College of Business Administration and Accountancy

Marketing Management:
Marketing Plan
OTTO SHOES

MACASAYA, Diane Marie

RABACAL, Erica Laine
TATAC, Sweetsell
TESALONA, Khristina Claire
YUMUL, Sheila Marie
1

TABLE OF CONTENTS
Title Page........................................................................................................................1
Table of Contents.......................................................................................................... 2
I. Executive summary.....................................................................................................4
II. Introduction.................................................................................................................4
III. Background of the Study..........................................................................................5
IV. Current Marketing Situation
Product Situation.................................................................................................6
Market Situation...................................................................................................6
Competitive Situation..........................................................................................7
Distribution Situation..........................................................................................7
Macro-environment..............................................................................................7
V. Opportunity and Issue Analysis
Strength................................................................................................................8
Weakness.............................................................................................................8
Opportunity..........................................................................................................9
Threat....................................................................................................................9

Issue......................................................................................................................9
VI. Marketing Objectives
Market Share......................................................................................................10
Profitability.........................................................................................................10
VII. Marketing Strategies
Product Strategies.............................................................................................12
Target Market Strategies...................................................................................15
Positioning Strategies.......................................................................................16
Pricing Strategies..............................................................................................16
Distribution Strategies......................................................................................17
Promotion Strategies.........................................................................................17
VIII. Financial Analysis.................................................................................................18
IX. Action Plan...............................................................................................................22
X. Appendices...............................................................................................................25
XI. Bibliography............................................................................................................26

I. Executive summary

OTTO Shoes is a men and women's shoe brand in the Marikina, Metro Manila,
Philippines. OTTO Shoes badly needs an upscale shoe designs for men and women
because the current stores have an inadequate selection.

OTTO will have a supreme, extensive selection of different designs for shoes.
Generally, the size of Passion Soles' selection is cost prohibitive due to all the different
sizes that must be stocked per style. OTTO Shoes has a unique business model that
allows them to have an extensive selection at the cost of only of affordable price with
unique designs. This is accomplished through a special relationship with the wholesaler
so OTTO Shoes can receive a customer's needed designs. While some people might
not like a store where shoes cannot be tried out before purchasing or ordering, men and
women's fashionable shoes are different. When it comes to trendy, nice looking shoes,
aesthetics are prioritized more than fit. Clearly these shoes are comfortable, and they
look so nice and that is what counts.

OTTO Shoes will have an extensive knowledge of the women's retail shoe
industry to quickly gain market share. Profitability will be reached by the end of the year
2013 and Php15 million will be generated in revenue by the end of 2013.

II. Introduction
OTTO general merchandise is a Retailer Shoes business in Marikina, Metro
Manila. An OTTO Shoes specializes in genuine and synthetic leather footwear for men,
4

women and children. Marikina City has been the shoe capital of the Philippines where in
OTTO Shoes is located at. OTTO Shoes are purely made in Philippines and now are
spotted into different places and shopping mall in the country.
OTTO Shoes has come a long way from its first free-standing shoe store with five
employees. Since 1979, OTTO Shoes has been manufacturing high quality footwear
famed for being comfortable and trendy. Driven by passion for innovation and Filipino
pride, the people behind OTTO Shoes continuously strive to deliver only the best.
OTTO Shoes has not stopped evolving, each success serving as inspiration to further
sharpen their craft. It is this enthusiasm for great designs that keeps OTTO Shoes at the
top of its game. And the shoe brand is taking its quest for the next groundbreaking style
to an entirely new level.

III. Background of the Study

The OTTO Shoes company has experienced strong growth over the past few
years and has helped in shaping an ideal market for international shoe companies. This
improve profile has lead to immense competition from the international companies that
not only threaten the small shoe domestic companies, but also places them in a zone
where they have to develop intrinsic and unique shoe designs on small but sustainable
scale. The diverse and competitive complexion of the OTTO Shoes market has a major
impact on consumers buying behaviour, and with the continuous development in new
designs of shoes there is not only increased competition for domestic firms but an
enhanced array of possibilities from a consumer point of view. Furthermore the

companies engaged in this sector have their own take on what are trendy and
fashionable shoes at any given moment; according to colours, style, popular culture,
design theme, emerging trends, seasonality, etc. This provides consumers with
unparalleled opportunities to pick and choose across different brands and to combine
them in order to satisfy their increasing need for expressing their individuality and
to choose their own style of shoes.

