. Once you understand them thoroughly, you can use a simpler tool,
called stock turn. When applied properly, it can often replace the more cumbersome
calculations.

Gross Profit

Since the two basic tools are built on gross profit, you need a clear view of the meaning
of gross profit.

In a retail store, gross profit is the difference between what you pay for merchandise and
what you sell it for.

There are two ways of calculating gross profit.

1. The simplest way is to take the selling price and subtract the cost.

Selling Price (-) Cost (=) Gross Profit

2. In a retail store, customers often return merchandise, some of which then has to be sold
at less than full price. There are also frequent sales. Accountants and many retailers
therefore prefer to calculate gross profit by subtracting the cost of merchandise from net
sales. Net sales means total sales (as rung up on the register) less returns. Cost of
merchandise, again, is what the store paid for the units which were sold but not returned.

43
Gross profit can be calculated as shown:

Total Sales (-) Return (-) Cost of Merchandise (=) Gross Profit

Example: Gross Profit

A retailer buys merchandise for $10 and sells that merchandise for $20. If the retailer
sells 1,000 units but accepts 100 units in returns, what is her or his gross profit?

Using the formula above, gross profit can be calculated as follows:

$20,000 Total Sales (-) $ 2,000 For 100 Returns (-) $ 9,000 Cost of Net Merchandise
Sold

(=) $ 9,000 Gross Profit

The same answer can also be obtained using the simpler formula: Since the gross profit
on each unit is $10 ($20 selling price$10 cost), and 900 units were sold (and not
returned), the gross profit on the merchandise is ($10 x 900 units) or $9,000 - the same as
above. In reality, this second calculation may not be as simple because there may have
been a special price sale and therefore a different selling price for some of the units.

Please note that expenses such as rent on your store, utilities, cost of labor, and other
operating costs are paid out of gross profit. The amount remaining after such expenses
are paid is your net profit. Obviously, the higher your gross profit the higher your net
profit will be. This is because most of a retail store's operating expenses are fixed and do
not increase significantly with greater sales.

Also note that gross profit is arrived at by using the cost of the specific merchandise
which was actually sold - not your purchases for the same period.

Profit Per Square Foot

Profit per square foot provides an indication of how much profit an item of merchandise
brings from each square foot of selling space it occupies. It therefore helps to determine
how much space should be allocated to each item. Since floor and shelf space in a store is
limited, profit/sq. ft. can be used to help you make the best use of your space.

As the term suggests, profit/sq. ft. is calculated by dividing the gross profit of an item by
the area of selling space for that item. The formula is shown below:

44
 Gross Profit
Profit per Square Foot = ___________________
                                     Sq. ft. of selling space

Example: Profit per Square Foot

Assume a retailer's business made $4,000 in gross profit last year on a particular line "x".
The selling area for the line was 200 square feet of shelf and floor space. What is the
profit per square foot on line 'x'?

Using the formula above, the profit per square foot on line "x" can be figured as follows:

                                 $4,000 gross profit on line "x"

Profit per Sq. Ft. = _______________________________ = $20
                           200 sq. ft. of selling area for item "x"

Allocation of Space Based on Profit Per Square Foot

To get the highest profit from your available selling space, you must study each of your
lines and items to determine which give you the highest, as well as the lowest, profit per
square foot. To do this, calculate the profit/sq. ft. on some of your best moving items, and
on some you consider least profitable. This will provide you with your profitability range
and, using that range you can decide on the amount of gross profit you want each square
foot in the store to bring you.

You can then increase overall profitability by taking action on low profit items. This can
be done by:

 Promoting them more effectively

 Reducing space allotted to them, or

 Replacing them

If all items, even the poorest, are yielding a sufficiently high profit/sq. ft. but you would
like to increase profitability further, you can achieve that by:

 Increasing promotion and merchandising efforts on items

 Expanding the store, or

 Both

This raises the question:

45
"What is the lowest gross profit/sq. ft. that the poorest items should bring?"

This is not easy to answer. Every retail business has to carry some items which customers
expect to find in the store, even if they are not profitable at all. That is why many retailers
talk about "loss leaders". These low profit items, some of which may have to be sold at a
net loss at certain times, should not be considered in the same manner as regular
merchandise.

