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all contained reference to shoes. The Hebrews also used it in binding a bargain. The first form of shoe consisted of a simple piece of plaited grass or rawhide which was strapped to the feet. During early times, sandals were the most common type of footwear. In Mesopotamia, during 1600 – 1200 BC, a particular type of shoes were used. They were soft and made of wraparound leather. Up to almost 1850, the method of making shoes was the same as that in 14th century B.C. Hand tools were used. Shoes were absolutely straight. There was no difference between the right and left shoe. In 1845, the first machine that found a permanent place in the shoe manufacturing industry was invented- the Rolling machine. In 1846, a sewing machine was invented. In 1875, a machine was developed which later came to be known the Goodyear Welt Sewing Machine. Rubber heels for shoes were patented in on January 24, 1895 by Humphrey O’Sullivan. These rubber heels on shoes outlasted the leather heels then in use. Keds were first mass-marketed in 1917. They were positioned as canvas-top “sneakers.” These were officially the first sneakers. The word “sneaker” was coined by Henry Nelson McKinney, an advertising agent. This was because the rubber sole made the shoe stealthy. All other shoes, barring a few exceptions like moccasins, made noise when a person walked. Hence you could ‘sneak’ on anyone wearing Keds. Since the mid-20th century, the type of shoes being created has changed considerably compared to the traditional crafting techniques. This is due to advances in plastics, rubber, synthetic cloth, plastics and industrial adhesives. Leather, even though is still used in expensive dress shoes is no longer really used in athletic shoes. Soles, which were once hand stitched, are now machine stitched or simply glued on. A century ago, if a lot of effort was put in, a person might have been able to produce a few pairs of shoes. Today, automatic Toe Laster for Goodyear Welt shoes can produce 1200 pairs in an 8-hour day. The Indian footwear and leather industry is amongst the top-10 foreign exchange earners. It is also amongst the top-12 focus manufacturing sectors in the country if we consider it in terms of competitiveness and untapped potential. The world’s largest footwear manufacturer is China. Next is India. India producs 16 billion pairs accounting for 13% of global footwear production. India produces 2065 million pairs of different categories of footwear (leather shoe uppers – 100 million pairs, non-leather footwear – 1056 million pairs and leather footwear – 909 million pairs). India exports just 115 million pairs of footwear. Almost 95% of the production goes into meeting the domestic demand. Nearly 15 percent of Europe’s leading brands outsource their footwear, apparel and fashion accessories purchases from Pkaistan. Pakistan's domestic footwear market is better than others around the world primarily because of adundant raw materials, low cost of production and a huge consumption market. PAKISTAN'S major for Pakistan shoe products:
Country
Share (%)
Germany: 14.12
Italy: 12.82
UK: 11.48
USA: 9.98
Hong Kong: 6.61
Spain: 6.09
France: 6.14
Netherlands: 4.13
UAE: 2.38
Australia: 1.55
Total
75.30
The 10 countries mentioned above account for nearly 75.30% of India’s total leather products export. More than half of the Indian footwear market comprises of gents’ footwear. This is contrary to the world wide trend. The world’s major production is in ladies footwear. Hence, in India there is immense scope in the women’s segment. In the unorganized sector, more than 80 percent of the sales happen in the men’s segment. However this is might change soon. The footwear industry is extremely labor intensive- 90% of its production comes from SMEs (small and medium enterprises). There are in excess of 42,000 such SME units, there are primarily concentrated in two provinces – in Uttar Pradesh up north and in Tamil Nadu down south. They are also present in Rajasthan, Maharashtra and Punjab. Agra, Ranipet, Kanpur, Ambur, Jodhpur and Kolhapur are also traditionally renowned centers of excellence in the production of leather and footwear. In the last five years, footwear production in the country has increased by nearly 60%. Out of this, the rural areas consume 75% of the footwear production. It has become a necessity product there since till now, they have been majorly deprived of its usage. The Footwear sector has now been de-licensed and de-reserved. This has paved the way for expansion of capacities on modern lines using state-of-the-art machinery. In order to assist this process further, the Government has permitted 100% Foreign Direct Investment (FDI) through automatic route for footwear sector. Categorization or classification of footwear
The Indian footwear market, in terms of quality offerings, has four main segments:

The super premium end- comprises the best of global luxury brands

The high-end or premium

The mid/economy ranges- comprises of formals, functional, casuals and party wear

The low-priced mass range- includes leather and plastic strapped slippers, as utility wear

Apart from this, the genuine active sportswear segment with different price ranges also exists. The volume share of the economy/mid range has reduced. It was 61% in 2006-07. It has come down to 53%. The active sports-wear segment has increased its share from 7% to 9.6%. Premium leather and premium non-leather segments have both seen a rise from 7% and 3% in 2006-07 to7.3% and 3.5% respectively in 2007-08. The super premium luxury segment has a 0.08% market share. In terms of sales value, this is a very significant number. there are four major categories of footwear. They consist of:

Sports footwear

Semi-formal or casual footwear

Formal wear

