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Sneaker Marketiing Management Add in library

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Question:

Describe about critical analysis of sneakers market market entry option of new sneakers brand in India?
 
 

Answer:

Introduction:

Originally from the United States, sneakers was a type of shoes which was designed for sport but today we see that this shoe has taken its course from sports purpose to fashion statement (Aaker, Fournier and Brasel, 2004). The sneaker market has evolved and grown successfully for years. This product is no more a shoe for sport but has changed the mindset to fashion. Men’s shoes are meant to be hard and as well as trendy but sneakers have risen higher in the footwear industry. The invention of sneakers has not only brought a revolution in the men’s footwear industry but has also created a hip in the women’s industry (Berrill and Hovey, n.d.). The concept of sneakers have created a niche for themselves in the market where an individual does not have to go to big malls to find the shoe; anybody can get a pair of sneakers in the market from any shoe shop. This shoe can be found by the word of mouth (Cowie, 2002). Part one of this study has dealt with given case scenario of Sneakers and explain the importance of social, culture and context factors on the development of the sneakers market in the UK. In the second part of this study, the market entry option of the new sneakers brand has been evaluated for India market.

Part A: Critical analysis of Sneakers market

As mentioned earlier the notions of sneakers is not just limited to sports but also have spread to other style statements and this has increased the level of competition in the footwear industry (Carmen, n.d.).  Competitors now compete with each other in terms of innovation and creativity (Coleman, 2013). The design of the sneakers has progressed in a quicker pace that the marketers have to identify and anticipate the future demands of the shoe and the change in the consumers taste and preferences in order to survive the market (Das, Stenger and Ellis, 2009).

Sneakers were always popular variety of footwear among the people since 1800s and were always available as the production of sneaker was efficient and cheaply produced by the people. The inventor of sneaker Charles Goodyear naively made the contemporary sneaker when he originally vulcanized rubber (Luna and Forquer Gupta, 2001). The manufacturers used the excessive rubber from the other products for making soles and then the idea struck. James Greenwood, American etymologist described “sneaks” as the shoes which has canvas tops and the sole was of Indian rubber. Converse and keds were among the early brands of sneakers but the footwear industry remained insignificant till the sport and fitness came into the consciousness of the masses (Gillespie, Jeannet and Hennessey, 2007).

The industry progressed slowly with many brands coming into the picture starting from Nike to Reebok. The sales of sneakers doubled with time as it become a craze and cultural icon (Grassl, 2000). From all, converse became popular. It became synonymous with basketball as it was first worn by basketball professional Chuck Taylor in the year 1935. Nike, Reebok and Adidas have dominated the market since the last two decades with over 56% of the sale in international market. These brands have always benefitted from the goodwill and brand equity in the market from the time of its creation (Maehle, Otnes and Supphellen, 2011). This valuable feeling gives the leading brands the competitive advantage and a thorough knowledge of the market and a status for dependably manufacturing and delivering successful sneaker trademark from which some have become well-renowned. The transition from a manufacturing centric product to a market-centric product, sneaker no longer is a shoe but a style statement of one’s personal status (Marchi, Martinelli and Balboni, 2014). The footwear industry has fine tuned with and well polished use of demand, endorsements by celebrity and emotional branding for the promotion of the ideas of exclusivity and individuality in the customers, has drove the reinvention of sneakers (Melnyczuk, 2004).

Sneakers are very much sensitive to the notions of the consumers and simultaneously the success of it depends on the ability to equalize the demands with supply which is limited to create the exclusivity. This equilibrium acts as the demand which is unrequited and is the trademark of many consumer brands (Merk, 2011). It has been seen that the consumer buys sneakers in order to sport a casual look rather than gaming activities. It has also been seen that the consumers go for than the design of the sneakers keeping aside the original particulars. Nobody can explain why the sneaker is so much popular among the consumers (Nenycz-Thiel and Romaniuk, 2014). Studies concluded many theories which were based on the marketing strategies and the sales figure rather than the logical study of the popularity of the product. Footwear industry is a developed industry where major players like Reebok, Nike are dominating and there are also many small retailers in the unorganized sector who are also a part of the sneaker competition (Parker, 2006).

 

As per the survey, which consisted of 150 respondents aged between 19-25 years old indicated that customers were not obsessed with sneakers but would not mind having a pair of sneakers. Pilot study is done for the survey which is useful because it is conducted to evaluate cost, feasibility time in order to predict the sample size and improve the study. The survey when carried out it was seen that many questions in the questionnaire were vague and the respondents wanted it to be more integrated so as to avoid biased results. It has been seen that after the global recession in 2008 there was recovery in the international market. Growth in the other rising markets is considerably higher than the markets in US and UK. Thus there is a shift in the sneakers market from the developed to the emerging markets. US started the first business market for sneaker which eventually moved to the developed markets like, UK and France.

