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.

1. 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: Servis:
Shoes 499-1799 Shoes 429-1699
Sleepers 329-999 Sandals 329-999
Sleeper (Ladies) 499-899 Sleepers 429-899
Wienbrener: DonCorlos:
Shoes 899-2199 Shoes 999-2500
Sandals 499-1499 Sandals 899-1999
Sleepers 499-1299 Sleepers 699-1299
Power: Cheetah:
Joggers 999-1899 Joggers 1199-3999
Sandals 899-1299

Bubble & Gambles: Toz:

Kids Shoes 299-799 Kids Shoes 299-899
Leeza: (Ladies)
SLEEPERS 299-499
Joggers 499-999
Sandals 499-1459
Shoes 599-999
B-First: Skoz:
School Shoes 379-649 School Shoes 349-699
B-Comfit: Calza:
Sleepers 599-899 Sleepers 349-749
Sandals 499-999 Sandals 349-849
 Ladies Sandals 429-899

RECOMMENDATION:

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

2. 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 (Total Cost Sales Total Sales Profit Total
Unit in Figure) Price/Unit (PKR) Margin/Unit Profit
cost (PKR) (PKR) (PKR)
(PKR)

New style in
Power 1 Lac 696 69600000 1699 16990000 1003 100300000
Joggers 0

New style in 1 Lac 584 58400000 1899 18990000 1315 131500000

Wienbrener 0
Shoes (Male)

Bata Sandal 1 Lac 239 23900000 799 79900000 560 56000000

(Male)

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

20000000
New style in Power Joggers

20000000
New style in Wienbrener Shoes (Male)

20000000
Bata Sandal (Male)
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))

Scale Weighted
Factor (1) (2) (3) (4) (5) Score Weight score
Technical Task Difficulty Very Difficult Easy 4 4 16
Development Skills Required Have None Required Perfect fit 5 5 20
Design Superiority Assurance None Very High 4 5 20
Security of Design (Patent) None Have Patent 4 5 20
Manufacturing Equipment/Processes Have None Required Have Them 5 5 25
Vendor Cooperation Available None In Sight Current Relationship 4 3 12
Likelihood of Competitive Cost Competition Over 10% Less 5 5 25
Likelihood of Quality Product Below Current Levels Leadership 4 5 20
Likelihood of Speed to Market Two Years or More Under Six Month 4 4 16
Team people available None Right One All Key Ones 5 5 25
Dollar investments required 10 Million 50 Million 5 5 25
Legal issue Major Ones None in Sight 5 2 10

234

Market Volatility High/Erratic Very Stable 3 5 15

Probable Market Share Fourth at Best Number One 3 5 15
Probable Product Life Less Than a Month Over 2 Years 4 5 20
Promotion Requirement Have No Experience Very Familiar 5 5 25
Target Customer Perfect Stranger Close/Current 4 5 20
Distributers/Retailers No Relationship Current/Strong 5 3 15
Likelihood of Filling Need Very Low Very High 4 5 20
Competition to be Faced Tough/Aggressive Weak 2 5 10
Environmental effects Negative Positive 4 2 8
Global application No Use Outside National Fits Global 5 4 20

Customer integration Very Unlikely Customers Seeks It 4 1 4

Probable profit Break Even at Best ROI>40% 3 5 15

187
421

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

Factor Scale Score Weight Weighted
(1) (2) (3) (4) (5) score
Technical Task Difficulty Very Difficult Easy 3 5 15
Development Skills Required Have None Required Perfect fit 3 5 15
Design Superiority Assurance None Very High 2 5 10
Security of Design (Patent) None Have Patent 4 5 20
Manufacturing Equipment/Processes Have None Required Have Them 3 5 15
Vendor Cooperation Available None In Sight Current Relationship 1 5 5
Likelihood of competitive cost Competition Over 10% Less 1 5 5
Likelihood of Quality Product Below Current Levels Leadership 3 5 15
Likelihood of Speed to Market Two Years or More Under Six Month 4 5 20
Team people available None Right One All Key Ones 4 5 20
Dollar investments required 10 Million 70 Million 3 5 15
Legal issue Major Ones Non in Sight 5 2 10

165

Market Volatility High/Erratic Very Stable 2 5 10

Probable Market Share Fourth at Best Number One 2 4 8
Probable Product Life Less Than a Month Over 2 Years 4 4 16
Promotion Requirement Have No Experience Very Familiar 4 5 16
Target Customer Perfect Stranger Close/Current 3 5 15
Distributers/Retailers No Relationship Current/Strong 5 3 15
Likelihood of Filling Need Very Low Very High 3 5 15
Competition to be Faced Tough/Aggressive Weak 2 5 15
Environmental effects Negative Positive 4 2 8
Global application No Use Outside National Fits Global 5 4 20

Customer integration Very Unlikely Customers Seeks It 5 2 10

Probable profit Break Even at Best ROI>40% 1 5 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