Ajanta Shoes Company Ltd

of 3
All materials on our website are shared by users. If you have any questions about copyright issues, please report us to resolve them. We are always happy to assist you.
Case study for Marketing compant
  Marketing in IndiaCase Studies: Ajanta Shoes Company Ltd. CASE STUDIES  Ajanta Shoes Company Ltd  In December 199 the e!ecuti es o# Ajanta Shoes Company $ere to decide their pricing strategy #or their  products in the #ace o# #ierce competition in the market. %he company has been in business #or the past thirty years. %i1&1991 the company did not ha e any prob&em o# se&&ing its shoes since the demand e!ceeded the supp&y situation. 'o$e er( a#ter opening up o# the economy the company #aced se ere competition both #rom other &eading shoe manu#acturers in the domestic market and a&so #rom the mu&tinationa& companies that had recent&y entered the market.It $as estimated that the Indian #oot$ear industry $as $orth )(*** crores in a&ue terms. %he industry $as dominated by the unorgani+ed sector to the e!tent o# ,*-. %he organi+ed sector had the insta&&ed capacity to  produce both &eather and non&eather shoes to the tune o# si!ty#i e mi&&ion pairs. %he mu&tinationa&s $hich had recent&y entered the market main&y #ocused on sports shoes segment./ata Shoe Company( the &eader in the market( had di##icu&t times to #ace. %he company #aced sti## competition#rom mu&tinationa&s. %o maintain its &eading position( the company $as gearing up to impro e its popu&ar  brands and a&so &aunch ne$ ones. 0or instance its recent &aunch o# 'ush uppies range and 2ua 3adis &ine o# s&ippers $as considered to be a good success. Its other popu&ar brands inc&udeAmbassador( o$er( 4orth Star( etc. %he company had recent&y re amped its distribution net$ork by appointing a chain o# #ranchisees to impro e its market penetration in rura& and urban areas. %hrough its #ranchising system /ata added 5** ne$ to$ns in addition to 6* to$ns in $hich its products $ere a&ready so&d. %he 1.7** retai& out&ets spread across the country $as the great strength o# the company. %he company sa$ great #uture #or the 8ata brand name. %he pricing strategy o# the company $as to appea& to the midd&ec&ass #ami&ies.Some o# the the other &eading competitors inc&uded Liberty( Action( Lakhani( hoeni!( uma and Lotto  besides mu&tinationa&s &ike /eebok and Adidas. Liberty shoes #o&&o$ed high ua&ityhigh price strategy. A#ter 8ata( it $as the ne!t Indian p&ayer $ho $as ab&e to bring ne$ sty&es and mode&s o# shoes in tune $ith the changing trends in the market p&ace. %he company $as strong in the schoo&shoes segment and a&so in casua&( sporty and a&&purpose shoes. 8ut it cou&d not compete e##ecti e&y $ith hoeni! $ith its %u## brand and Action shoes or #or that matter $ith other mu&tinationa& brands in sports shoes segment. %he company sponsored Miss or&d 199) and came up $ith some Miss or&d ranges o# shoes under its Senorita series. %hecompany had ;6* e!c&usi e sho$rooms and o er (*** mu&tibrand stores across the country. %he prices o# its  products $ere main&y aimed at midd&ec&ass #ami&ies in metropo&itan cities and suburban to$ns.ood&and shoes( Mescos( 3assons and Lumberjack are other competitors $ho aimed at the premium segment.%he mu&tinationa&s $hich ha e entered into the market recent&y a&so aimed at premium segment. /eebok( Adidas and 4ike( #or e!amp&e( $ere trying to estab&ish a niche in the premium market segment. %hese companies be&ie ed that $ith the chang51g times( price $as no &onger considered( to be the on&y #actor by theconsumers but ua&ity( sty&e( #inish and other a&ues became important./eebok products( #or e!amp&e( $ere aimed at Indian youth $ho $ere increasing&y becoming #itness and #ashion conscious. %he company $anted to re o&utioni+e the sports segment $ith inno ati e and creati e  promotiona& strategies &ike organi+ing #itness e!ercise $orkshops( road races( and using ce&ebrities/ahu& Dra id in cricket( Misha <re$a& in suash( etc. Simi&ar&y( Adidas roped in Sachin %endu&kar( Leander aes( Mahesh 8hupathi to endorse its brands. In addition( it opened e!c&usi e out&ets in se&ected cities to create  brand a$areness.  