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Research Project Report
ON
“Launching New Brands in Sports & Casual Category : A Strategic Perspective”
Submitted
By
Rishu Singh
Under the Supervision/Guidance
Of
C.C. Dr.Goutam Saha
IN PARTIAL FULFILLMENT OF THE POST GRADUATE DEGREE "MASTER OF FASHION
MANAGEMENT (MFM)"
Submitted to
Department of Fashion Management Studies (FMS) National Institute of Fashion Technology (NIFT)
IDCO Plot No. 24, Chandaka Industrial Estate
Bhubaneswar, PIN - 751024
Ph. 91 674 2305700, Fax: 2304710 Web: www.nift.ac.in May, 2016
DECLARATION
I , Rishu Singh hereby declare that the Project entitled ― “Launching New Brands in Sports & Casual Category: A Strategic Perspective ‖ submitted towards, partial fulfilment of the Degree of Master of Fashion Management is my original work and no part of the project has been copied from any other reports or any other work carried by someone else which has been submitted for any other degree/award. However, any material taken from any other published source has been suitably referred and acknowledged at various places.
Name: Rishu SIngh Roll Number: MFM/14/ Batch: 2014- Centre BHUBANESWAR
Date: Place: BHUBANESWAR
ACKNOWLEDGEMENT
I am grateful to NIFT for providing me an opportunity to do research work on ― Launching New Brands in Sports & Casual Category: A Strategic Perspective ‖. I express my whole hearted thanks to my guide Dr.Goutam Saha , for his encouragement and moral support in organizing my work and giving me valuable tips for making it presentable. I am indebted to Mr Akash Sharma , Manager(e-commerce), my industry mentor who has guided and supervised me throughout this study. I have no words to express my gratitude to her. My thanks are also due to Mr Aayush Goenka, MD of Calzini Fashion Ltd. f or his advice in collecting data and other relevant information. I will be failing in my duty if I do not mention the name of my CC Dr.Goutam Saha and other faculty members for their help in my Degree Project
NAME: Rishu Singh Master of Fashion Management Date of submission:
OBJECTIVES
To study different strategic management models for launching new brands efficiently in e-commerce market place To provide informed decision about further investments in different brands for e-commerce. To modify existing strategies as well as to make new strategies for upcoming new brands in e- commerce market place. Analyzing all the available brands at e-commerce market place in socks category w.r.t. prices, discounts and socks
SIGNIFICANCE OF STUDY
The study will Calzini Fashion Ltd. to modify existing strategies as well as to make new strategies for upcoming new brands in e-commerce market place.
METHODOLOGY
We analyzed Competitiveness of Indian Socks Market through Porter‘s 5 Forces Model. Intra Company Brand Analyses is done through BCG, Directional Policy and Analytical Hierarchy Process Matrix. We have applied Concept of Central Tendency by analyzing Mean and Standard Deviation of the existing data set of Stocks, Price and Discount.
- LIST OF FIGURES
- LIST OF TABLES
- LIST OF ABBREVATION........................................................................................................................................................................
- ABSTRACT
- INTRODUCTION
- 1.1. GENERAL
- 1.2. ABOUT THE PROJECT
- 1.2.1. GENERAL
- 1.2.1.1. PROBLEM DEFINITION
- 1.2.1.2. RESEARCH GAP
- 1.2.1.3. RESEARCH OBJECTIVE
- 1.3. SPECIFICS ABOUT THE PROJECT..................................................................................................................................................
- 1.4. PROJECT ELEMENTS
- BRANDS UNDER CALZINI (E-COMMERCE)
- 1.5. PROJECT RESULTS
- 1.6. PICTURES OF SAMPLE SOCKS OF ‘MOJEME’ AND ‘STEP- SOCKS’
- 1.7. SIGNIFICANCE OF THE STUDY
- LITERATURE REVIEW
- Application:
- Dimensions:
- Relative market share
- Market growth rate
- Limitation:
- Application:
- Dimensions:
- Attractiveness of a Market Segment
- Capability of the organization
- Inferences from Directional Policy Matrix..........................................................................................................................................