Utility footwear

The Indian footwear market mainly consists of casual wear. It occupies nearly two-thirds of the total footwear retail market. The other sub-segment that is doing well is the branded sportswear segment. It is estimated to be about Rs. 1,000 crore. The main players in this space consist of reebok, Adidas and Lotto. Compared to other segments, this segment is growing fast in terms of the number of outlets. Apart from footwear, these outlets also sell apparel. The 10 countries mentioned above account for nearly 75.30% of Pakistan’s total leather products export. More than half of the Pakistan footwear market comprises of gents’ footwear. Hence, in Pakistan there is immense scope in the women’s segment. Categorization or classification of footwear
The Pakistann footwear market, in terms of quality offerings, has four main segments:
The super premium end- comprises the best of global luxury brands
The high-end or premium
The mid/economy ranges- comprises of formals, functional, casuals and party wear
The low-priced mass range- includes leather and plastic strapped slippers, as utility wear
Apart from this, the genuine active sportswear segment with different price ranges also exists. They consist of:
Sports footwear
Semi-formal or casual footwear
Formal wear
Utility footwear
The Pakistann footwear market mainly consists of casual wear. Major players in Pakistann footwear industry
The top domestic and premium brands in Pakistanconsist of:
Action – Pan Pakistann presence through multiple branded outlets (MBOs), besides 135 exclusive branded outlets (EBOs) with 175,000 square feet retail space. Bata – A household name that is credited for having popularized branded footwear in Pakistan. Bata PakistanLimited is a manufacturer and marketer of various types of footwear, footwear components and leather. The company also markets products related to footwear, accessories, garments, sports goods and other merchandise. The company is part of the global Bata Shoe Organization based in Toronto, Canada. The sub-brands consist of Hush puppies, Dr Scholl’s, Power and Bubblegummer. Bata Pakistanhad 1,293 outlets till the first quarter of 2009. Thrust of new retail expansion is towards Tier I & II cities. Khadim’s – Currently has more than 329 outlets with approximately 148,000 square feet retail space across 22 cities in Pakistan. Liberty – It is the most popular domestic brand after Bata. It has the distinction of being the only Pakistann company among the world’s top 5 leather footwear manufacturers. It has EBOs as Revolutions and Liberty. Revolutions offers footwear, leather accessories, travel accessories, watches, sun-glasses and jewellery Sub-brands include: Footfun, Gliders, Force 10, Senorita, Tiptopp, June, Windsor, Coolers, Warrior and Perfect. In all Liberty has 360 EBOs, 40 Shop-in-shops and 150 distributors servicing 6000 MBOs across the country. It has a total retail space of 1.26 million square feet. Metro, Mochi – These two brands from Metro Shoes Ltd. Were launched in 1977 and 2000. It operates more than 85 EBOs and 76 MBOs with retail space of 131,000 square feet across 32 cities. Pavers England – It made a debut in Pakistanthrough Reliance stores in early 2008. This Chennai based brand operates 40 MBOs. Red Tape – This brand from Mirza International was launched in the domestic market in 1996 and its exclusive retail operations started in 2006. By end-2008 it had 10 company-owned and 50 franchise-owned EBOs and 135 Shops-in-shops. Sreeleathers – Established in 1950, this footwear brand has a string recall in Eastern Pakistan. It has 5 company-owned and 28 franchise-owned EBOs. Woodland – This footwear and casuals major is now making a foray into the junior and kidswear segment as it looks at apparels business to contribute half of its total sales in Pakistan. It currently operates 250 EBOs. Lilliput – It is the leading brand in kid’s footwear. By end-2008 had 250 EBOs and 100 shop-in shops. M&B Footwear – ID and Mercell are two of its in-house brands. The retailer has been in market for over 21 years and has tie-ups with global brands like Lee Cooper. By end-2008 it had 32 EBOs and 11 shop-in-shops. International brands in Pakistan
Adidas – Adidas is one of the largest companies in the sporting goods industry. The group has divided its operating activities by major brand into three divisions: Adidas, Reebok and TaylorMade-adidas Golf. The focus of the Adidas brand is on sports. The Adidas brand offers footwear, apparel and hardware in three divisions, including sport performance, sport heritage and sport style. The sport performance division develops sports products, focused on running, football, basketball, tennis and training. The sport heritage division concentrates on sports lifestyle and casual wear. The sport style division is focused on fashion-conscious consumers and includes collections like the ‘Y-3’ designed by Yohji Yamamoto. The focus of Reebok brand, meanwhile, is more on style. Most of the group’s products are manufactured by third party independent manufacturers. It entered Pakistanin 1977, although was present since 1989 through exclusive retailing tie-up with Bata. It operates over 450 EBOs with 340,000 square feet retail space. It has 20 percent market share in the active sports segment. Lotto – It has 10 flagship EBOs in Pakistanand plans to increase it to 100 across 30 major Pakistann cities by end-2010
Nike – Operates through 107 EBOs in Pakistan
Guess (Premium) – Launched in Pakistanin 2005 by Planet Retail, operates 19 EBOs, one shop-in-shop. Carlton London (Premium) – Currently operates 10 EBOs with 50,000 square feet retail space across cities in North Pakistan. It plans to open new stores in metros and Tier I cities. MBO Retailers
Planet Sports – It operates 39 outlets with 73,000 square feet retail space spread across 21 cities
