Conjoint ananlysis shoe industry

Product : Leather Shoes

IBS, Hyderabad (2009-11)

NEW PRODUCT DEVELOPMENT
LEATHER SHOES
Submitted to Prof. T.V.Ramraj

Team Sec - A
ANURAG SHUKLA 09BSHYD0148
SETHI PIYUSH MAHAVIR 09BSHYD0757
SAURABH TOSHAN 09BSHYD0754
SOUMI RAY 09BSHYD0852
SHUBHODEEP ROY 09BSHYD0799
CHOUDHURY
PATEL TAPANKUMAR 09BSHYD1017
SUNILBHAI

PDM : Sec – A Page 1 of 41


INDIAN LEATHER FOOTWEAR INDUSTRY

The footwear industry is a significant segment in the leather industry in India. India
ranks second among the footwear producing countries next only to China.

This is a labor intensive industry and it is concentrated in the small and cottage
industries. While leather shoes and uppers are concentrated in large scale units, the
sandals and ‘chappals’ are produced in the household and cottage sectors. The leather
industry is the 8th largest earner of foreign exchange for the country and it employs
around 2.5 million people (mostly women).
Some facts and figures related to the Indian Footwear Industry:
• 2.06 billion pairs of footwear produces in a year.
• About 16% of the global production is produced in India.
• Major Foreign destination markets : U.S.A – 12%, EU countries – 63%, Hong
Kong – 10%, Australia – 1.5%, others – 13.5%.
• India has the best tanning expertise.

India has become the most favored destination for production of leather footwear. The
major production centers in India are Chennai, Ranipet, Ambur in Tamil Nadu, Mumbai
in Maharashtra, Kanpur in U.P, Jalandhar in Punjab, Agra and Delhi. Shoes marketed in
India wear brand names like Florsheim, Bata, Khadims, Action, Liberty, Woodland, Red
Tape, Red Chief, Lee Cooper, etc. As part of its effort to play a lead role in the global
trade, the Indian leather industry is focusing on key deliverables of innovative design,
consistently superior quality and unfailing delivery schedules. The availability of
abundant raw material base, large domestic market and the opportunity to cater to world
markets makes India an attractive destination for technology and investments.

The Indian footwear industry is provided with institutional infrastructure support through
premier institutions like Central Leather Research Institute, Chennai, Footwear Design
& Development Institute, Noida, National Institute of Fashion Technology, New Delhi,
etc in the areas of technological development, design and product development and
human resource development.

Export and Import of footwear from and to India constitute a significant share in the total
exports and imports in India. The different types of leather footwear exported from India
are dress shoes, casuals, moccasins, sport shoes, horrachies, sandals, ballerinas,
booties.



This project has been undertaken to study NEW PRODUCT DEVELOPMENT in the
leather footwear market in India. This study considers various attributes and their
various levels like:

1) PRICE (Rs.) :
• 500
• 1000
• 1500

2) BRAND PREFERENCE :
• Branded
• Unbranded
• Indifferent

3) SHAPE :
• Flat nose
• Long nose
• Rounded nose

4) HEEL :
• Low
• Flat
• High

5) LACE :
• With lace
• Without lace

Since we proposed to launch the product for men, in two colors, viz. Black and Brown,
that attribute has not been taken into analysis; and respondents are men.

The complete project work is divided into two parts, viz. Conjoint Analysis and Multi
Dimensional Scale mapping.



Conjoint Analysis



To begin with, we have run the Design.exe file which prompted us to enter the no. of
features. The no. of features in our analysis for Formal Leather shoes are 5, namely-
Price, Brand Preference, Shape, Heel and lace.

The features are now defined in Design Specifications with model type as Part Worth.
Apart from feature named Lace which is having 2 levels all other features have 3 levels
which are defined in the next screen.

16 cards were then selected to be generated by the software with n/T value to be 1.6
which is greater than 1.3 and hence an acceptable value.



The levels of each attribute were then entered which are as shown-

The files were then saved twice as a card file and a design file. Duplicity for any card is
checked in the next step and no duplicate card was found at this stage hence there was
no need to change, replace or eliminate any card

The condition no. was then checked and found to be 2.13 which is within the acceptable
limit of 25.



The correlation matrix is then analyzed which is shown as below-

In order to test the reliability and validity of our research we then proceeded to add 4
holdout cards to the existing 16 cards generated by the software. It was made sure that
these holdout cards do not dominate the cards generated by the design.



Duplicity for any card is again checked in the next step and cards 5 and 18 were found
to be duplicate, hence one of the attribute of card 5 was altered to make sure that there
was no duplicity in the cards later.

The file is saved twice here in this stage as card and design file. The design file created
is further used in the study. The cards were then visually verified for their consistency in
their contents by displaying the cards under the display head.