Every item of regular merchandise must bring a net profit (after all expenses have been
paid). To determine what net profit an item or line will bring, you can calculate your
expenses per square foot of selling space and subtract them from the gross profit per
square foot to obtain the net profit per square foot for that item or line.

Gross profit per square foot (-) expenses per square foot (=) net profit per square foot

Expenses include salaries for employees, rent, insurance, packing materials, cleaning
services, interest on loans, utilities, and other similar expenses as well as a fair salary for
you. The sum of these costs are referred to as expenses per square foot.

For example, if all your expenses add up to $48,000 per year and you have 4000 square
feet of selling space, then your expenses per square foot are $12.00, Any item or line
which brings an annual gross profit per square foot (profit/sq. ft.) of less than $12.00 is
not bringing you any net profit at all. In fact it is not paying its way and you should either
promote it more effectively, or seriously consider replacing it with more profitable
merchandise.

4.8. Leather Footwear Industry & Production

Export oriented production of leather footwear is a systematic process of labor, capital

and technology in large scale. Export promotion of leather footwear side by side with
export of leather is a fundamental issue of any developing country. A vast work starting
with the processing of raw hide and skins upped the finishing touch of pair of footwear
seems to be unthinkable but overall processing of leather footwear for export is highly
employment oriented and the business can be profitable. There is a great possibility for us
to build national economy by utilizing cheap manpower through proper training for this
mutual endeavor and co-operation between the entrepreneur of export oriented footwear
units and the government are required. Only then it will be possible to earn foreign
currencies worth Tk. 1000 crore by implementing practical working plan.

4.9. Bangladesh as a Developing Country in Leather footwear Industry

46
(Evaluation of the Industry, Products, Local Market, Export & Export Policy)

Footwear Industry has grown in Bangladesh territory since the colonial era although its
modernization took place only in the late 1980s. During the British period, there was no
footwear manufacturing firm producing on a mass scale in East Bengal. However,
traditional cottage type footwear industry with limited production facilities existed in a
skeleton form in the district towns at this time. Various types of footwear were imported,
mainly from calcutta. After Partition of Bengal in 1947, footwear started being imported
from West Pakistan. When Bata Shoe Company established its manufacturing plant at
Tongi in 1962, it was the first manufacturing plant to produce shoes on a large scale in
East Pakistan. Eastern Progressive Shoe Industries (EPSI) established its production plant
in 1967 and started exporting footwear to USSR, Czechoslovakia and England. Bata and
EPSI held a major share in the local footwear market also. The industry suffered a major
setback during the war of liberation but was rehabilitated after independence. Many new
footwear-manufacturing units have been established recently. Notable among them are
Apex Footwear, Excelsior Shoes, and Paragon Leather and Footwear Industries.

The number of production units in the industry now exceeds 2,000. Most units are,
however, small and medium in size and only 23 are relatively large and have mechanized
and semi-mechanized production technology. The annual production capacity of the
industry is about 32 million pairs of leather and non-leather footwear. Of this 25.17
million is produced by mechanized and semi-mechanized units. Production capacity of
individual manufacturing concerns varies from 750 to 3,000 pairs a day. The shoes
produced find their way mainly to the local market; only a few firms produce shoes for
export. The industry provides direct employment to about 25,000 people. Nearly 50% of
them are engaged in mechanized and semi-mechanized units and are classified, on the
basis of employees, as large, medium, and small. Women workers are predominant (55%-
60%) in the mechanized sector. About 80% of all footwear units are located in dhaka and
chittagong. Production in small units is processed manually. The total volume produced
by these indigenous units account for about 7 million pairs per year.

Footwear units vary in product line, production capacity and exposure to domestic and
foreign markets. The relatively large ones manufacture multiple items such as leather
shoes, sports and trainer shoes, canvas and leather sandals, jute shoes, chappals (slippers)
and shoe uppers. These units constitute the largest share of the export market.

Marketing of footwear manufacturing units at home is done through a network of

wholesale and retail shops which employ an estimated 50,000 persons. Marketing of
imported footwear is done through importers/local agents. Local manufacturers use a
network of Dhaka based, district level and thana level wholesalers to sell to retailers and

47
finally to consumers. Exports are organized through sales to foreign regional wholesalers
and through them, to foreign retail traders and consumers.

