Matrix Footwear Case

Should Matrix foray into premium footwear for youth market/ fashion accessories market? What are the factors you should take into account while taking product line stretching decisions? How does product policy impact the value proposition of the matrix store? How can matrix diversify into unrelated areas like fashion accessories without repeating the mistakes of the past?

Recommendation/Inferences on major issues:

Yes, they should enter into the Footwear Premium Market segment with focus on young adults market which is growing at the rate of 30% Through the initial years of Premium footwear business, they should focus on building brand equity in the target market. Once they consolidate market position, they can diversify into fashion accessories business. The important point here is to diversify in only related to leather products such as Belts, Purse etc. since leather processing is one of the strengths of the company The company should ensure they do not tinker with company’s core business of affordable footwear. They should treat the V_F_M (Value-for-Money) business and Premium Segment as two different businesses and do not try to club both into a single entity.

This can be done easily since the company already has categorized its retail chain into three segments: premium stores, family stores and bazar stores. Create a separate plan for production and distribution of the new Premium Segment. This must be a separate small scale high premium footwear section. The company will need to develop a specialized sales and marketing division to ensure focused strategy for the young adults markets. Matrix should not repeat the mistake they did by selling footwear as a fashion accessories along with diversified offering. Company should focus on their strength and brand value in footwear business and offer footwear products in growing market segments. Instead other products should be slowly introduced as fashion accessories.

Summary of Analysis supporting the recommendation:

Matrix Footwear India should enter into Premium Market Segment because:

Today’s younger generation feels that the present products and design of Matrix India is too old-fashioned and they do not want to use them. Although the present market share of Premium Segment is only 12%, it is growing at the rate of 30%, and this is huge business potential for Matrix Footwear Matrix traditionally has an image of ‘old fashioned, VFM products’. Young adults segment is growing fast and presently Matrix do not have products for this segment. Matrix already has a chain of premium retail stores

They can diversify into unrelated areas such as fashion-accessories through the following strategies: Through the initial years of setting up the Premium business, do not diversify into other un-related fashion wear products. The strategy should be to focus on the premium footwear business and build brand equity. In the long run after Matrix has developed market share in the premium footwear segment, they can do brand extension by offering other related leather products such as Belts and Purses (since leather processing will their strength due to years of experience in footwear business).

Factors to take into account while taking product line stretching decisions: Matrix should not repeat the mistake they did by selling footwear as a fashion accessories along with diversified offerings under premium segment. Company should focus on their strength and brand value in footwear business and offer footwear products in growing young adult market segments. Create a separate brand for the Premium Segment Footwear, do not try to club it with the same economy class footwear section. Since Matrix is entering into new product segment designed especially for youth they should conduct market analysis, focus on product development and market testing.

This will help optimize manufacturing process by initially manufacturing low volumes and maintaining low inventory, however based on market response this can be increased slowly Create a new marketing, production, distribution and sales strategy plan for the new brand. The ambience should be considerably different the economy class. Matrix can utilize its chain of premium stores to retail the product Intelligently design a pricing strategy to match the premium products costs and profits

Strategy for Production and Distribution of High Premium Products:

Create a separate plan for production and distribution of the new Premium Segment and do not tinker with the present setup for V-F-M that caters to the mass economy class. This must be a separate small scale high premium footwear. Outsource the production and distribution of other un-related fashion wear products such as leather Belts and Purse.