Marketing Plan for Fabindia, Ahmedabad

PGP Project Presentation

Marketing Planfor

FABINDIA, Ahmedabad

Presented By:

NIKITA SANGHVI

Stevens Business School

FLOW OF PRESENTATION

IntroductionCurrent Marketing SituationThreats and Opportunities AnalysisObjectives and IssuesMarketing StrategyAction ProgramRecommendations

Batch 2009-2911 Marketing Plan


INTRODUCTION

FABRIC OF INDIA

• India's largest private platform for products that are made from traditional techniques, skills and hand-based processes

• Initially commenced as a village based industry in 1960 by John Bissell• Links over 40,000 craft based rural producers to modern urban markets• Promotes inclusive capitalism, through its unique COC (community owned

companies) model

Marketing PlanBatch 2009-2911


INTRODUCTION

Fabindia Products


TEXTILE BASED •ready-to-wear garments •accessories for men, women, teenagers and children; •bed, bath, table and kitchen linen; •floor coverings, upholstery fabric and curtains. •Cotton, silk, wool, grass, linen and jute are the basic fibres used

NON- TEXTILE BASED

•Home Products (October 2000)furniture, lighting, stationery,

tableware, cane baskets selection of handcrafted

utility items

NON- TEXTILE BASED

Organic Food Products (July 2004) cereals, grains, pulses, spices, sugar, tea, coffee, honey, fruit preservesherbs

NON- TEXTILE BASED

Authentic Personal care products (March 2006)soaps, shampoos, hair oils, pure oils, moisturizers, body scrubs, face packs, hair conditioners special skin care products


INTRODUCTION

Awards for Fab India• Awarded “Best Retail Brand, 2004” by The Economic Times of India.• Got “Designer Promoting Indian Craft or Technique award” as Hall of Fame

reward.Annual Report (2008-09)• Annual turnover of the company is in the range of Rs 500 crore• Profit ranges between Rs 35- 40 crore. • Registered a CAGR of about 58% in the period 2006-2008



INTRODUCTION

Fabindia Store locations• 108 stores in 40 major cities of India. • 6 stores in international places including UAE, Dubai,

Bahrain, Italy and Rome.• Online Shopping & Exports to 34 countries


Stevens Business School Marketing Plan

Fab India: timelineJohn Bissel starts

FabIndia as a

whole sale

export company

Added ready to

wear garments

to the retail

offering

Marketing focus shifts

from exports to local Indian

retail

William Bissel

takes over as MD,

FabIndia

Has 6 stores in metros

>Food products

range launched. >20 stores across the

metros, and start

expanding to Tier 2 and 3

Body care

product range

launched, FabIndia

Sana

108 retail stores across India and 6 stores

at internat

ional

1960Early 80’s

1990’s 1999 2001 2004 2006 2010

Batch 2009-2911

Vision:200 stores and a turnover of Rs.1000 crore by 2011


CURRENT MARKETING SITUATION

A delighted Customer is our Best Brand Ambassador”

USP : quality of the fabric and the cultivated image of ‘Indianness’

Does not follow any customer acquisition strategy: focuses on customer retention

Key element: word of mouth publicity ( Zero advertising except print ads during promotions ), advertorials, mobile marketing, in-store posters

Mystery Shopper Program: to check the customer satisfaction level

85%

15%

Customer Profile

•Motivating factor for the customer: quality and consistency of product and the service

•Over 83% of Fabindia’ s customers go back satisfied, with 58% being highly satisfied with the brand and its offeringsSOURCE: Interview of Mr. William Bissel, MD, Fabindia published in The Economic Times, Jun 2009

Batch 2009-2911


CURRENT MARKETING SITUATION


FabIndia Store Format

Full fledged stores Concept stores

•Metros•Posh locality•All product lines

•Tier II cities•Specific products retailing

•It has designed the stores’ decor and ambience keeping this in mind•The layout usually keeps clothes section at the back of the store and the entrance area is utilized for home products. •The exclusive jewellery counter is also kept in the fronts.