Bangladesh has gradually been converted from a footwear importing country to a

footwear exporting one. The annual export of footwear items has increased from a Tk
0.14 million in 1972 to Tk 1.9 billion in 1997. The real development, however, has taken
place since 1990, when exports exceeded the Tk 1 billion mark. Exports of leather
footwear grew by 527% between 1990-91 and 1996-97. The list of export markets of
footwear from Bangladesh includes Japan, the volume leader with a market share of 34%,
followed by UK (11%), Spain (9%), Germany (8%), Russia (7%), Italy (5%), and USA
(2%).

The main authority that controls the footwear business in Bangladesh is the ministry of
commerce and industry. FBCCI(Federation of Bangladesh Chamber of Commerce and
Industry) and EPB (Export Promotion Bureau) play significant roles in promoting export-
oriented and local footwear businesses. But key organizations that protect and serve the
interest of the industry are footwear associations, prominent among who are the
Bangladesh Paduka Prostutkarak Samity (BPPS) and the Bangladesh Paduka
Byabashayee Samiti (BPBS). BPPS is an association of footwear manufacturing
concerns, while BPBS represents footwear traders. BPPS, established in 1984, and
registered in 1988, had 149 members in 1999. However, large export oriented firms such
as Bata, Apex and Excelsior shoes are not affiliated with this organization. BPBS was
established in 1983 and now has about 400 members.

Source: Asiatic Society of Bangladesh

4.10. Category of marketing and merchandising of footwear

Of the five prominent categories, In Bangladesh context, three have been popular.
There are various kinds of footwear are available in here like-
 Leather shoes.
 Synthetic shoes.
 Leather sandals.
 Synthetic sandals.
 Sports shoes.
 Canvas & PVC shoes.
 Slippers and Chappals.
 Army boots.
 Ladies boots.

48
  Jute sandals/chappals.

However, it was observed during the field survey, that more than hundred types of items
are being made from leather for export purpose, with ever expanding uses. This category
of industry is highly vulnerable for non-leather substitutes and supplements. Functionally
leather and non-leather items perform the same job. Leather items are preferred for their
natural feel, elegance and of course long life.

The local sales affected, need not necessarily be always to the Bangladeshi customers. It
is observed that foreign tourists’ effect purchases from Bangladeshi stores during there
visit to Bangladesh.
The situation in Dhaka is slightly different. Domestic marketing is remarkable high in the
case of other Divisions units

4.11. Merchandising strategies for footwear industries

Now days, major companies are adopting merchandising concepts, which comply with all
procedures to execute and dispatch the shipment on time, considering quality, cost and
time. Merchandisers are serious in the success of any garment retail business. They
provide the right products at the right time, enabling a company to match with latest
market trends and meet the market demand. In the merchandising concept, time
management is a gig to manage one's time properly, so he can focus on value adding
actions.

Today's garment merchandisers have to move with frequent changes in demand and the
developing technologies utilized in manufacturing and production. To find out customer
requirements, they regularly visit retail outlets, and come up with latest updates from
frontline staff. In order to keep an eye on developments in sourcing, site visits are made
every week to mainland factories to meet suppliers and study production.

In garment merchandising, there is no specific rule, so it's important to be able to think on

one's feet.

The main procedures of merchandisers are as followed: 

Understanding Sample Order

Merchandiser has to understand the buyer's requirements after receiving specification in

the sample order. In many cases, there are modifications pertaining to the specifications
in the order to dispatch on time and the right quality.

49
He has to talk with the in-house veterans on the execution problems of sample orders, as
the right information is required in decision making.

