Launch of New Product (Shoes)

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PROJECT REPORT ON

NEW PRODUCT DEVELOPMENT SUBMITTED BY ACHAL BHUSHAN KHESS ANSHUL GUPTA KUMAR MAKRAND BHASKER NEHA JHA MEGHA AGARWAL PRAGYAN DAS

(SCHOOL OF MANAGEMENT KIIT UNIVERSITY (09-11 BATCH))

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OUR LOGO “be AheAd”

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Cox Is “Comfort Occult Xtraordinary”

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ACKNOWLEDGEMENT We would like to take this opportunity to express our deep sense of gratitude to Mrs.Rakhi Dutta, Prof.(Marketing),KIIT School of Management, Bhubaneswar, for her sincere guidance and help extended to us during the project work . She as a guide has constantly encouraged and inspired us by her personal involvement, making the project a success. We are also grateful to the library authorities of KSOM for providing us with the needed information during our preparation of project work.

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Executive summary we know that a person can be best described with his shoes. we have come up with a unique and simple product COX SHOES .These days in our hectic lives, we face a general problem of bad odour from a pair of shoes worn by us for long duration .People sitting close to us or in our nearby surrounding start getting irritated as well as they get bad smell that is more than difficult to bear up.So, to over come this problem we have come up with a solution for you – “COX SHOES”. Cox shoes avid range of fragrance pad gives the consumers a varied range to choose from. (the inner part of fragrance pad is so designed that it will fit only to COX shoes) Cox shoes feature of acupressure will not only seek to health problems but also dilutes problems of leg sprains and muscle strains. Additional materials like KELVAR has been used to enhance the quality. As this is a new product with new additional features of fragrance pad and acu pressure points in the sports shoes for the first time, so reasonable Price is set based largely on competitor’s price, by comparing quality, and features.Our product is compared with products in upper middle and lower middle category i.e. with Adidas, Nike, Action, Reebok etc… also As the product has special feature like acupressure points and fragrance pad it will be characterized by high level of perceived quality and features with price just high enough but not out of customer’s reach.Determinig all these factors Price range of product: Rs1500.00 to 4000.00 is set. Promotion mix like Advertising,Sales promotion,Direct marketing and public relation are used to build a brand image and increase the sales volume.Distribution channels like zero-level ,1level and 2 –level has been selected for the product to reach all the targeted segment.

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INTRODUCTION OF NEW PRODUCT COX SHOES “If your feet is in your shoes,You can steer yourself IN ANY DIRECTION You choose,You are on your own,and You know what you know,you are the guy who ll decide where to go.” And as we know that a person can be best described wih his shoes we have come up with a unique and simple product COX SHOES .These days in our hectic lives, we face a general problem of bad odour from a pair of shoes worn by us for long duration .People sitting close to us or in our nearby surrounding start getting irritated as well as they get bad smell that is more than difficult to bear up. So, to overcome this problem we have come up with a solution for you – “COX SHOES” with a special fragrance oriented pads ,so as to secrete a pleasing odour all the while schedule without being embarrassed. Using this once will make a you a loyal believer of its advantages, which industry has never witnessed before.

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Since our pads are replaceable, we are also providing two extra pads with our shoes free. Each pad can be used regularly for six months. Since we are also targeting health and as it is said that “health is wealth” so we have come up with and added feature of our shoe that is there will be accupressure points, so that customer will be relieved from major health problems which come up due to stress and over exertion. Our shoe will also be available with different fragrances (mild & strong) accordingly.

WHY FOOT WEAR MARKET? • The Indian foot wear retail market is expected to grow at a CAGR of over 20% for the period spanning from 2008 to 2011. •

It is expected to increase in about 60% of the total raw materials of foot wear export by 2011 from over 38% in 2006-2008.

• Presently the Indian footwear market is dominated by men’s foot wear market that accounts 58% of the total Indian footwear retail market. • Entry and exit barriers are low.

ABOUT THE PRODUCT

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COX shoes behave like an extension of the foot, which is a complex structure of bone, muscle and fatty tissues. • Cox shoes provide the user with a comfortableness and uniqueness to the maximum. • Cox shoes avid range of fragrance pad gives the consumers a varied range to choose from. (the inner part of fragrance pad is so designed that it will fit only to COX shoes) • The fragrance provided with the shoes will save the user from embarrassments arising from bad odour . • Cox shoes feature of acupressure will not only seek to health problems but also dilutes problems of leg sprains and muscle strains. •

Raw Materials used in shoes To enhance performance, sophisticated shoe structures are employed which make use of viscous and elastic foam materials such as ethylene vinyl acetate (EVA) and polyurethane (PU). The use of viscous plastics in the heel area serves to absorb the impact forces during the initial ground contact, and provides the foot with a soft ‘cushioning’ effect. Additional materials used: 1. KELVAR (Used to enhance the quality)

The Properties of KEVLAR. KEVLAR is one of the most important manmade organic fibers ever developed. Because of its unique combination of properties it is used today in a wide variety of industrial applications. The fiber possesses a remarkable combination of properties that has led to its use in a variety of commercial products since the 1970's Fibers of KEVLAR consist of long, interconnecting molecular chains produced from poly-paraphenylene terephthalamide. 8

