BATA Final

ASSIGNMENT: NEW PRODUCT DEVELOPMENT

TOPIC: BATA SHOES LAHORE, PAKISTAN

CLASS: MBA (EVENING)

SEMESTER: 5th

SUBMITTED TO: SIR: HAMMAD ASHRAF

SUBMITTED BY: FARHAN MAHMOOD (GL) (ME-01083-009)

NADEEN MOHSIN (ME-01083-009)

SUBMITTED ON: 26-05-2010

EXECUTIVE SUMMARY

STAGE 03:

CONCEPT/PROJECT EVALUATION

We select the stage Concept/Project Evaluation because Bata

Shoes Lahore Pakistan are using some techniques for finding

opportunities and evaluation of new initiatives among there

competitors. They are also using a technique for testing its concept

before development and launch new product in the market. They

are also using a technique for evaluate the organization capabilities

before developing product. In this project we discuss all that

techniques which are used by Bata, discuss about the draw backs

and give the recommendations on these techniques for

improvement.

For finding opportunities and evaluation of new initiatives Bata uses the Price Range

Strategy. By using this technique Bata find the gaps for new initiatives and its position

among competitors.

For the concept testing before developing and launch a new product, Bata capture the

views of customers through questioning.

For evaluate the organization capabilities, Bata’s managers held a meeting where they

discuss about capabilities. They are able or not for developing new product.

So, we will discuss each technique one by one.

01. PRICE RANGE STRATEGY:

Bata Shoes Ltd using Price Range Strategy for finding the opportunities and evaluation the new

initiatives among competitors. Here is the question;

How Bata use this technique?

Bata prepare one sheet on which all the competitors’ products, brands, category and prices as

well as Bata’s products, brands, category and prices are listed. With the help of this format Bata

find out the new product or new category in new price range which is missing in Bata and

competitors offers to their customers.

Bata has different brands namely as;

Bata

Wienbrener

Power

B-First

Bata Comfit

Bubble & Gambles

Leena (Newly Launch in this Summer)

So, for explore the Price Range Strategy technique, we use the example of LEENA which is

newly launch in the market by Bata. Leena is the latest ladies brand of Bata in which Bata offers

the huge range of sleepers for ladies in different colours variation and designs.

Leena

Bata find this opportunity and evaluate it among competitors through price range strategy. Bata

has different competitors like;

Servis

Stylo

English Shoes

Delhouse

Elegant Shoes etc.

If we talk about Leena, the price range of Leena in the market for customers is 299-499 Pk

Rupees. Before the idea generation of Leena, the competitors have the product in this range.

Like Servis, Stylo and others offers ladies sleepers in this price range (299-499). Bata analysis

all the competitors and they find that in ladies sleeper category, the competitors of Bata give this

category to their customers in low price which is 299-499 Pk Rupees.

Here we take example of one competitor, for example Servis and make a sheet in which we

select all brands and categories which Bata and Service offers to their valued customers. By the

help of this sheet we will understand that how Bata use this technique.

According to this sheet, Bata missing different categories in different brands like Servis offers

Sandals in Servis, Sandals in Cheetah and Leeza in which, Sleepers, joggers, Sandals and Shoes.

These Categories are missing in Bata. After Analysis this sheet Bata Select a product Sleeper

with the price range 299-499 and the brand name is Leena. But they differentiate Leena among

competitors through colours variation and more designs. Here the selection of new product is

depending on the manufacturing capability of organization. In the case of Leena, Bata watched

that the Leena Sleeper is easy to manufacture and east to launch in summer.

BATA SERVIS

Bata:

Shoes 499-1799

Sleepers 329-999

Sleeper (Ladies) 499-899

Wienbrener:

Shoes 899-2199

Sandals 499-1499

Sleepers 499-1299

Power:

Joggers 999-1899

Bubble & Gambles:

Kids Shoes 299-799

B-First:

School Shoes 379-649

B-Comfit:

Sleepers 599-899

Sandals 499-999

Ladies Sandals 429-899

Servis:

Shoes 429-1699

Sandals 329-999

Sleepers 429-899

DonCorlos:

Shoes 999-2500

Sandals 899-1999

Sleepers 699-1299

Cheetah:

Joggers 1199-3999

Sandals 899-1299

Toz:

Kids Shoes 299-899

Leeza: (Ladies)

SLEEPERS 299-499

Joggers 499-999

Sandals 499-1459

Shoes 599-999

Skoz:

School Shoes 349-699

Calza:

Sleepers 349-749

Sandals 349-849

RECOMMENDATION:

For the Price Range Strategy, the recommendation is GAP ANALYSIS.

