SILK SCARVES MARKETING ANALYSIS
Anamika Dham (IED 2010) Friday 1 October 2010
PROJECT The aim is to export silk scarves by Indian manufacturers into Europe.
Friday 1 October 2010
EXECUTIVE SUMMARY India is one of the biggest and the main manufacturer for silk fabric in the world and with its developing economy, the indian sector is increasing its exports for its silk products in the international market. In this project we have set out strategies of our company that intends to appear in international exports. After a lot of research and various factors, we have come to define our country that has the best characteristics for the export of our product. The country has been able to switch to a more detailed analysis of the export market, its risks and its opportunities.Then outlining the ways in which the country will operate in the new market, finally with a statement of P & L analysis coming up with the economic feasibility of the strategy concerned.
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COMPANY
JAVID TRADING PVT. LIMITED •
Javid Trading Pvt. Ltd. was established in 2006. Based in Delhi it is one of the leading manufacturers, exporters and suppliers of shawls, Stoles, Scarves, Paper Mache products, etc. The company also deals in a huge range of Kashmiri handicrafts. Today, our collection is most sought after by domestic and overseas clients because of its exclusive and intricate designs. From crafting traditional designs to modern prints, and our ability to blend traditional motifs with contemporary designs and the ability to adapt to changing fashion demands, we have won admirers from global fashion-conscious buyers. Clients from all over the world rely on us for refreshingly new and unique shopping experience. Our international market base spread over several countries across Europe, America and Middle East.
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PRODUCT •
THE PRODUCT IS SILK SCARVES BEING MANUFACTURED FROM INDIA. THE SCARVES CAN BE CUSTOMIZED ACCORDING TO THE BUYERS NEEDS.
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WE ARE PRODUCING SOMETHING DIFFERENT THAN THE OTHER SILK MANUFACTURERS IN ORDER TO MEET THE BUYERS NEEDS AND WE KEEP CHANGING THE STYLES WITH THE CHANGE IN TREND EVERY SEASON.
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CAN BE USED BY BOTH MEN AND WOMEN IN WINTERS AS WELL AS SUMMER.
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DIFFERENT COLORS, BEADED OR EMBROIDERED.
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PRODUCTION CHAIN IN HOUSE PRODUCTION
design of the scarf
raw material(100%quality silk fiber)
yarns(spinning, twisting, weaving, knitting and weaving)
finished and packaging
SILK SCARF
fabric
Finishing
embroidery, beads, threads or other materials for customizing
dyeing colors
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EXPORTING DATA
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...
partner
India
reporter
value in euros(product)
Similar articles of silk or silk waste
Belgium
value in euros
21
Germany
value in euros
1171
Spain
value in euros
1913
EU27
value in euros
202858
France
value in euros
147888
United Kingdom
value in euros
5408
Greece
value in euros
Italy
value in euros
Portugal
value in euros
Sweden
value in euros
33833
6712
IMPORTING DATA
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...
partner
India
Reporter
value in euros(product)
Similar articles of silk or silk waste
Belgium
value in euros
72009
Germany
value in euros
3633438
Spain
value in euros
2467044
EU27
value in euros
21789709
France
value in euros
3301733
United Kingdom
value in euros
3290876
Greece
value in euros
353835
Italy
value in euros
3705203
Portugal
value in euros
124418
Sweden
value in euros
235439
BER ANALYSIS MACRO-ENVIRONMENT FACTORS VARIABLES
UK
ITALY
GERMANY
FRANCE
GDP
-4.6%(3.5)
-5.1%(1)
-4.9%(2)
-2.5%(10)
GDP PPP
$ 34,800(10)
$ 29,900(1)
$ 34,100(9)
$ 32,600(5)
RATE OF INFLATION
2.2%(10)
0.8%(7)
0.3%(2.5)
0.1%(1)
GDP
$2.19Trillion (8)
$1.739 Trillion(1)
$2.81 Trillion (10)
$2.097 Trillion(7)
real growth rate
purchasing power
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MARKET OPPORTUNITIES VARIABLES
UK
ITALY
GERMANY
FRANCE
IMPORTS
$486 BILLION (2.5)
$410.2 BILLION(1)
$966.9 BILLION(10)
EXPORTS
$357.3 BILLION(1)
$412.9 BILLION(1.5)
$1.159 TRILLION(10)
$538.9 BILLION(4) 0 $472.7
AGE (16-64)
67.1%(10)
66.3%(6)
66.1%(5)
65%(1)
VAT (TAXES)
17.5(1)
20(10)
19(6)
19.6(8)
TARIFF ( DUTIES)
6.4%
6.4%
6.4%
6.4%
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BILLION(2)
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• •
GERMANY
• •
LARGEST NATIONAL ECONOMY
4TH LARGEST BY NOMINAL GDP REAL GROWTH RATE IN THE WORLD
5TH LARGEST IN GDP PPP
SILK SCARVES IN GERMANY AFTER LOOKING AT GERMANY’S IMPORTS AND THE DATA, WE HAVE FIGURED OUT THAT THE BEST MARKET TO EXPORT OUR SCARVES TO WOULD BE GERMANY. GERMANS IN GENERAL LOVE TO WEAR SCARVES, WEATHER ITS OUTDOOR OR INDOOR, A STUDY RESEARCH SAYS THAT GERMANS LOVE THEIR NECK SCARFS, THEY ARE WORN BY WOMEN, MEN, OLD, YOUNG , CONSERVATIVES , ALTERNATIVES AND EVERYONE IN BETWEEN. THEY VARY IN SIZES AND ARE MOSTLY WORN ALL YEAR ROUND.