COMPETITION

Unorganized sector

Organized Sector

•Garments Based (Shoppers Stop, Pantaloons, Westside, Reliance Trends, Globus)

•Government Handloom Initiatives (Khadi Gramodyog, Cottage Industries Emporium, State Government departments)

•Designer Boutiques

Ethnic wear retailers like Khadder, W and Good Things, and Stand alone stores like Shristi, Biba, Anokhi

•Local tailors who provide customised garments to the customers at reasonable prices •Local NGOs selling wares,

•Regional -Law Garden Market for buying handicraft and Gujarati outfits

Batch 2009-2911

STRENGTHS

• Quintessential Indianness in fabric through the years– Popular for authenticity of hand-woven fabric

• Sourcing system from rural India– Strong supplier relationship

– Provision of capital loans (in agreement with banks)

– Leniency on order fulfilment & no-return policy

– 100% use of supplier’s capacity

• Sustainable employment opportunities to rural skilled poor

• Employees are given autonomy and hence inducing accountability

• Focus on customer retention instead of generation– Large chunk of buyers are repeat purchasers

– Product quality improvement done keeping this in mind

• Word-of-mouth strong enough not to require any advertising

• Delays in delivery from artisans– Opportunity losses due to irregularity– Difficult to predict quantity and time of thaan coming from weaver– Also arises as different stores are encouraged to order different stock

• Insignificant spend on marketing communications– Losing out on attracting new customers instead of depending only on repeat

purchase

• Not enough personnel to push Fabindia to greater growth– Unavailability of people experienced in retail sector– Unavailability of people believing in the same mission– More formal processes would face resistance from existing employees

• Untimely delivery of products– Transport, storage and shelf-life issues of organic foods– Suppliers were spread pan-India

WEAKNESSES

• Latent potential of organic foods market– Leveraging changing consumer tastes & perceptions– Awareness generation of merit in these foods

• Utilize multi-brand retail outlets and construction groups– Display of Fabindia products in MBOs and department stores

• Leverages footfalls of the store, increasing likelihood of sales– Use of Fabindia home furnishings in modular flats of buildings

• If consumer buys this flat or any other, and is impressed, will use Fabindia furnishings

• Leveraging Web 2.0 tools and techniques– Tying up with matrimonial sites for designer fancy wedding wear– Interactive website for designing as per individual requirements

• Customization level is high• Lead time between fixing of occasion date and event can be used for delivery

OPPORTUNITIES

• Unorganized local operators– Handloom retail shops/chains in regional pockets

– Souvenir shops providing indigenous products at lower prices

• Entry of organized brands and companies into retail– High expected growth & entry of business houses in large ways

– Competitors access funds from conglomerate partners or markets

• Tilt of Indian consumers towards foreign brands– Foreign brands alter lifestyle choices of the target market

– “Imported” or designer home furnishings have greater ‘flaunt value’ vis-a-vis Fabindia

• Development of government co-operatives– Boost in future to KVIC and state handloom units

– Improvement in their ambience and shopping experience

• Rising prices of real estate could hamper growth– Opening new stand-alone stores will be tough

– Experimenting with formats and markets may not be advisable

THREATS


MARKET SURVEY

Objective: To explore: • The affective responses Fabindia’s consumers• Cognitive responses of Fabindia’s consumers • Purchasing behavior of the consumers for products of apparel category

Sampling Design• Sampling Unit : Customers of Fabindia• Sampling techniques : Convenience Sampling• Sample size : Customers -30



MARKET SURVEY

•70% of respondents were above 30 years of age

•60% - Males, 40% - Females

Demographics•90% -

Word of mouth

•10% - Print Media

Contact of Information

•Only 30% shopped online

•Out of 30%, only half of them had purchased online from Fabindia

•According to experts this trend is set to change with increasing internet penetration and e-retailing

Online Spending Behavior

Batch 2009-2911


MARKET SURVEY

•30% - Natural

•33% - Authentic

•20% - Comfortable

•17% - Traditional

Fabindia For You

•53% - Satisfied

•33% - Appreciation

•14% - Good

Affective Responses

Batch 2009-2911


MARKET SURVEY

Batch 2009-2911

Which of the following do you think was the instrumental in your choosing to buy the garments? Rank them on the scale of 1 to 5 with 1 being the most important.

