Marketing Plan - Arong

7/31/2019 Marketing Plan - Arong

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Executive Summary

Aarong is a fair trade organization, which is dedicated to make positive changes in the lives ofdisadvantaged artisans and underprivileged rural women. It does so by reviving and promotingtheir skills and craft. It is the first social enterprise of BRAC and was established in 1978 by Sir Fazle

Hasan Abed, the founder of BRAC. Their designs of the products have brought consumer attention

back to the products and styles that are native to Bangladesh. The designs focus on the varied types

and textures of crafts and patterns that have been passed along from generation to generation among

weavers and artisans in craft hubs around the country. It aims to position Bangladeshs handicraft on aworldwide platform. We tried out to cover all the business operation process of Aarong such as

situation analysis- Target market, sales and costs, industry analysis, competitors, macro environment

forces, growth analysis. In SWOT analysis we have analyzed the whole scenario of Aarong. In

marketing strategy we have identified different positioning, market offerings, branding and

communication strategy of Aarong. Next comes the financial part where we have covered all the

pricing strategy of Aarong which they apply before making a new product and then comes theimplementation control part which starts from performance management and ends with contingency

plan where we have mentioned all the future barriers of Aarong and how they encounter the situation.


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Marketing Plan - Aarong

BRAC University- MKT 501Marketing Management 1

Situation Analysis

Target Markets

Aarong targets the middle class and upper class population, as can be understood from the prices they

allocate. Bangladeshis living abroad look to Aarong for products that connect them to their heritage.The need, therefore, is of connection to heritage. Products like mens,womens clothing, jewellery,etc. and particularlyNokishi Katha products like bags, wall hangings, mats, etc. fulfill the wants of the

customers. The prices aim to satisfy the customer by delivering unique and the highest level of quality

products and also injecting tradition and heritage in everyday life.

Aarong currently has 12 branches in overall; 7 of them spread throughout the Dhaka city, 2 in

Chittagong, 1 each in Khulna and Sylhet, and a single international outlet in London. Currently people

visit the stores to buy the different products and this is where the company and customers

communicate with each other.

Sales and Costs

The financial information of Aarong is confidential and it is released as an attached part of the entire

BRAC organization. The only access to such information was that of 2006, which stated sales of Taka

14,839.02 million and costs of Taka 8916.52 million.

Industry Analysis

An analysis between Aarong, Sadakalo, and Kaycraft is shown below. It uses the 4P concept and a

part of the 4C concept, along with the consideration of experience in the market.

Aarong SadaKalo Kaycraft

Product Best quality

UniquenessWell varied

Good quality

Less variation

Good quality

Less variation

Price Expensive Relatively

reasonable than

Aarong

Relatively

reasonable than

Aarong

Promotion Wide advertising

using billboards

Relatively less

than Aarong: also

uses billboards

Relatively less

than Aarong: also

uses billboards

Place 12 branches 10 branches 12 branches

Experience Most experienced

(since 1978)

Much less than

Aarong (since

2002)

Less that Aarong

but more than

Sadakalo (since

1993)Consumer wants

and needs

Fulfils need for

traditional

Bangladeshi

products

Fulfils need for

traditional

Bangladeshi

products but

limited only to

black and white

colors

Fulfils need for

traditional

Bangladeshi

products but with

less variation than

Aarong

Convenience to

buy

Limited to visiting

stores only

Limited to visiting

stores only

Limited to visiting

stores only

Communication Limited to visiting

stores only

Limited to visiting

stores only

Limited to visiting

stores only


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CompetitorsCurrently Aarong has 5 major competitors: Sada Kalo; Kaycraft; Anjons; Rong; Handibazar, all of

them being established brands.

Macroenvironment Forces

This report will focus on the cultural, ecological, technological, and political/legal macroenvironmentforces along with Aarongs competitors.

Growth AnalysisThey are going to expand their business in America and Europe so by the end of 2012 their target

branches will be more than 20.

SWOT Analysis

Strength

The companys reputation is its primary strength, as the brand name Aarong automatically createsprojections in the minds of the general people. The main drivers of the brand equity are the logo,

which symbolizes a peacock and thereby a sense of beauty, and the name itself. Customers seeing the

logo automatically visualize traditional Bangladeshi handicraft products.

Aarong currently has 68% of the total market share for handicrafts. It establishes customer satisfaction

with new and innovative along with quality products. Their innovation is hence yet another strength.

Their service quality is also referred high as it has integrated providing quality service as one of its

responsibilities.

Aarong promotes its products through vast advertising, particularly through the billboards. These are

quite well spread throughout the city especially on the busy roads, so they are quite hard to miss out.

