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Brief History of Bata

Bata is one of the world's leading footwear retailers and manufacturers with operations across 5 continents managed by 4 regional commercial business units (CBUs). The MBU approach provides quality resources and support in key areas to the companies operating in similar markets such as product development, sourcing or marketing support. Each MBU is entrepreneurial in nature, and can quickly adapt to changes in the market place and seize potential growth opportunities.

Bata's strength lies in its worldwide presence. While local companies are self-governing, each one benefits from its link to the international organization for back-office systems, product innovations and sourcing.

Although Bata operates in a wide variety of markets, climates and buying power Bata companies share the same leadership points. Two important ones are product concept development and constant improvement of business processes in order to offer customers great value and the best possible service. Bata Pakistan was established in 1942 when Pakistan came into being, it was ready to serve the nation. It was incorporated in Pakistan as Bata Shoe Company (Pakistan) Limited in 1951 and went public to become Bata Pakistan Limited in the year 1979.

Since its inception, the company has not only maintained a reputation of manufacturing high quality footwear for all the socioeconomic segments of the society but has also been designing shoes in accordance with the changing fashions and trends. 

During the last year Bata produced over 17.2 million pairs and sold 16.9 out of them with the help of their large distribution network of 400 Retail Stores and Agencies, 13 Wholesale Depots, 23 Distributors and about 400 Registered Wholesale Dealers who are selling goods as independent retailers. In 2009 the company generated turnover of Rs.6.5, billon showed an increase of 26% against previous year. 

The Company has an organized Export Department which is constantly engaged in exploring new export markets in order to earn the foreign exchange for the country. During the current year i.e. 2010, it is expected to export 1 million pairs of various styles of footwear to European and African countries.

Bata is a multinational company and has played a vital role in the economic progress of Pakistan. It has transferred sophisticated technology and business skills to the country and provides direct and indirect employment to about 10,000 people. Bata also supports a large number of local manufacturers by buying raw materials from them.

 

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As corporate responsible citizen Bata is actively fulfilling its responsibilities since when it’s started its business in the country. We are permanently patronizing many charitable organizations and helping them in the form of cash and free shoes. The renowned names on our list are S. O. S Children Village, Shoukat Khanum Cancer Hospital and Rising Sun Institute. Besides these we have also running many welfare schemes for our own employees.

Bata has always been the market leader and in order to maintain its leadership it has invested millions of rupees in updating its systems and equipment during the last few years. This will enable the company to expand, modernize and develop its operations and in the process provide additional employment opportunities.

Bata the market leader is well equipped to cater the customer’s demands and to meet future challenges.

Bata Pakistan

In Pakistan, Bata started with the establishment of a plant in Batapur (about 20 kilometers from the provincial capital of Lahore) in 1942, particularly to produce leather boots for the army. In 1984 another factory, known as the Maraka branch, was established on Multan Road in Lahore. By 1987, the Maraka branch had 350 employees and was producing one and a half million pairs of leather footwear per year. The Maraka factory used more capital-intensive processes such as direct injection equipment, while the Batapur factory was more labour-intensive. During 1988

Bata purchased another smaller factory at Ferozepur Road in Lahore. By 2001 Bata had invested Rs 430 millions in its factories and about Rs 150 million in stores and fittings.

Since its inception has started the company has not only maintained a reputation of manufacturing high quality footwear for all the socioeconomic segments of the society but has also been designing shoes in accordence with the changing fashions and trends. During the last year Bata produced over 17.2 million pairs and sold 16.9 of them with the help of their large distribution network of 400 retail stores and agencies, 13 wholesale depots, 23 distributors and about 400 registered wholesale dealers who are selling good as independent retailers. In 2009 the company generated turnover of Rs. 6.5 billion showed an increase of 26% against previous year.

Bata multinational company has always played a vital roll in the economic progress of Pakistan. It has transferred sophisticated technology and business skills to the country and provides direct and indirect employment to about 10,000 people. Bata also supports a large number of local manufacturers by buying raw materials from them.

As corporate responsible citizen Bata is actively fulfilling its responsibilities since when it’s started its business in the country. We are permanently patronizing many charitable organizations and providing them help in the form of cash and free shoes. The renowned names on our list are SOS children village, shoukat khanam Cancer hospital and rising sun institute. Besides these Bata also running many welfare schemes for our own employees.

