Topic: Marketing Case- Montes Calçados: A step Ahead

Types Of Document: Case Study

Subject Of Area: Marketing

Number Of Pages: 7

Number Of Spacing: Single Spacing (550 words/page)

Academic Level: Master

Introduction

Renato Montes immigrated to Rio de Janeiro in 19687 from Portugal. Montes father was a skilled shoe maker and also a designer who taught the craft to Renato. In the initial period, Renato was unable to find work therefore he started by repairing shoes, did odd jobs and spend his free time learning the craftsmen ship.

He felt that South America was a market which had many opportunities and considered Brazil as major source of shoe manufacturing. In 1972 Renato married Lillian Costa. In the year 1974, Renato designed a leather sandal with Ipanema high style which became an instant success and the industry accepted the product.

Lillian had a cousin in the shoe market therefore he helped Renato setup Montes Ipanema Sandals. Both Renato and Lillian placed the sandals manufactured by company on various fashionable retailers in Rio de Janeiro and Sao Paulo which helped the company attain profits and revenues.

Lillian focused the urban women between the age 18 to 35 where she wanted to target customers willing to buy distinctive, affordable and trendy shoes. The sandals, coupled with this strategic focus, laid the foundation for MC’s success.

Along with this, with the instant success, MC started to take the Brazilian shoes in the global market. MC being a successful firm in the market was able to expand because of the high volume, well rationalized production and it had the items to produce the bulk of their profits and the revenues.

The company also subcontracted to lower volume items that enabled the organization to offer a wider range of sizes and styles where it also shipped the latest designs rather quickly. This aspect therefore allowed the company to increase the overall productivity when the demand was high and it helped the organization to bring the results.

Finally, it can be said that MC also expanded itself in global market which helped the organization in the positive manner and it extend the profit margins for the company. MC manufacturer all its products in Brazil and it extended the production to various parts of the world. MC provided its subcontractor partners with raw materials and normally paid on delivery to ensure strong relationships.

Problem Statement

Montes Calçados is basically a renowned fast fashion Brazilian manufacturer of fashionable and casual women shoes more specifically targeted for women aged 18 to 35. The brand has been operating in major cities across the globe.

The major issue that has been presented in the case basically depicts the fact that the revenues for Montes Calçados have been declining and therefore the management needs to evaluate the two major growth options, whether to actually expand distribution online to increase sales and revenue for the company and the second option presented to the management is to introduce the sales for the brand by introducing new product range and styles.

Along with this, the management also needs to think about the “Brazilian” position of the brand. The case therefore discussed the strategy and also the general management issues about the direction of business. Therefore, it can be said that the management under the leadership of Vitoria Montes need to decide the future growth strategy for the company.

The sales have declined and Vitoria Montes need to find methods and ways that can overcome the current situation of the company and ensure that the organization can sustain and remain a profitable firm in the market.

Analysis

As the case depicts, the organization has been operating in the shoe industry for the past many years and it has been able to reap in decent profits and results. In the light of the current situation prevailing in the organization and with the sales of the company a bit stagnant and has declined. In such a situation the management needs to make correct, efficient and rather effective decisions in order to overcome the issue of declining profit.

SWOT Analysis

Following is the SWOT Analysis for Montes Calçados.

Strengths: The major strength for Montes Calçados is the fact that the company has been operating in the marker for the past many years. Moreover, the organization manufactures all its products in Brazil which is the unique selling proposition for the company. Along with this, the financial stability of the organization is also considered to be a major or key success factor for the company.

In addition to this, the brand operates in more than 90 cities of the world is again a success factor for the company. The quality of products offered by Montes Calçados depicts the success for the company. Therefore, it can be said that Montes Calçados is a successful brand that has been operating under the strong leadership of Vitoria Montes.

Weaknesses: The major weakness for the company is the fact that the prices of Montes Calçados are quite high and they are above the industry average prices, therefore this makes the company find it difficult to expand in smaller markets.

Furthermore, the lack of products in the company portfolio has also been a major worry for the company. Finally, the focus on one single market that is the niche market makes the brand not cater the needs and wants of middle class consumer.

Opportunities: As the current situation of the company needs a rethink of the strategy, therefore, the major opportunities that are available for the firm can be to actually expand distribution online to increase sales and revenue for the company and the second option presented to the management is to introduce the sales for the brand by introducing new product range and styles.