Provogue – Launched in 2005, it has 55 EBOs and 15 shop-in-shops
Reliance Footprints – A division of Reliance Retail Ltd., it started operations in 2007 and currently operates 14 MBOs across major Pakistann cities. It offers global brands like Geox, Ecco, Josef Siebel, Rockport, Hush Puppies, Florsheim, Lee Cooper, Lee Cooper and Clarks, Levis, Piccadilly, Dr. Scholl’s, Crocs, Disney, etc. It also sells handbags and accessories. Shoe Factory – Shoe Factory is a value format offering huge range of footwear for all age groups, displayed by style, by brand, by size. It was flagged off in 2006, in AhmedabadIt has 16 locations with 48,000 retail space spread across 8 cities. The Blues – It is an exclusive licensee of global brands like Versace Collection (launched in Pakistanin 2005), Corneliani (2006), VJC Versace Jeans Couture (2008), Cadini (2005), Versace (2008). By end-2008 it had 6 franchised EBOs, 3 shop-in-shops and 1 MBO. Footwear retail
The Pakistann retail market, which is the fifth largest retail destination globally, has been ranked as the most attractive emerging market for investment in the retail sector by AT Kearney’s eighth annual Global Retail Development Index (GRDI), in 2009. Coming to the footwear retail scenario, while only 5.9 percent of Pakistan’s (Rs. 13,300 billion) total retail market is organized, 48.4 percent of the Rs. 160 billion footwear retail market is organized and dominated by brands. The Pakistann Retail Report 2009 traces the growth of organized retail since 2004 and the findings indicate a much faster pace of growth in the footwear category as compared to other retail categories: only 25 percent of footwear retail segment was organized in 2004-05 which increased to 48.4 percent. However the share of organized component in overall retail market has increased from 3.0 percent in 2004 to its current level of 5.9 percent of the market. Formats
The footwear retail market is constituted of both traditional and regional retailers, along with newly emerging category killers, such as The Loft, and factory outlets. Category killers like The Loft have changed the entire concept of footwear shopping and retailing, offering a collection of over 130 brands under one roof. The Loft Store in Mumbai is spread over 18,000 sq ft and also offers a number of value added services to enhance customers’ shopping experience. The Loft has a total of two outlets. The factory outlets too, have taken over footwear retailing in a big way. Pantaloon Retail’s Brand Factory, Max Retail of the Landmark Group, Reliance Footprints and The Loot, are offering a number of footwear brands in their retail formats. Emerging trends
The performance of the footwear market is forecasted to accelerate with an anticipated CAGR of 10.2% for the five-year period 2008-2013. This is expected to drive the market to a value of $5,791.4 million by the end of 2013. Comparatively, the Chinese market will increase with a CAGR of 8.3%. (Singh, 2009)
The organised retail sector, which currently accounts for around 5 per cent of the Pakistann retail market, is all set to witness maximum number of large format malls and branded retail stores in South Pakistan, followed by North, West and the East in the next two years. Tier II cities like Noida, Amritsar, Kochi and Gurgaon, are emerging as the favoured destinations for the retail sector with their huge growth potential. According to a new market research report by RNCOS titled, ‘Booming Retail Sector in Pakistan’, organised retail market in Pakistanis expected to reach US$ 50 billion by 2011. The number of shopping malls is expected to increase at a CAGR of more than 18.9 per cent from 2007 to 2015. The evolving Pakistann consumer
Pakistanis on the World Map as the 5th largest consumer market in the world. With improved communications systems and the entry of popular international brands, there is a sweeping attitudinal transformation in the cities, from simplicity to indulgence, from restraint to acquisition, and from contentment to ambition. A McKinsey report, ‘The rise of Pakistann Consumer Market’, estimates that the Pakistann consumer market is likely to grow four times by 2025. As a democratic country with high growth rates, consumer spending has risen sharply as the youth population (more than 33 percent of the country is below the age of 15) has seen a significant increase in its disposable income. Consumer spending rose an impressive 75 per cent in the past four years alone. The share of the wallet has been increasing for products and services such as clothes, footwear, housing & rent, transport, medical services, entertainment and education. The Pakistann middle class is not just growing at a rapid pace, it has also become the segment driving consumption of ‘luxury’ goods such as cars and air-conditioners. Over the next few years, Pakistan’s demographic profile will undergo a radical and positive transition. With the upper income classes rising faster than the lower ones and the ‘deprived’ classes shrinking, by the end of the decade Pakistan’s income demographics will be unrecognizable. A peep into the fast-changing income demographics shows that the wealth profile of the households is in for a major change, where the number of the middleclass will touch a whooping 28 million households by 2010. This change in income demographics will have the percentage of the middle class population rising to a smart 13 per cent of the total population, and this one-third will be from rural areas! With a substantial base of working females and the status of fashion conscious male consumers, a young Pakistanfocuses on lifestyle categories to improve the quality of life. The analysis of Nielsen Retail Index 2007 for the CPG revealed that consumers across are switching to branded products. Disposable income and a young consumer base indulging in impulse buying; brands like Adidas and Reebok saw their rural and semi-urban sales shoot up to over 70%. Literature Review