Marketing in IndiaCase Studies: Ajanta Shoes Company Ltd.Ajanta Shoes Company manu#actured di##erent types o# #oot$ear at its #actory in =anpur. %he product mi! o# the company consisted o# men>s #oot$ear( &adies #oot$ear and chi&dren #oot$ear. In each category the company o##ered shoes( sanda&s( and s&ippers. /ecent&y the company a&so started o##ering sports shoes $hich $ere priced s&ight&y higher than those o# other products. %he price range o# products o##ered by company $as #rom /s 7** to /s 17**. %he company>s brand name Amanita $as ery popu&ar among the consumers both in metropo&itan and suburban areas. ?# &ate the company $as making p&ans to penetrate the rura& markets.%he Managing Director o# the company said: @e ha ebeen in business #or the &ast ;* years. Ask any consumer #or the ua&ity and durabi&ity o# our products. ?ur shoes and s&ippers are made o# genuine &eather and yet so&d at &o$er prices. %he ne$ products &aunched by the big companies are( no doubt( trendy but $ou&dnot &ast &ong. eop&e are easi&y s$ayed a$ay by ad ertisement and promotion gimmicks. e be&ie e in o##ering products o# genuine ua&ity. In the &ong run the consumers $i&& #ind out the superiority o# our  products. Indeed our motto is that the product speaks #or itse&#. A satis#ied customer is the best ad ertisement $e can ha e.@%he company had a $ide distribution net$ork comprising o er 76* out&ets &ocated most&y in metropo&itan andsuburban areas. %he Marketing Manager $as proud that some o# their dea&ers ha e been doing business $ith the company generation a#ter generation. %hey $ere &ooked a#ter by the company through se era& incenti es and promotion schemes. 0urther they $ere a&so in ited once a year #or training at the company headuarters #or about a $eek. A#ter the training programme the company organi+ed a big reception in a #i e star hote& $here #ami&ies o# the dea&ers $ere a&so in ited.%he Marketing Manager #e&t that though the company>s products $ere o# e!ce&&ent ua&ity the sa&es had been dec&ining o er the years. 'e said that the reasons #or the dec&ine in sa&es $ere most&y because o# the competition #rom the mu&tinationa& companies. %hese companies ad ertised hea i&y and o##ered arious discounts. 'e #e&t ery bad that some o# them had >a&ready started $ooing the company>s dea&ers to $ork #or them by o##ering se era& inducements. 0urther he said that $hi&e the company>s o&d &oya& customers continuedto do business $ith Ajanta Shoes( the younger generation $as s$ayed by the ad ertisement o# mu&tinationa&s and they pre#erred to buy trendy shoes( though they $ere ery e!pensi e. %he Marketing Manager #e&t that thecompany>s inabi&ity to ad ertise its products on a &arge sca&e $as one o# the reasons $hy the company &ost its share o# the market to its competitors. 0urther the company $as a&$ays &ate in &aunching ne$ #ashions in #oot$ear. %he company hea i&y re&ied on its sa&es persons and dea&ers to get the &atest market trends. %his caused de&ay in &aunching ne$ products. 8y the time the company $as ab&e to get the #eedback #rom its sa&es  personne& in ariab&y the competitors had a&ready introduced se era& ne$ products and taken the major In ie$ o# competiti e situation( dea&ers demanded arious discounts and concessions #or se&&ing the company>s products. %hey #e&t that the company cou&d se&& its products on&y on the basis o# price and they #e&t that i# the company cou&d reduce the price o# its products that $ou&d he&p them to impro e sa&es.