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Bata has always been the market leader and in order to maintain its leadership it has invested millions of rupees in updating its systems and equipment during the last few years. This will enable the company to expand, modernize and develop its operations and in the process provide additional employment opportunities.

Bata today

Serves 1 million customers per day Employs more than 50,000 people Operates 5000 retail stores Manages a retail presence in over 70 countries Runs 27 production facilities across 20 countries

Bata Brands  

Bubble gummers

Bubble gummer is the leading children's footwear brand in Latin America and has development an extensive presence in Asia and in Europe. Bubble gummers offers good quality, comfortable, funny and colorful shoes for the 0 to 9 olds that assure the healthy growth of a child'sfoot. New range of self design shoes with combination of vibrant colored material upper with self branded outsole. Suggested retail price RM11.99-59.99. POP Material to feature the latest designs.Bubble gummers also carry a wide range of accessories: - e.g.: Full range of casual bag, school bag, stationary and others. Also complimented with non BBG BRAND accessories namely featuring latest cartoon theme accessories.

Power

Power embodies diversity with ranges in running, training, court, basketball, football and Outdoor that combines function with creativity. To enhance the different categories there is also a range of young, casual and Trendy collection of shoes. The range that has technical features and functions to boost the Power image is the

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badminton and court collections.

Marie Claire shoes are for women with an active lifestyle who seek contemporary modern styles, Marie Claire shoe stores successfully opened in Latin America and Asia. Bata Brands is the trademark owner of Marie Claire for shoes worldwide.

The WEINBRENNER line is made up of leather shoes and boots, low, mid and high cut. Cuts or design are dictated by fashion, but can include Goodyear welt construction, rugged moccasin and other strongly outdoor associated cuts but always in casual style. Closure generally with laces and eyelets, sometimes supplemented with hooks, D-rings and straps with buckles. Colors will be of natural tones including black, brown, café and burgundy. “Outdoors is Yours” is a tagline commonly used.

Bata comfit Comfort will be an important feature in design and assembly of all the

comfit shoes. Many of the Desirable and characteristics such as double stitching molded and massage insole, latex foam insole, soft textile or cambrelle lining will be used to emphasize the brand image of both comfort and style. Unit rubber, PVC, PU or TPR sole are commonly used. “Get Comfortable Today” is a tagline commonly associated with these range of shoes1

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Value Chain Analysis

A value chain is a chain of activities for a firm operating in a specific industry. The business unit is the appropriate level for construction of a value chain, not the divisional level or corporate level. Products pass through all activities of the chain in order, and at each activity the product gains some value. The chain of activities gives the products more added value than the sum of the independent activity's value. The following are the primary value chain activities for Bata in which following activities are involved:

Inbound logistics: Purchasing department headed by Purchases Manager, deals with the purchases of raw material (excluding hides and skins) that is ultimately used to manufacture different stores of products. Bata is using its raw materials from his different suppliers. Some of the suppliers are local while some are from Indonesia. Along with their own production, they are also outsourcing for some of their products. They are keeping a check on the quality of the products from outsourcing and using their own brand name. The raw material coming from their suppliers is stored in the warehouses. These raw materials are then moved to the production area, where the production is being done and the finished good are moved towards warehouse again for storage after proper quality inspection. They are their own distributers and they have their own stores all over Pakistan. Actually that department not only maintains records of material essential to produce the products but also considers the average weekly consumption of one particular material in factory so that production process may not be hampered due to non-availability of material. That also places orders for instantly needed materials and keeps record of goods on way.

Operations: Here production department works on raw material and made it finished goods. This includes two further departments.

Leather factory Rubber factory

LEATHER FACTORY

Leather factory consists of several departments, is a crucial mechanized unit of Bata shoe organization where different components of the shoe are prepared and combinations of these components ultimately produce the shoes. Although leather shoes are produced in leather factory.

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RUBBER FACTORY

Rubber factory process are same as that are in leather factory the only differences are (i) In the rubber factory rubber shoes are manufactured whereas in the leather factory leather shoes are manufactured (ii) In the leather factory lasts of wood or iron metal are used whereas a aluminum lasts are used in the rubber factory. The daily production of rubber factory in about 31,000 pairs of shoes.

There are also following departments work under in production.