02. RECOGNIZATION OF ORGANIZATION CAPABILITIES :

Third is the recognization of organization capabilities. This is basically a judgment of

capabilities which is required for new product development. According to our visit in Bata

Shoes Ltd, we collect the information in this area. In Bata Shoes Ltd, there is no any specific

technique use by Bata. When idea is selected then all the managers are arrange a meeting, it

may be for a day or for a week. Where they decide that they should develop the product or

not.

So with the help of an example, we can easily understand how Bata judge the organization

capabilities for developing and launching the new product.

For example, there are two or three ideas and Bata want to transfer these ideas into the

tangible product form. The ideas are,

(01) New category of new style in Power Joggers

(02) New category of new style in Wienbrener shoes (Male)

(03) New category of new style in Bata Sandal (Male)

Now Bata want to transfer these ideas in product form. So Bata arrange a meeting of all

managers, general managers and directors of all departments. The departments like;

Finance

Marketing

R&D

Production/Manufacturing

Store

CAD/CAM etc.

All the managers, general managers and directors sit together and talk about on all

aspects with the help of all required documents which prepared by all departments

managers and held presentations as well.

FINANCE DEPARTMENT:

Finance Department gives the investment/manufacturing cost and profit margin of all

new ideas in figure. For Example,

Categories Units Single Unit cost

(PKR)

(Total Cost in Figure)

(PKR)

Sales Price/Unit

(PKR)

Total Sales(PKR)

Profit Margin/Unit

(PKR)

Total Profit

New style in Power Joggers

1 Lac 696 69600000 1699 169900000 1003 100300000

New style in Wienbrener Shoes (Male)

1 Lac 584 58400000 1899 189900000 1315 131500000

Bata Sandal (Male)

1 Lac 239 23900000 799 79900000 560 56000000

MARKETING DEPARTMENT:

Marketing Department gives the advertisement cost and customer survey cost included in

it. Its gives information about competitors as well that the competitors have these

category or design or not. Let assume, in this case these styles are totally new.

For example;

Categories Advertisement Cost

New style in Power Joggers20000000

New style in Wienbrener Shoes (Male)20000000

Bata Sandal (Male)20000000

It set also target market for each category.

Target Market

Power Joggers Sports Person

Wienbrener Shoes Professionals/Business Class

Bata Sandal Teenagers/Mature (Male)

R&D DEPARTMENT:

In Bata, R&D is the Sub-Department of marketing department and it is in-house. In this

case, R&D Department tests the samples of all these categories regarding comfort and

design.

PRODUCTION/MANUFACTURING DEPARTMENT:

Production/Manufacturing Department gives the information about their requirements

regarding all categories. In this case for example, manufacturing Department quote an

inventory in which they mentioned all requirements like raw material (Leather/Rexene,

thread, oil, studs, glue), stitching and assembled machines etc. Store Department is

interconnecting with manufacturing department. If gives information about the

availability of raw material.

For Power Joggers Category, they have raw material and platform but in new

style, there is a zigzag stitch on it. For zigzag stitch there is a separate machine

which is missing in Bata. Zigzag machine should import from Japan which costs

high. It may be 20 million approx total cost of machine.

For Wienbrener Shoes, manufacturing department quote an inventory which

shows that they have complete raw material and platform for manufacturing

Wienbrener shoe.

For Bata Sandal (Male), manufacturing department quote a sheet which shows

that they have complete raw material and platform for manufacturing Bata Sandal.

CAD/CAM:

In this case CAD/CAM department makes 3D images of all new categories.

CONCOLUSION

In this case, after the analysis of all departments on all aspects. The result is that, the best

option for developing and launching is Wienbrener Shoes (Male). Because finance

department gives the profit margin and manufacturing cost which is best from others.

