General Information
As mentioned, Leon Tamaris & Co is a Greek company producing women’s footwear since 2000. In the beginning the company was only importing shoes and was the Greek representative of German firms.
The company is based in Athens and has representatives in the rest of Greece. The company had its premises at the industrial district of Taurus near the center of Athens. It had an office and a small production unit. In 2005, the company started to produce some of its products in Germany and the rest of the production remained in Greece.
It is a family business and its legal entity gives the company the possibility to get speedy loans from the banks easily since its legal representative’s personal assets can be used as a guarantee.
The company has a stable market share, despite the strong competition. The company’s competitive advantage is the high quality of its products. It has s good fame in the market about its good quality of its products and their durability.
The company is aiming to increase its market share, as well as the increase of its sales and the decrease of its production costs
Apart from its production, the company also imports every year twelve different series of products made from different materials. Most of this footwear is manufactured in Eastern Asia with low cost materials and low quality. Most of the shoes sold in the Greek market are not made in Greece.
The Market
The company’s target market is women between the ages of 18 and 50. The market size and the market share of the company and its competitors are estimated on the basis of information gathered by its salesmen. In 2012, the company sold about 400.000 of pairs in the Greek market. A part of these are manufactured in Greece and another part in Germany, however, the major part is imported from China.
The company has a stable market share. However, customers due to the economic crisis are conservative in buying. The prices of low cost footwear have been influenced by the crisis since the buying power of consumers has decreased and this has affected the company’s turnover.
In addition, the market size is expected to decrease, because of the decrease in births However, this will not significantly affect the sales of footwear, because today parents give more care and buy more goods, clothing and footwear for their children even for the grown ups who are unemployed and have not yet left the nest and working women pay more attention to their appearance and buy more shoes and clothes.
The company is mainly targeting the Greek and the Cypriot markets, however a part of the production is exported to European and Arab countries. The biggest Greek cities Athens and Thessalonica absorb the major part of the production.
Leon Tamaris & Co communicates with its customers and tries to be aware of their needs. The company conducts market researches to identify customers’ needs and assess their satisfaction. These market researches showed that customers are very satisfied with the company and the quality of its products.
Competition
Leon Tamaris & Co is fighting competition by offering “value for money” and it has an intense promotion in fashion magazines. However, in Greece it is easy for a new competitor to enter the market by importing footwear from Eastern Asia and other countries. Everyone can visit the two exhibitions that take place in Europe and import quantities of footwear without having any special knowledge on these products. In Greece there are many companies in the footwear market and competition is severe. The major competitors are GEOX, CLARKS, TIMBERLAND and BOXER.
GEOX was established in 2000 and it is a well known brand worldwide. Due to its close contacts with designers, producers and retailers worldwide, the company offers a great variety of products designed by the most famous designers. In addition, it has exclusive collections and follows ‘green’ policies to protect the environment. The company has presence in more than 100 cities worldwide and has offices in the US, Europe, Japan. China, Hong Kong. The company offers excellent customer service including in-time delivery and reliability, CLARKS was established in 1825, in Somerset Village in the US, when Cyrus Clark started to make carpets from sheepskin. In 1830, he and his brother started to make slippers from sheepskin wool and in 1856 in their production process the first ‘Singer’ sewing machines were introduced. Then, William Clark focused on giving special attention on the health of the feet and this was the beginning of the company’s fame, as a producer of shoes healthy for the feet. In the 70’s the company introduced polyurethane as a material for the shoe soles and gave extra comfort to its customers. Clarks was very successful in the UK and in the US and today it is the first brand in the world.
TIMBERLAND, introduced the technology of shoes without stitches that are completely waterproof. The shoes were distributed worldwide starting from Italy. Then the company opened a shop in Rhode Island. Gradually Timberland produced also women’s shoes as well as clothes and accessories. The company produced the Timberland Grip Trail shoe sole, the first sole made from caoutchouc. In addition, the company produced the line ‘Mukluk’ targeting the VIP’s. Timberland supported an Eco friendly policy and introduced the Active Technology (ACT) system in its shoes and clothes, which offered comfort and was taking into consideration climate changes.
