The Entry Strategy for Embroidered Quilts Into the United Kingdoms Market - Report Example

Executive Summary As a result of research conducted by the group 4stars in February of a market entry strategy of hybrid marketing system was recommended for Embroidered quilts (Nakshi Katha) to the UK market. This report details an 18 month promotional plan for Nakshi Kantha in line with those recommendations. The research was based on several marketing analytical tools, such as ANSOFF, VRIO, SWOT and PESTEL. The results obtained from this research were used to devise the promotional plan for the products in UK’s market. The outcome of these analyses gave a considerably healthy response towards introducing Nakshi Kantha to the people of United Kingdom. The purpose of introducing Nakshi Kantha into UK’s market is to offer a new channel of appreciation for the Bengali craft of embroidery. United Kingdom has one of most stable economies all around the globe, so introducing a new product into its market will be a wise decision. However, this market can prove unfriendly for the product, since Nakshi Kantha is new for the market, and it needs to establish its own customer base. The SMART objectives for the promotional campaign have been devised in the light of these analyses. Like any other promotional campaign, the first objective is to determine the target consumers, in the case the main emphasis will be laid on decorators and gift exchanging ceremonies. The company aims to achieve the sale of 10,000 pieces in its first in the market; the income generated from these sales will be equal to the sum of selling expenses and production cost. According to the promotional policy the first six months will be spent in arranging distribution channels, organizing exhibitions and participating in carnivals, these activities will be carried out for providing initial market exposure to the product. The advertisement of the Nakshi Kantha will be carried out through different mediums such as television, radio, online ads and through social media. Further, wholesale points will be established in business centers during this time, and the company will also engage itself with the retail market dealers. Instead of shipping the produce every month, the company aims to establish a warehouse for the storage of goods. This will cut down the transport charges. After evaluating the demands of the people; the company will introduce its products in the market on regular basis. The company will have to evolve along with the changing trends of the market, and it will also need to keep its policies flexible. Lower number of the sales in the first year should be referred to as failure of the product to make its market; rather it should be treated as a trial phase, where the company should indulge itself in critically evaluating its shortcomings. S UK’s market is definitely full of opportunities; however, surviving its competition is far more difficult than to enter it. So, the company must not give up on receiving slow response from the market, rather it should focus on improving its products’ quality. Contents Executive Summary 1 1.0Introduction 4 2.0Marketing Objectives 4 3.0Product Adaptation 5 4.0Promotion of the Product 5 .0Channels of Distribution and Distribution Methods 7 .0Price 8 .0Financials 8 First Year’s Income Statement 10 .0Conclusion 11 0.0References 13 1.0 Introduction The research carried out in February 2014, by the group 4stars outlined the entry strategy for embroidered quilts (Nakshi Kantha) into the United Kingdom’s marketwhich was…….WHAT!”. Moreover, it also offered a design for marketing strategy (the marketing strategy recommended was…….. WHAT?as well. Do you agree with the recommendations or NOT?The purpose of this report is to provide an insightno – no insight, it is to provide THE plan, the facts, exactly What will happen When and How of the promotional plan for embroidered quilts for next eighteen months. The performance of embroidered quilts in the UK’s market will be determined by its popularity among the people and the total number of sales that are recorded in this period. The first few months will be allocated for promoting and arranging exhibitions to introduce this new product to the consumers, next step will be to spread the word all around the country, followed by establishing introductory stalls at carnivals. These temporal exhibits will help the company to identify the segments of society that may become future consumers of the product. After six months of limited access, the products will be introduced into the market at large scale. The wholesale outlet owned by the company will monitor the overall supply and price control. The objectives of the campaign have summarized in the following table Specificity To target decorators, and gift exchanging events Measurable To make sales of £ 100,000 in first year Achievable Avoid overambitious decisions Realistic To sell 10,000 pieces Timed 1 year or 12 months 2.0 Marketing Objectives While introducing a new product into the market, it is imperative to define objectives and goals that a company desires to obtain (Bradley 2004). These objectives need to be guides, realistic and achievable, but this does not mean that the bar is set at low. In this regard the company plans to introduce Nakshi Kantha, a craft from Bengal into the United Kingdom. The objectives established by the company are to target decorators from middle class, and to target occasions of exchange of gift; further it aims at achieving 10,000 sales in the first year; consequently the threshold for the sales in the first year is set at £ 100,000. Embroidered quilts are multipurpose products; they can be bought for domestic use, or can be given to loved ones in form of gifts. The target consumers of the product are people from middle class, because the product is affordable. Moreover, considering the population size of the country, setting a target of selling 10,000 pieces in the first year is quiet achievable, yet the company will have to offer best quality in the market (Muhammad, 1992; Perveen, 1997). 3.0 Product Adaptation Traditionally embroidered quilts were made from old fabric, but they can also be produced on newer ones. Furthermore, the difference in the climatic conditions of UK and Bangladesh must be kept in mind when manufacturing products for UK’s market. Moreover, consumers must be provided with access to order their customize designs. 