- Limitation:
- General
- Framework
- Application
- Limitation
- SOCKS INDUSTRY ANALYSIS
- BCG MATRIX (E-COMMERCE)
- DIRECTIONAL POLICY MATRIX
- ANALYTICAL HIERARCHY PROCESS
- FINDINGS
- CONCLUSION
- COMPARATIVE ANALYSIS
- 9.2. SETTING OF PRICE, DISCOUNT AND STOCK DISTRIBUTION - 9.3. INFERENCES DEDUCTED FROM THE STUDY
- RESULTS
- REFERENCE
- FIGURE 1: STEP SOCKS SAMPLE LIST OF FIGURES
- FIGURE 2: MOJEME SOCKS SAMPLE..............................................................................................
- FIGURE 3 SOCKS INDUSTRY ANALYSIS
- FIGURE 4 BCG MATRIX
- FIGURE 5 DIRECTIONAL POLICY MATRIX
- FIGURE 6 AHP MATRIX..............................................................................................................
- FIGURE 7 STOCK DISTRIBUTION CHART
- FIGURE 8 STOCK DISTRIBUTION FOR DIFFERENT PRICE POINTS
- FIGURE 9 STOCK DISTRIBUTION OVER DISCOUNT STRUCTURE
- TABLE 1 BCG MATRIX CALCULATION LIST OF TABLES
- TABLE 2 NORMALIZED CRITERIA COMPARISON MATRIX
- TABLE 3 CONSISTENCY TEST MATRIX........................................................................................
- TABLE 4 SUB CRITERIA MATRIX- AESTHETICS
- TABLE 5 SUB CRITERIA MATRIX- COMFORT
- TABLE 6 SUB CRITERIA TABLE- TECHNOLOGY
- TABLE 7 SUB CRITERIA MATRIX- HEALTH
- TABLE 8 SUB CRITERIA MATRIX: BRAND PREMIUM...................................................................
- TABLE 9 WEIGHTED BENEFITS- COST TABLES
- TABLE 10 PRICE POINTS
- TABLE 11 DISCOUNT STRUCTURE
- TABLE 12 STOCK DISTRIBUTIONS
- TABLE 13 STOCK DISTRIBUTION FOR DIFFERENT PRICE POINTS
- TABLE 14 TABLE OF COEFFICIENT OF VARIANCE FOR DIFFERENT PRICE POINTS
- TABLE 15 STOCK DISTRIBUTION OVER DISCOUNT STRUCTURE
- TABLE 16 COEFFICIENT OF VARIATION FOR DIFFERENT DISCOUNT STRUCTURE
ABSTRACT
The growing number of multi-business companies (McKinsey & Company, 2008) incorporated in recent decades has made it necessary for these same companies to manage and keep profitable various Strategic Business Units (SBUs) – ―a grouping of functional units that have the responsibility for profit (or losses) of part of the organization‘s core businesses‖ (Kerzner, 2009, p.