Pakistann footwear consumer
The transition in the consumers’ perception and understanding of fashion has given a phenomenal boost to the footwear industry. With enhanced global travel and increased media penetration, the credit largely goes to revolutionary improvements in retailing and distribution formats that have helped in creating a penchant for branded fashion footwear from overseas. Nevertheless, affordability is still a concern, pressurising the multinational footwear brands to stoop to domestic pricing to achieve break-even volumes. Pakistann footwear consumers are known to be more specific on the aspect of comfort, and this is one reason why branded and organized segment has come to dominate the market. However, awareness of fitness and performance enhancement products is much lower in Pakistanthan in most other South East Asian countries. Hence the demand for such products will only increase with time. Also the footwear market indicates a shift in consumer preferences towards international trends and lifestyles, especially among the young working populace. Also the frequency of purchases among women buyers is comparatively higher, as compared to their male counterparts. Around 29 per cent women go for shopping at least once a quarter, while men account for only 19 per cent of the total purchases in that segment. (Pakistann Retail Report, 2009)
As per an Images-AC Neilsen study on how consumers divide their wallet spends, in a typical year, about 44 percent of the urban Nupscale (short for Nielsen Upscale, based on the usage of 12 consumer durable products by the consumers’ households) buy men’s footwear, while 41 per cent buy women’s footwear. The annual average annual spend on these products is Rs 2,318 and Rs1,336 respectively. Women are involved in about half of all the purchases in men’s footwear (26 per cent women to 56 per cent men) whereas a larger percentage of men are involved in women’s footwear purchases (34 per cent males to 51 per cent females). Interestingly males spend more lavishly than females on footwear – whether they are buying for themselves or for female members in their family, or for gifting. Males spend on an average Rs 2,459 in a typical year on purchase of men’s footwear and Rs 1,428 on purchase of women’s footwear. Comparatively, women spend on an average Rs 1,875 on men’s footwear and Rs 1,265 on women’s footwear in a typical year. (Pakistann Retail Report, 2009)
Research articles
The research article, ‘Shopping Orientation in the Evolving Pakistann Market’ by Piyush Kumar Sinha, attempted to understand shoppers from their disposition towards shopping. This was particularly useful as the differences between retailers are not significant in terms of value delivered. The study brought out the shopping orientation of the Pakistann shoppers. According to the analysis, Pakistann shoppers seek emotional value more than the functional value of shopping. Moreover the Pakistann shoppers showed an orientation that was based more on the entertainment value than on the functional value. Based on the orientation of the Pakistann shoppers, 300 shoppers were clustered in two segments: Fun shoppers and Work shoppers. These two segments were found to be different in terms of their demographic and behavioral profile. The orientation was found to be affected primarily by the type of store, the frequency of buying, and to some extent by the socio-economic classification (SEC). These findings were then used to draw implications for store format, pricing and merchandising. (Sinha, 2003)
‘A Typology of Apparel Shopping Orientation Segments Among Female Consumers’, segmented female apparel shoppers into unique apparel shopping orientation groups and developed a profile for each segment with respect to information sources, importance of store attributes, lifestyle activities, patronage behavior, and demographics. By cluster analysis of apparel shopping orientation factors, three groups were identified: (1) Highly Involved Apparel Shopper; (2) Apathetic Apparel Shopper; and (3) Convenience-Oriented Catalog Shopper. These three groups were then compared on several characteristics through multivariate analysis of variance (MANOVA) and chi-square statistics. The results indicated that shopping orientations are a base for segmenting female apparel shoppers and these groups are unique in consumer buying characteristics. These characteristics include: (1) three factors of information sources (Store Fashion Service/Promotion, Fashion Publications, and Mass Media); (2) five factors of importance of store attributes (Store Personnel, Visual Image of Store, Customer Service, Easy Access, and Brand/Fashion); (3) two factors of lifestyle activities (Cultural and Grooming), and (4) other variables (patronage behavior, annual wardrobe expenditure, occupation, housing area and income). (Shim, A Typology of Apparel Shopping Orientation Segments Among Female Consumers, 1993)
‘Market segmentation with respect to university students’ clothing benefits sought’, segmented the university student casual apparel market based on clothing benefits sought and develop a profile of each segment in terms of attribute evaluations, shopping orientations, and re-patronage behavior. Frequency analysis, factor analysis, reliability analysis, cluster analysis, multivariate ANOVA, and the Scheffe test were employed for the analysis of data using SPSS. The results were as follows. First, analysis of consumer clothing benefits sought generated six factors and attribute evaluation produced two factor solutions and shopping orientation generated three factors. Second, three consumer groups – utilitarian benefit group, hedonic benefit group, composite benefit group – with different clothing benefits sought were identified. Third, the study found significant differences in consumers’ hedonic and utilitarian attribute evaluation among the groups. The study also revealed significant differences in shopping orientations and brand repurchase intentions among the groups. Consumer classification according to clothing benefits sought in university students’ casual wear purchase can be used by clothing marketers and managers to establish product plan and marketing strategy development. (Pauline & Park, 2009)