This industry provides innumerable interesting products of which sneaker is very popular. Therefore with sneaker came the creative segment where fashion and performance has merged together to design this product which replaced sport with lifestyle fashion. Nike, Adidas and Reebok fall under non-price competition where consumers buy their sneakers because of the brand value, product propagation, success but this has not stopped the sneaker market to spread in the unorganized sector (Reebok EasyTone Women’s Footwear Case, 2012). According to the case study we have seen that major players like Nike and Reebok boosted up their sales by promoting through the celebrities like Michael Jordan and Jay-Z. Adidas’s profits soared up by $35 million in the next year. The immediate success of these brands has materialized through the sponsorship of celebrities that the customer base of sneaker increased (Rubio, Villaseñor and Oubiña, 2014).

Part B: Market entry option of new sneakers brand in India

While expanding the business in the global market, organization needs to concentrate on perception of customer about the brand and based on the feedback given by customer, they needs to incorporate brand awareness activities, which drives the sales and market presence of niche brands like sneakers.

In the contemporary economic scenario, India is considered as one of the most preferable emerging market for global brands like Nike, Adidas, and Reebok. If the market share of these three major giants is considered here, then it can be found that Reebok is considered as the leader of the Indian market, in this specific category. At the same time, the organization successfully positions itself as a reasonably-priced Global brand.

Figure: Market share of Nike, Adidas, Reebok in India

Source: https://www.outlookbusiness.com/article_v3.aspx?artid=280763

Born in the States to play sport, brands of the pool of Nike, Adidas, and Reebok are driven more by the strong eagerness of the end user to possess them rather than an utmost requirement of the same (Sangani, 2012).

According to the footwear industry the buyers can be divided into two types. Firstly the ones who are committed to these types of shoes and don’t follow or but the other types which this industry offers. Secondly the consumers who are more conventional ones who will buy other types of shoes as well not always sticking to the sneakers (Shoes, Glues and Homework: Dangerous Work in the Global Footwear Industry, 2010). Research indicates that Sneakers today have become more of a fashion statement. Under such circumstances, for a new sneaker brand to enter and grow in the emerging market like India, the focus should be on creating unique styled products which not only would have an underlining fashion statement but also a niche USP (Special issue Multicultural marketplaces: new territory for international marketing and cross-cultural consumer research, 2013).

India market can be analysed from the following graph which shows the attitude of the consumers towards the particular brands. It shows that the consumers in the blue part (56%) prefer brands or new brands which keep 36% of consumers in the red part who do not prefer brands and the rest 8% are unaltered towards brands.


Figure:
Response rate of brand preference

The end users of these brands are really driven by their rarity, which inevitably means design, and popularity rather than associated costs in possessing the same. Another point worth highlighting is that these users are slightly indifferent to advertising and hence the marketing strategy for a new brand has to be very much end user oriented and sharp rather than a flat one (Special issue on cross-cultural and cross-national consumer research: psychology, behavior, and beyond, 2013). Also, an all out aggressive advertising may make the entire launching exercise turn haywire. Sneakers indeed are in close proximity and an indicator of the end user’s life style, culture and tastes and hence it is so very important for the new brand to launch the category of its products keeping in mind the demography of the region. So far as design is concerned, colour is one factor which has to be invariably kept in mind. Also, the user more often than not stay pre decided regarding the brand they wish to purchase rather than making a purchasing decision at the point of sale. Hence it is highly vague that a new unknown brand can witness high sales by the sheer mind conditioning and push selling done by highly trained salesmen.

If the possibility of launching new brand in the Indian market is considered as the primary aim of this study, then it is very much necessary to evaluate the trend in market share of the existing brands. The below mentioned figures indicates that both Adidas and Reebok are losing their relative market share. At the same time, Nike and Jordan are expanding in the Indian market. Therefore, it is look like crucial to identify, the individual policies of each of these organization so that an effective policy can be adopted to launch this new sneakers brand in the Indian market.

Figure: Market share of Adidas and Reebok

Source: https://www.businessinsider.in/2-Charts-That-Show-How-Nike-Dominates-The-Sneaker-Market/articleshow/37106326.cms

Figure: Market share of Nike and Jordan

Source: https://www.businessinsider.in/2-Charts-That-Show-How-Nike-Dominates-The-Sneaker-Market/articleshow/37106326.cms

Research indicates that distribution of free pairs at locations of high youth presence and endorsement by a prominent personality preferably from music, sports or the silver screen may be a way to make inroads into this market. According to the research taken about by the business school it can be said that there are many aspects regarding the sneaker market where Adidas, Reebok fails to fulfil the demands of customers, whereas Nike and Jordan fulfils the demands (Marchi, Martinelli and Balboni, 2014).

