PEARL ACADEMY OF FASHION
Fastrack Product development
By Akanksha nanda PG-FMG1 Semester 2
Fastrack|PAF
ACKNOWLEDGEMENT
It was a matter of great pleasure for us in submitting our integrated project on the brand FASTRACK on product development. We are grateful to Ms.Anuradha and Ms.Khatre, our course coordinator and course leader as well as our FMG faculty for their invaluable guidance and cooperation during the course of the project. They provided us with their assistance and support whenever needed that has been instrumental in completion of this project. I would also like to thank the management of our institute for providing us with valuable knowledge in the first semester itself and transforming us into more confident individuals.
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Fastrack|PAF
ACKNOWLEDGEMENT
It was a matter of great pleasure for us in submitting our integrated project on the brand FASTRACK on product development. We are grateful to Ms.Anuradha and Ms.Khatre, our course coordinator and course leader as well as our FMG faculty for their invaluable guidance and cooperation during the course of the project. They provided us with their assistance and support whenever needed that has been instrumental in completion of this project. I would also like to thank the management of our institute for providing us with valuable knowledge in the first semester itself and transforming us into more confident individuals.
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Fastrack|PAF
TABLE OF CONTENTS
S.NO
TOPIC
PAGE .NO
1.
Acknowledgement……………………………………………….2
2.
Objectives ……………………………………………………… 4
3.
Research methodology ………………………………………… 5
4.
Introduction: FASTRACK ……………………………………..7
5.
company background …………………………………………...9
6.
industry overview …………………..………..............................11
7.
brand profile ………………………………..………………….17
8.
building the brand ………………………….….……………….22
9.
marketing channel ……………………………………..…........26
10.
competitors ……………………………………………………..29
11.
Promotional mix ………………………………………………..37
12.
segmenting , targeting , positioning …………………………….43
13.
customer relation management …………………………………46
14.
corporate social responsibility…………………………………..51
15.
pricing ………………………………………………………….53
16.
product development …………………………………………..60
17.
financial statements ……………………………………………61
18.
recommendations & limitations ………………………………..68
19.
bibliography ……………………………………………………..69
20.
annexture …………………………………………………………70
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Fastrack|PAF
OBJECTIVES
To understand the bags market and its demand in India
To analyse the brand of TITAN fastrack in the market
To study and comprehend the class learning l earning into our integrated Project.
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Fastrack|PAF
RESEARCH METHODOLOGY
A research methodology defines the purpose of the research, how it proceeds, how to measure progress and what constitute success with respect to the objectives determined for carrying out the research study.
RESEARCH DESIGN
The appropriate research design formulated is exploratory research: this kind of research has the primary objective of development of insights into the problem. It studies the main area where the problem lies and also tries to evaluate some appropriate courses of action.
DATA COLLECTION METHOD
For the effective completion of the project, secondary methods of data collection will be used. The data collected through the secondary methods is known as secondary data. Secondary data is the data hand, which have already been collected by some one else and which have already been passed through the statistical process. It could be internal and external sources of data. Internal source: which originates from the specific field or area where research is carried out .for e.g. published brochures, official reports, etc. External source: this originates outside the field of study like books, periodicals, journals, newspapers and the Internet.
Hypothesis A hypothesis is a specific statement of prediction. It describes in concrete (rather than theoretical) Terms what you expect will happen in your study. Not all studies have hypotheses. Sometimes a study is designed to be exploratory. There is no formal hypothesis, and perhaps the Purpose of the study is to explore some area more thoroughly in order to develop some specific Hypothesis or prediction that can be tested in future research. A single study may have one 5
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Or many hypotheses. For this we shall hypothesis that the consumers will by more bags than before.