IV. Current Marketing Situation

Product Situation
OTTO Shoes is offering shoes for women who age 20-60 and above. We all
know that OTTO Shoes has good quality in terms of their shoes and good service. It
offers many designs and good quality but mostly for working class women and men. As
what women says they dont like the designs of OTTO Shoes because it looks like an
old-fashioned shoes designed for old women. And because of their design OTTO Shoes
is now place nearing declining stage. They should make new designs so they could
catch up in the taste of every women with their good quality it is not impossible that they
could rise their market share. It is also making communications with the consumers by
means of creating print ads, television ads. Marketing and advertisement can make the
product be more appealing to teens, ladies, or even women as well as for men too.
Market situation
The prospects and market of the OTTO Shoes are the people who live at
Marikina, Metro Manila. Since this is where the shoe business is located and originated

with. And based on research, the population of Marikina has increased 1.4%growth
rate. Men and women with work, and children that goes to school are also targeted. The
income of the market can range with the average income that a working person can
have since OTTO Shoes has a premium price. People with a quality and style
conscious best suits the market of OTTO Shoes.
Competitive Situation
The competition creates threats and provides opportunities and to grow the
business, OTTO Shoes need to gain market share by drawing customers and
purchases away from competing companies. The OTTO Shoes faces a direct
competition among other shoe brands such as Mendrez, Gibi and Rusty Lopez that also
have the quality and style that the market wants. The other competitors can be the new
brands or the expanded offerings that the old competitors have.
Distribution Situation
In the shoe industry, the products are delivered to retailers, from the
manufacturers, who operate outlets that directly sell products to consumers. Most of
them also have outlets in retail establishments such as department stores. This helps
them reach more consumers alongside with their competitors. In some cases, the
producers sell their products directly to customers. Some dont use such intermediary
channels, like retailers, and put up factory outlet store.
Macro-environment

The major external and uncontrollable

Shoes decision

making,

factors that influence OTTO

and affect its performance and strategies

these factors including: the economic

factors; demographics; legal,

are

political,

and social conditions; technological changes; and natural forces.

Specific examples of macro environment influences consist of its competitors,
changes

in interest

rates

changes

in

cultural tastes,

disastrous weather,

and government regulations. As of to Otto Shoes competitors and changes in cultural

tastes are the ones having the great responsibility on affecting its performance and
strategies.

V. Opportunity and Issue Analysis

Strength

OTTO Shoes has established its image and credibility for decades.

It has long lasting soles and other materials.

Its quality is durable and trusted for years.

OTTO Shoes is a competitive brand of shoes in the footwear industry.

Excellent staff who are well trained and customer attentive.

They also get great discounts, increasing job satisfaction.

Weakness

OTTO Shoes lacks advertisement and its style are already outdated.

Its designs are limited and common.

The packaging is not appealing and it is not famous anymore.

It is almost in decline stage.

Opportunity

OTTO Shoes has build up a good brand image.

Nowadays, OTTO Shoes has larger target market that can increase its sales and
good image.

It has also large profit that can be used for innovations and advertisements.
Threat

OTTO Shoes has a lot of potential competitors.

Its products have high prices that many people cannot afford.

Their stores are small and many of it are located in places that many of the target
markets do not go into.
Issue

OTTO Shoes have decreased in sales for the past years and it seems that it
does not exist anymore in the market.

OTTO Shoes is no longer noticeable by the target market.

VI. Marketing Objectives

Market Share
Knowledge of a companys market share is important for business owners in
order to determine their competitive strength in comparison to other companies in the
same sector, and assess performance from year to year. The Footwear industrys
annual revenue is EUR48 billion and the estimated revenue and other operating income
of OTTO Shoes Company is 12,491,969. The market share of OTTO Shoes in the
footwear industry is 0.026%.
Profitability
OTTO Shoes Company is undertaking a project at a cost of Php8, 684,000. If the
estimated revenue and other operating income of OTTO Shoes annually is Php13,
367,881 the profitability of the company annually is Php4, 683, 881. By the end of 2013,
OTTO Shoes would have a profit of Php15 million.
EQUIPMENT
EQUIPMENT
Leather

QUANTITY
stitching 10

RATE

AMOUNT

Php80,000

Php800,000

machines
Sewing machines

10

Php10,000

Php100,000

Electrification

Php100,000

Php100,000

Packaging Machine

10

Php5,000

Php50,000
Php1,050,000

TOTAL

10

Table6.1. Estimated capital of OTTO shoes in the equipments in a year.