The issue with Adidas is that while it is staked out its turf as an official sportswear partner, Nike has more top athlete. This ultimately influences the buying behaviour of the consumers. So, it plays major role in measuring how the sneaker market is influenced by the sub-culture and culture. This information will be useful when the brand is trying to expand their market in Indian market.  The information also provided an approach to the consumer’s beliefs, values and behaviour who consider themselves as shoe addicts (Grassl, 2000).

According to the graphs in the case study it can be inferred that the sneaker addicts always and often go for the rarity and the popularity of a shoe model respectively. There lies a difference in the notion of the consumers in case of popularity where the classical consumers think popularity means everybody is wearing it whereas the addicts notion is if it is rare or not. Thus for a sneaker brand to expand in Indian market, it must first segregate the consumers into two groups one of classical and the other being the addicts. The company has to understand the Indian market inside out so that the consumer base is strong in this market. For a new sneaker brand to open up in Indian market, the brand has to acquire more knowledge about its consumers along with their taste and preferences. According to the case study figure 4 gives a clear overview of the purchasing behaviour of the classical consumer i.e., on what basis are do their purchase influence. It is seen that design and brand are preferred most by these consumers so a brand to expand must look into their design of the shoes and also maintain and try to increase their brand value.

Figure: Factors that influence purchasing process

It has been seen in the case study that to make a brand successful in Indian market it has to see to what extent are the consumers loyal to the brands. It is difficult to achieve brand loyalty within the first year of expansion because many other products were rising in the market and there were already other brands struggling in India to be in competitive advantage. Thus a sneaker brand to expand its market in Indian market, it has to develop new strategies and innovation so as to attract new customers and retain the old ones. Creating a sub brand it makes easier for the brands to get prospective markets and consumers. From this survey which is carried out in Scotland we can infer that for India as the prospective market for the expansion of a brand and make a position in the market will have to look into the culture and subcultures of the consumers (Melnyczuk, 2004).

There are many factors depending on which a brand has to take care before expanding. First it should see the host country with respect to the home country and collect all the general information. According to the case study the purchasing motives of the consumers in the host country should be understood. Relating to the case study we can see that the popularity of sneakers both in addicts and classical consumers are high. Addicts have kept sneaker as their choice of shoe and 73.3% of classical consumer also prefer the same which means that a brand expansion in Indian market depends on the type of consumer base which will favour sneakers. It depends on the popularity of the brand whether a consumer will favour the product or not.

According to Aaker’s brand equity model we see that there are five components such as brand loyalty, brand awareness, perceived quality, brand associations and other proprietary assets. Nike, Reebok have been for a long time in the footwear industry and this makes them the market players today because they know the strategies by which they have shaped up their brand equity (Merk, 2011). For a new brand to open up in Indian market, it should evaluate its value based on the model. The footwear industry in India is relatively slow compared to other emerging markets and it is relatively expensive so in during feeble economic growth the consumers will purchase less frequently. In this global market scenario big brand like Nike, Adidas will focus on premium consumers but there are consumers like the classical consumer who will not only buy sneaker but will also put their hand on other types of shoes, so for a new brand to position in the Indian market, it has to attract the consumers who do not fall under the premium consumers list and try to retain them with the rarity and popularity of their product among these consumers (Nenycz-Thiel and Romaniuk, 2014).

According to the survey carried out in the case study classical consumers are ones which are influenced mostly by the design and the brand of the sneakers along with the cost. They focus on the brand as a sign of quality and also the basis of integration in the society. Thus for the new brand to expand in the Indian market, they have to target the classical consumer for whom the price is a major factor for buying the product because they will hold back and move to other alternatives if the price of the sneakers is out of their budget. So basically for a new brand to acquire the consumer base in the Indian market it has to position its name among the consumer group.

However, the Indian footwear industry has been dominated by big firms those have initiated the business activity with export market. However, few companies of footwear are directly interlinked with different multinational companies through global supply chain. Major elements of the supply chain network within India are involved within the uncertainty, frequency and specificity. Wholesalers can undertake the direct entry of this sector. On the other hand, leather industry can be considered as traditional industry of the Indian sector. There are decreased series of unemployment within the Indian society. Therefore, this organization can enhance the level of business opportunities within the Indian sector with extensive level of brand awareness and advertising technique.

This company can face immense competition while operating business within the Indian competitive sector of Footwear Company. There are different business companies who have delivered extensive level of branding towards the consumers of the market. This company should deliver different types of advertising techniques and marketing campaign process for the consumers of the market sector. The company for the consumers of the company should deliver extensive level of brad awareness. Therefore, the company should be able to take extensive level of business capabilities within the competitive sector of the market. The company should deliver extensive level of brand equity component for the customers within the market. On the other hand, this company can enhance the level of business with the help of different marketing attributes within the competitive sector of the market.