Designing department: Involve in designing fashion trends and designs that focus on meet customer preferences.

Laboratory: Bata shoe has its own laboratory where professionals busy to examine the quality of materials and ultimate products.

Merchandising department: This consider the back bone in the entire production of Bata Shoe Organization. That department involves in planning of shoes departments.

Outbound logistics

In this two departments work actively, wholesale department and other is retail. Retail department has the responsibility to facilitate the company owned outlets countrywide. On the other hand wholesale department perform the duty to provide the shoes to company dealers in local markets.

Marketing & Sales

Marketing programmers that identify and satisfy customer’s needs have always been a top priority in the B.S.O. As a result, entirely new types of selling systems have been created and standards developed that have influenced the shoe business worldwide. The marketing programs are design very well to communicate with the mass audience. The marketing efforts are done in ads to communicate the products features and benefits and create an image of family brand in their target customers. The ads are used well on the heart strategy, to pull the customers in the outlets. Then the sales staff is done their job in product sale. The sales staff is trained well and has a courteous behavior toward the customers.

Service

This includes all areas all areas of service such as after-sales service, complaints handling, training and so on. In this areas company doing effectively, such as company provide

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service in case of damage within two weeks.

Firm infrastructure

The infrastructure of the firm include organizational structure, control system, company culture etc.

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Human Resource Management

The organizations effectiveness depends not only on how it is structured but also on how well its personnel are selected, trained, directed motivated and evaluated. The personnel department of Bata shoe organization well aware of its responsibilities selects the qualified, experienced, hardworking, semiskilled and unskilled persons after observing them from different angles. Once the person selected he or she is motivated through several incentives .The department already has a tradition to offer on the job training to the personnel .A semi skilled or unskilled person while in learning process enjoys all the benefits offered by the company to all the skilled employees. Employees are encouraged developed and trained to become more capable and competent in their jobs so that they can confront to the forthcoming challenges and problems.

Technology development

Technology is an important source of competitive advantage. Companies need to innovate to reduce costs and to protect and sustain competitive advantage. Bata shoes always in search for new technological advancements to take their edge in low cost production and effective communication within their departments.

Procurement

This function is responsible for all purchasing of goods, services and materials. The aim is to secure the lowest possible price for purchases of the highest possible quality. Their function is discussed in detail above.

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PEST Analysis

Political Factor

Pakistan faces a political instability. Government fails about the consistency of their policies in any sector. Tax rate and tariff also increase in country. Under the existing constitutional framework, the Federal government can impose taxes on the sales and purchases of goods imported, exported, produced, manufactured or consumed. So it is so difficult for the company to increase prices and continue with the current prices.

Economy Factor

Economy factor include interest rate, economy growth, exchange rate and inflation rate in the country. In Pakistan all these factors have negative impact on economy. This will reduce the purchasing power of the customers. Then it will affect the company sales and its strategic decisions.

Social factor

Social factors include the cultural aspects and include health consciousness, population growth rate, age distribution, career attitudes and emphasis on safety. The population of the Pakistan is growing continuously then it will be opportunity to grow more in future. There I also trend in customer behavior they are now more brand conscious than ever. This will also result in demand of the company shoes.

Technological

Technological factors include technological aspects such as R&D activity, automation, technology incentives and the rate of technological change. Bata done tremendous job in this area, because they are having latest technology for the product making. It added some very special features in their shoes regarding its softness and comfort by using it.

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Market Analysis

The market for the footwear industry is very big. Because the every person has to wear a shoe or sandal for its feet’s. So every individual whether he/she child, young or old has to wear something for its feet’s.

This market is growing continuously, because there is an increase in population. That will result in increasing demand for shoes. Also there are some social factors as customer’s interest more on branded products.

Bata is a multinational company with more than 100 years of experience. Bata is working successfully in 70 countries with more than 5000 outlets. In Pakistan scenario it has a one national level competitor Service shoes. Bata has a more coverage in Pakistan market with 500 outlets, so it has almost 60% of market share.

Bata is targeting to every possible segment exist in Pakistan. So their demand is influence by many factors. When there is new classes start in schools, there sale was boost up for the school shoes. In start of the every season, on weddings, occasions, festivals and major increase on EID festival.

Yes market is broken down in many segments related to every brand. In school shoes category, it is further segmented. For school shoes main factor for segmentation is price. Bata provide shoes in almost every range, which is start from 399 to 749 Rs.