RAW MATERIALS
MATERIALS

QUANTITY

RATE

AMOUNT

Leather

1200 meters

Php1,000/meter

Php1,200,000

Zipper

1200 bundles

Php150,000/bundle

Php180,000

Buckles

1200 pieces

Php250/piece

Php300,000

Cloth

6,000 meters

Php100/meter

Php600,000
Php3,440,000

TOTAL

Table6.2. Estimated capital of OTTO shoes in the raw materials in a year.

SALARIES AND WAGES

WORKERS

NUMBER

SALARY

AMOUNT

Manager

Php234,000

Php234,000

Supervisors

Php162,000

Php810,000

Employees

25

Php126,000

Php3,150,000
Php4,194,000

TOTAL

11

Table6.3. Estimated capital of OTTO Shoes in the salaries and wages in a year.

VII. Marketing Strategies

Product Strategies
OTTO Shoes offers a line of high-quality footwear products including shoes,
slippers, flats, heels, wedge, and stiletto. It also offers bags and accessories that will
surely fit everyones taste. OTTO Shoes are also built to last for decades for its strong
quality. With the companys tagline: We dont cope with trends. We set the trend.
OTTO Shoes aims to produce prestigious and impressive shoes that will start trends for
fashion-conscious people. OTTO Shoes keeps on finding new ways to innovate and
sustain fashion royalty. This will be an effective strategy as it will be able to make the
mindset of our consumers to always want to stay updated with our new designs.
The value of elegant and fashionable footwear is now possible. Customers can
be the best that they can be with the footwear that is comfortable and easy on the eyes.
Otto Shoes is also perfect for that casual stroll or an important pow-wow at work, there
is an OTTO Shoes selection for every occasion. Customers will come up with a
gorgeous ensemble by wearing the perfect stompers from the OTTO Shoes line.
OTTO Shoes provides appealing boxes for purchased shoe items to the
customers. Unique designs are created that will surely attract more consumers and will
stand the company out from its competitors. The quality bags can be used by customers
for other purposes since the company makes sure that they are strong and safe. OTTO

12

Shoes is an eco-friendly company that also appreciates the use of eco-friendly bags for
shopping.
Any complains will be entertained properly. Appropriate remedies to the products
deficiencies will be given. Receipts should be shown along with shoes that needs repair.
Products that has deficiencies can be replaced once proven that they are purchased
within a week.

Figure7.1. OTTO Shoes improved logo

13

Figure7.2. OTTO Shoes new shoe packaging

14

Figure7.3. OTTO Shoes new product packaging

Target Market Strategies

OTTO Shoes targets professional men and women. The company produces
products that are long lasting and are of high quality - perfect for busy people. OTTO is
also offering teens comfortable and pleasing footwear that will surely fit their style.
OTTO Shoes are also perfect for housewives who have plenty of disposable income
15

because of their husbands. Their love for shoes won't be a problem since they have
their time and money to get what they want to own. And OTTO shoes have designed
specific shoes for them - perfect for indoor use and for strolling.
Positioning Strategies
OTTO shoes will position itself as the best provider of fashionable high quality
shoes for men and women. The materials used to create the products are the best
materials that shoes should use. In line with our goal to set trends, the company will
position itself on the industry as a creative producer of shoes. New and unique styles
are innovated to rise from the usual styles that most competitors are common with.
Regular production of new styles will make it exciting for the industry and consumers to
buy OTTO shoes. The shoes will be available in outlet stores and in department stores
also. Reasonable prices will be given.
Pricing Strategies
The companys pricing strategy is penetration strategy which offers a high-quality
product at a much lower than expected price. This strategy would greatly help the
business enter a new market even a strong competitor comes and it builds loyalty with
the new costumers at the beginning. Once the company gained a large market share
and customer based, the company begins to increase the price of the said product. The
penetration strategy can also dramatically increase the lifetime value of the customers
because they're "hooked" with the outstanding first product offering and customers will
assume that the future products are just high quality.