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CONSUMER PROFILE
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DEMOGRAPHIC INDICATORS: The per capita income of germany is in one of the top 25 countries of the world and they have had a steady growth in their population for the last few years. Their rate of urbanization from(2005-2010 est) is 0.1 % and now about 74% of them is urban population.
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PURCHASING POWER: Germany’s annual GDP purchasing power rate is est 1.4%.Their annual growth rate has increased over the last 3 years,(2006) 2.7%; (2007) 2.5%; (2008) 1.7%; ,exception for the year (2009 est.) -5%. The percentage of the household income or consumption for higher 20% is pretty high compared to the lower 10%. And they have one of the highest importing from international countries in different sectors and since they have a large number of population in age range between 16-64(mostly employed), hence they are most likely to have good amount of buyers who like to spend on fashion items.
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GERMAN FASHION: In fashion terms Germany has in the space of a few years discarded its developing country status and created a thriving and unique fashion industry whose heart beats in Berlin.German fashion relies on individuality, expression and character, is sometimes witty, sometimes elegant. German designers achieve success abroad and German fashion labels attract customers with quality products. And the Berlin look has a magnetic attraction for trend scouts.And they love to have something which is unique and made according to their tastes and can be used in all climates.
CONSUMER(Ideal) Needs or solutions proposed
Production of the product
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Groups of buyers
• • • • • •
everyday life, formal events or elegant wear natural fiber fabrics hand sewed, customized, color coordination single buyers, unisex 16-64 age group high quality, easily available
Examining the similarities between both the consumer analysis and ideal consumer, we notice that the german market has a large number of age range what we are looking at for our ideal customer, it also has a large number of people who in their fashion look for elegance and they want something which is unique and hence with the above mentioned we can conclude that our ideal customer matches the consumer profile of the german market. Friday 1 October 2010
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DISTRIBUTION
EXCLUSIVE DISTRIBUTION:
EXCLUSIVE DISTRIBUTION is when a company chooses only one distributor in one market area and the distributor will sell only that brand in the market. we are choosing this particular strategy because our product is mostly known for its quality, uniqueness, image and since we are one company who make customized scarves with high quality fabrics. We are going to sell our product to our distributor as they are the client, completely finished and we want guarantee that it will have rapid delivery and no modifications being made because we will make the product according to our buyers needs. we want to have a local distributor/agent or importer that will be responsible with the regulations. The distance between India and Germany will give us high transportation costs, there would be tariff duties on all the products we export which would be 6.4% and then the shipment cost or the airfare cost would be additional.
CHANNEL: Manufacturer
Transportation cost Shipment/airfare cost
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Distributor
Point of sales
End User
DISTRIBUTION strategy PRODUCER ANSWER STRATEGY
concentrate totally on production at the most competitive cost and delegate the marketing function entirely to the distributor
we have chosen this particular strategy since we are a small manufacturing company in India, we want to totally concentrate to produce our product and make it completely according to the buyers needs and not get much into the marketing it in the new market, We want to have a distributor, who will make all the market function, and deliver the goods in the expected time and be able to sell all our products in order for profits for the company. For us, The distributor will be our client.
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PROMOTION •
Indian silk is known worldwide, and everyone is aware of the high quality silk fabric produced in India. With the promotion, our main aim would be to communicate to the consumers about our scarves which are of high quality, hand made out of the strongest natural fiber and they can be customized according to the consumer needs for increasing sales and the number of clients.
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Promotion strategy:TEMPORARY SALES EVENT
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we are going to participate in the trade fair show (bread and butter) in german markets for our company, This we are going to be able to do by the local distributor’s help which we have chosen for our company as he would be aware of the market, he is going to get all the possible clients and buyers. We are going to pay for the participation in the trade fair show, but when we get buyers, our distributor would be the one dealing with the relations with the buyers and us. We are choosing this way because last few years B&B’s have exceeded its expectation with atleast 60.000 visitors and growing rapidly every year, increase in number of people, buyers, and our product would be known by so many in the german market.