Conclusion:

Segregation of the consumers on the basis of likeness of the product is necessary so as to know which particular segment has to be targeted. The process of expansion of a new brand might take some time in Indian market, because the consumers has to first know the brand and what different itr has to offer compared to other famous brands (Parker, 2006). As it is repeatedly seen in the case study that the consumers are focusing mainly on the rarity and popularity of the product which importantly includes the design of the product, the brand has to design the sneakers in a way which keeps them in competitive advantage among the big players within the market which was once developed (Veloutsou, 2009).

 

References

Aaker, J., Fournier, S. and Brasel, S. (2004). When Good Brands Do Bad. Journal of Consumer Research, 31(1), pp.1-16.

Berrill, J. and Hovey, M. (n.d.). An Empirical Investigation into the Internationalisation Patterns of UK Firms. SSRN Journal.

Carmen, P. (n.d.). Analysis and Understanding of Key Marketing Concepts Marketing Activities Organized within the Footwear Industry Companies. SSRN Journal.

Coleman, C. (2013). Classic Campaigns - "It's Gotta Be the Shoes": Nike, Mike and Mars and the "Sneaker Killings". Advertising & Society Review, 14(2).

Cowie, J. (2002). Edna Bonacich and Richard P. Appelbaum, Behind the Label: Inequality in the Los Angeles Apparel Industry. Berkeley: University of California Press, 2000; Nancy L. Green, Ready-to-Wear and Ready-to-Work: A Century of Industry and Immigrants in Paris and New York. Durham: Duke University Press, 1997; Miriam Ching Yoon Louie, Sweatshop Warriors: Immigrant Women Workers Take on the Global Factory. Cambridge: South End Press, 2001; Leon Stein, The Triangle Fire. Introduction by William Greider. Ithaca: Cornell/ILR Press, reprint 2001 [1962]; Tom Vanderbilt, The Sneaker Book: Anatomy of an Industry and an Icon. New York: The New Press, 1998. International Labor and Working-Class History, 61.

Das, S., Stenger, C. and Ellis, C. (2009). Managing tomorrow's brands: Moving from measurement towards an integrated system of brand equity. J Brand Manag, 17(1), pp.26-38.

Gillespie, K., Jeannet, J. and Hennessey, H. (2007). Global marketing. Boston: Houghton Mifflin Co.

Grassl, W. (2000). Strategic Brand Management: Building, Measuring, and Managing Brand Equity.20003Kevin Lane Keller. Strategic Brand Management: Building, Measuring, and Managing Brand Equity. . Upper Saddle River, NY: Prenticeâ€ÂHall 1998. xxvi + 636pp. + 122pp. (cases, epilogue, credits, index) $60.00. Journal of Consumer Marketing, 17(3), pp.263-272.

Luna, D. and Forquer Gupta, S. (2001). An integrative framework for crossâ€Âcultural consumer behavior. International Marketing Review, 18(1), pp.45-69.

Maehle, N., Otnes, C. and Supphellen, M. (2011). Consumers' perceptions of the dimensions of brand personality. Journal of Consumer Behaviour, 10(5), pp.290-303.

Marchi, G., Martinelli, E. and Balboni, B. (2014). The country of origin effect on retailer buying behavior: a cross-country analysis on Italian footwear. Journal of Global Fashion Marketing, 5(2), pp.122-134.

Melnyczuk, A. (2004). Starting with Sneakers. The Antioch Review, 62(3), p.487.

Merk, J. (2011). Production beyond the Horizon of Consumption: Spatial Fixes and Anti-sweatshop Struggles in the Global Athletic Footwear Industry. Global Society, 25(1), pp.73-95.

Nenycz-Thiel, M. and Romaniuk, J. (2014). The real difference between consumers' perceptions of private labels and national brands. J. Consumer Behav., p.n/a-n/a.

Parker, P. (2006). The 2006 United Kingdom economic and product market databook. San Diego, CA: ICON Group.

Reebok EasyTone Women’s Footwear Case. (2012). Advertising & Society Review, 12(4).

Rubio, N., Villaseñor, N. and Oubiña, J. (2014). Consumer identification with store brands: Differences between consumers according to their brand loyalty. BRQ Business Research Quarterly.

Sangani, K. (2012). The cost of running [Footwear industry]. Engineering & Technology, 7(3), pp.64-67.

Shoes, Glues and Homework: Dangerous Work in the Global Footwear Industry. (2010). Contemporary Sociology: A Journal of Reviews, 39(3), pp.363-363.

Special issue Multicultural marketplaces: new territory for international marketing and cross-cultural consumer research. (2013). International Marketing Review, 30(3).

Special issue on cross-cultural and cross-national consumer research: psychology, behavior, and beyond. (2013). International Marketing Review, 30(2).

Veloutsou, C. (2009). Brands as relationship facilitators in consumer markets. Marketing Theory, 9(1), pp.127-130.

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