And the big reason for rejecting the Sandal and Power jogger is that, they have no zigzag

machine and it costs very high if they import it from Japan and for sandal point of view,

the manufacturing cost it low but as compare to the Wienbrener the profit margin is high

and Bata can easily make it because they have all resources for manufacture Wienbrener.

RECOMMENDATION:

In the recommendation of Recognization of Organization capabilities, technique which is

used by Bata, the recommendation is FULL SCREENING.

Bata can easily judge the organization capabilities for developing and launching the new

product. Because Bata is using the old, lengthy and not organized technique for this

purpose. Where all the managers left there other work and open a new chapter and

discussing on it. Make different or many kinds of formats. But in Full Screening, there is

only one format, on this format all the required factors are mentioned which is related to

Development and Launching of new product. Here is a question;

How Bata will use this Technique (Full Screening)?

Bata’s management set a duty of one person from marketing department. He

makes a format and put all the important and relevant factors on it. Then he gives

the rating on score and weight age. Through this format, organization can easily

judge the organization capabilities regarding Developing and Launching the new

product.

Let assume, For example, Bata have two new ideas;

WIENBRENER SHOES (NEW CATEGORY, MALE)

POWER JOGGER (NEW CATEGORY, MALE)

The formats of Full Screening on these ideas are mentioned below.

Scoring Model for full Screening (WIENBRENER SHOES (MALE))

Factor

Scale

(1) (2) (3) (4) (5) Score Weight

Weighted

score

Technical Task Difficulty

Development Skills Required

Design Superiority Assurance

Security of Design (Patent)

Manufacturing Equipment/Processes

Vendor Cooperation Available

Likelihood of Competitive Cost

Likelihood of Quality Product

Likelihood of Speed to Market

Team people available

Dollar investments required

Legal issue

Very Difficult Easy

Have None Required Perfect fit

None Very High

None Have Patent

Have None Required Have Them

None In Sight Current Relationship

Competition Over 10% Less

Below Current Levels Leadership

Two Years or More Under Six Month

None Right One All Key Ones

10 Million 50 Million

Major Ones None in Sight

4

5

4

4

5

4

5

4

4

5

5

5

4

5

5

5

5

3

5

5

4

5

5

2

16

20

20

20

25

12

25

20

16

25

25

10

234

Market Volatility

Probable Market Share

Probable Product Life

Promotion Requirement

Target Customer

Distributers/Retailers

Likelihood of Filling Need

Competition to be Faced

Environmental effects

Global application

Customer integration

Probable profit

High/Erratic Very Stable

Fourth at Best Number One

Less Than a Month Over 2 Years

Have No Experience Very Familiar

Perfect Stranger Close/Current

No Relationship Current/Strong

Very Low Very High

Tough/Aggressive Weak

Negative Positive

No Use Outside National Fits Global

Very Unlikely Customers Seeks It

Break Even at Best ROI>40%

3

3

4

5

4

5

4

2

4

5

4

3

5

5

5

5

5

3

5

5

2

4

1

5

15

15

20

25

20

15

20

10

8

20

4

15

187

421

Scoring Model for full Screening (POWER JOGGER (MALE))

Factor Scale

(1) (2) (3) (4) (5)

Score Weight Weighted

score

Technical Task Difficulty

Development Skills Required

Design Superiority Assurance

Security of Design (Patent)

Manufacturing Equipment/Processes

Vendor Cooperation Available

Likelihood of competitive cost

Likelihood of Quality Product

Likelihood of Speed to Market

Team people available

Dollar investments required

Legal issue

Very Difficult Easy

Have None Required Perfect fit

None Very High

None Have Patent

Have None Required Have Them

None In Sight Current Relationship

Competition Over 10% Less

Below Current Levels Leadership

Two Years or More Under Six Month

None Right One All Key Ones

10 Million 70 Million

Major Ones Non in Sight

3

3

2

4

3

1

1

3

4

4

3

5

5

5

5

5

5

5

5

5

5

5

5

2

15

15

10

20

15

5

5

15

20

20

15

10

165

Market Volatility

Probable Market Share

Probable Product Life

Promotion Requirement

Target Customer

Distributers/Retailers

Likelihood of Filling Need

Competition to be Faced

Environmental effects

Global application

Customer integration

Probable profit

High/Erratic Very Stable

Fourth at Best Number One

Less Than a Month Over 2 Years

Have No Experience Very Familiar

Perfect Stranger Close/Current

No Relationship Current/Strong

Very Low Very High

Tough/Aggressive Weak

Negative Positive

No Use Outside National Fits Global

Very Unlikely Customers Seeks It

Break Even at Best ROI>40%

2

2

4

4

3

5

3

2

4

5

5

1

5

4

4

5

5

3

5

5

2

4

2

5

10

8

16

16

15

15

15

15

8

20

10

5

153

318

With the help of these two formats Bata can easily select the best one idea between these two.