WeaknessesIt can be debatable but one of their weaknesses, which Aarong considers as a neutral factor, is the

price of the products. Although the quality is considered good (and thereby the increased prices), thishas certainly been one of the issues that customers speak out about. Of course another consideration is

that of Aarongs target markets and henceforth the prices may be justifiable.

A certain weakness is the distribution of the products, since only by visiting the stores can customers

be aware of the newcomers. Aarong does have a website but that really does not do much about the

particular products; it provides basic information about the company. Order catalogs or ecommerce

features are missing, thereby the means of ordering from home is missing.

Service of Aarong in overall maybe a positive factor but their sales force has room for improvement.

Since they are a part of BRAC, there are ample training opportunities but somehow this does not

improve the sales force. One reason may be BRACs policy of hiring a certain percentage of rural

people; this can suggest that more improved or further training is required.


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Opportunities

Aarongs opportunities are expanding not only inside Bangladesh but also outside the country. Theyare currently operating there branches in Europe and they are going to cover America very soon. In

this way Aarong is expanding their business globally. We can say that Aarong is adapting intensive

growth under market development strategies like new product in the new market they are going to

capture. From income distribution we can say that it wont create any affect into the population of thepeople of Bangladesh, because our target people is middle and above so its neither fall in opportunity

nor in threats. To talk about culture there are big opportunities where Aarong can enhance their

heritage through products into the markets. Everything has changed so culture has become vital issue

now days, people are trendier than before they want new tailored product so Aarong can come up with

new products in occasions like- Pohela Boishak, Pohela Falgun, Victory Day, and IndependenceDay, to sell their products in those special occasions. On the basis of seasonal changing people is

more concern about their choice so Aarong can make products on the basis of customer preferences.

Aarong does not address any environmental issues because the products they are producing are all

handicrafts so it doesnt harmful for the society and it also shows Go green Slogan. So far we canassume they are contributing on corporate social responsibility so far so natural factor can also fall

neither opportunity nor are threats. Technology factors are also not influencing any environmentalissues so that also falls in neither opportunities nor threats since the whole industry is purely manual.

The political and legal environments also have no effect because the handicrafts industry is less

vulnerable to any law of the country.

Threats

The biggest threat of Aarong is from their competitors because their pricing strategy is very

competitive compared to Aarong. One competitor, Sadakalo, has come up with a great concept like all

their products are mixture of white (sada) and black (kalo) with a very competitive price. Another

competitor OGs Panjabi shape is very different from others ; Khubsurtis design of salwar kamiz,

Rangs Sarees so these are all core and unique concepts of the competitors and also decreasing themarket share of Aarong. So the threats against competitors are increasing day by day.


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Marketing Strategy

Marketing strategy of Aarong

Aarong is a BRAC social enterprise that supports rural artisans like potters, jewelers, jute workers,basket weavers, silk weavers. Their marketing strategy is differentiation. Aarong has continuously

invented and reinvented products that are tasteful, unique and superior in quality. Aarong focuses on

innovations and thats why consumers are willing to pay a little premium because their product offerscreative excellence and uniqueness. Aarongs strategy motivates their artisans to produce uniquedesigns traditional products.

Mission statement

To promote traditional Bangladeshi products and designs that represents our rich craft and cultural

heritage by employing sixty five thousand rural artisans and handicraft producers.

Target Market

Aarong usually targets upper-middle class to upper class urban customers. They have around one

million loyal customers. Most of the products are designed for trendy young generations. Housewives

are also their important target group. Aarong has reached to the four divisions of Bangladesh such as

Dhaka, Sylhet, Khulna. They have also one franchise in London, UK.

Figure: Percentage of consumers of Aarong

Market Offerings of Aarong

Aarongs market offerings are shaped up for its target groups l ike men, women, children and youth.Their product line is around ninety to hundred. Aarong offers ethnic wear to beautiful crafts from an

array of hand-woven textiles such as silk, cotton, handspun, endi to terracotta, bamboo, jute and much

more.

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

youth Men Women Children


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There are some value propositions categorized by target groups:

Women Traditional sarees like Jamdani, Muslin, shalwar kamiz,

shawls, fabrics, shoes, bags

Man Traditional Panjabi, Executive shirt, fotua, short kurta,

T-shirt, shawls, sandals

Youth Taga- a brand of young generation Skirt, fotua, kurta.

Taga Accessories include- trendy bags, belt, sandals

Jewellery products Gold, silver, pearl and other jewellery available

Home accessesaries Table lamp, cutlery, dinning ware, bowls & plates, photo

frames, plant accessories

Terracotta products Bowls and plates, Glass, Dinning ware

Aarong has fame for its elegant Jamdani collection. They arrange exhibition of Jamdani sarees named

Story of Pride. Aarong believes that the display of Jamdani sarees, an artistic excellence, will makesome contribution to the restoration of Jamdani to its past glory.