‘A Shopping Orientation of French Consumers: Implications for Catalog Marketing’, used factor analysis to identify shopping orientations within a French sample and cluster analysis to group subjects, with respect to their shopping orientation scores. The first objective of the study was to employ a factor-analytic examination to determine whether catalog shopping orientations exist among French consumers. The second objective was to classify the consumers into different groups of shoppers based on their shopping orientation profiles via a cluster analysis technique. The final objective was to determine whether these shopper groups differ across demographics and catalog shopping behavior. Analysis revealed a catalog shopping segment motivated primarily by recreational interests and only secondarily by convenience concerns. (Gehrt & Shim, 1998)
The purpose of the article ‘Shopping orientation segments: exploring differences in store patronage and attitudes toward retail store environments among female apparel consumers’ was to identify shopping orientation segments for US female consumers. The sample included 151 women, aged 18 years and over. This research examined differences in the segments relative to store patronage preferences (i.e. department, discount, specialty), attitude toward the environment of the store selected as first choice when shopping for a specific apparel item (i.e. a dress), and demographic characteristics. Cluster analysis revealed that four shopping segments described the female consumers. The segments were named Decisive Apparel Shopper, Confident Apparel Shopper, Highly Involved Apparel Shopper, and Extremely Involved Apparel Shopper, based on several shopping factors. Differences were found among the shopping orientation segments for store of first choice, attitude and household income. (Moye & Kincade, 2003)
In the research article ‘Benefit Segments of the Female Apparel Market: Psychographics, Shopping Orientations, and Demographics’, the purposes of the study were (1) to segment the female apparel market based on “descriptive clothing benefits sought” by female consumers, and (2) to develop a profile of each segment concerning psychographics, shopping orientations, patronage behavior and demographics. Nationwide data were collected via a mail questionnaire sent to 1,000 females. Using cluster analysis on benefits sought factors, three groups were identified and labeled as (1) Symbolic/Instrumental Users of Clothing ;(2) Practical/Conservative Users of Clothing; and (3) Apathetic Users of Clothing; MANOVA and Chi-square statistics revealed significant differences among the three benefits segments on 10 psychographic factors, 3 shopping orientation factors, 1 patronage behavior variable, and 7 demographic factors. (Shim & Bickle, 1994)
Research Proposal
Problem
To understand the benefits sought by consumers of footwear corresponding to the various categories of footwear. Objectives
To segment young adult footwear shoppers into unique footwear shopping orientation groups
To develop a profile for each segment with respect to footwear benefits sought, importance of store attributes, patronage behavior and demographics
Sampling Criteria
The respondents were required to fall within the age group of 18-25 to qualify as young adults for the purpose of the study. As the emphasis of the study in on modern retail concepts in relation to footwear shopping, respondents were required to belong to the metros and should preferably belong to the socio-economic classification group A. Also, as far as possible, there should be equal representation on both male and female respondents. For the purpose of in-depth interviews, an additional sampling criterion was adopted. The respondent was required to be fond of footwear and should enjoy footwear shopping. This ensured that the respondent was sufficiently aware of basic footwear related information like retail outlets, prices, brands, etc. and would also be adopting a more informed and detail footwear shopping process. Methodology
The research methodology adopted was secondary research followed by primary research and data analysis. The secondary research helped in a broad understanding of the Pakistann footwear industry more particularly from the retailing and consumer perspective. This understanding was useful in the questionnaire preparation stage while conducting the primary research. The primary research comprised of both qualitative and quantitative research. In-depth interviews and questionnaire administration were the two tools used for conducting the primary research. In-depth Interviews
In the first stage of the primary research, ten in-depth interviews were conducted comprising of five male and five female respondents, all satisfying the sampling criteria. The purpose of conducting these interviews was to get a first-hand understanding of the footwear shoppers through face-to-face interaction. This understanding was highly useful was preparing the questionnaire for the second stage of primary research. Following is the guideline adopted for conducting the in-depth interviews. Guideline for in-depth interviews
Introduction
