Nature of competition in the market and strategies of long‐term profitability
For Russian
footwear market the most common type of competition is price
competition. But there are no price wars on this market, because
producers understand that if any price war begins it will ruin all
the positioning and existing standards. It can be called a type of
unspoken deal.
The most
effective strategy for footwear market is keeping fixed costs at low
level and at the same time constantly decreasing variable cost via
more attractive deals with production firms (Chine market of
production) and getting low prices for the materials used in
production.
Nowadays,
producing footwear somewhere else except Chine is not efficient. Even
the Vietnam
production facilities can’t set prices for firms like chine does.
Of course
production itself should only be done by outsourcing. Another
important factor of being successful in this market is product
differentiation. And here marketing model of STP means a lot. We need
to clarify our target audience and make different products for each
target group.
Sources
RBC
report “Retail shoes 2010”
Marketline
reports: Footwear in Russia, Global footwear
Analytical
report of Discovery group: Russian footwear market at crisis:
nowadays and future perspectives
Cabral
L. Introduction to Industrial Organization. MIT.
2000