General Features of KEVLAR: · High Tensile Strength at Low Weight

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Low Elongation to Break High Modulus (Structural Rigidity) Low Electrical Conductivity High Chemical Resistance Low Thermal Shrinkage High Toughness (Work-To-Break) Excellent Dimensional Stability High Cut Resistance Flame Resistant, Self-Extinguishing

2.Material used in making of fragrance pad and

acupressure point

• Vegetable tanned sheepskin • Active carbon filter prevents odor • Slightly padded with latex foam • Fragrance •

Breathable leather shoe liner protects the inside of shoes from dampness, bacteria causing odor. Product attributes

• Provides freshness to feet by its pleasant smell. • Acupressure will act as a reliever of pain. • Replacable fragrance and acupressure pad(the inner part of fragrance pad is so designed that it will fit only to COX shoes) • Pioneered in comfort • Best for athletes • Provides firmness to feet • Style quotient also maintained • Available in varied range of price and size with a warranty of 1 year. 9

P R O D U C T

L E N G T H

PRODUCT MIX FOR COX SHOES

PRODUCT MIX WIDTH RUNNIN G

CRICKET

ATHELET E

TENNIS

SOCCER

WITH FRANGANCE

SIZE -6 TO10

WITH FRANGANCE PAD & ACU PRESSURE

PRODUCT DEPTH =VARIANTS X SIZES 2 X 5 = 10

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TARGETING

SEGMENTATION Geographic City: More focus on metro cities because people believe in trying innovative, new and better products. Demographic: Age: 14 years and above. Gender: Male and female both. Income: earning above Rs 20000 thousand P.M. Occupation: Students, Athletes. Psychographic: Socio-economic: Upper-middle. Lower-middle. Life-style: Sport-oriented, outdoor oriented. 11

Behavioral: Benefits: Quality, service, after sell service. User status: Non user, potential user, first time user.

TARGETING

1. Measurable: Size ,purchasing power ,characteristics of the segments 2. Substantial: A segment should be largest possible homogeneous groups worth going after with a tailored marketing program e.g.earning capacity 20,000p.m. 3. Accessible: Reach should be good. 4. Differentiation: People have different perception about different marketing mix. A business man and a sports person will have different feel about COX shoes. 5. Actionable: Effective programs can be formulated for attracting and serving the segments.

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TARGETING

TARGETING

AWARE

UNAWA

NOT TRIED

NEGATIVE OPINION

TRIED

NEUTR AL

POSITI VE

REJECTED

NOT YET REPEAT

REPEATED 13

LOYAL TO OTHER

LIGHT USER

SWITCHER

REGUL AR USER

LOYAL TO BRAND

HEAVY USER

POSITIONING

Positioning through point of difference by presenting and highlighting the new attributes of cox shoes. • • • • • •

Relevance Feasibility Distinctiveness Believability Communicability Sustainability

Pricing Pricing is the process of determining what a company will receive in exchange for its products. Pricing factors are manufacturing cost, market place, competition, market condition, Quality of product.

Setting the price As this is a new product with new additional features of fragrance pad and acu pressure points launching for the first time, so reasonable price should be set according to the following factor. 1. Selecting the price objective. 2. Determine demand. 14

3. 4. 5. 6.

Estimate cost. Analyzing competitors cost price and offers. Selecting price method. Final price

Selecting the price objective Product quality leadership As the product has special feature like acupressure points and fragrance pad it will be characterized by high level of perceived quality and features with price just high enough but not out of customer’s reach.

Determining the demand 1. Product is distinctive because of its special feature in it (fragrance pad & acupressure), which makes it different from others. 2. Buyers less aware of substitute since there is no other player in the market with such features, so in respect of its features buyers will not get any substitute. 3. Expenditure is smaller part of the buyers total income .since the price of footwear is small part of the total income. 4. The product has more quality and exclusiveness. So according to this market for the product will be fewer prices sensitive and price can be kept a little higher than other products.

Estimating cost The total cost depends on fixed and variable cost. it is important to know how cost vary with different levels of production ,and accordingly cost are estimated. Economies of scale are used to minimize the cost in long run. 15

Analyzing competitor cost price and offer PRICE COMPARISON OF DIFFERENT BRANDS BRANDS Category(upper middle-lower middle) PUMA

PRICE

PRODUCT RANGE

RANGE 1500-6500

RUNNING, CASUAL,SOCCER,CYCLE ,etc.

ADDIDAS

1500-4500

RUNNING, TENNIS,TRAINERS, BASKET BALL, etc.

NIKE

1700-5000

REEBOK

1300-4000

TRAINERS, FOOTBALL, RUNNING, GOLF, BASKET BALL etc… WALKING, AEROBICS, RUNNING, BAKET BALL, etc..

ACTION

900-2800

CASUAL,SOCCER,CYCLE,RUNNI NG,etc…

BATA

1000-1700

Soccer,running,casual etc.