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we are also going to have an advertisement on our company, so the people are aware of the company and know about it before becoming our clients, The advertisement will have just a brief description of our products and how we produce them in order to ensure high quality unique products.
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Since our cost would not be that high and we are a small company, we will not want a very big stall at the fair and alot of advertising for it. we would suggest, 30% for advertising and the rest for the trade fair show stand.
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COMPETITORS ANALYSIS
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COMPETITORS ANALYSIS ...
Reporter
Germany
...
Reporter
Germany
Partner
Product/Indicators
Value in Euros
Partner
Product/Indicators
QTY in 100 kgs
France
Similar articles of silk and silk waste
5124566
France
Similar articles of silk and silk waste
49
united Kingdom
Similar articles of silk and silk waste
722799
united Kingdom
Similar articles of silk and silk waste
98
Italy
Similar articles of silk and silk waste
4555789
Italy
Similar articles of silk and silk waste
141
Portugal
Similar articles of silk and silk waste
10618
Portugal
Similar articles of silk and silk waste
0
Sweden
Similar articles of silk and silk waste
21771
Sweden
Similar articles of silk and silk waste
1
Main competitors- France and Italy value for France- 104582.9 value for Italy-32310.56
After analyzing the data from eurostat, and seeing the amount of imports from other EU countries to germany for silk scarves, we see that our two main competitors are France and Italy. The value of imports from France is a lot higher than that of italy and india. India’s value of imports to germany is 5615.8 for 100 kgs, Hence we see that, since germany has a huge market, the buyers will be price sensitive and they would want a France- High and normal quality cheaper price than that of France and Italy. Italy- High and best quality Italy’s cost of import is high because they also produce silk, and they are the 3rd largest India- medium-low and high producer and they have higher quality silk, but even india produces high quality silk quality and we customize the scarves according to customer needs. Hence we would keep the pricing as low as possible because we will also have a lot of transportation costs additional to the production.
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COMPETITIVE ADVANTAGE In the german market, India has a competitive advantage over the main two competitors. we can see that through the data we analyzed before and with the internal competitive advantage which is mostly based on production, management cost control. In this we see, that we have higher productivity level and we are resistant with competitors with diminishing prices. India will have lower prices and that would be an advantage for them as the german market is a huge market and the buyers will be a bit price sensitive if they are getting the same product with high quality in cheaper price
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PRICE Since we use a simple production chain our production cost will not be that high as we are in house producers and manufacturers. Germany has a high per capita income but their annual purchasing power rate has lowered in the last year, so they would be price sensitive about their costs, Hence our cost would be lower compared to the prices of scarfs exported from italy or france. Since our production cost is not high, so keeping the pricing low would not harm our profit, It would be advantageous for us, as germany being a big market will take in more our products with lesser price than one from france or italy. According to us the lower price would have a direct impact on company’s profitability, the buyers level of demand and our company to get a place in the german market We are going to use the strategy for price with competitors objective, in order to lower the chances of the competitor to get in the market before us.we will stabilize the prices at competitors level. Our products price is going to be medium low as italy and france both have high prices for their products.
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SWOT ANALYSIS Strengths - in house manufacturer and producer - high quality production - leading companies in India - one distributor only - customized - customer you find will be most likely to be loyal.
Opportunities - Add new features to your product - regular buyers -changing customer needs -inexpensive - technological advances
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Weaknesses - Less innovation - sales would depend on type of product - since being shipped from india, their might be a delay in delivery - poor access to distribution
Threats - price sensitive -product sensitive - taxes and duties cost -if the distributor chooses another company over ours.
P & L ANALYSIS Financial
year 2010
Revenue per unit
¢60
Total revenue from sales
25660.02
Vat(19%)
4875.4
Total revenue
20784.62
Costs Promotion
5060.79
Tariffs
359.412
Production cost
37.115
Total cost Profit
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15327.3
MARKETING PLAN
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Our main aim is to enter the German Market , Our main mission in the market would be to distribute high quality silk scarves to the crowd.
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Our Ideal client would be anyone and everyone with simple,elegant or classic lifestyle and wanting uniqueness or exclusivity in their fashion sense.
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For our distribution, our main strategy would be exclusive strategy, which is basically we will have only one local distributor in the german market who will distribute the products to the end users
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We will promote the company and the product by having a stand in the local trade fair show and having few advertisements on the company to make the people more aware of our intrinsic designs and exclusivity.
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Since we have a in house production and manufacturing process,The competitive advantage that we would have are internal advantages because of high productivity level, exclusivity,uniqueness in your product and low pricing.
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German market is a huge market in fashion, and our company believes in changing the products with each new trend and since our pricing would be medium-low, we would have more loyal customers and have more buyers for our inexpensive high quality product.
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After analyzing all the data, strategies and the estimated calculated price, we see that the company will undergo a profit.
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THANK YOU
Friday 1 October 2010