4.0 Promotion of the Product The first step towards promoting Nakshi Kantha will be to arrange an exhibition where all the available designs will be displayed. The entry to this exhibit will be free, and the attendees will be provided chance to buy from the displayed pieces at a 40% discounted price. This exhibition will be the first encounter between the product and consumers. The venue for this exhibition must be a central place, like London. The displayed pieces should only be available in limited amount, so that people who are interested develop a demand. Thus when Nakshi Kantha will be introduced into the market, these people will be eager to visit the stores or stalls to purchase the piece of their liking (Akan 2006; Hoey 2011). After an introductory exhibition, the next aim must be to look out for stalls at different carnivals and funfairs; this will be the second step. The response of the people towards the product will be calculated through the number of people visiting these stalls, further, this will allow the company to understand the trends among the purchasers (Ghauri & Cateora, 2010). To inform people about these exhibitions and stalls, social media can be used for instance spreading messages via short message services, establishing a Facebook page for Nakshi Katha followers. Establishing a website for displaying the products available in stock and it should also deal in e-marketing of product like receiving orders and online payment methods. Exploring online shopping engines can also prove helpful in selling the products to the people. Exhibition, stalls and online shops should be used to develop demand among the people, and a threshold for number of sales should be achieved through these methods. After selling products in limited venues, one can get a fair idea about how people will respond to the product when introduced into a regular market. Moreover, these initial steps will also help the company to outline the trends of supply and production, and the extent of investment. The ANSOFF analysis helps in outlining the marketing strategy, by analyzing the statute of a company’s product and its market. If the product is old one then the market is old, and if new product is to be introduced, the company will have to look out for a new market. Nakshi Kantha is a folk art in Bangladesh, and it is several centuries old, however, for UK this art is new. In this regard the product and the market of Nakshi Kantha must be considered as new one. Below is a Gantt chart that shows the progress of research and business according to time. .0 Channels of Distribution and Distribution Methods The number of retailers will eventually depend on the demand of the product, however, the greater the number the better it will be for the company. Still over supplying the product into the market will bring stationary phase within the company’s growth. Therefore calculated approach must be applied to determine the number of retailers. If the company wants to maintain a fair number of retail dealers it must establish its own outlet, that will not only act as a wholesale shop for the retailers to purchase, but it will also grant the domestic consumer to come and take a look at all the products available for shopping. The number of company’s outlet should be limited and must be located in the business hubs, while retailers should not have any spatial or temporal limitations (Lymbersky 2008). By establishing a company’s own outlet will eventually remove the element of middleman from the dealings. All the dealing will take place under the nose of company’s management. While dealing with retailers the company should deal in credit instead of collecting cash. The markup should not drop below 40%. However, one can never fix it to one point. Moreover, the market does not offer any competition to the company, because it is the pioneer for introducing embroidered quilts. This provides the company defines price ceiling and floor for embroidered quilts from Bengal. Furthermore, it will allow the company the control over establishing certain limits when sale seasons arrive in the market (Doole & Lowe, 2008). At home company must hire craftsmen at fixed monthly wages with 1-year contract. The structure of the company should be organized and it should not depend on individual household units. This will in return provide maximum profit to the company and as well as it will keep the employees happy, and prevent the company from receiving charges like maltreatment of cheap labor and etc. .0 Price The cost price of products varies from the type embroidery, material and mediums used. The cost price of traditional quilts ranges £ 8 to 15. While the cost for a bed sheet is £3 to 10. The cost price for wall hangings and dresses vary with design and quality. Custom duty charges around 5 to 9 % generally for most of the goods imported into United Kingdom. At the moment the VAT charges 20% of the cost price. The average rate of shipping material from Bangladesh to United Kingdom range £ 2-4.1/ kg. Including all these charges, the retail price of the product will reach almost two times its cost price. Thus the gross margin will be equal to the cost price of the product in the market (Kotabe, 2010). The margin for profit will be in the range of 40 to 50% of the cost price. Depending on the sale trends, company may arrange an off- season on products. To bring vigor into the flow of the credit company must keep the margin of arranging cut-price fairs or sale points. .0 Financials The initial selling expense for the company will exceed its production cost for several reasons. The company has to establish its office and look out for wholesale shops and warehouse for storage, it needs to advertise and promote its forthcoming products and it needs to recruit manpower to carryout various operations (Crane, 2010). However, the hefty budget spent for marketing must not be dealt as loss to the company; rather it should be considered as preliminary investment towards a solid future. The company will also have to get it registered with UK’s government. The company will also have to spend on importing produce from Bangladesh; therefore, a huge chunk of investment will be allocated towards shipping and transport of the goods. Macro environment was analysed using PESTEL analysis. It aims at cumulating the effect of various factors that can affect the market and product; they include socio-political environment, physical environment, legal complexities and so on. Opening a market in UK is safe because of it socio-politic and economic stability. The total budget selling expenses are estimated to be £ 27,500 that includes