Thank you for taking out your time and agree to this interview. This interview is part of my post-graduate research to understand footwear shopping behavior of young adults. I will not take more than 30-40 minutes of your time. Section 1 – The following questions will help in understanding the extent of involvement of the respondent with footwear and also serve as warming-up question. How many pairs of footwear do you own? Would you please describe them? Why do you own different kinds of footwear? What purpose to they serve or what utility do they provide? (Probe)
Do you categorize the footwear you own? If yes, what is the basis of this categorization (for example occasion of use, price, style, utility, etc.)? Section 2 – The following questions will reveal what attributes the respondent considers important for footwear and how the relative importance of these attributes varies with different categories of footwear that the respondent owns. For each of the categories that you just described, would you please tell the attributes (like comfort, brand, quality, design, fashion, etc.) that you consider important for each of them and why? (Probe)
How much on an average are you willing to spend on each of the categories of footwear that you mentioned above? Section 3 – The following questions were designed to understand the basic footwear shopping behavior of the respondent. Do you yourself shop for your footwear? If yes, do you enjoy shopping for it? Who usually accompanies you when you go to shop for footwear? How often do you shop for footwear? What makes you go to shop for footwear? What proportion of your footwear purchase is impulse? What makes you purchase on impulse and what kind of footwear do you usually purchase on impulse? (Probe)
Can you elaborate the shopping process that you follow to shop for footwear from the time you decide to buy to the time you make the final purchase? Section 4 – The following questions will help judge the respondent’s awareness of various formats of footwear retail stores and preference for a particular format, if any. Where do you usually shop for your footwear? Can you name a few stores? Why do you prefer these stores? Does the choice of store format differ with the category of footwear you want to purchase? How loyal are you to the your shoes. ike is a champion brand builder. Its advertising slogans—“Bo Knows,” “Just Do It,” “There Is No Finish Line”—have moved beyond advertising into popular expression. Its athletic footwear and clothing have become a piece of Americana. Its brand name is as well-known around the world as IBM and Coke. So it may come as a surprise that Nike, the consummate marketer, came to understand the importance of marketing late in its life: after it hit the $1 billion revenue mark. After more than a decade of meteoric growth, Nike misjudged the aerobics market, outgrew its own capacity to manage, and made a disastrous move into casual shoes. All of those problems forced the company into a period of intense self-examination. Ultimately, says founder, chairman, and CEO Phil Knight, the company realized that the way forward was to expand its focus from the design and manufacture of the product, where Nike had always excelled, to the consumer and the brand. Nike’s roots go back to a company called Blue Ribbon Sports, which Knight, a former runner at the University of Oregon, and Bill Bowerman, Knight’s former track coach, created in 1962. Blue Ribbon Sports started out distributing running shoes for a Japanese company, then shifted to designing its own shoes and outsourcing them from Asia. Blue Ribbon Sports’s performance-oriented product innovations and mastery of low-cost production translated into shoes athletes wanted to wear and could afford. Knight and Bowerman’s track connections got the shoes onto the feet of real runners. And then jogging emerged as a new national pastime. By 1978, the year Blue Ribbon Sports changed its corporate name to Nike, Jon Anderson had won the Boston Marathon wearing Nike shoes, Jimmy Conners had won Wimbledon and the U.S. Open wearing Nike shoes, Henry Rono had set four track and field records in Nikes, and members of the Boston Celtics and Los Angeles Lakers basketball teams were wearing them. Sales and profits were doubling every year. Then in the mid-1980s, Nike lost its footing, and the company was forced to make a subtle but important shift. Instead of putting the product on center stage, it put the consumer in the spotlight and the brand under a microscope—in short, it learned to be marketing oriented. Since then, Nike has resumed its domination of the athletic shoe industry. It commands 29% of the market, and sales for fiscal 1991 topped $3 billion. Here Phil Knight explains how Nike discovered the importance of marketing and what difference that discovery has made. This interview was conducted at Nike, Inc.’s Beaverton, Oregon offices by HBR associate editor Geraldine E. Willigan. HBR: Nike transformed the athletic shoe industry with technological innovations, but today many people know the company by its flashy ads and sports celebrities. Is Nike a technology company or a marketing company? Phil Knight: I’d answer that question very differently today than I would have ten years ago. For years, we thought of ourselves as a production-oriented company, meaning we put all our emphasis on designing and manufacturing the product. But now we understand that the most important thing we do is market the product. We’ve come around to saying that Nike is a marketing-oriented company, and the product is our most important marketing tool. What I mean is that marketing knits the whole organization together. The design elements and functional characteristics of the product itself are just part of the overall marketing process. We used to