The management also needs to think about the “Brazilian” position of the brand. Furthermore, the expansion in local market by offering franchiselicense to the local businesses can also be a decent opportunity for the company.

Threats: The major threats for Montes Calçados are the competition the company has to face from all the different sections of the market. For instance, the rivals such as Vans, Toms, Jimmy Choo, Gucci, Clarks, Nike, VF and Wolverine are major competitors for Montes Calçados.

Along with this, the raw material cost is ever increasing which again is a threat for the company. Finally, the declining profits have been a major issue for the company in the recent years.

Marketing Mix

Following is the marketing mix for Montes Calçados.

Product: The major products offered by Montes Calçados are Brazilian market manufacture shoe items that are sold in more than 90 countries worldwide. In addition to this, the diverse product line of the company has made the brand one of the top retailers in the market.

The size and options offered by Montes Calçados are considered major success factor for the company. The marketing strategy of the company is to offer high class, unique and premium products to the customers.

Price: The price strategy offered by Montes Calçados is a skimming strategy. The prices offered by Montes Calçados are above the average price of the market and therefore it makes the brand a premium brand in the market. The price strategy is to attract upper end of the market.

Place: The place strategy of the company is to expand itself in the major cities worldwide. For instance, as the case depicts, more than 93 cities offer Montes Calçados shoes. Moreover, the company plans to decide the future direction of the company.

Promotion: Finally, the promotional strategy of the company is to sell its products through traditional forums such as direct sales, retail stores, etc. The promotional strategy needs to be reconsidered and the management should look to offer Montes Calçados products over the social media platforms and online mediums also.

5 C’s of Marketing Strategy

Company: The company name is Montes Calçados. It is a shoe manufacturing company that offers unique, high quality Brazilian design products for the company. Moreover, the company has been operating in 90 plus cities of the world.

Customer: The major customers for Montes Calçados are upper middle class customers. The brand offers pricy products therefore it does not cater the needs of low end or the middle class market. In addition to this, the customers are mostly educated people and trendy individuals.

Competitors: The major competitors for Montes Calçados are Vans, Toms, Jimmy Choo, Gucci, Clarks, Nike, VF and Wolverine. In addition to this, the smaller rivals in the market are to some extent the rivals for Montes Calçados. However, they can be considered as indirect rivals of the industry.

Context: The context of Montes Calçados is to attract audience willing to spend extra penny for high quality, unique design shoes manufactured as per the Brazilian style. It is a decent quality product that offers color, style, uniqueness. The political impact, economic impact, social impact and the technological impact are considered to be the major factors of context.

Collaborators: The company does have distributors and suppliers who work as third party representatives that distribute the company products in different markets not only locally, but it also distributes international.

Laddering Method

Laddering method is basically a qualitative marketing research technique which looks to basically understand as to why the people will use and buy the product or service offered by the company.

The research basically helps in understanding the needs and wants of the customers and try to archive increased sales and success by offering efficient and effective products to the customers and provide them with quality, value and user friendly product.

In the current situation, Montes Calçados has been planning to find the options of regaining its profits and revenues. Since the competition has been increasing quite stringently therefore, the management needs to make the decision in this regard and needs to fulfill the needs and wants of the customers.

Based on the marketing research and laddering technique, the two alternative options for the company shall be to actually expand distribution online to increase sales and revenue for the company and the second option presented to the management is to introduce the sales for the brand by introducing new product range and styles.

Revenue Analysis

This particular part of the assignment is relating to the financial part. It is more about analyzing the revenue of the company per annum basis. The revenue of the company generated in the financial year 2014 was 383 Million $.

The revenue of the company grew by 4.17% and 3.28% respectively for years 2015 and 2016. The revenue of the company is expected to decrease in the year 2017 by 1.45%. It is expected that it will remain in the same trend and decreased a bit by the year 2020. Mentioned below graph is showing the same thing.

Based on the same aspect, it can be said that the financial performance and positioning of the company is high and organized that helps them to secure their positioning in the market. There are numerous markets which the company is covering their operations such as Brazil, North America, Europe, Asia and others. Mentioned below chart is showing the same story particularly.