%ab&e 1 presents the pro#it and &oss account o# Ajanta Shoes company #or the year 199). %he #actory $as $orking on&y at ;*- o# the capacity because o# &ack o# orders. %he company cou&d increase its production $ithin a short period pro ided enough orders $ere a ai&ab&e.During Apri&( 199)( a#ter going through the reports submitted by the company>s sa&es personne&( the company top e!ecuti es $ere serious&y considering $hether the company shou&d reduce the prices o# some o# its  products in the &ight o# suggestions gi en by most o# its dea&ers. %his $ou&d he&p to impro e the #actory capacity uti&isation a oid &osses $hich the company $as incurring. An independent study made in this regard re ea&ed that i# the company cou&d reduce the prices o# its products by 7*- the sa&es $ou&d increase by 6*-. At a 1*- reduction in price the sa&es $ou&d increase on&y by 7*-.  Marketing in IndiaCase Studies: Ajanta Shoes Company Ltd. Table 1 /s B***Sa&es17(***/a$ Materia&s5,(**8o!es;)*ackaging75*?ther Materia&s,5*?ther ariab&es Costs;)*ages E Sa&aries;()**Ad ertising1(7**romotion;)*Administrati e ? erheads)**%ota& Costs17(;)*ro#its B?r LossB;)* 4onoperating Income17* 4et ro#it 8e#ore %a! BLossB75*%he Marketing Manager( ho$e er( #e&t that price $as not the major #actor. It $as &ack o# a$areness on the  part o# the consumers about the ua&ity o# the company>s products that stood in the $ay o# increasing sa&es. Consumers ha e become more and more brand conscious. %hough Ajanta &aunched se era& popu&ar premium  brands in the past( they cou&d not support them $ith adeuate promotion $ith the resu&t that the competitors snatched a$ay company>s market share by &aunching ne$er brands aiming at the premium segment. ?nce the company ad ertises its products and educate the consumers ho$ the company>s products $ere more durab&e and o# superior ua&ity the sa&es $ou&d increase. 0or this he ad ocated at &east doub&ing ad ertising and  promotion e!penditure.%he Managing Director #e&t that the shoe industry in India had huge potentia&. In a country $ith a popu&ation o# 96* mi&&ion e en i# 76* mi&&ion $ere to constitute potentia& market( the si+e o# the market $as too big. 'e $ondered $hy the company shou&d not go in #or mass market positioning instead o# #o&&o$ing the e!amp&e o# mu&tinationa&s $hich aimed at premium market positioning. hy not introduce a ne$ &ine o# shoes and #oot$ear designs #or the &o$ and medium price rangesF hy to $aste money on ad ertisingF Instead( $ou&d it not be better to reno ate the company>s retai& out&ets and o##er more incenti es to the dea&ers to push the  products to the consumers $ho are interested in buying &o$er and medium price range #oot$earF0urther he $as o# the opinion that the company had to estab&ish a pricing objecti e $hich $as c&ose&y re&ated to the o era&& business strategy. Second&y( he rea&ised that pricing shou&d be treated as part o# o era&& marketing mi! strategy. %hird&y( the company had to e!ercise pricing discip&ine. It $as a&$ays tempting to make short term pricing mo es( either up or do$n( in response to changing market situation but such mo e had to be a&igned $ith the o era&& objecti es o# the company.In the &ight o# the discussions $ith the top e!ecuti es o# the company the Managing Director $as $ondering $hether &o$ering price o# the company>s products $ou&d make any &ong term strategic sense and $hat changes $ere reuired in the company>s o era&& marketing strategy and in the marketing mi! to maintain  pro#it &e e&s and impro e company>s per#ormance. Questions 1.G a&uate the company>s pricing strategy. hat shou&d be the company>s pricing objecti esF7.hat steps the company shou&d take to arrest dec&ine in sa&esF;.hat changes are needed in the company>s marketing mi! strategy to maintain and impro e its market share and pro#it goa&sF
We Need Your Support
Thank you for visiting our website and your interest in our free products and services. We are nonprofit website to share and download documents. To the running of this website, we need your help to support us.

Thanks to everyone for your continued support.

No, Thanks