33%

17%17%

17%

7%

3% 3% 3%

Respondents(in %)

Quality of FabricsRange of Garments AvailablePrice of the GarmentsThe Fabindia brandTraditional workNatural Fabric ( eg. Cotton, Linen)Location of the StoreService provided by staffDisplay of the Garments at StoreStore Ambience


MARKET SURVEY

Batch 2009-2911

Rate your experience at Fabindia in terms of your satisfaction level for the following: (Highly Satisfactory, Satisfactory, Average, Unsatisfactory, Highly Unsatisfactory)

17%

17%

13%13%13%

10%

10% 7%

Respondents(in %)

Range of Garments AvailablePrice of the GarmentsQuality of FabricsLocation of the StoreDesigns/Colors of GarmentsService provided by Staff Store AmbienceDisplay of the Garments at Store


SUMMARY OF MARKET SURVEY

PRIORITY FACTORS SATISFACTION

Quality of Fabrics Range of Garments Available

Range of Garments Available Price of the Garments

Price of the Garments Quality of Fabrics

The Fabindia brand Location of the Store

Traditional work Designs/Colors of Garments

Natural Fabric ( eg. Cotton, Linen) Service provided by Staff

Location of the Store Store Ambience

Service provided by staff Display of the Garments at Store

Display of the Garments at Store

Store AmbienceBatch 2009-2911 Marketing Plan


• Capitalize the potential to expand the Target Segment from 25+ years to 18+years

• Fabindia does not advertise, depends on word of mouth. This essence will be taken away with the help of social media campaign and broadcasting and print media tools

• Take advantage of the perfect overlap of Fabindia target segment Profile and the internet user profile, 18-35 years

• Create fully fledged retail market online• First mover advantage in their segment • Connect with the customer to customize• Focus on discovering the methods to improve the quality and life of

the fabric• Unravel the issues related to supply chain management

OBJECTIVES

Batch 2009-2911


• Expand average basket size of target segment which coincides with internet

• Promotion optimization • Endorsement: Shabana Azmi , Ranbir Kapoor & Deepika

Padukone • Convenient country specific format • Online space- for more visibility • Online marketplace – integrated into operations• Aspiration value - though long term membership benefits• Increase preference n brand recall in foreign countries n NRIs• Lock in % of wallet as Indians increasingly shop online

STRATEGY

Batch 2009-2911

Stevens Business SchoolBatch 2009-2911 Marketing Plan

• Launch online activities with the Summer collection• Online Trial Room: mix n match clothes and design a new look on

a 3D simulated trialroom w/ a model as per physical specification

• High search ranking: Google Adwords• Exhibition + workshops on ground• Diwali – make ur own gift bag for your family/friend – buy them

a new look and get it home delivered !• CSR weekend promotion: showcase craftsmen and tie up with

Breakthrough

TACTICS


FABINDIA: 2011

Revamping website

Launch summer

collection- print ads given in

newspapers

Create an e-market

place

Link online sales to supply chain

Build social media

presence

On ground

promotions to

complement e-

campaign

60th year anniversar

y – Initiates

CRM activity

Early 80’s

Batch 2009-2911

FINANCIAL COMPARISONS

• Financial aspects of Fabindia have been compared with Pantaloons

• Though not a direct competitor, it represents the Indian Retail Industry very well

• Financials for its direct competitors such as Anokhi, Khadi Gram Udhyog etc. were not available, restricting comparison

• This assessment contrasts the performance of Fabindia with respect to the biggest retailer of India

• Hence, we get a sense of the feasible options available with Fabindia to raise funds


INTEREST COVERAGE RATIO

Year 2005 Year 2006 Year 2007 Year 200802468

1012141618

8.419.27

10.75

16.54

3.274.15

5.51

2.08

FabindiaPantaloons


The interest coverage ratio of Fabindia is far higher than that of Pantaloons. Hence, raising funds through debt is not a big challenge.