4.12. Investment in Export Oriented Shoe Factories of Bangladesh

The footwear buyers of many countries including European Union, Japan, USA can think
of Bangladesh is an appropriate place for producing leather footwear suitable for their
importers. Because these countries always imports a very good quantity of leather
footwear from South East Asia. The numbers of most modern shoe industries established
in the country are about 29 and investment is about US$ 7 million, equivalent to TK. 650
crores. It reveals that export of footwear from Bangladesh is still poor compared to the
business done by European shoe making companies. The investor banks could not show
their skills in selecting the entrepreneurs for the investment in export oriented footwear
sector. As many cases it is learnt that the investment have been made through political
influence. So, nationalized banking sector and the Government bodies should come
forward by offering their full co-operation to solving the problems and help in developing
of this important export sector. A detail survey report on export oriented footwear
industries list is attached. It can be clearly understood from the given list that in
Bangladesh export oriented leather footwear industries have been set up with machineries
having most modern technology. No appropriate

50
Table 10: Investment in Export Oriented Shoe Factories of Bangladesh

Sl.No. Name of the shoe Weather have Average Present

Industry, Location & own Tannery production. condition as
Installed Production Throughout found by
Capacity. 1999. survey
organization.
01 Apex Footwear Ltd. Yes 5000 pair shoe Very Good.
Shafipur, Gazipur. upper/day.
7000 pair shoe upper/day. 3500 pair Full
4000 pair Full shoe/day. shoe/day.
02 H.N. shoe Yes 1000 pair full Very good.
Shafipur, Gazipur. shoe /day
03 Dhaka Footwear Ltd. Yes 400 pair/day. Good.
147, hazaribagh, Dhaka-
129.
04 Karim Footwear Ltd. Yes Production not
181, Hazaribagh, Dhaka. yet started
05 Haroon Leather Ltd. No Tannery 600 pair/day Very good.
Zirabo, savar, Dhaka.
06 Legacy Footwear Ltd. No Tannery Export Small
Mowchak, gazipur. processing production
starter in recent prospective.
time.
07 Dhaka Uro Shoe Ltd No Tannery Export Production on
EPZ, Savar, Dhaka. processing Trial basis.
starter in recent
time.
08 Surma Leather & No Tannery Export Small
Footwear Ltd. processing production
Doudkandi, Comilla. starter in recent prospective.
time.
09 Madina Footwear Ltd. No Tannery Trial
production
10 Jenys Footwear Ltd. No Tannery 500-600 Good running
Shampur, Dhaka. pair/day condition.
11 Inter fashion Leather & No Tannery Trial
Footwear Production.
12 Savar Industries Pvt. Ltd. No Tannery 300-400 Good
Savar, EPZ. (100% foreign pair/day
investment)

51
13 Riverside Leather & No Tannery Export Small
Footwear Pvt. Ltd. processing is production of
Pagla, Narayangong, almost nil. ladies sandal
Dhaka. for local
market.
14 Jass Leather 7 Footwear No Tannery Export Small
Ltd. processing production
Demra, Dhaka. starter in recent prospective.
time.
15 Bengal Footwear No Tannery No production
Sonargaon, Narayangong. since its
inception in
1991.
16 Far East (BD) Ltd. No Tannery 3000 pair/day. Full running
EPZ, Savar, Dhaka. Textile shoes,
100% foreign
investment.
17 Comfort Footwear Ltd. No Tannery Export Small
Savar, Dhaka. processing is production
very less
18 Youngonce Shoes Ltd. Textile shoes, 5000 pair/day. Full running.
EPZ, Chittagong. 100% foreign
investment,
Kids/sports
shoe.
19 Excelcior Shoes Ltd. Textile shoes, 3000 pair/day Full running
EPZ, Chittagong. Kids/sports
shoe.
20 Paragon Footwear Ltd. No Tannery Export Small
EPZ, Chittagong processing in production
recent time

Local market survey for footwear:

Total people involvement: 30000-32000 (Approx)

Total Production: 6-6.5 million (including all)
Total Production in Bangladeshi currency: 15.5 million (taka)

52
To know the market trend I have done a survey in different market place including the
shopping centre to foot path among the men and women.
Primarily I have selected 20 men and 20 women to get the information about local market
demand which are given below

Classification of Bangladeshi customer according to their ability

# Upper Class Customer
# Middle Class Customer
# General Category

# Customer based survey of leather goods in Bangladesh

Types of customer Types of products Origin of products Value range in taka

Upper Class Shoe (gents) Foreign Above 2500

Standard || Local& Foreign 1500-2000
General category || Local Below 500
Upper Class Ladies sandal Foreign Above 800
Standard || Local& Foreign 400-1200
General category || Local 100-400

Source: Field work 2017

4.13. Strategies to upgrade and integrate the production process into

modern lines in footwear.