The Design stage was then exited, and we then proceeded to run the LINMAP.EXE.

Number of selection was chosen as 1 since we are going in for a new analysis.

Full profile conjoint was then selected to carry out further analysis.



After the previous routine steps we then proceeded with the initial ordering of the
features as obtained via the software as shown under-



Specification file was then created in the previous snapshot.



After this we again went back to analyze the holdout data.



The correlation between holdout data and the predicted scores is found to be 0.17
which is indeed very less than the acceptable value of 0.7; several attempts were made
to lower down the average percentage of pairs violated including addition of some more
respondents but this was the fair data which we managed to get without manipulations.



Determining Group utility function was the next step in the analysis-



The Group Statistics showed that the first preference for users was Price which was
rated as most important by 34.8% respondents then comes the preference for lace
which was important to 32.58% respondents. The other preferences are shown as
above.

We now proceed to determine the no. of respondents violating in our study, for this we
again go back to the initial screen and select option 4.

The threshold violations are then set to 20% in our study, and the distribution of number
of violations is then asked for by selecting option 2.



The above screenshot shows the % of violations for the first respondent, and as can be
seen the respondent’s first preference is for the shape then brand followed by other
features. Likewise we obtained violations for each and every respondent and the
cumulative violations (exceeding the threshold of 20%) for the entire set are depicted in
the next screenshot.



This shows that 27.3% of our respondents violated the threshold acceptance region of
20%.



SEGMENT.EXE

Here we try to locate the segment where our product fits the best.



From below, we can plot a graph of clusters.

60000

50000

40000
Axis Title

30000 Cluster
Distance
20000

10000

0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17

Probable cluster, we can target.

Above graph shows that we can form two clusters, based upon respondents’ responses.

Below is a group utility function, which shows % importance of each attribute of our
product. It is evident from below table that “PRICE” and “LACE” are the most prominent
attributes to be taken care in designing the product (SHOE).



PRICE 1000 500 1500
REL. IMP. = 34.8% -5.735 0.467 5.268

NON-
BRAND PREFERENCE INDIFFERENT BRANDED
BRANDED
REL. IMP. = 8.57% 1.267 -1.444 0.177

ROUNDED
SHAPE LONG NOSE FLAT NOSE
NOSE
REL. IMP. = 4.12% 0.566 0.171 -0.737

HEEL FLAT HIGH LOW
REL. IMP. = 19.92% 2.635 -3.663 1.027

WITHOUT •
LACE WITH LACE
LACE
REL. IMP. = 32.58% 5.149 -5.149



PRICE
6

4

2
REL. IMPORTANCE

0
500 1000 1500
-2

-4

-6

-8
PRICE

Here we can see that utility decreased as price increased from Rs. 500 to Rs. 1,000.
But thereafter it shows that utility increased as price increases beyond Rs. 1,000. So,
charging high prices, i.e. beyond 1000 we can not only increase customer utility, but can
also fetch more profits. This gives us room to enter into a segment where
consumers are ready to pay premium prices.

BRAND PREFERENCE
1.5
1
REL. IMPORTANCE

0.5
0
-0.5 NON-BRANDED INDIFFERENT BRANDED

-1
-1.5
-2

Most of the respondents are indifferent to brand.



SHAPE OF NOSE
0.8
0.6
REL. IMPORTANCE 0.4
0.2
0
-0.2 FLAT NOSE ROUNDED NOSE LONG NOSE
-0.4
-0.6
-0.8
-1

Above graph shows lowest utility for ROUNDED NOSE and highest utility for
LONG NOSE. This is an indication of how fashion conscious, respondents are.

HEEL HEIGHT
3
REL. IMPORTANCE

2

1

0
FLAT LOW HIGH
-1

-2

-3

-4

Above shows FLAT HEELS are preferred by most of the respondents.



SHOE LACE
6

REL. IMPORTANC 4

2

0
WITHOUT LACE WITH LACE
-2

-4

-6

Above graph shows respondents are more inclined to have a pair of shoes WITH LACE.

Here our analysis shows that the complete respondent group can is divided into two
clusters. Group #1 is more focused on LACE, HEEL and PRICE, whereas Group #2 is
more concerned about SHAPE and HEEL.



SIMULATION.EXE

Here we simulate a market scenario. We take product features of competitors and map
their market share. Then we add our product and check that how successfully our
product fetches market share of the existing competitors.

Simulation file : SHOE-A.SIM is created.

It asks no. of product we wish to simulate. Here we have taken 2 probable competitors’
product features.



Entre features of product #1.

Entre features of product #2.