The weighted score of Wienbrener is high than the Power because in different areas, there are

some problems for manufacturing and launching new category of Power Jogger. Problems are, in

manufacturing, Design, investment. Because Bata require zigzag stitching machine for new

category of Power Jogger which cost high if Bata import if from Japan. They have also required

technicians for installation of machines. They also require machine operator. These are the main

problem in new category of Power Jogger due to this the weighted score is less than Wienbrener.

On the other hand, Bata can easily develop and launch the new category of Wienbrener Shoes

because the weighted score is high because of high score in different factors like, Bata have

machines, platform, and engineers, design superiority, high quality of Product, big target market,

low investment, high profit and some other factors.

So the weighted score of Wienbrener in high (421) than the Power (318), so the best option for

Bata is Wienbrener.

APPENDIX

BACKGROUND OF FOOTWEAR INDUSTRY OF PAKSITAN:

The history of shoe industry in Pakistan is as old as the country itself. At the time of

independence there were only a few vendors producing soles in selected stuff’s and that

too at a very small scale. However, since then this industry has been flourishing and has

never looked back.

During 1950s, some well-equipped vendors were set up at Karachi, Gujrat and Lahore,

while during 60s and 70s more units were established at Hyderabad Kasur, Sialkot,

Multan, Sahiwal and Gujranwala. As well as foreign companies were also set there units

in different cities of Pakistan. Bata is the one of them.

Now there are many units working in Pakistan and manufacturing shoes of different

styles. They fulfill the need of local customers as well as the export the shoes in different

countries.

N P D TRENDS IN THIS ECONOMIC SECTOR:

In the global market, the demand for footwear is high and in most of the

developing countries it is growing on average. Pakistan’s footwear industry

manufactures around 120 million pair annually for local consumption and it

exports 2 million pair per annum roughly.

If we talk about the trends in footwear industry of Pakistan, there are many

organization producing shoes in different styles and in different stuff. Now people

either a local customer or foreign customer want new trend or innovation in shoe.

They want new designs according to the season like; summer, winter etc.

Companies in Pakistan like; Bata. Service, Hush Puppies, Starlet, Stylo and many

other local and foreign companies are trying to give the best and comfortable

designs of shoe to customers.

HISTORY OF BATA

Bata Ltd founded in 1894

by Thomas Bata, the founder. The company

is led by a third generation of the Bata

family with operations in 68 countries. Bata

owns more than 4,700 retail stores and 46

production facilities. Total employment for

the company exceeds 50,000.

BATA SHOES IN PAKSITAN:

Bata Pakistan limited is one of the 65 companies working all over the world as shoe

manufacturer. It started its operation at Batapur in 1942. Bata Pakistan limited having

60:40% foreign and local shareholdings respectively. Bata equips with sophisticated

technological and business skills, provides direct employment to about 2,792 people.

Bata Pakistan is producing more then 14.0 million pairs of Rubber& Canvas, Leather and

Plastic footwear annually in two production units at Batapur and Maraka. Bata is selling

more then 17.0 million pairs of Rubber, Leather and plastic footwear annually. For this

purpose company have the following selling channels all over the country.

1. Retail Stores

Own stores 245

Agencies 83

K. type (Associates) 26

Bubble gummers 122

2. Wholesale Depots 113

3. Distributors / Mini Distributors 14

VISION OF BATA LTD PAKSITAN:

To grow as a dynamic, innovative and market driven domestic manufacturer and

distributor, with footwear as our core business, while maintaining a commitment

to the country, culture and environment in which we operate.