# Improve and increase design and development activity.

# Upgrade techniques of production.
# Provide training in product design.

53
# Introduce modern production systems and process.
# Create decentralized production and centralized marketing.
# Use marketing techniques and generate brand name
# Computerizes process and management
# Increase the quality of inputs
# Provide training for shop floor personnel
# Use leather substitutes
# Allow free import of accessories

Factors to increase the manufacturing, marketing and product quality in Bangladeshi

footwear
# Modernize production process, introduce mass production techniques, introduce
modern management practices.
#Use eco- friendly alternate materials, processing systems
# Promote products collect market intelligence, high value product market for larger
market share
# Star joint ventures
# Develop designs
# Reduce excise and import duties
# Mechanized production
# Make products which are market specific
# Increase in production cost unavoidable. Additional cost to be absorbed or passed on to
customer.

4.14. Experience of footwear marketing in Bangladesh

The history of footwear marketing is not so rich and mentionable. Even 10 years ago
there was not such organization involved in mass footwear production except BATA. On
that time, most footwear were manufactured by small and non-mechanized footwear unit
and they sold their product through informal distribution channel. But, due to total
technological revolution around the world the situation of Bangladesh is also changing
and now few footwear companies manufacturing wide scale of footwear for both export
and local market. The activities of Footwear Company working inside the boundary of
Bangladesh are briefly described under:

Over the last 10/12 years some new generation of footwear manufacturer have been
emerging in the local footwear market. Their main strength is that they are successfully

54
doing the footwear export in European and Asian Market. With the experience in export
market and inspiring by BATA they have started their own local marketing system by
following BATA’s operation. The are also trying to creat their own brand in local
footwear market viz: APEX, BAY, Jennny’s etc. The have the capabilities to survive in
the local market but all they need is experience.

4.14.3. Experience of other small units.

Actually this group is huge in their quantity and production and surprisingly customer
access. Most of the shoe manufactures in Bangladesh are manufactured by them. But
their main problem is selling. They have no selling unit. In some cases they don’t even
know who their customers are. For selling their product they have to depend to the
wholesaler and these wholesaler are mostly situated in Fulbaria
Wholesale Market (Gulistan area) and Chakbazar Wholesale Market. Their main assets
are: Their workmanship, low cost, and almost unlimited verity of product. But the main
problem is that they have to arrange their all raw materials from different sources. Their
operation is illustrated below:

4.15. Problems in marketing of footwear

The problems in the marketing of footwear have been analyzed from three angles
covering general/ basic problems, rejection and piling of stocks. The problems of
marketing are comprehensive in nature because the area of operation is so widethat it is
difficult to predict the nature of problem that would corp. up

The general/ basic problems of the leather goods industry cover

• high degree of competition

55
• unable to get reasonable price
• poor brand image
• unable to get orders
• unable to ensure quality
• Lack of infrastructure etc.
Table 10: Weakness of footwear industries:

Weakness Percent of total firms

Financial crisis 88%
Weak marketing 87%
Low volume of production 87%
Uncompetitive product price 74%

Major Problems of Export Oriented Footwear Industries

The export of leather goods us declining every year due to various reason and most of the
problems are solvable if concerned agencies of GOB extend full support and cooperation
through the policy incentives.

4.16. Contribute of leather sector to GDP in Bangladesh (million taka)

Year Leather Leather Footwear Total % of total

goods GDP

2003 792 3022 792 4606 0.33

2004 878 3066 878 4822 0.33

2005 1104 3104 1104 5312 0.35

56
 2006 1282 3147 1282 5711 0.36

2007 1383 3189 1383 5955 0.36

2008 1471 3233 1471 5175 0.35

2009 976 3276 976 6175 0.28

2010 1529 3322 1529 5228 0.33

2011 1402 3368 1402 6172 0.30

2012 1920 3428 1702 7050 0.35

2013 2058 3602 1905 7565 0.36

Source: BBS, 2013

For the most recent statistics, we can have a look here:

Source: http://leatherbulletin.com

Value of leather exports Over the past 10 years the value of leather exports has grown by
an average US$ 41 million.7 With a total export value of US$ 883 million in the financial
year 2013-2014, leather and leather products amounted to 2.4 per cent of total export
income and an estimated 1 per cent of GDP.8

Table : Leather sector exports (million US$)

57
Source: Central Bank of Bangladesh, “Commodity-wise export receipts”, no date
<https://www.bb.org.bd/econdata/export/exp_rcpt_comodity.php> (27 July 2015).

