Growth Challenges and Strategic Solutions for Drip Footwear Case Study

Business Tactics for Addressing Drip Footwear's Market and Expansion Hurdles

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Introduction

Drip Footwear, a developing enterprise based in South Africa, has undergone remarkable expansion within a relatively short timeframe. The introduction of the brand by Mr. Lekau Sehoana, the proprietor of the company, occurred in 2019. Within the same year, he successfully established 11 stores in shopping malls and sold many pairs of trainers (Werner and Woessmann, 2023). Notwithstanding, the enterprise continues to encounter obstacles, including securing funds for expansion and manoeuvring through a saturated industry. The objective of this study is to examine the main obstacles faced by Drip Footwear and propose viable business tactics to surmount these challenges. Furthermore, the research investigates the competitive and growth tactics that Drip Footwear can adopt to sustain its current market standing and uphold its growth trajectory.

What are the Key issues affecting the company? Why do they exist? How do they impact the company? How can they be resolved?

Figure 1: Drip footwear

Drip Footwear is an emerging enterprise that has experienced rapid growth amidst the COVID-19 pandemic. To achieve growth and prosperity, the organization must effectively tackle several significant challenges. The present document will examine the principal challenges faced by the organization, their origins, and the potential of enterprise-level remedies to address them.

The primary factors that influence business operations

• Drip Footwear faced financial constraints in engaging reputed firms for the development of its business plan (Zwane, 2022). This results in a decrease in the allocation of resources towards research and development, advertising and promotional activities, and expansion initiatives.
• The primary source of revenue for Drip Footwear is derived from its eleven mall outlets. The corporation's susceptibility to pandemics, economic downturns, and changing consumer preferences is heightened by its reliance on brick-and-mortar retail establishments.
• Drip Footwear exclusively produces footwear that bears its own brand . The potential decrease in popularity of trainers or the increase in product offerings by competitors may present a concern.

Significant matters hold great importance

• The absence of a track record or a validated business plan may have deterred prominent corporations from providing financial backing to the aforementioned enterprise. The COVID-19 pandemic has presented challenges for entrepreneurs seeking to obtain financing.
• The COVID-19 pandemic has adversely impacted Drip Footwear's business model, which primarily relies on physical stores. The founder's limited understanding of e-commerce and online marketing could potentially account for the company's dependence on physical retail locations.
• Drip Footwear may engage in the production of branded shoes due to the personal preference of its founder. This impedes the organization's ability to choose products.

The impact on business

• Drip Footwear cannot allocate resources towards research, marketing, or expansion initiatives. This could potentially impede the expansion of the organization and its ability to compete with larger corporations.
• The vulnerability of drip footwear can be attributed to the physical settings. The susceptibility of a given entity to economic downturns, pandemics, and shifts in consumer purchasing patterns is noteworthy. Those mentioned above may have an effect on the expansion and financial gains of the corporation.
• The limited shoe selection of Drip Footwear may pose a challenge for the brand in terms of competing with other brands. This could potentially impede the expansion and financial success of the corporation.

Addressing Significant Challenges

• Drip Footwear could secure funding through various means, such as crowdfunding, angel investors, and venture capital. The startup could collaborate with large corporations to secure additional funding.
• The implementation of e-commerce and online marketing strategies may potentially reduce Drip Footwear's dependence on brick-and-mortar retail locations. The organization has the option to utilise online marketplaces or develop a proprietary electronic commerce platform.
• Drip Footwear may consider researching consumer preferences and trends as a means of diversifying its product portfolio. To increase sales, the corporation may consider forming strategic partnerships with other brands or artists.

Amidst the COVID-19 pandemic, Drip Footwear has undergone a significant expansion. In order to achieve growth and prosperity, the organization must tackle several significant challenges (Werner and Woessmann, 2023). Drip Footwear's current challenges, including inadequate financial resources, reliance on brick-and-mortar stores, and restricted range of merchandise, could potentially be addressed through the implementation of a comprehensive strategic plan.

Critical Analysis of the current external and internal environment

The competitive landscape of Drip Footwear's Industry is characterized by significant challenges, with various internal and external factors impacting its operations. External factors such as the Covid-19 pandemic, shifts in consumer behaviour, and advancements in technology have the potential to impact the growth and profitability of the organisation (Ozili and Arun, 2023). In order to maintain growth and competitiveness within the shoe industry, it is imperative for the company to address its weaknesses, specifically its dependence on physical retail locations and limited product offerings.