- – that have become increasingly autonomous both strategically and in terms of functional support (Chakravarthy & Henderson, 2007). However, various aspects of portfolio planning models have been strongly criticized when used in diversified companies; in particular, because they are subject to multiple free interpretations (Wind et al., 1983), additionally for the absence of descriptive elements relative to the potential collaborative relationship between the various SBUs, and for the lack of meaningful directives in terms of a concrete approach to dealing with the competition (Gluck & Kauffman, 1979). In the past, also academic research began to focus on the relationships between diversification strategies and company performance (Ramanujam & Varadarajan, 1989), in particular in an attempt to show how companies characterized by a portfolio of unrelated activities (conglomerates) or by a series of vertically integrated activities are less productive than companies with a portfolio of correlated activities (Rumelt, 1982). Nevertheless, even though some attempts to apply market analysis frameworks to the fashion business can be found – e.g., the Ansoff matrix (Chiari, 2009, p. 46), there is no one particular study in the literature that points out, through a methodological application, the potential of the GE/McKinsey Matrix in the managerial sphere specific to companies that operate in the fashion industry, in terms of decision-making support for strategies of both portfolio and competitive analyses. Indeed, it is well known that there has been a worldwide trend in recent decades toward internationalization of fashion companies (particularly in the luxury market); and the development of diversification strategies based on an increase in the number of products and/or brands held in their portfolios (Amatulli, 2009). These are strategies which are successful, in particular for multi-brands and particularly in the long-term if accompanied by reasoning that is not purely financial, the correct vision of the sectorial specificity and right balance between brand autonomy and integration (Carcano & Rovetta, 2009). India is adding three Internet users every second and is already the second-largest Internet market globally in terms of users, according to the report. India expect Internet penetration to increase from 32 per cent in 2015 to 59 per cent in 2020, translating to a near-doubling of the Internet user base. It estimates India will have almost 320 million online shoppers by 2020 compared with 50 million in 2015. The top three online retail platforms dominated the Indian ecommerce market in 2015 with a combined market share of 83 per cent. Flipkart, including Myntra, maintained its top position with a 45 per cent market share, followed by Snapdeal (ex-Freecharge) at 26 per cent and Amazon India at 12 per cent. Paytm had a 7 per
cent share. At $13.8 billion, the GMV of the top three e-commerce companies exceeded that of the top 10 offline retailers at $12.6 billion last year. Mobile is set to become the dominant channel, with more than 500 million consumers already using phones. Smartphones will account for more than 90 percent of handsets in the market by 2020. At the same time, it estimated that around 45 million people in India transacted online in 2015, representing only 14 percent of all those connected: ―This means there is a huge opportunity for growth and the opportunity to incorporate new technology for customer engagement, real-time data feedback, social engagement, recommendations and 3-D fitting rooms.‖ There is a gap in existing research literature to apply strategic management in its Indian Fashion e- commerce market. In this research paper we try to explain how AHP matrix along with GE matrix can be used to strategise different brands under a company and how concept of simple Central Tendency can be used as a powerful tool to set Price, Discounts and Distribute Stocks of any new brands to be launched by a company.
In Socks Industry, aproximately 64% of market share of the branded socks at e-commerce market place is dominated by Sports/Casual Category and at present Calzini Fashions Ltd do not have any brand that caters the demand of this segment. Hence, to launch new brands under this segment for e-commerce channel, a comparative study of brands available at e-retail along with Brand Strategy Management Study needs to done, to strategise the upcoming brands as well as to take decisions on pricing, discount and stock distribution.
even more clearly, for organizations operating in this sector to know about and use to their best advantage analysis tools that have already been proven effective and relatively rapid to use. India is adding three Internet users every second and is already the second-largest Internet market globally in terms of users, according to the report. India expect Internet penetration to increase from 32 per cent in 2015 to 59 per cent in 2020, translating to a near-doubling of the Internet user base. It estimates India will have almost 320 million online shoppers by 2020 compared with 50 million in 2015. The top three online retail platforms dominated the Indian ecommerce market in 2015 with a combined market share of 83 per cent. Flipkart, including Myntra, maintained its top position with a 45 per cent market share, followed by Snapdeal (ex- Freecharge) at 26 per cent and Amazon India at 12 per cent. Paytm had a 7 per cent share. At $13.8 billion, the GMV of the top three e-commerce companies exceeded that of the top 10 offline retailers at $12.6 billion last year. Mobile is set to become the dominant channel, with more than 500 million consumers already using phones. Smartphones will account for more than 90 percent of handsets in the market by 2020. At the same time, it estimated that around 45 million people in India transacted online in 2015, representing only 14 percent of all those connected: ―This means there is a huge opportunity for growth and the opportunity to incorporate new technology for customer engagement, real-time data feedback, social engagement, recommendations and 3-D fitting rooms.