16

A pair of shoes would basically cost Php600 to Php2500 depending on its design
and materials used. Each OTTO Shoes store may be paid by cash, debit card or credit
card.
Distribution Strategies
Distribution refers to the methods used to sell products and the channels in which
products go by before reaching the end-consumer.
OTTO Shoes is marketed through regional and local specialty shops scattered
along metro manila, and in different Walter Mart, Robinsons and SM Malls nationwide.
By the end of 2013 OTTO Shoes seek out to expand its distribution throughout the
country.
The companys main distribution objective is to create relationship to its new
customers and as well as to continue its relationship to its brand loyal customers at
present. In addition, OTTO Shoes plans to expand online sales by offering customized
product line via Internet. The company would also like to build its own place at a certain
populous cities in the country. With this approach OTTO Shoes would greatly increase
the number of its customer.
Promotion Strategies
OTTO Shoes communicate with customers regarding with its products in a
variety of ways. The products are available via internet and direct mailings. The firms
promotional efforts also seek to differentiate its product from its competitors.

17

The companys promotional strategies would be through print ads located at

different malls nationwide, billboards and few post banner ads along selected highways
and expressways, and of course together with the online advertising. The estimated
budget for this promotional strategy will run to one million and above.
Word-of-mouth promotion by the brand loyal customers will also be a great help
to promote the product.

VIII. Financial Analysis

This marketing plan is devised to generate revenue through various advertising
and sales methods. Footwear Industry revenue objective is that the company intends to
generate EUR130 million in sales during the predetermined time frame that the
marketing plan is in effect. Revenue objectives for marketing plans need to be very
specific so that the company can have a way of measuring the plan's success or failure.
The footwear industry has a projected costs for the product sold. The projected
costs are made up of the elements required to manufacture and distribute the product
including material costs, shipping costs and personnel costs. The objective of this is to
track these costs and find ways of lowering them to make the product more price
competitive in the marketplace. This is not necessarily always a search for the lowest
product costs. The footwear industry determines that the costs of certain materials to
make their product are higher than comparable materials, but the quality is higher. The
financial objective with costs is to find that balance which will allow the company to
create a product that meets company standards, but does so at the best possible price.
18

The table below shows the summary of the income statement of the footwear
industry where in the increase sales revenues of EUR 192.7 million to Ph EUR 11,596.6
million in 2011/12, accompanied by an over proportional rise in the cost of materials, led
to a decline in gross profit. The gross profit margin declined from 50.0 % to 48.5 %
owing to developments in the Multichannel Retail segment.
Even taking a rise in Other Operating Profits of Php124.4 million into account, the
evolution of personnel costs, other operating expenses and the investment result led to
a

decline

in

earnings before

interest, taxes,

depreciation and

amortisation

(EBIT-DA).This declined in comparison with the previous year by EUR 127.9 million to
EUR 538.9 million.
Depreciation, amortisation and impairments in particular as a result of lower
unscheduled write downs declined in the 2011/12 financial year by EUR 9.4 million to
EUR 279.8 million, leading to earnings before interest and tax (EBIT) of EUR 259.0
million (2010/11: 377.5 million). The EBIT margin amounted to 2.2 % following 3.3 % in
the previous year.
The footwear industrys net financial result for the year under review, at EUR
203.9 million, lay distinctly below the previous years level (EUR 121.0 million).Net
interest amounted to EUR 170.7 million (2010/11: EUR 144.5 million). Other net
financial income amounted to EUR 33.2 million following EUR 23.5 million in the
preceding year.

19

Consolidated Income Statement

(Summary)

2011/12

2010/11

million

million

euros

euros

11,597

11,404

(EBITDA)

539

667

Earnings before interest and tax (EBIT)

259

378

Earnings before tax (EBT)

55

257

Net profit for the financial year

23

181

Sales revenues
Earnings before interest, tax, depreciation and amortisation

Table7.1. Summary of the Consolidated Income Statement of the footwear industry

The table below shows the Consolidated Income Statement of the footwear
industry for three consecutive years which is from year 2010 to 2012.
Consolidated Income Statement
1 March 2011 to 29 February 2012
2011/12

2010/11

PHP 000

PHP 000

Revenue

11,596,565 11,403,913

Other operating income

895,404

20

770,962

Revenue and other operating income

12,491,969 12,174,875

Change in inventories and other internal costs capitalized

19,301

32,772

Purchased goods and services

5,928,066

5,668,563

Expenses relating to financial services

44,100

38,013

Personnel expenses

2,053,394

1,961,268

Other operating expenses

4,030,593

3,980,808

Income (loss) from equity investments

83,738

107,724

Income from associates and joint ventures

82,332

106,643

Income from other equity investments

1,406

1,081

538,855

666,719

241,887

235,396

37,933

53,802

259,035

377,521

Interest and similar expenses

25,639

36,479

Other net financial income

196,339

181,014

33,232

23,529

55,103

256,515

Earnings

before

interest,

tax,

depreciation

amortisation (EBITDA)

and

Depreciation and amortisation

Impairment losses

Earnings before interest and tax (EBIT)