BOXER was established in the city of Kalamata in Greece in 1919. The company, after its catastrophe in the Second World War moved to Athens and built a new factory there. In 1974 the company built a second factory and started to produce 5.000 pairs of shoes per day. The company became the biggest production unit in the sector and exported shoes to Germany to Russia and the UK. In 2006, BOXER was financed by the European Investment Programs of the Greek Ministry of Development and built a third factory with the latest technologies in the production process. Thus in 2010, the company expanded its production to 8.500 pairs per day and started exports in many more markets abroad.
Analysis of the External Environment
PEST is a tool for the analysis of the external macro-environment that affects all companies. P.E.S.T. is an acronym for the Political, Economic, Social, and Technological factors of the external macro-environment of a company or an organization. Such external factors usually are beyond the firm’s control and sometimes present themselves as threats, however, some other times can create new opportunities (Kotler, 1994).
The external environment influences the company’s operation and its success or failure. In addition it influences customers’ attitude.
Political Environment
In Greece there are laws protecting companies from illegal rivalry and consumers and employees. There are also regulations and procedures for importing and exporting goods. In the sector of footwear, it is crucial for a company to monitor the legal framework which prescribes the production and distribution of footwear. Leon Tamaris & Co is influenced by the political environment because it is importing from Germany and today due to the political contradiction between the two countries consumers do not prefer to buy products imported from Germany and they may shift to the competitors’ products.
Economic Environment
Greece does not seem to recover from the economic crisis and today people who can be considered at the border of poverty have reached the 30%, that is, about 1000.000 families. Unemployment has reached the highest levels especially for young people between 20 and 30 years old. Due to the crisis, footwear retailers reduced demand because their sales decreased significantly and the company in order to retain its economic heath had to decrease the salaries.
Social Environment
The majority of Leon Tamaris & Co customers come from the middle class, thus the company is taking into consideration the changes that occur in the middle class such as the quality of living, their profiles, the aging of the population etc. The middle class has been significantly influenced by the economic crisis.
Technological Environment
In the footwear industry there are a lot of technological innovations in the production process and the materials that make shoes comfortable, waterproof etc. Thus, the company should have modern technological equipment in its production process. In addition, it should have the necessary infrastructure to achieve modern designs for its products.
SWOT Analysis
SWOT analysis is a tool for auditing an organization and its environment that helps marketers to focus on key issues. SWOT stands for strengths, weaknesses, opportunities, and threats and requires listing and analyzing these four issues (Doyle 1994). Thus, a SWOT analysis is performed to identify the company’s strengths and weaknesses as well as its business opportunities and possible threats:
Strengths
The company is small and flexible, thus, it is easy to take decisions and make changes in the design of the products but also in other issues such as pricing, distribution and promotion. The whole chain of the process from the design stage up to the distribution is under the control of the company Companies that import their products cannot make changes since the products are designed by other companies abroad. The company has a good fame in the Greek market for the high quality of its products. It is experienced in the production of shoes since 2000 and has a good knowledge of the Greek market and it can easily adapt to the market needs.
Weaknesses
A weakness is the high prices of the products, since the company is selling its products at about 10% higher than the mean prices in the Greek market. Though, the brand name of the company can justify higher prices. The company’s high prices are due to the superior quality of the materials and the production costs. However, in Greece there is a continuous decrease in the prices of footwear, due to the economic recession, for example hyperstores sell at very low prices, though the quality is not good. High prices is a serious disadvantage for the Greeks whose buying power has decreased.
Opportunities
Greeks show a significant interest for clothing and footwear and their spending on these is continuously increasing. Thus, the market increases and despite the economic crisis, the market share of the company remains stable and is expecting to increase its sales.
Threats
Mass imports from China of footwear in low prices which can not be competed. The quality is not good, however because prices are very low consumers buy these products and they are sold in big quantities.
In addition, recently two more competitors have entered the market. Although this is an indication of the potential of the market, these new competitors have taken market share.
In Table 1, SWOT analysis is presented.
The Marketing Mix
The marketing mix is also known as the ‘four Ps’, which are product, price, place and promotion. A fifth ‘p’ was also added to the marketing mix elements, people (Kotler 1994).
Product
The company produces footwear for women whose ages are between 18 and 50 years. The company designs and manufactures twelve different lines of products each year and each line has three or four types of shoes. Every line has its own name and is manufactured with the same materials.