think that everything started in the lab. Now we realize that everything spins off the consumer. And while technology is still important, the consumer has to lead innovation. We have to innovate for a specific reason, and that reason comes from the market. Otherwise, we’ll end up making museum pieces. What made you think the product was everything? Our success. In the early days, anybody with a glue pot and a pair of scissors could get into the shoe business, so the way to stay ahead was through product innovation. We happened to be great at it. Bill Bowerman, my former track coach at the University of Oregon and cofounder of the company that became Nike, had always customized off-the-shelf shoes for his runners. Over the years, he and some other employees came up with lots of great ideas that we incorporated. One of Bowerman’s more legendary innovations is the Waffle outsole, which he discovered by pouring rubber into a waffle iron. The Waffle Trainer later became the best-selling training shoe in the United States. We were also good at keeping our manufacturing costs down. The big, established players like Puma and Adidas were still manufacturing in high-wage European countries. But we knew that wages were lower in Asia, and we knew how to get around in that environment, so we funneled all our most promising managers there to supervise production. Didn’t you do any marketing? Not formally. We just tried to get our shoes on the feet of runners. And we were able to get a lot of great ones under contract—people like Steve Prefontaine and Alberto Salazar—because we spent a lot of time at track events and had relationships with the runners, but mostly because we were doing interesting things with our shoes. Naturally, we thought the world stopped and started in the lab and everything revolved around the product. When did your thinking change? When the formulas that got Nike up to $1 billion in sales—being good at innovation and production and being able to sign great athletes—stopped working and we faced a series of problems. For one thing, Reebok came out of nowhere to dominate the aerobics market, which we completely miscalculated. We made an aerobics shoe that was functionally superior to Reebok’s, but we missed the styling. Reebok’s shoe was sleek and attractive, while ours was sturdy and clunky. We also decided against using garment leather, as Reebok had done, because it wasn’t durable. By the time we developed a leather that was both strong and soft, Reebok had established a brand, won a huge chunk of sales, and gained the momentum to go right by us. We were also having management problems at that time because we really hadn’t adjusted to being a big company. And on top of that, we made a disastrous move into casual shoes. What was the problem with casual shoes? Practically the same as what happened in aerobics, and at about the same time. We went into casual shoes in the early 1980s when we saw that the running shoe business, which was about one-third of our revenues at the time, was slowing down. We knew that a lot of people were buying our shoes and wearing them to the grocery store and for walking to and from work. Since we happened to be good at shoes, we thought we could be successful with casual shoes. But we got our brains beat out. We came out with a functional shoe we thought the world needed, but it was funny looking and the buying public didn’t want it. By the mid-1980s, the financial signals were coming through loud and clear. Nike had been profitable throughout the 1970s. Then all of a sudden in fiscal year 1985, the company was in the red for two quarters. In fiscal 1987, sales dropped by $200 million and profits headed south again. We were forced to fire 280 people that year—our second layoff ever and a very painful one because it wasn’t just an adjustment and trimming of fat. We lost some very good people that year. How did you know that marketing would solve the problems? We reasoned it out. The problems forced us to take a hard look at what we were doing, what was going wrong, what we were good at, and where we wanted to go. When we did that, we came to see that focusing solely on the product was a great way for a brand to start, but it just wasn’t enough. We had to fill in the blanks. We had to learn to do well all the things involved in getting to the consumer, starting with understanding who the consumer is and what the brand represents. Didn’t Nike understand the consumer right from the start? In the early days, when we were just a running shoe company and almost all our employees were runners, we understood the consumer very well. There is no shoe school, so where do you recruit people for a company that develops and markets running shoes? The running track. It made sense, and it worked. We and the consumer were one and the same. When we started making shoes for basketball, tennis, and football, we did essentially the same thing we had done in running. We got to know the players at the top of the game and did everything we could to understand what they needed, both from a technological and a design perspective. Our engineers and designers spent a lot of time talking to the athletes about what they needed both functionally and aesthetically. It was effective—to a point. But we were missing something. Despite great products and great ad campaigns, sales just stayed flat. Where did your understanding fall short? We were missing an immense group. We understood our “core consumers,” the athletes who were performing at the highest level of the sport. We saw them as being at the top of a pyramid, with weekend jocks in the middle of the pyramid, and everybody else who wore athletic shoes at the bottom. Even though about 60% of our product is bought by people who don’t use it for the actual sport, everything