‖ CALZINI FASHIONS LTD is Founded in 1990 and is counted among the leading manufacturers, traders and exporters of Organic Socks. It is an Indo-Swiss-Italian venture in collaboration with Calzificio Kim SRL (Italy) and Intertrend AG (Switzerland) and a known name in the world of fashion. Our product list is comprised of socks, caps and handkerchiefs. Calzini's manufacturing facility is located in NOIDA. It is the first NSIC approved organic socks manufacturing facility in India. The factory manufactures 3,50,000 pairs of socks each month using state of the art fully computerized knitting machines. The company manufacture organic socks from GOTS (Global Organic Textile Standards) certified organic cotton, strictly as per the MHA (Ministry of Home Affairs) specifications for Organic Socks for paramilitary forces. All the socks of the company are tested regularly at NABL approved laboratories and fully comply with the MHA specifications for Organic Socks. The company sells its production into India and also exports to buyers in Europe, UK, Middle east and Australia. Besides selling to retailers under its own/licensed brands (Arrow, Calzini, Flying Machine, Hush Puppies, Savile Row Co); The company also working as the socks vendor/partner to various brands and private labels including Bata, Reliance, Spencer‘s, Metro Cash & Carry, Metro Shoes, SG Sport, etc. In Socks Industry, aproximately 64% of market share of the branded socks at e-commerce market place is dominated by Sports/Casual Category and at present Calzini Fashions Ltd do not have any brand that caters the demand of this segment. Hence, to launch new brands under this segment for e-commerce channel, a comparative study of brands available at e-retail along with
Brand Strategy Management Study needs to done, to strategise the upcoming brands as well as to take decisions on pricing, discount and stock distribution. There is a gap in existing research literature to apply strategic management in its Indian Fashion e-commerce market. In this research paper we try to explain how AHP matrix along with GE matrix can be used to strategise different brands under a company and how concept of simple Central Tendency can be used as a powerful tool to set Price, Discounts and Distribute Stocks of any new brands to be launched by a company.
1.2. ABOUT THE PROJECT
1.2.1. GENERAL 1.2.1.1. PROBLEM DEFINITION Possible modification in existing strategies of the brands under CALZINI FASHIONS LTD serving e-commerce channel. Provide necessary information required to launch new brands under Sports and Fashion Socks Category for e-commerce market place. No brand under CALZINI FASHIONS LTD was serving Sports and Fashion Category, which constitutes of 64% of branded socks category. 1.2.1.2. RESEARCH GAP There is a gap in existing research literature to apply strategic management in its Indian Fashion e-commerce market. In this research paper we try to explain how AHP matrix along with GE matrix can be used to strategise different brands under a company and how concept of simple Central Tendency can be used as a powerful tool to set Price, Discounts and Distribute Stocks of any new brands to be launched by a company. 1.2.1.3. RESEARCH OBJECTIVE To study performance of the existing brands under the Company and suggest possible modifications in the strategies to further improve each brand performance. To study different strategic management models for launching new brands efficiently in e-commerce market place. To provide informed decision about further investments in different brands for To research well-known and high rating socks brands available on top six e- commerce portals for setting up Price and Discount for the brands to be launched at e-commerce market place under Calzini Fashions Ltd.
1.6. PICTURES OF SAMPLE SOCKS OF „MOJEME‟ AND „STEP- SOCKS‟
Figure 1: Step Socks Sample
Figure 2: Mojeme Socks Sample
1.7. SIGNIFICANCE OF THE STUDY This project will help CALZIINI FASHIONS LTD to modify its existing strategies for the its brands for e-commerce channel as well as to decide on strategies for their upcoming brands at e- commerce market place.
2. LITERATURE REVIEW
A company offers a variety of product lines, each requiring a certain investment and promising a certain return on that investment. In this view of operations, top management‘s role is to determine the products (or businesses) that will comprise the portfolio and to allot funds to them on some rational basis. A number of product portfolio models have appeared over the past several years to assist management in this task. Examples are the growth/share matrix, the business profile matrix, the business assessment array, and the directional policy matrix.