The chart is showing the revenue generation capability of five different regions as highlighted in the selective case study. From the aforementioned chart, it is found that the region other and Asia have identical proportion in terms of generating revenue for the company which is showing a proportion of 21% each. The projection of revenue and gross profit is as follows.

It is also found from the same analysis that European region is the 2nd largest one which has a capacity to increase the revenue of the company with a proportion of 20% in particular. It is showing that all of these three underlying regions are essential for their core efficiency and development. The gross profit as well as revenue is likely to decrease from 2018 till 2020, but still it is quite efficient and high.

Apart from Europe, there are two other regions as well which are identical in terms of generating revenue for the company which are Brazil and North America, which has a revenue generation capability of 19% in particular, which is quite efficient.

The company is advised to maintain the same scenario and maximize their potential in the given marketplace. There are two different ratios which will be taken into the consideration, such as Gross Profit Margin and Operating Profit Margin.

Gross Profit Margin (GPM) is a profitability ratio that assesses the ability of a company in generating gross profit from its regular operations. In the year 2014, the GPM of the selective organization was 55.09% which increased for three consecutive years, showing that the company has a great potential in the market, which is quite efficient. The growing trend of the GPM is showing that the ability of the company in generating gross income is high and organized.

The company has a great potential to materialize their growth with perfection in the given market. The GPM of the company decreased marginally in the year 2017 to reach on a level of 58.62%. However, the average GPM of the company is still higher than the 50%. It is clearly showing that the company is able to generate gross profit of $50 from their net sales of $ 100, which is quite efficient and has the chance to maintain their positioning in the market.

This particular outcome would be attentive and efficient for the company in the long run betterment and efficiency. The company has to maintain the same trend for a long span of time.

Operating Profit Margin (OPM) is a profitability ratio that assesses the ability of a company in generating operating profit from its regular operations. In the year 2014, the OPM of the selective organization was 19.58% which increased for three consecutive years, showing that the company has a great potential in the market, which is quite efficient. The growing trend of the OPM is showing that the ability of the company in generating gross income is high and organized.

The company has a great potential to materialize their growth with perfection in the given market. The OPM of the company decreased marginally in the year 2017 to reach on a level of 23.15%.

However, the average OPM of the company is still higher than the 20%. It is clearly showing that the company is able to generate operating profit of $20 from their net sales of $ 100, which is quite efficient and has the chance to maintain their positioning in the market.

This particular outcome would be attentive and efficient for the company in the long run betterment and efficiency. The company has to maintain the same trend for a long span of time for their efficiency and growth.

Alternative Analysis

Based on the issues presented in the case, following are the two alternatives available for the company.

Distribute products online: The first recommendation for the management of the company is to offer the company products over the internet. As for now, there is no online presence for the company. To attain customers and to increase the sales the recommendation shall be to penetrate in the online market and offer products to the customers directly at their homes. The alternative in spite being a lucrative one, it requires increase human resource and execution to eventually make online presence for Montes Calçados.

New Product launch: The second alternative based on the issues presented in the case, the company under the leadership should look to offer new and wide range of goods to the customers. As for now, Montes Calçados does not have a wide range of goods; therefore the customer does not have many options to choose from.

To sustain the market competition and to remain a competitive force, the management needs to introduce new products, trendy designs and need to come out of its focus of being a brand for 18-35 years old females.

Recommendations

The recommended solution for the company Montes Calçados based on the issues presented in the case shall be to focus on expanding the reach to the customers in markets where it does not have presence can be captured by making the brand available on the internet.

Based on the financial projection, it can be said that the revenue of the company will decrease a bit from 2017 till 2020 as compared to the revenue which they achieved and reported in the year 2016. The main reason behind the decrease was their jump to the online selling for the first time. However, the result is efficient, as the revenue of the company is expected to increase in the future. Hence, it is recommended to Montes to go to E-Commerce.

This is the most feasible and effective solution to increase the declining sales because most of the competitors for the company are basically attracting larger customer base because of their online presence, therefore, the management of Montes Calçados needs to do the same and attain profitable results by expanding its produce range to the online medium.

Along with this, the recommended solution is not a costly one and the management can actually spend some capital to make the company an online shoe brand. Therefore, in the end, it can be said that Montes Calçados needs to expand its scope and market by becoming a brand that serves customers through online platform also.

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