Following shows market share of both the products (LEATHER SHOES) in the existing
market (based upon the responses we have collected, it simulates customer
preferences and calculates % of people who will buy which of these 2 products, of
competitors)



Followings are the features of our product we intend to launch, against above 2
products of the competitor. (Here product #1 shows our launched product, which we
intend to compare with that of our competitors’.) Here based upon the segment criteria,
we derived earlier, we have taken values/information accordingly. Here we have banked
upon two main criteria, i.e. PRICE, SHAPE and LACE.

Following shows respective market shares of the products. Here please note that
product #1 and product #2 are competitors’ products, and product #3 is our
prospective launching. We can see that market share of product #1 has been
reduced from 48.468% to 24.24% and that of product #2 has been reduced from
51.52% to 21.21%. This is due to introduction of our new product in the market.
From above, we can infer that our product has very high prospects of being
popular and stands high adoptability from customers.



So, here we can conclude that the product we proposed will be successful in the
market, which will have following attributes:
• Price : Rs. 1500
• Branded
• Long Nose
• High Heel
• With Lace



Multi Dimensional
Scale Analysis



POSITIONING USING MDS

Selection of the brands
The number of brands included in our study of the footwear market is 4. The brands
taken into consideration fulfill almost all possible attributes a footwear customer looks
for. The brands represent both the high end market for foot-wears as well as the lower
end of the market. This gives an overall view of the market in accordance to price,
comfort, durability and many other factors discussed later. The four brands taken into
consideration are:
• BATA
• KHADIM
• WOODLAND
• FLOROSCHEIM

The idea behind the selection of these brands is also because these brands are the
major players in the footwear industry. BATA originally an international brand but
because of its strong presence in the Indian market is often mistaken by the consumers
as an Indian brand. KHADIM is an Indian brand while WOODLAND and
FLOROSCHEIM both are international brands but with a strong presence in the Indian
market. So therefore by these selections we have tried to compare with two Indian and
two International brands.

We conducted a preliminary study where we asked the respondents to name few
footwear brands and then looking at the no of frequencies of each brands i.e. how many
times they were recalled by the respondents we zeroed into these four brands. The
other brands which were discussed about were:
• LIBERTY
• ACTION
• LEE COOPER
• RED TAPE

Going by the frequency of brand recall we thus decided to take into consideration the
first four brands.



Selection of Attributes related to the brands
The selection of the attributes was done after we conducted focus group study. The
focus group studies were conducted in order to understand which are the attributes a
consumer relates to a particular brand or what are the attributes a consumer looks for
while purchasing a foot-wear. After two focus group studies the attributes which came
up for the brands are:
 Affordability
 Flexibility
 Durability
 Quality
 Stylish
 Comfortable
 Firm Grip

The attributes are explained in brief below

Affordability: a consumer before a purchase considers the price of the product and this
attribute is one of the important elements of a purchase decision.
Flexibility: By flexibility the consumer looks how flexible the shoe is in terms of running,
walking or trekking.
Durability: The consumer looks for how durable the product is i.e. how long the product
will last.
Quality: The quality in terms of everything matters a lot to the consumer because that’s
what decides the value for money.
Stylish: The style of a shoe is another important element of footwear especially in the
case of formal and sports shoes.
Comfortable: The footwear if isn’t comfortable then no other attributes matter
Firm-Grip: The sole of the footwear needs to have a firm-grip so as to support and
maintain balance.

Process of the study using MDS

The process of the study can be broadly divided into four stages namely
1. Preparing the questionnaire
2. Filling up of the questionnaire
3. Data entry into EXCEL and SPSS
4. Analyzing the results and data interpretation



Preparing the questionnaire

The questionnaire was prepared after the focus group studies where the aim was to
zero in the brands of the competitors following which to derive at the attributes a
consumer looks for. The questionnaire prepared is attached at the end of the report.
The questionnaire was divided into two parts. The first part required the respondents to
rate the brands on the basis of the attributes on a likert scale. A specimen question is
provided below

Q. Rate the brand BATA on the basis of the following attributes where 1 refers to
closest and 10 refers to the farthest to that attribute
Affordability 1 2 3 4 5 6 7 8 9 10
Durability 1 2 3 4 5 6 7 8 9 10
Flexibility 1 2 3 4 5 6 7 8 9 10
Comfort 1 2 3 4 5 6 7 8 9 10
Style 1 2 3 4 5 6 7 8 9 10
Quality 1 2 3 4 5 6 7 8 9
10
Firm Grip 1 2 3 4 5 6 7 8 9 10

The second part required the respondents to compare two attributes and also two
brands. A specimen question is given below

Q. Rate the following pairs on a scale of 1-10 where I refer to absolute closeness and
10 refer to absolute dissimilarity.
Affordable/ Durable 1 2 3 4 5 6 7 8 9 10
Durable/Quality 1 2 3 4 5 6 7 8 9 10

Filling up the questionnaire

A survey was then conducted with a sample size of 50 respondents in the campus with
25 males and 25 females.

