From Well-heeled to Tip-toed, Shoe-shine to Shoe-lace: Valuing Product Differentiation in Men’s Formal Footwear

Vishal Kumar and Satish Y. Deodhar

No WP2014-12-04, IIMA Working Papers from Indian Institute of Management Ahmedabad, Research and Publication Department

Abstract: Gone are the days when the only branded footwear Indians knew was Bata. After years of economic liberalization, one finds many firms; local, national, and international jostling for consumer attention by producing various types of footwear in Indian market. In fact, today Indian footwear industry is the second largest in the world. This market can be described as a stylized case of a monopolistically competitive market where there is intense competition among firms manufacturing differentiated products. In this study, we focus our attention on men’s formal shoes which are distinguished by the presence (or absence) of many differentiated attributes such as heel, toes, colour, surface, laces, buckles and brands. Invoking hedonic price analysis and bid and offer curves of the customers and firms respectively, shoe prices are viewed as the sum total of the valuation of each of the shoe attributes. We estimate the relative valuation of the shoe attributes by regressing market prices of shoes on various quality attributes. Analysis shows that shoes made of leather, shiny surface, buckles, laces, and brands carry a premium and differentiation based on colour, pointed toes, high heels, and texture is not important. In a highly competitive market, such data driven studies can provide pointers to firms in altering existing shoe models and successfully launching newer ones.

Date: 2014-12-11
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