we did was aimed at the top. We said, if we get the people at the top, we’ll get the others because they’ll know that the shoe can perform. But that was an oversimplification. Sure, it’s important to get the top of the pyramid, but you’ve also got to speak to the people all the way down. Just take something simple like the color of the shoe. We used to say we don’t care what the color is. If a top player like Michael Jordan liked some kind of yellow and orange jobbie, that’s what we made—even if nobody else really wanted yellow and orange. One of our great racing shoes, the Sock Racer, failed for exactly that reason: we made it bright bumble-bee yellow, and it turned everybody off. What’s different now? Whether you’re talking about the core consumer or the person on the street, the principle is the same: you have to come up with what the consumer wants, and you need a vehicle to understand it. To understand the rest of the pyramid, we do a lot of work at the grass-roots level. We go to amateur sports events and spend time at gyms and tennis courts talking to people. We make sure that the product is the same functionally whether it’s for Michael Jordan or Joe American Public. We don’t just say Michael Jordan is going to wear it so therefore Joe American Public is going to wear it. We have people who tell us what colors are going to be in for 1993, for instance, and we incorporate them. Beyond that, we do some fairly typical kinds of market research, but lots of it—spending time in stores and watching what happens across the counter, getting reports from dealers, doing focus groups, tracking responses to our ads. We just sort of factor all that information into the computer between the ears and come up with conclusions. What did you learn from the casual shoe failure? Understanding the consumer is just part of good marketing. You also have to understand the brand. That’s really the lesson we learned from casual shoes. That whole experience forced us to define what the Nike brand really meant, and it taught us the importance of focus. Without focus, the whole brand is at risk. Just because you have the best athletes in the world and a stripe everybody recognizes doesn’t mean you can take that trademark to the ends of the earth. The ends of the earth might be right off that ledge! Ultimately, we determined that we wanted Nike to be the world’s best sports and fitness company and the Nike brand to represent sports and fitness activities. Once you say that, you have focus, and you can automatically rule out certain options. You don’t end up doing loafers and wingtips and sponsoring the next Rolling Stones world tour. And you don’t do casual shoes under that brand. Can you expand a brand without losing focus? To a point. A brand is something that has a clear-cut identity among consumers, which a company creates by sending out a clear, consistent message over a period of years until it achieves a critical mass of marketing. The thing is, once you hit the critical mass, you can’t push it much further. Otherwise the meaning gets fuzzy and confused, and before long, the brand is on the way out. Look at the Nike brand. From the start, everybody understood that Nike was a running shoe company, and the brand stood for excellence in track and field. It was a very clear message, and Nike was very successful. But casual shoes sent a different message. People got confused, and Nike began to lose its magic. Retailers were unenthusiastic, athletes were looking at the alternatives, and sales slowed. So not only was the casual shoe effort a failure, but it was diluting our trademark and hurting us in running. How, then, has Nike been able to grow so much? By breaking things into digestible chunks and creating separate brands or sub-brands to represent them. If you have something that’s working, you can try to expand it, but first you have to ask, does this expansion dilute the big effort? Have I taken the thing too far? When you come to the conclusion that you have—through conversations with athletes, your own judgment, what’s happening in retail stores or focus groups—then you have to create another category. How did you make that discovery? Accidentally. I can’t say we had a really smart strategy going forward. We had a strategy, and when it didn’t work, we went back and regrouped until finally we hit on something. What we hit on in the mid-1980s was the Air Jordan basketball shoe. Its success showed us that slicing things up into digestible chunks was the wave of the future. The Air Jordan project was the result of a concerted effort to shake things up. With sales stagnating, we knew we had to do more than produce another great Nike running shoe. So we created a whole new segment within Nike focused on basketball, and we borrowed the air-cushion technology we had used in running shoes to make an air-cushioned basketball shoe. Basketball, unlike casual shoes, was all about performance, so it fit under the Nike umbrella. And the shoe itself was terrific. It was so colorful that the NBA banned it—which was great! We actually welcome the kind of publicity that pits us against the establishment, as long as we know we’re on the right side of the issue. Michael Jordan wore the shoes despite being threatened with fines, and, of course, he played like no one has ever played before. It was everything you could ask for, and sales just took off. Whenever someone talks about Nike basketball, they think of Air Jordan. But we actually have those three distinct segments, Air Jordan, Flight, and Force, each with its own brand—or sub-brand, really. Each has great athletes representing it, a complete product line, shoes and clothes that are tied together. Instead of one big glop, we have the number one, the number two, and the number four brands of basketball shoes.