Data entry into EXCEL and SPSS

After the questionnaires were filled the data was entered into EXCEL and SPSS for
analysis. The respondents rating were averaged and then entered. In some places the
average would arrive in decimals wherein we took the nearest decimal. The data was
entered into a form of a matrix shown below



In the matrix above the comparison between one attribute to itself is shown by 1.
Analyzing the data in SPSS

The data entered was then imported to SPSS for further analysis.

The SPSS analysis is explained in detail in the next section

SPSS analysis using Multidimensional Scaling
Once the data has been entered in SPSS the next step was to analyze the data using
Multidimensional Scaling. The whole process has been explained step-wise
1. Select ANALYZE tab and then select SCALE and select Multidimensional Scaling



2. On the selection of MDS from SCALE tab the output viewer opens up



Analysis of the Multidimensional Scaling Model

Object Points

In the above chart the points of the brands represents the positioning of the brands in
the market and their closeness to the attributes as in how close are they to the attribute.
It is evident from the chart that KHADIM is considered both “durable” and “affordable”
because of its proximity towards both the attributes. While BATA is more of “affordable”
and somewhat “flexible”. The international brands WOODLAND and FLOROCHEIM are
in a different position in the market. WOODLAND is considered “comfortable” and
“flexible”. While FLOROCHEIM can be attributed to “quality” because of its proximity to
the point.

Positioning of our brand in the market

Looking at the chart above the positioning of our brand would be done at the space
above because that refers to the area which is not covered by any brand in the market.
The area is viewed below in the chart.



The positioning of our brand will be done in the area near to “style” “durability” and
“quality”. This space in the market is uncovered by any other brands and this would be
the ideal space to capture in the foot-wear market.

Positioning Theme of our Brand

QUESTIONNAIRE

PART 1

Q. Rate the brand BATA on the basis of the following attributes where 1 refers to
Affordability 1 2 3 4 5 6 7 8 9 10
Durability 1 2 3 4 5 6 7 8 9 10
Flexibility 1 2 3 4 5 6 7 8 9 10
Comfort 1 2 3 4 5 6 7 8 9 10
Style 1 2 3 4 5 6 7 8 9 10
Quality 1 2 3 4 5 6 7 8 9 10


Firm Grip 1 2 3 4 5 6 7 8 9 10

Q. Rate the brand KHADIM on the basis of the following attributes where 1 refers to
Affordability 1 2 3 4 5 6 7 8 9 10
Durability 1 2 3 4 5 6 7 8 9 10
Flexibility 1 2 3 4 5 6 7 8 9 10
Comfort 1 2 3 4 5 6 7 8 9 10
Style 1 2 3 4 5 6 7 8 9 10
Quality 1 2 3 4 5 6 7 8 9 10
Firm Grip 1 2 3 4 5 6 7 8 9 10

Q. Rate the brand WOODLAND on the basis of the following attributes where 1 refers to
Affordability 1 2 3 4 5 6 7 8 9 10
Durability 1 2 3 4 5 6 7 8 9 10
Flexibility 1 2 3 4 5 6 7 8 9 10
Comfort 1 2 3 4 5 6 7 8 9 10
Style 1 2 3 4 5 6 7 8 9 10
Quality 1 2 3 4 5 6 7 8 9 10
Firm Grip 1 2 3 4 5 6 7 8 9 10

Q. Rate the brand FLOROCHEIM on the basis of the following attributes where 1 refers
to closest and 10 refers to the farthest to that attribute
Affordability 1 2 3 4 5 6 7 8 9 10
Durability 1 2 3 4 5 6 7 8 9 10
Flexibility 1 2 3 4 5 6 7 8 9 10
Comfort 1 2 3 4 5 6 7 8 9 10
Style 1 2 3 4 5 6 7 8 9 10
Quality 1 2 3 4 5 6 7 8 9 10
Firm Grip 1 2 3 4 5 6 7 8 9 10

PART 2

Q. Fill in the table comparing two attributes with each other and with Brands on a scale
of 1-10 where 1 refers to absolute similarity and 10 refers to absolute dissimilarity.
Aff Flex Dur Qlty Styl Com Firm Bata Wdld Flor Khad
Affordable 1
Flexibility 1
Durable 1



Quality 1
Stylish 1
Comfortable 1
Firm-grip 1
BATA 1
WOODLAND 1
FLOROSCHEIM 1
KHADIM 1

If we combine both of our analysis – Conjoint Analysis and MDS Analysis – we
conclude the following attributes that should be featured in our prospective product:
• Price : Rs. 1500
• Branded
• Long nose & High Heel – with some fashionable features
• Durable
• Quality
• With Lace


Conjoint ananlysis shoe industry

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