MISSION OF BATA LTD PAKSITAN:

To be successful as the most dynamic flexible and market responsive

organization, with footwear as its core business.

EXPORT VOLUME:

The company export volume is around 170 to 190 million annually (1.3 million pairs) in

all categories being supplied to various European countries, Middle East and Far East

countries.

MACRO & MICRO FACTORS IMPACT ON COMPANY’S

NEW PRODUCT INITIATIVES

MACRO FACTOR’S:

ECONOMIC FACTOR:

As far as Bata is concern, it’s also effect by the economical factor. Doing business

in Pakistan they have to watch the economic condition of Pakistan. Purchasing

power of people is very important. But during the last 2 years and so inflation rate

have increased at rapid pace during this year inflation have been increased by

10%. Purchasing power of people have been decreased so its effect the business

of Bata in Pakistan. Another factor is that, in making of leather, petrol is used and

prices of petrol in Pakistan is increasing day by day so it increase the cost of

production of Bata company

POLITICAL FACTOR:

Like other organizations “BATA” also has to obey the laws, rules and regulations

existing within the country. In Pakistan we have a very friendly business

environment, the regulations and rules are very easy to apply and follow. For

example for Bata industries there are no restraints and no limitations to stop the

expansion of their business. They have no reason to slow down their production

or distribution nor their publicity or marketing.

SOCIAL & CULTURAL FACTOR:

Bata is producing its products in more then sixty countries world wide. Every

country has different culture ,norms and values so that Bata have to vary its

strategies according to the geographic area Bata advertise its products according

to the cultural aspects, it means Pakistani ad are different from Canada. E.g. In

Pakistani Bata ads, they always show the family concept to promote their product.

TECHNOLOGICAL FACTOR:

As far as Bata is concern, it’s also effect by the technological factor. Bata good in

technology, having latest technology and to remain at this high level of

technology, Bata must focus on the trends changes in technology and they adopt it

immediately. By the change in customer perception, then there is change in

demand, need, them fashion and then in technology as well. Bata always trying to

focus on the change in technological market.

INTERNATIONAL FACTOR:

As for as Bata is concern, Ever since the import and distribution of Chinese

products namely shoes, has increased in Pakistan, the sales of Bata have dropped

considerably. Thus the business of Bata industries has been affected by an

international factor in the form of low labor, and manufacturing costs of Chinese

products. In the process of countering this situation, Bata industries contracted

with Chinese manufacturers for low costing and cheap products. So that they can

have a leveled competition in the local and international market.

MICRO FACTOR’S:

CUSTOMER AND CLIENTS:

Bata Collections target a wide range of customers and offer an excellent price-

quality ratio. Bata’s exclusive models along with national and international brands

are carefully selected and updated in response to market demand.

But how the customer affects? Bata always trying to fulfill the needs of there

valued customers by giving new initiatives. If Bata fail to do this job then the

Bata’s business strategies and business become fails.

COMPETITORS:

Competitors are other organizations with a high potential, offering rival products

or services. e.g. Service shoes, Stylo, Delhousy, English and many other high

standard industries, which compete with great strength and tact.

In early days of Bata in Pakistan, They have no such competitors. During the last

decade lot of shoe making companies have been arrived so Bata have to face the

competition. Because local competitors prices are relatively low as compared to

Bata.

SUPPLIERS:

Bata’s suppliers are Chinese raw material holders, manufactured supplies from

local cottage industry etc. the impact of suppliers on Bata is that if the prices of

raw material increases, it directly affect the company’s marketing mix strategy.

The result is that the price of products increases.

EMPLOYEES:

Bata always employing the correct staff and keeping these staff motivated which

is an essential part of the strategic planning process of an organization. Bata

always focus on the training and development of there employees which plays an

essential role in-order to gain a competitive edge. If Bata hires unskilled

employees, the impact will be bad.

REFERENCES

Rana Ahmad Noon

Promotional & Advertisement Manager

Bata Shoes Lahore, Pakistan.

Asif Khan

Buyer (Merchandising)

Bata Shoes Lahore, Pakistan.

Ayyaz Ahmad

Maintenance Manager

Bata Shoes Lahore, Pakistan.

OTHER SEARCHING SOURCE:

www.bata.com.pk

www.google.com

www.servis.com.pk