INTEREST COST AS % OF SALES



0.5

1

1.5

2

2.5

1.09 1.140.96

0.69

2.14

1.49

2.252.08

FabindiaPantaloons

The interest cost as a percentage of sales for Fabindia is far lesser than that of Pantaloons. Hence, raising funds through debt is again not a big challenge.


PROFIT MARGIN RATIO (IN %)


The PAT as a percentage of sales of Fabindia is higher than that of Pantaloons. Though retail industry works at low margins, Fabindia’s margins are quite high. Hence, raising funds through debt is not a big challenge.


1

2

3

4

5

6

7

5.66 5.786.3 6.02

3.41 3.273.63

2.71

FabindiaPantaloons

OPTIONS AVAILABLE

• DEBT FINANCING – Pros

• The decision authority stay with them, hence can stick to their mission• Healthy current ratio (around 2:1 throughout years)• A very healthy interest coverage ratio (as high as 16 times) which is

quite higher compared to Pantaloons, Shoppers Stop etc. (1.5%-2.5%)• A very healthy debt to equity ratio • Interest cost as a percentage of Sales is very low (0.006%)• Family owned

– Cons• Debt acquired may not be huge• Loose out on the expertise of other organisations which can be

brought in through JVs or investments

OPTIONS AVAILABLE

• PRIVATE INVESTORS/ JVs

– Pros• Huge investments can be brought in• Professional expertise can be brought in

– Cons• Decision authority gets diluted• Emphasis may shift to profit maximisation and hence Fabindia’s

mission may get diluted


CULTURAL EVENT(ON GROUND ACTIVATION)

• The FabIndia Website gives information about the various fabric crafts like Chikankari, Kalamkari, Batik etc. for the customers.

• We will bring this art on ground for them to experience it first hand and also learn it.

• Every metro will have a 2 day workshop cum exhibition where these artists will put up stalls about these crafts and exhibit the work along with “Live Craft Workshop”, workshops (for more knowledge and interest) for keen audience.

• It will be called “Know what you wear”

• This makes the customers more aware of the work put in for their fabric and helps them with their association with brand FabIndia.

• It will also have a regional food festival at the same time to make it an overall fun and enriching experience.

Batch 2009-2911


“WOMEN OF TODAY”

• As an extended activity, on weekends FabIndia will have “weekend promotions” with special focus on “Women of Today”.• Men can be encouraged to increasingly visit the stores with the women in their

lives with offers like “ bring your mom/sis/wife/ girlfriend to shop, and get x% off”

• FabIndia will tie up with various NGOs like Breakthrough, Jagori etc. for their cause of empowering women.

•Viral video to be launched in association with Breakthrough ( along the lines of Mann ke Manjeere)

Objective- The passion group identifies with the theme ““Women of Today” and results in new customer acquisition

Batch 2009-2911

RECOMMENDATIONS AT A GLANCE

• Heavy investments in back-end of value chain– Supply chain development for efficiency and quality management

• Expansion aiding strong regional presence– Outlets to counter regional competition– Sourcing from local suppliers for outlet and other regions will be easier

• Growth through harnessing new customers– Cannot depend on existing customers to counter competition– Must create new customers in all segments

• Tie up with different types of graduate schools for talent– Rural management graduates for managing supply chain and rural

initiatives– Management graduates for helping growth in front-end and retail

arms


THANK YOU