Table: Exports of leather footwear

Source: Export Promotion Bureau, Statistics Product-wise, July 2012 – June 2015
<http://www.epb.gov.bd/index.php/home/productexportdata> (27 July 2015).

58
 CHAPTER 6

Costing for shoe:

SL ITEMS MU UNIT AMOUNT COST(TK)

NO PRICE

Upper
01 Leather(upper) sq. ft. 150 2.5 375
Total upper cost 375
Lining
02. Synthetic (Black) sq. ft. 20 2 40
Fabrics sq. ft. 20 0.5 10
Leather insocks sq. ft. 75 .5 37.5
(Black)
Total Lining Cost 87.5
Sole
03. TPR Unit 150 2 300
sole
Total sole cost 300
Insole
04. Insole board Sht 15 1 15
05. Steel shank pc 2 2 4
Total insole 19
Reinforcement
06. Stiffener,100/150 sht 62.5 .01 6.25
Cm/sheet
Total reinforcement 6.25
Adhesive & others
07. Sole edge color Kg 203.05 0.001 0.20

59
08. P.U Cement Kg 138.15 0.006 .829

09. Latex kg 65.00 .0052 3.38

10. Hot melt Kg 400 0.005 2.00

adhesive
11. Needle Pc 5 1 5

12. Thread Mtr 0.70 5 3.50

13. Emery no 60 Mtr 1700 .0005 .0.85

Total Adhesive & others 15.5

Shoe Box

14. Box Pc 15 1 15

15. Tissue Paper Pc 2 2 4

16. Adhesive Pot 5 1 5

Total Packaging Cost 24

Total Materials cost 827.25

Labor cost 100

Total cost 928

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 CHAPTER 7

CONCLUSION
The export earnings from leather products have increased significantly. Footwear sector
has the potentiality of earning a huge amount of foreign exchange to develop our country
economy as well. Globalization has made the market competitive .Nevertheless,
availability of raw materials; lowest labor can draw extra advantages for Bangladesh
footwear export. With the arrangements of quality raw materials, well trained workforce
in management, marketing toward global aspect, pollution free separate leather state,
common facility centre for SMEs, leather board and leather research institute are the
factors to get the highest feedback from this sector.

Bangladesh needs entrepreneurs for this developing sector. It is a fact that lack of expert
is a unique problem for this sector. On the other hand, B.Sc. in footwear engineering may
be the possible solution to get a way to develop the sector in a significant way.

Footwear Engineers will be able to improve the footwear sector with their innovation and
technology.

After completion of my thesis work, it is crystal clear that footwear department has its
drawbacks in the country economy and after completion the Degree there is lot of
opportunities of the students of this subject.

In addition, this the sector which is closely related to the development of the country has
the potentiality to involve people not only in the job market but the footwear engineers
have the scope to become an entrepreneur and an opportunity of establishment of new
industry with their innovations.

61
BIBLIOGRAPHY

· Marketing Management - By Philip Kotler

· Text Book footwear Manufacture
· SATRA Bulletin-Jan,1995
· UNIDO –Tannery and Env.
· Scientific Leather Council (SLC)
· BPC Survey 2012-2013
· BSCIC Hand Book
· world Leather 2013
· Publications of commerce and industry 2013
· Publications of commerce and industry 2013
· Bangladesh Yellow pages-2013
· Publications of DILF-2006-2012
· LFMEAB Report-2014
. International Trade Corporation (ITC)
· BFLLGFEA Final report (2012-2013)
· Annual report of BATA 2013
· GTZ report 2013
. R.G. Miller - Manual of Shoe Making, 1966
. Internet
. World Footwear-vol. 15, No. 5, sep/Oct, 2001
. Export promotion bureau report-2014
. Lecture notes, provided by teachers
. World footwear Wikipedia

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