A Study on Consumer Behaviour in Footwear Industry

Background of the Study

Consumer market includes all the individuals and households who buy or acquire goods and services for personal consumption. According to Kotler and Armstrong (2010), currently, the world consumer market consists of more than 6.6 billion people who annually consume an estimated $65 trillion worth of goods and services. Among these consumer goods shoes are one of the basics. Currently, different types of shoes are produced by different companies in different countries to different consumers around the world. These Consumers around the world vary tremendously in age, income, education level, tastes and preference even though they buy an incredible variety of goods and services. But these diverse customers relate with each other and with other elements of the world around them affect their choice among various products, services and companies.

Customers buying behavior is enormous, and highlights the importance of the customer at the center of the marketer's universe. Each customer is unique with different needs and wants and buying choices and habits are influenced by habit, and choice that are in turn tempered by psychological and social drivers that affect purchase decision processes. It is a complex multi-dimensional variable. Customer buying behavior is critical for influencing not only product purchase decisions but also important marketing decisions for commercial firms, nonprofit organizations, and regulatory agencies. Applications of customer buying behavior decisions lie on marketing strategies, regulatory policies, social marketing, and informed individual. Buying Behavior is the decision processes and acts of people involved in buying and using products. Customer buying behavior is the sum total of a consumer's attitudes, preferences, intentions and decisions regarding the consumer's behavior in the marketplace when purchasing a product or service. The study of customer behavior draws upon social science disciplines of anthropology, psychology, sociology, and economics.

The study on consumer behavior in the footwear industry enables us to analyze one’s buying decision. Footwear is a necessity and is therefore bought by the consumers of every income group whether at the top of the pyramid or at the bottom of the pyramid. The present project is an attempt to understand the differences in buying patterns of footwear of people belonging to different income groups; the difference in buying patterns of men and women. Category motivators identified are price, looks, purpose, brand name, style, variety and durability.

Today, as a result of changing world business environment, global competition is intensifying, foreign firms are expanding into new international markets and home markets are no longer as rich in opportunity. Local companies that never thought about foreign competitors suddenly find these competitions in their own back yards (Kotleret al., 2005).

According to UNIDO (2002), the African footwear sub-sector seems isolated from the fast pace of technological innovation taking place globally. Lack of design capabilities, of operator, supervisory and manager skills, and of knowledge of more appropriate material inputs and marketing techniques, all combine to cause poor productivity and a low level of competitiveness. Even in the local market, high operation costs and a lack of attention to what the market demands in shoes in terms of quality and price, allow cheap Asian products and second hand shoes to penetrate the market.

There is insufficient production of non-footwear leather products, such as leather garments, in the Eastern and Southern Africa sub-region, although this situation has improved somewhat since the early 1990s. This is a major loss of opportunity to an industry capable of the small-scale production that can offer the comparative advantages of cheap labor, low capital requirements and relatively simple technology.

Concerning Human resources development issues training agencies and institutions have been established by donations received through co-operation programs and have been supported by regular investment programs. However, the training and technical assistance infrastructure in the leather supply chain has substantial shortfalls both in facilities and services.

Manufacturing industries in Sub-Saharan Africa have generally been stagnant or shrinking for the last three decades (Bigsten and Söderbom, 2006). As Collier and Gunning (1999) and Fafchamps (2004) and many others argue, industrial development in Africa has been hindered by my raid of problems ranging from high transportation costs, high transaction costs due to imperfect information, and imperfect contract enforcement to highly risky business and political environments. Moreover, both the provision of public services and the development of grass-root is institutions and social capital are considered to be insufficient in Africa to cope with such problems.

The history of the leather industry in Ethiopia started 88 years ago, when the then Asko Tannery, now known as TikurAbay Shoe Factory, was established. The production of leather shoes in Ethiopia dates back to the late 1930s when Armenian merchants founded two shoe factories in Addis Ababa. These factories nurtured a number of shoemakers, who opened their own factories across the country.