No demand is not consistent over time. It is fluctuate due to cyclical factor, it goes high when there is a new year start for the schools, also on different occasions and festivals such as EID.

Product life cycle

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Bata comfit, Weinbrenner, North Star, Marie Claire

Bata school shoes

Hawai chappal

DR.SCHOLL

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Competitor Analysis

The Servis group established a footwear manufacturing plant and tannery in the fifties to produce leather shoes for school children, leather boots for the army and to export canvas shoes to Europe. The company sold five million pairs a

year through wholesalers and through a chain of 236 company-owned outlets and twenty-four franchised retail outlets. During the sixties and seventies, Servis had followed the practice of opening a store wherever Bata opened a store. Servis outsourced manufacturing to forty-six suppliers and owned its own tannery and plants in Muridke and Gujrat.

Service Sales Corporation (SSC) was set up as the marketing and distribution arm of the Servis group for footwear sales to the domestic market. SSC procured 70 per cent of the five million shoes it sold from Service Industries Limited (SIL). Compared to Bata, Servis carried a somewhat higher priced range of shoes, including the premium Don Carlos and Cheetah brands which were produced in-house. In late 2003 arrangements were made to carry the premium Nike brand in Servis stores.

About a third of our sales come from export markets. Like Bata we too feel the temptation to decrease our manufacturing base and increase our level of outsourcing, particularly after 1997 when the 15 per cent GST (sales tax) and 16% in the 2009 was applied selectively to the formal sector only, and profits of both Bata and Servis plummeted. But this (a decreased manufacturing base) would hurt our ability to export. So instead of contracting out our operations, we have decided to further expand, diversify, and invest in new technologies and processes.

The Shafi Group began as a trading house in hides and skins in 1940 and by 2002 it had eight manufacturing units

including four tanneries, two leather garment units, one footwear unit and units specializing in leather/textile chemicals and in information technology. The group produced about fifty million square feet of finished leather annually, placing it among the largest leather manufacturers in the country. Companies in the group had arrangements for technical collaboration with leading Spanish and German firms, and had developed a reputation for high quality in various

Specialized leather products. Units in the group procured most of the skins and hides locally, and had established long-term arrangements with suppliers.

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In 1998 Shafi (Pvt) Ltd opened a 1,400 square feet shoe retail store in Lahore under the brand name of Urban sole. Two additional, somewhat smaller, stores were established in Karachi in 2000 and 2002.

Urban sole carries men’s leather shoes targeted for the young professional. We are not family stores like Bata and Servis. Our shoes average Rs 1,250 a pair, which is somewhat lower than Hush Puppies at Rs 1,350, but considerably higher than Servis at Rs 360, and Bata at Rs 250-275 a pair. Currently 70 per cent of the shoes we carry are procured from our own shoe factory, but we are considering the possibility of expanding our range through increased outsourcing.

The Umer Group started off in the sixties in trading and ship-breaking and by 1980 established itself in the production and export of cotton yarn In 1995 Farrukh Salim took over as head of Firhaj from his uncle. Salim was then 22 years old and had just returned after spending two years in the UK studying footwear technology. In 1995 Firhaj entered into an arrangement with the US-based Wolverine, with an exclusive license to manufacture and distribute the premium Hush Puppies brand in Pakistan. Firhaj was required to pay a fixed

royalty on revenues, ensure stringent quality standards and ensure that all stores selling the brand carried a specified product range and adhered to standard pricing, decor and store layout. By 2002 Firhaj had 250 employees and it distributed the Hush Puppies brand through ten company-owned concept stores in major cities including Lahore, Karachi, Faisalabad, Multan and Sarghoda. Each store had a display area (in addition to back office storage space) of 500 to 700 square feet and carried about 100 SKs.

Firhaj also had arrangements with thirty independent franchisees in additional cities, which might typically carry about fifty SKUs. Finally the Bata Organization had global arrangements with Wolverine to carry the brand, and as a result Hush Puppies were stocked in twenty-seven Bata stores in Pakistan, with plans to gradually expand to about fifty Bata stores.