Positioning of Aarong as a brand

The unique positioning of Aarong as a Bangladeshi Brand of pride has always helped its

consumers to identify them with the root of Bangladeshi cultural heritage. Now it has become the

household brand of Bangladesh.

Aarong has been awarded Superbrand Award a UK based independent authority ofbranding, in November 2010. This has made Aarong to be positioned itself as prestigious

brand.

Aarong is going to launch E-commerce shopping in 2013. Consumers can buy Aarongproducts from anywhere in the world.

Aarong has been celebrating their 30 years of establishment. It was established in 1978. My Aarong reward a discount card, is offered by Aarong to its loyal customers. The

cardholders can have exclusive crowd- free shopping hours and benefits.

Communication Strategy

Aarongs communication strategies are pretty skillful and effective which create longstanding-customer base. Aarongs tagline is Aki britte banglar mukh- states Bengali always try to keep

focus on their traditional cultural heritage.

Their major communication tools are-

Advertising: Aarong air TV commercial, print media advertising in newspaper, billboard,magazines. Their communication partner is Ogilvy & mather.

Aarong arranges fashion shows, exhibition of magnificent Jamdani named Story of Pridewas a real success.

My Aarong reward is a discount card, offered to its valued customers. They can earn pointby purchasing Aarong product for getting further discount.

Garage sale of Aarong is newly launched communication initiatives where the poor artisanscan directly sell their product to consumers.

Aarong celebrates Environment day, fathers day, friendship day. On World EnvironmentDay 2011, it highlights it eco-friendly and biodegradable products like jute bags, showpieces

of bamboo, cane, clay.


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Pricing strategy of 1 Particular product of Aarong:

Variable costs: T.K

Direct materials 50

Direct labour 36

Manufacturing

Overhead 77

Total variable cost 163

Fixed costs 500,000.00

Expected unit sales 100,000.00

Unit cost is given

below:

Unit cost= Variable cost + fixed cost/unit sales = 163+500000/100000

168 TAKA IS THE UNIT

COST

If we can assume Aarong wants to earn a 20% markup on sales then the calculation would be

Markup price = unit cost/1-desired return on sales

171 is the mark up

price

Aarong would charge 171 from a customer to make a profit of 3 tk per unit

Break even Volume would be = fixed cost/(price-variable cost)

62500 is the break even volume

Break even sales would be = fixed cost/ contribution margin percentage

12500000 is the break even sales revenue


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The Financial data we have collected from Aarong Sales and Profit of 2006 are given below:

AarongsAarongs MarketsMarkets DomesticDomestic

100

1.52

7.54

9.06

3.38

6.59

11.20

31.08

29.63

% of

Dom. Sales

262.88

2.74

20.15

26.37

6.59

13.56

19.15

91.46

82.86

Profit

(Tk.)

38.13

33.35

45.72

30.74

42.65

45.30

43.73

33.20

40.27

Sales

Growth %

2023.524,000Khulna

102173.1919,500Mogbazar

47101.998,300Uttara

3552.224,464Rankin St.

40140.125,463Chittagong

54116.678,000Sylhet

87,587

19,328

18,532

Area

(Sft)

5411,546.64Total

124480.70Dhanmondi

119458.23Gulshan

No. of

Employees

Sales

(M Tk.)

31st Dec.2006

9 Outlets 5 in Dhaka 2 in Chittagong

1 in Sylhet 1 in Khulna

Sales by ProductSales by Product

Household

: Non-

textile6.1%

Household

: Textile

12.2%

Women's

Wear

26.8%Jewellery

7.8%

Children's

Wear

10.7%

Men's

Wear27.7%

Others

2.2%

Leather

6.6%

Others includes Food and Herbal Products, Stationery, Toys and Furniture


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Financial Performance:Financial Performance: Sales

668.65

807.67

943.77

1229.82

1702.34

0

200

400

600

800

1000

1200

1400

1600

1800

2002 2003 2004 2005 2006

Million Tk.

Local Export

Exports = 4%

Of Total Sales

20.73% 16.91% 30.31% 38.21%Growth >>

Financial Performance: ProfitFinancial Performance: Profit

305.92

192.82

100.9484.46

63.48

0

50

100

150

200

250

300

350

2002 2003 2004 2005 2006

Million Tk.