Interest and similar income

Earnings before tax (EBT)

Income tax

21

32,184

75,389

Profit for the year

22,919

181,126

Profit attributable to the Group

40,080

125,349

Profit attributable to non-controlling interests

27,439

45,517

10,278

10,260

Profit attributable to publicly listed equity and participation

certificates

Table7.2. shows the Consolidated Income statement of the footwear industry

The footwear industry objective is to have sales of Php130 million by the end of
2012 and a sale of Php135 million by the end of 2013 with a higher gross margin of
higher than 70 percent and a positive cash flow yearly.

IX. Action Plan

OTTO Shoes is offering the highest quality of shoes built to last for decades. The
principal task of this marketing plan is to start knocking on doors in consumers attention
by means of creating new footwear like slippers, flats, heels, wedge, and stilettos. To
deliver the message well to the targeted customers they set the new tagline: We dont
cope with trends. We set the trends. Having this tagline consumer will have a mind set
of having or purchasing one of its products.

22

OTTO Shoes will also provide an eco-friendly bag for shopping. With the newest
and unique design for its packaging it will surely get more consumers that will make the
company more appealing to them. Any dissatisfaction from the consumer will be
attended properly by the respectful employees of OTTO Shoes. Products that were
purchased with damage can be replaced if and only if it was a week after the purchase.
OTTO Shoes is also targeting professional men and women so the company
created products that are long lasting that will fit for busy people. Also comfortable and
good looking shoes for teens. They made it perfectly for their preferred events, for
indoor and even for outdoors. OTTO Shoes made it affordable and yet high quality for a
long-lasting footwear. OTTO Shoes will position itself as the excellent providers of
trendy shoes for men and women. The materials used for creating the footwear they are
offering were the best materials. New and unique styles are innovated to rise from the
usual styles that most competitors are common with.
The Company is setting a penetration strategy for its price by which they offer a
high-quality product at much lower than they what expected. This will help the company
to cope up with the strong competitors to build a loyalty from the targeted consumers. A
pair of shoes would cost Php600 depending on its design and materials used. Each
shoe can be purchased by cash, debit card or even credit card. OTTO Shoes will be
marketed through regional and local shops scattered along metro manila, especially SM
malls, Robinsons, Walter Mart nationwide. For the next three years OTTO Shoes seek
out to expand its distribution throughout the country. The companys main distribution
goal is to build relationship with its newest consumer as well as to maintain their
relationship to their product by their loyalty on purchasing it. In line with their distribution,
23

OTTO Shoes is planning to expand online sales by offering customized product line via
Internet.
OTTO Shoes will communicate with their customers as to concerning with its
product in many ways. The product will be available in many outlets nationwide and also
you can purchase it via Internet. The Companys promotional strategy will be through
print ads that will be located at different malls, billboards, and few post banner ads
along selected highways and expressways and together with the online advertising.

24

Appendices

APPENDIX A
Figure7.1. OTTO Shoes improved logo
Figure7.2. OTTO Shoes new shoe packaging
Figure7.3. OTTO Shoes new product packaging

APPENDIX B
Table6.1. Estimated capital of OTTO shoes in the equipments in a year.
Table6.2. Estimated capital of OTTO shoes in the raw materials in a year.
Table6.3. Estimated capital of OTTO Shoes in the salaries and wages in a year.
Table7.2. shows the Consolidated Income statement of the footwear industry

25

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Kotler, P. And Keller, K. (2012).Marketing Management 14th edition. Prentice Hall

Pearson Education International Jurong, Singapore

Kurtz, D and Boone, L (2010).Principles of Ed. Contemporary Marketing 14thEdition.

Cengage Learning Asia Pte Ltd. Singapore

Bruno Dyck& Mitchell J. Neubert (2012).Management.Philippine Edition, Cengage

Learning

Wells, W., Burnett, J & Moriarty, S. (2009) Advertising Principles and Practices, 8th
Ed. Pearson

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