Hush Puppies is a premium brand, and its manufacture requires exceedingly high levels of skills and specialized equipment. Such a shoe can involve up to 170 operations, many of which require ’hand sewn on last’ construction. There are no short cuts in this business.. We have to ensure that our product range matches what the customer wants, and we need to manage our relationship with franchise partners. Finally we have to manage our relationship with our international partners. They would like to standardize across the globe, in terms of product range, prices and store decor, while we need to make sure that they understand how our local needs and tastes may at times require a different product range and prices.

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Women’s Fashion Shoe Stores

A large number of stores such as Stylo, Metro, Milli, Catwalk and Local specialized in women’s fashion shoes. Leading stores generally introduced about a thousand new designs each for the summer and winter seasons. Since each design was available in multiple colors and sizes, a large store carried about 20,000 pairs in stock. Sometimes a new design was introduced with as little as one pair to test the market; the design was closely monitored for two weeks. Replenishment cycle time could be as short as seven to ten days. Popular designs were rapidly imitated by second and third tier stores, and thus leading stores had an average product life cycle of only thirty to forty-five days. According to an industry insider, over half of the new designs introduced failed and had to be sold at considerably discounted prices.

Their basis for competition is for real or perceived differentiation and variety in product.

Porters Five Forces Model

Threat of substitute products

Threat of substitute products means how easily your customers can switch to your competitors product

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Bata has a threat of substitutes, because it has one major competitor Servis and many other and local competitors.

Servis has their outlets as near with the Bata outlets and offer almost the same products in their outlets.

Threat of new entrants

A new entry of a competitor into your market also weakens your power. Threat of new entry depends upon entry and exit barriers.

Threat of new entrants is low, because Bata has a very big capital intensive infrastructure. That is not easy for new competitors.

Bata is working on economies of scale, which is difficult for new entrant. Bata is working with latest machinery and with up-to-date R&D.

Industry Rivalry

Industry rivalry means the intensity of competition among the existing competitors in the market. Intensity of rivalry depends on the number of competitors and their capabilities.

Industry rivalry is high for the Bata because there are number of small and equal competitor (Servis) in market.

Today competitive environment consumer brand loyalty decrease and they switch where they get new and better variety.

Footwear industry is also growing rapidly, which means it increase competition.

Bargaining power of suppliers

Bargaining Power of supplier means how strong is the position of a seller.  How much your supplier have control over increasing the Price of supplies.

Bata has the control over their suppliers. Company depends more than one supplier for the raw material. So suppliers has the low bargaining power in this industry.

Bargaining power of Buyers

Bargaining Power of Buyers means, how much control the buyers have to drive down your products price, Can they work together in ordering large volumes.

Bata distribute their products to company owned outlets. The products for who has the dealership, company has a fix margin on the product. In this way buyers had not any strong bargaining power.

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SWOT Analysis

The following SWOT analysis captures the key strengths and weaknesses within the company, and describes the opportunities and threats facing Bata.

Strengths:

70 years experience in shoe industry Experienced management Strong brand name Extremely strong relationships with suppliers. Excellent staff who are well trained and customer attentive. Strong perception of red color which is associated by people. Brand equity Footwear for the entire family Financially strong Conveniently accessible outlets in various parts of the country Targeting all income segments Nationwide retail network

Weaknesses:

Losing competition because of the other big players like Servis, Adidas and Nike, etc. Not too much stylist so it is losing the attraction of the customer, especially in the Youth

segment. They don’t have any powerful brand ambassador to promote their brand. They haven’t promoted themselves thoroughly, invested very less in their add campaign. Outsourcing can make it reliable on others No participation form young generation in decisions No efficient response from CRD(customer relationship department) to customer needs No proper planning regarding Advertisement No variety in fashionable shoes

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Opportunities:

A growing segment of the market that is increasing. Big gap of market to be captured. The ability to operate on lean overhead relative to competitors. E-Commerce Acquired, Partnership with small players. Entering new segments of market Innovative products New mediums for advertisement

Threat:

Introduction of new brands in the market. Young generation is attracted to the other branded shoes like Adidas, Nike, and H.P etc. At present law and order situation. Price wars with competitors Competitors Economic threat Changing in consumer preferences

Analyze Buyer Behaviour

This will depend totally on product category. For our project we choose school shoes for children. The purchase for the school shoes the children force their parents for new shoes, schools have the restrictions, and also parents felt the need for the new shoes. But mostly children demand their parents for new shoes.