advertisement charges, distribution charges and other costs. The production cost for the product will be £ 1000.00/ 100 pieces. The company plans to sell a minimum of 10,000 pieces in the first year, so the overall cost of production will be £ 100,000. The summary of selling expenses has been given in the following table: Advertising/Promotional expenses  £ 10,000 Distribution Expenses £ 10,000 Other Costs  £ 7,500 Total Selling Expenses = £ 27,500 First Year’s Income Statement Production Cost Cost of raw material £ 15,500 Cost of labour £ 43,000 Cost of production processes £ 12,000 Total cost £ 70,500 Selling Expenses Cost of raw material £ 10,000 Distribution expenses £ 10,000 Other costs £ 7,500 Total selling expenses £ 27,500 Sales Embroidered quilts £ 55,000 Bed sheets £ 20,000 Wall hangings £ 25,000 Total sales £ 100,000 Net Balance Production Cost + Selling Expenses £ 98,000 Total Sales £ 100,000 Profit £ 2,000 .0 Resource Requirements Resources required for introducing Nakshi Kantha into UK’s market, include an office along with wholesale outlet equipped with warehouse, it requires an advertisement campaign run by an advertising agency and manpower to administer the company’s dealings. All these resources will require a hefty capital to start with. Moreover, a production unit at home to manufacture the products for UK based consumers. The wholesale shop must be located near a business hub and it must be easy to access. The warehouse must be safe and prevents products from receiving unwanted damage. Company must place trained administrator in the office along with a team of managers, who can assist him or her in administering the whole setup (John 2012). The sales staff must be native yet they must know the product they are selling. Advertisements can be carried out through TV commercials, online add posting and via print media. Social media is another key tool for promoting the products. The VRIO framework discussed the matter under four questions related to resources. Whether the availability of resource is a problem or not? What is the degree of exploitation of resources in the company? Is there any competition regarding the resources? Are the competitors able to imitate the resources? Nakshi Kantha is a traditional art form in Bangladesh, its practice is common due to the easy access to the materials required for making embroidered quilts, and moreover, the art of embroidery is well known among the general masses. Therefore when introducing these products in UK’s market, issues related to resources will not have any effect on the production, as far as there is no external invasion. .0 Conclusion Embroidered quilts or Nakshi Kantha are a multipurpose utility product, they can be bought for domestic use, decorating offices or restaurants and they can be sold at gift shops. As a result of research conducted by the group 4stars in February of 2014 a market entry strategy of hybrid marketing system was recommended for Embroidered quilts (Nakshi Katha) to the UK market. This report details an 18 month promotional plan for Nakshi Kantha in line with those recommendations. The research was based on several marketing analytical tools, such as ANSOFF, VRIO, SWOT and PESTEL. The results obtained from this research were used to devise the promotional plan for the products in UK’s market. The outcome of these analyses gave a considerably healthy response towards introducing Nakshi Kantha to the people of United Kingdom. The purpose of introducing Nakshi Kantha into UK’s market is to offer a new channel of appreciation for the Bengali craft of embroidery. United Kingdom has one of most stable economies all around the globe, so introducing a new product into its market will be a wise decision. However, this market can prove unfriendly for the product, since Nakshi Kantha is new for the market, and it needs to establish its own customer base. The SMART objectives for the promotional campaign have been devised in the light of these analyses. Like any other promotional campaign, the first objective is to determine the target consumers, in the case the main emphasis will be laid on decorators and gift exchanging ceremonies. The company aims to achieve the sale of 10,000 pieces in its first in the market; the income generated from these sales will be equal to the sum of selling expenses and production cost. According to the promotional policy the first six months will be spent in arranging distribution channels, organizing exhibitions and participating in carnivals, these activities will be carried out for providing initial market exposure to the product. The advertisement of the Nakshi Kantha will be carried out through different mediums such as television, radio, online ads and through social media. Further, wholesale points will be established in business centers during this time, and the company will also engage itself with the retail market dealers. Instead of shipping the produce every month, the company aims to establish a warehouse for the storage of goods. This will cut down the transport charges. After evaluating the demands of the people; the company will introduce its products in the market on regular basis. The company will have to evolve along with the changing trends of the market, and it will also need to keep its policies flexible. Lower number of the sales in the first year should be referred to as failure of the product to make its market; rather it should be treated as a trial phase, where the company should indulge itself in critically evaluating its shortcomings. S UK’s market is definitely full of opportunities; however, surviving its competition is far more difficult than to enter it. So, the company must not give up on receiving slow response from the market, rather it should focus on improving its products’ quality. 0.0 References Akan, O, 2006. Critical tactics for implementing porter’s generic strategies. 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Kotabe, M., 2010. Global Marketing Management: International Student Version. 5th ed. s.l.:John Wiley & Sons. Lymbersky, C, 2008, Market Entry Strategies, Management Laboratory Press, Hamburg. Muhammad, S, 1992. Living Crafts in Bangladesh, Markup International, Dhaka.Bangladesh. Perveen, A, 1997. The Aesthetics & Vocabulary of Nakshi Kantha, Bangladesh National Museum, Dhaka. Wiklund, J., & Shepherd, D, 2003. Knowledge‐based resources, entrepreneurial orientation, and the performance of small and medium‐sized businesses. Strategic management journal, 24(13), pp. 1307-1314. Read More