The leather-shoe industry in Addis Ababa is exceptionally successful in Africa. We believe that this is a case worth investigating since it is expected to provide insight into the key to successful industrial development. A major finding is that the growth of this industry was driven initially by the massive entry of new enterprises established by former employees of the existing shoe factories but more recently by the growth in enterprise sizes due to improvements in the quality of products, marketing, and management. Such improvements were first made by highly educated entrepreneurs and subsequently followed by other enterprises. While the followers have grown in size, the leading enterprises have grown faster. Such a development pattern appears similar to the experience of successful cluster - based industrial development in China, Taiwan, and Japan, as is recently reported by Sonobe and Otsuka (2006 a).

Thus, study on consumers’ shoes preference has immense value to shoe companies through providing actual information about shoe consumers, these in turn help them better understand of their target consumers and designing market offers according to the need and want of their target consumers.

Statement of the Problem

Companies in this industry make footwear, including athletic, casual, and dress shoes as well as boots, sandals, and slippers. Major companies include NIKE, Sketchers USA, and Wolverine World Wide (all based in the US), along with Adidas (Germany), Asics (Japan), Salvatore Ferragamo (Italy), and Yue Yuen (China), a subsidiary of Pou Chen (Taiwan). Worldwide, about $180 billion worth of footwear is exported annually, according to the International Trade Centre. Top exporting nations are China, the US, Germany, Japan, and the Netherlands.

The US footwear manufacturing industry consists of about 200 companies with sales of about $2 billion. Many of the major shoe companies in the US are mainly owners of brand names that contract to have shoes made by independent manufacturers in other countries. Some large US producers, such as New Balance, make a portion of their shoes in the US; some smaller operations manufacture all their shoes in the US. About 98 percent of all footwear sold in the US is imported, according to the American Apparel and Footwear Association.

Ethiopian footwear sub-sector produces men’s casual shoes and children’s shoe-uppers made from pure leather. Leather factories sell these products to domestic market and directly to overseas importers and wholesalers as well as direct buying offices (Embassy of Ethiopia in United Kingdom, 2010). As it is obvious Ethiopia has the largest livestock population in Africa and the 10th largest in the world, the country had to be one of the major shoes producers and exporters in Africa as well as in the world having comparative advantage of raw material and cheap human resource advantages. Despite this fact, many studies indicated that the shoe companies found in the country face strong competition from shoes and other leather products imported from abroad.

According to World Bank group (2006), the domestic market for footwear at present suffers from fierce price competition from synthetic footwear imported from China at much cheaper prices. Though low in durability, these low quality Chinese shoes are considered somewhat stylish and fashionable in design and heel heights and are available for men, women and children in all local shops. Tegegne (2007) mentioned that the domestic shoes market has been flooded with cheap imports from Asia, particularly from China and this has inflicted heavy impacts on the sector, and threatened its competitiveness in the domestic market. Altenburg (2010) indicated, leather and leather products industry is stuck in a low-quality trap in which problems at all levels of the value chain are mutually reinforcing. That is inappropriate techniques at the stages of livestock management, tanning, and transport undermine competitiveness in high-value leather product markets, and low quality of final products translates into low prices and under-investment at all stages of the value chain. Sutton and Kellow (2010) also pointed out that the leather footwear of Ethiopia faces strong competition from shoes and other leather products imported from China and elsewhere.

But, failure to do so may result in disaster for a company’s products. In this regard, Kotler et al. (2005) noted that firms which delay taking steps and stay at home to play it safe may not only lose their chances to enter other markets, but also risk of losing their sales to companies from neighboring countries who have invaded their home markets. However, the consumer’s buying decision of shoes is still remained as open that need to be assessed. For this reason, this study conducted to assess factors that affect consumer buying decision in the selection of brand shoes. Since understanding of what consumers’ choices and why they prefer is branded for shoes manufacturers, wholesalers and retailers, it will lead to more accurate merchandise mix and marketing programs.