I. Time context Your primary task is to stop the downward movement of the company’s market share in the footware market in India,” said Michael S Williams, chief executive officer, Footwear (India) Ltd.
To Rakesh Tandon, newly appointed national sales manager. ” Our market share was 60 percent in early 1990s and it has come down to 40 percent in the year 2005 – 2006. To give customers more choices and to improve its top line, the company started selling footwears of other brands like Nike, Lotto, Reebok, Lee Cooper. This strategy was implemented from the year 2003 – 04.
II. Viewpoint Footwear (India) Ltd. was a leader in footwear industry in India with five factories and two tanneries located in eastern, northern, and southern parts of India.
The unorganised, small – scale footwear makers had a market share of 20 percent. The foreign brands like Nike, Reebok, and Adidas had captured a market share of 30 percent in a short span of time. The balance 50 percent market share was shared between the three players in the organized sector – Footwear India (40 percent), Liberty (6 percent), and Paragon (4 percent).The objective of the distribution channel was to make the company products available to consumers in every town across India.
For achieving this objective, the company had adopted a strategy of vertical marketing system (VMS). The company had two types of VMS: corporate vertical marketing system with both production and distribution under the company’s ownership, and contractual vertical marketing system by appointing retailers as the company’s franchisees.III. Statement of the Problem Rakesh Tandon looked at the annual financial results of the company.
He was not surprised that the company was making losses for the past two years. Rakesh wondered whether he should focus his analysis and suggestions on the improvements in top – line, bottom line, or both.IV.
Objectives A. Short – Range * Build customer loyalty * Meet customer expectation & preferences * Make the product highly affordable and widely available * Increase customer satisfaction and retention B. Long – Range * Recover its former company image as the leading company in its industry * Achieve the company’s goalV. Areas of Consideration Distribution Channel System Distribution Network A It consisted of 1500 retail outlets, which included the company-owned retail stores and franchise stores. The franchise store, which were 150 mainly located in rural markets, had contractual agreements with the company sell only the company’s products. The franchisees were local entrepreneurs, who had familiarity with local communities and conditions. They invested their capital to set up stores as per the requirements of the company.
These franchisees paid five percent of sales as royalty for using the company’s brand, and the proven business format.The franchisees also received the services and support from the company (franchisor) for site selection, planning, training salespeople and promotion. * Distribution Network B This network contributed 40 percent of the company’s total sales, and balance 60 percent came from distribution network A. network B was built around the wholesalers and independent retailers (called as dealers). The wholesalers were independent traders, who purchased merchandise from the company’s wholesale depots to resell to independent retailers (or dealers), who were located in rural areas, and markets of major cities and towns.
These dealers sold footwear products of all brands, as required by customers. VI. Alternative course of action * Create a good distribution program Should focus on the needs of your end–users. If users need personalized service, you can utilized a local dealer network or reseller program to provide that service. If your users prefer to buy online, you can create an e-commerce website and fulfillment system and sell direct; you can also sell to another online retailer or distributor that can offer your product on their own sites.You can build your own specialized sales team to prospect and close deals directly with customers. * Keep a friendly – competition among sales people A team must collaborate to meet goals but some competition in the workplace helps give us that little extra push to go a bit further. Striking a healthy balance between the strong human instructs of collaboration and competition is a beautiful thing.
* Build strong customer relationship 1. As Sam Walton says, “There is only one boss; the customer. And he can fire everybody in the company, from the chairman down, simply by spending has money somewhere else”. 2. A strong customer relationship can be your competitive strategy to gaining undue advantage in your niche.
As Peter Ducker says, “The purpose of business is to create a customer”. VII. Recommendation I recommend that all the said courses of action be implemented. These plans won’t surely increase the sales and company’s market shares but there’s a high probability that it will gain positive results. Since the company is cost conscious, the plans will be implemented first on few selected stores for test and evaluation.
If the said action was proven effective, then that is the time it will be implemented on all of the stores.