Mkt Scenario

8/8/2019 Mkt Scenario

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VALUE CHAIN

Incense Sticks:

The market for incense sticks is very vast and the

demand for these incense sticks is high even in the

far-flung rural areas. The incense industry is driven by

factors other than commerce like tradition,

superstition and religion.

India has a leadership position in the incense sticks

market and fulfills more than half of the world'sincense sticks requirements. Export earnings have

crossed 220 crore mark while the domestic market is

expected to be well over a thousand crores Every

year more than 60 billion sticks are produced and the

market is growing at a rate of 7% per year.

The incense stick market faces a sudden upsurge in

demand during the festive season. Demand from both

domestic and international sectors peaks up during

festivals like Dassera and Diwali. Some of the popular

fragrances that have captured the imagination of

consumers both in India and abroad include

Archanam - Mogra, Yagyam - Havan, Yogam -

Dhoop, Poojanam - Saffron, Dhyanam - Sandal,

Chintanam - Kasturi, and Shantam - Rose.

Today, the incense industry has not only become a

major revenue earner for the Government it has also

become a prominent source of employment for

women in rural areas. Presently, the incense industry

in India is a cottage industry and the market is largely

unorganized. Only twenty percent of the market is

occupied by organized players while the rest is

controlled by small operators. The government needsto pay urgent attention to this industry if it wants the

industry to retain its leadership position in the

industry.

The incense stick industry has also promoted social

entrepreneurship in the rural and semi urban areas as

more and more people have acquired the confidence

to start their own businesses. Some reputed Indian

corporate have taken the lead in promoting this trend

by training rural women in bamboo cutting, incense

rolling, raw incense sorting, perfuming and packaging

of incense sticks. The entry of corporate has helped in


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mechanization at each step of the manufacturing

process. Earlier rural women used to cut bamboo with

an axe leading to injuries. This process has been

done away with the introduction of bamboo cutting

machines.

Though mechanization was brought into this industry

by, the early 1990's experience has shown that

industrially manufactured incense sticks cannot match

the fragrance produced by handmade incense sticks.

This is because handmade incense sticks are madefrom medicinal aromatic herbs and fragrance oils

extracted from aromatic flowers.The net result of this

being that the incense stick industry has become a

major source of employment to women in the rural

areas.

Aromatherapy oils:

The economics working behind essential oils has

three components. First, the cultivation of herbs and

plants used to extract essential oils; second, the

actual process of extraction of the oils; and, third, the

marketing and actual sale of these oils.

Different plants have different oil content and they

differ in their sales also. For example, according to

the National Institute for Chemical Pharmaceutical

Research and Development, Romania, world

production of coriander oil in 2003 was estimated at

6 million and the essential oil content of dried

coriander is 0.15% to 1.7%. In contrast, market for

lavender oil was estimated at 5 million and the

essential oil content of the two types of lavender

varies between 0.55% and 1.5%.

There is major emphasis laid on the cultivation aspect

as the subsequent yield of essential oils depends

entirely on the quality of cultivation. According to a

report of the NRDC published in the early years of this

decade, the cost of cultivation of herbs in developing

countries per hectare comes to around US$ 500 to

1,000. In comparison, revenue per hectare is

estimated at around $3,000 to 6,000. This

demonstrates how beneficial the essential oils

business can prove. These oils have rates varying

from Rs 200 to Rs 2.25 lakh for a kilogram.


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According to a study conducted by the global market

research firm Frost and Sullivan in 2006, the rise in

consumer demand for natural food products, coupled

with the associated need for flavoring compounds

from natural sources, have provided a major boost to

the essential oils and oleoresins market. Frost and

Sullivan estimated that the market size of Europe and

the US for essential oils would grow to 666 million by

2009, with the actual volume consumed by the two in

2009 being 105,800 tons.

According to the United Nations COMTRADE

database, global imports of essential oils stood at $2

billion in 2005. As listed by them, the top ten import

markets in 2005 were the USA ($391 million), France

($199 million), the UK ($175 million), Japan ($152

million), Germany ($117 million), Switzerland ($103

million), Ireland ($75 million), China ($65 million),

Singapore ($61 million) and Spain ($61 million). The

fastest-growing markets, based on import spending

between 2000 and 2005 include Vietnam (14% per

annum), Poland (35%), Nigeria (16%), Turkey (25%),

South Africa (14%), Indonesia (14%), Saudi Arabia

(14%), India (19%), Spain (13%), Singapore (35%),

Switzerland (14%), and Japan (13%).

While India is a major exporter of many essential oils;

it also imports from several countries. Figures from

the Nahva Seva Port, Mumbai between December

2008 and March 2009 show India to have imported a

number of essential oils from countries like the US,

Brazil, the UK, China and Indonesia. It imported

aromatic chemicals worth over Rs 6 crore from the

US during this period through this port alone. At thesame time, India also exported essential oils to

several countries, including to the US, the UK, China,

Argentina and other European countries.

Packaging:

The current wave of economic development in India is

being seen from all over the world. As infrastructure,

manufacturing, agriculture, and services grow at high

rates the packaging industry is also showing great

variety and depth in its growth. Indias packaging

industry may achieve an annual turnover as high as

US$ 5 billion in the current financial year with a


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ANALYSIS

Inner Reflection currently operates in both domestic

and international markets. 80% of all business activity

is through exports while, only 20% is through

domestic retail.

They have limited resources for production. With the

current production capacity, if they need to penetrate

the domestic market, some of the export business will

need to be sacrificed.

The company sees great opportunity in the domestic

market. Also supplying to the domestic market is

more feasible and convenient for the company as it

greatly reduces the cost of the supply chain.

All products manufactured are eco-friendly and can

be used to create a strong brand image.

Based on all the information about the products the

following market segmentation and positioning

strategy has been designed for all the products.

Segmentation

The products cater to a Niche market segment.

GEOGRAPHIC:

Metros like Mumbai, Delhi, Chennai, Hyderabad,

Bangalore.

Tier II cities like Ahemdabad, Surat, Pune, Lucknow,

Indore, etc.

Places with high tourist attraction like Goa, Kerela,etc.

DEMOGRAPHIC:

Age Mid 20s & above

Social class Middle-middle & upper-middle class

PSYCHOGRAPHIC:

Status seekers

PSYCHOLOGICAL:

Needs-motivation sense of self worth


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Personality Compliant, socially active, self-indulging

Attitude Quality conscious, novelty seeker

Interests home dcor, environmental concerns

Positioning

Value for money, superior quality, eco-friendly

products.


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SUGGESTIONS

They could develop a website, this would help

in having direct access with buyers, suppliers

and customers.

They could develop a facebook page which

would give their products and brands greater

visibility. Brand awareness could be increased.

In order to create a strong and successful

brand image they should ensure that they pickand identify the stores very carefully. The

image of the retailer should be coherent with

that of the brand.

Since they have a limited production capacity,

there is greater flexibility. Hence, they could

undertake customized orders for bags, jeweler,candles and hand-made paper stationery and

other products.

While supplying to domestic retailers, price

discrimination should be avoided. There should

be standardization of price being offered to the

customers in the domestic market. Vast price

differences in th products would harm th brand

image. All the retailer should offer the products

at similar products.

The factors like women dominated workforce

and eco-friendly materials should ne

highlighted as it would help to create a

favorable brand image.


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CONCLUSION

Inner Reflection is a company with great potential in terms of their products. Go-Green is a lifestyle choice being

adopted by many of the consumers today. All their products are based the ideology Natural Creative Expressions.

With careful market selection and little marketing efforts they can successfully penetrate the Indian market.

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Mkt Scenario