Net Profit Margin 17.97%15.68%10.70%10.46%9.49%

33.01% 19.55% 90.96% 58.66%Increase >>


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Implementation Controls

Performance Management

Products and services that satisfies customers

Aarong, an iconic Bangladeshi brand and the countrys largest retail chain, offers customers over 100fashion and lifestyle product lines, including designer clothing, household items and jewellery, all of

which bear the promise of exceptional quality and value. The rich tradition of Bangladeshi craft and

folk art returned to prominence through Aarong, which, for the last 32 years, has been creatively

blending traditional and ethnic craft-skills with contemporary styles and trends. Aarong works with

over 1,600 artisan groups, ensuring the livelihood of over 65,000 artisans and directly benefiting

320,000 people across Bangladesh.

Aarongs discerning style and high-quality craftsmanship make every Aarong product unique anddemand for them has been consistently rising due to Aarongs focus on innovation, quality, value-based pricing and superior in-store customer service.

Products quality compared to competitorsA pioneer in the countrys craft industry, Aarongs unique product designs have brought consumerattention back to crafts and materials indigenous to Bangladesh, as its designers blend the traditional

with the contemporary in a way that continues to win consumer appeal. Its success revolutionized

trends and virtually created the market that has now been taken up by countless other boutiques and

brands. Aarong caters to this growing urban consumer-base through outlets in every major city in the

country. Aarong products are not only the gift items of choice for every occasion for local and

expatriate Bangladeshis but also the quintessential cultural mementos for these visitors.

Effort towards social responsibilityThe organization has identified three basic constraints for gainful employment of the low income and

marginalized people in the rural areas: lack of working capital, marketing support and opportunity for

skills development. In order to bridge these gaps, Aarong provides a wide range of services to itsworkers and suppliers:

Spot payment on product delivery to encourage efficiency and productivity Reach out to producers in remote areas to ensure fair value for their efforts Marketing communication and information for artisans Advances against purchase orders where necessary Training & Education in skills development to raise product quality and marketability Product Design and Support in Product Development Quality Control to increase producer awareness of the importance of quality

Contingency Plans

Future barriersAarong identified the following threats or barriers that they may possibly encounter.

Hand-crafted products have to compete on price, design and adaptability with modernmachine made products, which make difficulties for our traditional products to be competitive

in international market.

Artificial automated product produced by competing countries, as Chinese embroiderymachine products compete with our hand stitch.

Use of polyester, nylon, acrylic and other manmade elements in competing artificial productswhich reducing the product cost of artificial product


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Quality products produced by competing countries like India, Pakistan, China, South Africa,etc.

Competing countries are enjoying better Trade Terms sometimes.

Competing countries are offering better technological support and R&D facility in theircountries.

Tackling the future barriersAarong plans to tackle these barriers in the following ways.

Our Prime Minister Sheikh Hasina has told that, she will try to Make Every Home aIndustry. By considering handicraft she can really elaborate it like, Every home will be ahandicraft industry, because it is the only industry which can flourish at this tough time ofgas and energy crisis. PMs strong campaign for saving environment from climate changemay promote the hand made goods like handicrafts globally. An integrated branding and

promotion of Bangladeshi Handicrafts can be great tool of poverty alleviation also.

Setting up of design development centre is urgently needed for producing new product andproduct diversification.

Crafts men to be trained for better performance, innovation and technology to be provided foroverall development of the sector in a design development institute.

Quality raw materials to be ensured for product diversification. Develop fund for identifying new markets and new products. Continued and focused attention has to be given to handicrafts for up-gradation of skill,

creation of better work environment and development of cluster for specific crafts withcommon service and improvement of infrastructures and market development.

Arrangement of International Handicraft Fair to attract more buyers and thus reducingdifficulties in entering to overseas market for our Traditional and Non-Traditional Handmade

goods.

Without a doubt, the global market for handicrafts and hand-made goods is expanding. Whencustomers are faced with two products of similar price, quality and design, they will

invariably select hand-made goods in changed world with environment consciousness. The

cost of production of hand-made items is smaller in Bangladesh whilst it is possible to make

competitively priced handicrafts in Bangladesh, it is important to understand that pricing is

one of the key factors for.

Appendix

The following documents have been attached with this report:

1. The questionnaire used for this report2. A spreadsheet printout of the budgeting structure of Aarong3. A spreadsheet printout of the pricing strategy of Aarong


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Bibliography

[1] http://aarong.com/[2] http://aarong.com/aboutus.php[3] http://www.brac.net/content/social-enterprises-0[4] http://www.brac.net/content/stay-informed-brac-glance[5] http://www.sadakalo.net/locations.php[6] http://eid.kaykraft.com/outlets.html[7] http://eid.kaykraft.com/about.html[8] An internship report on Aarong, BRAC Business School (BBS), BRAC University

Documents

Marketing Plan - Arong