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Since the product has added features and enhanced quality so the product will be perceived similar to product in upper middle and in lower middle category so the price of the product will be compared with Adidas, Nike and Reebok.

Selecting a price method GOING RATE PRICING

Our product’s price is based largely on competitor’s price, by comparing quality, and features. Our product is compared with products in upper middle and lower middle category i.e. with Adidas, Nike, Action, Reebok etc…

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SELECTING FINAL PRICE Finally selecting the price additional factors like the impact of other marketing activities, company pricing policies, gain and risk sharing pricing are considered.

Raw Materials used in shoes To enhance performance, sophisticated shoe structures are employed which make use of viscous and elastic foam materials such as ethylene vinyl acetate (EVA) and polyurethane (PU). The use of viscous plastics in the heel area serves to absorb the impact forces during the initial ground contact, and provides the foot with a soft ‘cushioning’ effect. Additional materials used: 1.KELVAR (Used to enhance the quality) 2.Material used in making of fragrance pad and acupressure point • Vegetable tanned sheepskin • Active carbon filter prevents odor • Slightly padded with latex foam • Fragrance • Breatheable leather shoe liner protects the inside of shoes from dampness, bacteria causing odor . Fixed cost + variable cost

Cost incurred Low middle in percentage category

Upper middle 18

category Cost of materials

65%

780.00

2080.00

Cost of labor

15%

180.00

480.00

Other expenses

20%

240.00

640.00

Total cost

100%

1200.00

3200.00

Desired profit (25% on sales)

300

800.00

Required sale price

1500.00

4000.00

Price range of product: Rs1500.00 to 4000.00

Promotion Marketing activity used to communicate to consumer about the organization its product, its activity and directly or indirectly expenditure.

Promotion mix Advertising Sales promotion Direct marketing public relation

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Advertising : A paid form of non personal communication through media. We are promoting our shoe as it provides. -Nice fragrance -acupressure point that help to control blood pressures. As our logo & caption “we did it “which we have taken also suggest that we have created a product which is beneficial for the customer ,because no such shoes has been launched yet which have acupressure point and fragrance paid along with good quality.

Sales promotion An activity or material that Offer a direct inducement to purchase . We can do our sales promotion by: 1. Sport sponsorship By sponsoring local sports events. 2. Event sponsorship By sponsoring events like new year eve. 3. Advertisement on wheels 4. Contests Contest like marathon race can be organized to build brand image and increase the sales volume. 5. Tying up with core companies having brand name and involved in making only sports accessories or associating with brand companies producing health care gadgets to get the benefits of their brand value and increase the sales volume . 6. Using print media • Sport magazines 20

• Weekly magazines e.g. india today • Health magazines • Newspaper 1. Electronic media • Adds on TV and internet • Radio • Bill boards.

Direct marketing public relation: Public relation will be used to explain the benefits of cox shoes (like benefits of pleasant fragrance and acupressure points in shoes ).Direct marketing like internet and catalogs will be used to inform the targeted segments about the feature of the product and various models of the product.

DISTRIBUTION Distribution is one of the four elements of marketing mix. An organization or set of organizations (go-betweens) involved in the process of making a product or service available for use or consumption by a consumer or business user. 21

DISTRIBUTION CHANNEL Chain of intermediaries, each passing the product down the chain to the next organization, before it finally reaches the consumer or end-user. This process is known as the 'distribution chain' or the 'channel.' Each of the elements in these chains will have their own specific needs, which the producer must take into account, along with those of the all-important end-user. CHANNELS A number of alternate 'channels' of distribution may be available:  Distributor, who sells to retailers  Retailer (also called dealer or reseller), who sells to end customers  Advertisement typically used for consumption goods Distribution channels may not be restricted to physical products alone. They may be just as important for moving a service from producer to consumer in certain sectors, since both direct and indirect channels may be used. Hotels, for example, may sell their services (typically rooms) directly or through travel agents, tour operators, airlines, tourist boards, centralized reservation systems, etc. There have also been some innovations in the distribution of services. For example, there has been an increase in franchising and in rental services - the latter offering anything from televisions through tools. There has also been some evidence of service integration, with services linking together, particularly in the travel and tourism sectors.

CHANNEL LEVELS 22

Their are four channel levels by which a company can reach to consumers. •

zero level channel

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1- level channel

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2- level channel But we will be using only first three channel for our product distribution.

1. Zero level channels consist of a manufacturer selling directly to final consumer. we will

be selling our shoes by internet selling(by sending mails, by using sites such as e-bay ,amzon, alibaba.com).We will also sell our shoes directly to various institutes and sports academy.

2. 1-level channels, In 1-level channel we use only one intermediary or distributor, who will

supply goods to the retailer and they will also provide feedback to the company about demand of consumers. Exclusive showrooms can be used with wide coverage to cover different price points and target different segment of customers, which will generate sales volume.

3. 2 -level channels contains two intermediaries selling to retailers through wholesaler and

finally to customer inorder to cover the maximum targeted segment .(Here benefits of influence of distributor is used)

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