Framework for Design
Analysis of a product portfolio requires seven major steps:
- Establishing the level and unit of analysis and determining what links connect them.
- Identifying the relevant dimensions, including single-variable and composite.
- Determining the relative importance of the dimensions.
- To the extent that two or more dimensions are viewed as dominant, constructing a matrix based on them.
- Locating the products or businesses on the relevant portfolio dimensions.
- Projecting the likely position of each product or business on the dimensions if (a) no changes are expected in environmental conditions, competitive activities, or the company‘s strategies and if (b) changes are expected.
- Selecting the desired position for each existing and new product (as a basis for developing alternative strategies to close the gap between the current and new portfolios) and deciding how resources might best be allocated among these products. The Role of Brand Portfolio Management The proliferation of brands not only across the entire spectrum of a firm‘s products, but also as a key firm asset, has made brand strategy a key element of corporate strategy. Central to any brand strategy is brand portfolio management - the ability to organize all the firm‘s brands into a coherent brand portfolio and manage the complex interrelationships among brands in these portfolios. This process has become crucial for every company with multiple brands because the objective is to ensure not only that individual brands are successful, but also that the firm‘s overall group of brands is well coordinated and holistic. Well-managed brand portfolios create advantages throughout the firm, from avoiding consumer confusion to ensuring internal efficiency by preventing investment in overlapping product-development and/or marketing efforts (Carlotti, Coe, and Perrey, 2004). The far-reaching impact of brand portfolio decisions on a company‘s key economic measures highlights the importance of effective brand portfolio management not only in a marketing program‘s success, but also in the overall success of a
Dimensions:
Relative market share This indicates likely cash generation, because the higher the share the more cash will be generated. As a result of 'economies of scale' (a basic assumption of the BCG Matrix), it is assumed that these earnings will grow faster the higher the share. The exact measure is the brand's share relative to its largest competitor. Market growth rate Rapidly growing in rapidly growing markets, are what organizations strive for; but, as we have seen, the penalty is that they are usually net cash users – they require investment. The reason for this is often because the growth is being 'bought' by the high investment, in the reasonable expectation that a high market share will eventually turn into a sound investment in future profits. The theory behind the matrix assumes, therefore, that a higher growth rate is indicative of accompanying demands on investment.
Limitation:
The apparent implication of its four-quadrant form is that there should be balance of products or services across all four quadrants; and that is, indeed, the main message that it is intended to convey. Thus, money must be diverted from cash cows' to fund thestars' of the future, since cash cows' will inevitably decline to becomedogs'. There is an almost mesmeric inevitability about the whole process. It focuses attention, and funding, on to the stars'. It presumes, and almost demands, thatcash cows' will turn into `dogs'. No consideration of risk, No weighting of dimensions. Stringent as dimensions are pre-defined.
DIRECTIONAL POLICY MATRIX
Application: The Directional Policy Matrix measures the attractiveness of a segment and the capability of the organization to support that segment. Dimensions: Attractiveness of a Market Segment
Evaluating the attractiveness of a segment should include but not be limited to, these variables:
Size of the segment (number of customers, units or $ sales) Growth rate of the segment (a very important variable) Profit margins of the segment to the sales organization Ongoing purchasing power of the segment Attainable market share given promotional budget, fragmentation of the market and competitors‘ promotional expenditures Required market share to break even. Capability of the organization Evaluating the capability of the organization to meet the needs of the segments should include, but not be limited to, these variables analyzed against the competition:
Competitive capability of the organization against the marketing mix (product/service, place, price and promotion) Access to distribution channels
AVERAGE
WEA
K
AVERAGE
STRONG
UNATTRACTIVE ATTRACTIVE
Disinvest
Phase Withdrawal
Cash Generation
Phased Withdrawal
Custodial Growth
Growth Leader
Leader
Try Harder
Double Company’s^ or Quit Competitive Capabilities
Prospects of Profitability