The design of the products is unique for each line and changes every year according to fashion. The materials, the colors and especially the fabrics that are used are different for each line and they also change each year.
The company has innovative designs for its shoes. These designs are bought from specialized footwear designers abroad. After negotiating the cost the company signs a different agreement each time. Leon Tamaris & Co has not bought the rights from any of these specialized footwear designers. Though, its competitors have bought such rights.
The company designs its products on the basis of customers’ preferences and comfort and tries to select the suitable materials.
The products are manufactured on the basis of two criteria quality and price. The quality of the company’s products is superior to the quality of its competitor’s products. It is very difficult to decrease prices because quality should not be affected, thus every effort for price decrease should be made very carefully.
The products are packaged in plastic bags and in boxes, packaging, due to the nature of the product, cannot make the product more attractive.
The company is offering a two years guarantee for its products. It is also offering after sales service to its customers including information though the phone, repair and substitution of defective products. In the case that a product is damaged and can be repaired it is send to the company’s small workshop for repair.
Price
Prices are defined on the basis of the cost of the designs, the models, the lines and the quantities that will be produced, the materials that will be used and the labor costs. Prices start from 30 € and arrive up to 150 € with a mean price between 80 and 100 €.
In the Greek market women shoes’ prices start from 30 € and arrive up to 150 € with a mean price between 60 and 80 €. Thus, the company’s prices are sometimes higher.
According to the results of the market researches, Greek consumers have a certain amount which they want to spend for shoes and this amount is between 60 and 100 € and they do not want to exceed this amount. In addition, price is a very important criterion for consumers when they buy footwear and influences their decision and if price is high they do not buy.
The company tries to keep prices within these limits.
The company also takes into consideration the prices of its competitors. Prices for its “Casual” shoes’ range between 20 and 30€ and competitors’ prices are about the same.
The company offers high quality footwear in good prices, thus it is considered as offering “value for money”.
The policy of Leon Tamaris & Co is not to make price reductions, but in some big retail stores the company offers a 5% reduction. In addition, if customers pay cash they also have a 5% reduction.
Place
The company sells its products directly to the retailers. Thus, the company’s products are distributed to big footwear retail stores, small regional stores and big stores in the shopping malls. The company is adapting its distribution channel to the market needs. The company has two experienced salesmen and uses courier companies for the delivery of its products. In addition, it has sales representatives all over Greece. Sales representatives are paid with a commission on their sales.
In the previous years, quality shoes were sold only in big stores at the center of the cities, however, now consumers can find shoes of good quality also in smaller regional stores. In addition, the opening of shopping malls and the big chains selling clothing and footwear have changed the market since a significant number of consumers buy footwear there.
Furthermore, it should be mentioned that many small local retail stores can not compete in prices with the big chains and they close down. This problem is more intense outside Athens
Leon Tamaris’ products are of high quality, thus the company will not sell its products through super markets and hyperstores. This would destroy the company’s image, though some of its competitors sell also through this channel
The company is always trying to satisfy retailers, who want fast delivery, reliability and flexibility. Thus, the company is making efforts to minimize the waiting time for the delivery.
Promotion
Leon Tamaris & Co is collaborating with an advertising agency which organizes its promotional activities.
The company places advertisements in fashion magazines and until 2002 promotion was done also through the television. The company distributes promotional material such as leaflets to the retail stores which are given to customers and posters which are placed on the retail stores’ windows. Each year this promotional material is renewed. The company also offers a 20% discount to customers on their next purchase.
The company has an excellent phone service for customers. Its salesmen and its sales representatives can effectively communicate with customers and do well in public relations.
People
The company has 20 employees, 12 employees in the production and 8 in the administration. Since is it small the company prefers to have external collaborators the permanent staff. Thus, the company uses one external collaborator for distribution and another one to observe market trends who is also a footwear designer. In addition the company has an accountant and an assistant accountant.
The company’s employees are qualified, know the product well and they are well trained. The company is always trying to select the right employees to best fill all the positions.
Table 1: SWOT analysis
| Strengths ^ High product quality and good fame ^ Good knowledge of the Greek market ^ Flexibility ^ Total control from the design stage up to the distribution |
W Weaknesses ^ High prices |
| Opportunities ^ Greeks increasing spending on clothing and footwear O |
Threats ^ Mass imports from China of footwear in low prices ^ New competitors T |