Variety, quality and then price, those are variables customers used for the evaluation of the alternative products.

The most important criteria in choosing school shoes is quality, and this will not change in future.

Parents and mostly mothers came for the purchase of school shoes. Both are choosing the shoes but the final decision is made by mothers. Bata also in their ads featuring mother as a guiding person who has the responsibility to ready the children’s for the school. So it creates the sense of women approval for the purchase of school shoes.

Payments made by the fathers, whether they paid in stores or give mothers for shoes purchase.

The product is used by the children’s after the purchase. The shoes are used for school and also for events and festivals. It is evaluated on the

basis of its reliability that it requires less maintenance and its durability.

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Review of Market segmentation Strategy

The Bata currently used the segmentation strategy, because it has make different segments, and they target every target through its product prices.

The most important basis for segmentation is income level, family size, age, gender and occupation. For geographic segmentation regions and population density consider important. Psychographic Segmentation Company has more focus on customer lifestyle.

All of these segments are choose for targeting, because each has their impact and effectiveness in segmentation.

Positioning Strategy

Bata has captured the mind of the people by producing and delivering the best possible shoes quality for the long lasting consumption but with moderate pricing. Bata want to position itself in target customers as a family brand in shoes category.

The association of the family brand is intended to be strong, unique and favorable.

Intended POP’s are variety and price. POD’s is the quality and durability.

Brand Elements & Structure

The logo used by the company is The brand elements of Bata are their colour, which is red.

Their specific font type, style that is italic. This is protectable because it’s registered in internationally through legal bodies.

Name of Bata is not meaningful but that is suggestive. Its show brand of Bata, which is owner name.

It’s easily transferable to all the other brands. And easy adoptable. Bata didn’t use any slogan individually. But it has different slogans for every brand. Under Bata children's Programmer (BCP), Bata Pakistan has actively participated in

relief & rehabilitation activites to help individuals displaced by the flood. Under Bata Children Program Company build a school for flood affected area of Kot Addu Southern Punjab.

Yes all of these are memorable Bata doing umbrella branding.

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Pricing Strategy

The Bata used the competitive pricing strategy in some brands, such as in school shoes it has almost the same price as their competitor Servis and other local competitors.

The pricing strategy of the Bata is very simple for their brands. They focus each and every segment in the market, which is possible through cost leadership in market.

For school shoes brand B.first price range is 399 -749. In Bubble gummers it starts from 399 to 999. The discounts and allowances are varying in each season.

It’s a product for middle class.

Distribution Strategy

Their current distribution strategy of Bata that it has two departments Retailer and Wholesaler. Retail department place the products in countrywide company owned outlets. On the other hand wholesale department give the products in local markets who has the dealership from the company

Bata used the extensive distribution strategy for their products. Their purpose is to maximum market coverage.

Their outlets are very good in outlook and they show and try to create the family environment in their outlets, also provide a proper place for sitting. They also facilitate the customers with different sections with different brands. The outlets are very much successful in providing family environment.

The outlets are design well and they have the modern look and good used of themes for every brand.

The sale staff is so courteous with the customers. Because they are the one who help customers in their decision making. To ensure this company has training programs for employees in every year and they are running this successfully. Company has the policy for the recruitment of sales persons, and F.A is the minimum requirement for their selection.

Services are become very important in almost every industry. So the company also gives focus on the services for the customers. They are also repair the damage shoes in given timeline if the customer has the slip with it.

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Communication Strategy

The company used almost all the means to send their message to the masses. Company used marketing communication to inform, persuade and reminded consumers about the brand. Company used the media advertising, including TV, Radio, Newspaper, Magazines.

Bata also used place advertising which includes Billboards and Posters. It also used consumer promotions in the shape of price-offs at the end of season.

o Bata used the soft sell strategy in their ads. It tried to pull the customers in their outlets.o In creative strategy they always try to show the enjoyment, excitement and family

environment by different new ideas. Bata use electronic media, place media like billboard and print media in the beginning of every

season to the informing customer new arrival of brands for this advertising and promotion. Bata also use sale promotion in the end of ever season to sell their product on discount. Bata didn’t use any spokesperson for their ads.

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References:

Interviews with company personnel, distributors & retailers.

Business publications, trade journals. Expert opinions. Tangible marketing – products and ads. Websites. Help from seniors.

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