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Case Study – Matrix Footwear
- Shrutika Ruia PGP/28/169
Should Matrix stay away from the premium end of the footwear market? Or should it take a
shot at it again?
Matrix should not stay away from the premium end of footwear market. It should take a shot
again but focus on its strengths in the footwear manufacturing segment. Currently, Matrix has
a 17% market share, but the market landscape has been changing. The segment targeted by
Matrix includes middle class households and youngsters. Both middle class families and
youngsters have seen a rise in income levels and as a result are more brand aware. Additionally,
the premium segment makes up 12% of the current market with a growth rate of 30%. This
offers Matrix an opportunity to tap into if they execute their launch strategy well.
How can Matrix diversify into unrelated areas, like fashion-accessories, without repeating the
mistakes of the past?
Previously, Matrix decided to launch accessories in which it had no expertise or understanding
of the market. The product lines which were launched were not related to product categories
either – for e.g., producing coats and producing footwear were very different activities.
Additionally, Matrix’s launch plan was heavily influenced by changing customer preferences
and subsequent losses made by the company. A drastic and complete shift in focus is not
something that Matrix should repeat. Instead of launching multiple product lines, a few product
lines which can tie in with their main footwear offering for e.g., producing trendy socks or
colorful laces would be a value addition. A key feature underlying the endeavor should be to
clearly present the value addition of these accessories with respect to their “core” product that
is footwear. This would help customers focus on the key product andsee how the accessory is
related to it.
What changes will this entail in the company's approach to production and distribution?
Matrix footwear currently follows a distribution and production heavy strategy where it focuses
on high volume of sales of its lower end products. To shift its focus on premium products,
Matrix will need to customize its production chain but not at the cost of its footwear
manufacturing line. Some initiatives which they can take to tread carefully would be:
1. Premium and normal footwear products can both use the same production line. Focus
should be on developing a premium footwear line with variety of offerings depending
on fashion trends or demands.
2. Focusing on producing of accessories in select stores and then ramping up production
based on their response.
3. Launch an entire premium experience or a premium section in select stores to lure
customers who would like to try different footwear or are brand conscious
4. Focus on positioning the premium product line as high end – mentioning high quality
inputs used and the point of difference from competitor footwear products. This should
focus on trendy looks and design instead of price.
5. Incentivizing sales associates to sell both the current footwear range and the premium
product line instead of focusing on a single product.
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How can Stevens ensure that the move will not tinker with the company's core business of
affordable footwear?
For Stevens to ensure that the move does not hinder the company’s core business, some
things that he can do are:
1. Communicate to all stakeholders that the company’s core business still lies with
affordable footwear
2. Create a long-term strategy to allow Matrix footwear to be nimble/flexible and launch
new footwear keeping up with new fashion trends but also focus on their core footwear
offerings. This is because fashion trends are short term in nature and completely
shifting to a new range may hurt the company in the long run as was the case in 1988.
3. Positioning the product lines is key to help customers differentiate between the value
proposition of each brand.
4. Keep in mind the short term losses that may factor in due to increased cost of inputs for
production of premium products.
Must a company like Matrix wear the millstone of its failure around its neck forever? Or should
it ignore the opportunities held out by the young adult’s market, and stick to the economy
segment of the footwear market alone?
Yes, Matrix would do well to keep the failure of its 1988 products in mind. This helps create
a reference point for the company about what went wrong and how they learn from the entire
experience. Their failure made Matrix hesitant about launching a similar product offering in
the future, however using their learnings can help them not repeat the same mistakes and
succeed eventually.
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