PESTLE ANALYSIS

• POLITICAL: Government regulation, taxation, and trade policies can have an impact on dripped footwear (Ye, 2023). The prices of the products can be affected by the changes in taxation policies and thus affects the brand’s profitability. Brand operations can be affected by the government regulations such as environmental regulations and labor laws, etc.
• ECONOMIC: The changes in the rates, consumer patterns of spending, and inflation impact dripped footwear (Briard et al., 2023). Changes in the macroeconomic climate, such as recession and boom, have an impact on drip footwear because they may have an impact on customer behavior and purchasing power.
• SOCIOCULTURAL: Dripped footwear can be affected by consumer behavior or demographic changes. The demand for dripped footwear can be affected by changes in fashion trends or preferences. Brands' target market is affected by demographic trends such as the aging population (Cordella, et al. 2023).
• TECHNOLOGICAL: Dripped footwear is also affected by technological factors such as innovation and automation. With the help of innovation in production, brands can stay ahead of competitors (Mallakpour, et.al 2023).
• LEGAL: Dripped footwear brands can be affected by legal factors like labor laws and regulations and intellectual property. Products should have a proper trademark and patent for safeguarding. In terms of wages and working conditions can impact the brand's operations (Bennett, et al. 2023).
• ENVIRONMENTAL: Environmental factors like climate change, sustainability, and waste management can impact the dripped footwear brands (Begou and Kassomenos, 2023). The company must be aware of its environmental effects and employ eco-friendly materials, environmentally friendly manufacturing techniques, and eco-friendly packaging.

Porter's 5 forces are

• Bargaining power of suppliers: some of the industries offer the same type of products because of this bargaining power of suppliers is low for dripped footwear. But on the other hand, high-quality products may be measured by a limited number of suppliers, which may increase the bargaining power of the Industry (Adedoyin et.al 2023).
• Bargaining power of buyers: for consumers variety of options are available to choose in this case the bargaining power of the buyers is comparatively high in the footwear industry. They provide a variety of excellent customer service so that they can retain their customers.
• The threat of substitutes: In the footwear industry, industrythe threat of substitutes is high because alternative options such as sandals, boots, etc are available for consumers, and it's easy for them to switch (Rusch, 2023). Dripped footwear should adopt new innovative ideas so it will be easy for them to differentiate itself from competitors and decrease the threats of substitutes.
• Competitive rivalry: dripped footwear brands face competition from brands like Nike, puma, and other brands, The competitive rivalry is high in the footwear industry because several well-known players are competing for market shares.
• Threat of new entrants: It requires high investment in manufacturing, marketing, and distribution because the threat of new entrants is comparatively low. New entrants may face difficulty in competing because dripped footwear has a recognized brand image, loyal customer base, etc.

Competitive and growth strategies of Drip footwear

A growth strategy is a plan that businesses develop to increase a particular aspect of their business, such as annual revenue, the number of consumers, or the number of goods (Tzenios, et.al 2023). The additions of new sites, spending on customer acquisition, or growing a product line are examples of specific growth tactics.

• Market penetration: Any company looking to increase market share should start by figuring out how to lose less following. It’s a similar challenge for attracting new customers. You have to effectively communicate what makes your company exceptional and then fulfill that promise each time they buy from you. That’s how you ensure they’re not just buyers, but rather repeat customers who become advocates for your company.
• Market development: when your sales and marketing expenses are started producing declining returns, then you are successful in the existing market. When we reach at that point we need to start exploring growth options like expanding business to other countries or regions etc. for example, if you are selling on the online platform and after that, you are selling to retail stores and then selling to businesses, then you may think of selling to consumers also (Sharpe, et.al, 2022). Market research will be essential to entering a new market regardless of the type of business you are running. Before selecting two or three for further investigation, you should consider a number of potential marketplaces. You should consider markets that are appealing in terms of size, closeness, and growth, as well as those where your organization can compete.
• Product development: another growth strategy is to develop a new product in the existing market. If you understand what your customers want, it will be easy for you to be successful and easy for you in launching a new product in the market.

Some of the ways to develop a product are:

• Product modification: By altering a product's form, size, packaging, features, and color, for example, you might try to boost demand. The purpose of these changes would be to modernize the product and/or react to what the competition is offering.
• Different quality levels: by developing different quality levels it’s easy to appeal to different customer segments. For example, high-quality products can be sold to the niche market at a premium level (Gibson’s, 2023). But the low-quality product can be sold at a low price which is targeted to the mass market.
• Related products or services: By providing related goods and/or services, you can profit from a product's popularity. Products from well-known brands are more likely to be purchased by consumers. You can establish a relationship with clients based on subscriptions by providing relevant services.
• New products: Although it can be difficult, creating wholly new products enables you to strengthen the bonds you've refined with your current clients while attempting to win over brand-new ones (Chhabra, 2023). If your present consumer base is quite happy with your current offerings, they work.

Figure 2: 4 stages of product development

• Diversification: this is the final strategy to sell new products to new customers. If your industry is facing a failure or experiencing slow growth, then it will help in creating a new revenue stream. Companies that serve legacy industries, for instance, can begin focusing more on developing industries to find a market there.

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Conclusion

To conclude, Drip Footwear has attained significant accomplishments; however, it encounters obstacles in a fiercely competitive sector. The primary challenges faced by the organisation are the expansion of funding and the navigation of a complex regulatory environment. In order to mitigate these concerns, the organisation may opt to adopt business-level tactics, such as expanding its revenue streams, optimising its operational procedures, and investigating potential strategic partnerships. Drip Footwear has the potential to sustain its market position and growth trajectory by implementing competitive and growth strategies, such as product development, market penetration, strategic collaborations, and e-commerce expansion. The implementation of these strategies can potentially facilitate the growth and advancement of Drip Footwear in the future.

References

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Courtesy of drip, 2021, drip footwear (online) https://dripsa.co.za/accessed on 25.04.2023

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