RESEARCH METHODOLOGY TABLE
RESEARCH OBJECTIVE
RESEARCH DESIGN
DATA COLLECTION METHOD
SAMPLE DESIGN
TO UNDERSTAND THE BAGS MARKET AND ITS DEMAND IN INDIA
EXPLORATORY
SECONDARY DATA
OBSERVATIONS
TO ANALYSE THE BRAND OF TITAN FASTRACK IN THE MARKET
EXPLORATORY DESCRIPTIVE
SECONDARY DATA PRIMARY DATA QUESTIONAIRES
SAMPLE UNIT=YOUNG PROFESSIONALS SAMPLE SIZE =70 SAMPLE FRAME=NORTH, SOUTH,WEST AND CENTRAL DELHI
TO STUDY AND COMPREHEND THE CLASS LEARNING INTO OUR INTERGRATED PROJECT
DESCRIPTIVE
SECONDARY DATA
Qualitative techniques used:
In-depth interviews Focus group dissections
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INTRODUCTION
TITAN FASTRACK The brand
Fastrack was launched in 1998 as a sub brand of titan .it was spun off as an independent brand of watches getting the urban youth in 2005.since then it has infiltrated the lives of India‘s youth with designs that were refreshingly different and affordable .during that time, fastrack also jumped headlong into the eye gear business and in the last 4 years has quickly notched up the title of being the largest sunglasses brand in the country. It has now pushed past the horizon into newer areas- bags, belts, wallet and wrist brands – as a part of its mission to offer the youth everything they need to be cool .now serving up its vision in six different flavours, enough to fully pack a chilled out store, fastrack has chosen to ‗move on‘ and throw open doors of its own stores for its young consumers. The brand store is all set to cater to every need to today‘s youth as a complete accessories destination having all .fastrack gear under one roof. The first store landed on the scene in pune. Timex had entered the Indian market through a joint venture with Titan and that was our offering for the youth market. When that JV broke off in 1997 and Timex went independent, there was a gap in our portfolio and it only made sense to fill that need through our offering. Fastrack was launched. Subsequently, it grew from a range to a sub-brand, where Titan was upfront in the logo and the association was strong. Fastrack has excellent brand recognition across all its products and is a cult among the youth; the brand should start a new campaign promoting their website and allow users to build their own communities across all its products. When the brand was launched in 1998, it was positioned as "Cool watches from Titan"."Fastrack was to counter Timex, which had just walked out of the Titan family," says an industry watcher. The brand did well, initially. Its turnover crossed Rs 15 crore (Rs 150 million) in the first year itself, and had grown to Rs 25 crore (Rs 250 million) by 200102.Then time seemed to stand still. Sales were stagnating and it didn't look as if Fastrack would breach the Rs 25 crore (Rs 250 million) barriers. Titan swung into action quickly, repositioning the brand Fastrack was slotted as a mix of formal and casual, aimed at executives in the 22 to 25-year age group. The ageing of the target customer was important; Fastrack had previously positioned itself as a college goer's watch; but students -- at least, back then -- weren't known for their high disposable incomes, unlike young executives. 7
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The repositioning didn't help: by 2003-04, sales had dropped to Rs 23 crore (Rs 230 million). "We were constantly refreshing our designs, but our sales were stagnant," recalls Kurien, head of marketing. The trouble lay with the price. At the time, Fastrack watches cost between Rs 195 and Rs 1,700, which didn't encourage too many repeat purchases. "The focus began shifting away from watches. The brand was instead extended into sunglasses, with the launch of Fastrack Eye Gear in June 2004and then into handbags and belts. An obvious gap existed in the market, and Fastrack decided to fill it, launching its branded handbags at a middle price level: Rs 695- 1,895 a pair. "We want to give young people a fashionable product of good quality that is yet affordable," says Kurien. While successful in its own right, the brand extension has also helped the cause of the mother brand, helping Fastrack gain more visibility and creating more distribution options. At present Fastrack watches sells only through the Titan retail outlets. The first decision to this extension towards accessories like belts, bags and wristband. The logic behind this extension is that the target market uses these products and all these categories are dominated by unbranded products. It is true that there are no national brands in these categories except for the bags where there are players like VIP and Samsonite or Nike or Puma for its style and design .in terms of price there was no brand in the market. But there is no brand targeting the youth even in the bag segment. Regarding the belts and wrist band, there are no known players. So the brand managers may have thought that Fastrack can tap these markets by leveraging its brand equity among the youth. The decision of the brand is to enter the retailing business. This is the most alarming part of the brand's latest moves. From a product brand to a retailing brand is not a wise decision at all. It was initially wondering why a brand should do a forward integration like entering retailing. For Fastrack, I think there are two reasons. The first reason is the brand's decision to diversify into accessories. Fastrack's accessories cannot be sold through opticians and watch showrooms. Hence the decision to retail venture is largely driven by the brand extension rather than marketing sense. Another minor reason is that exclusive retail stores acts as brand building tools since the brand will be able to showcase all the products and marketing tools at its stores.
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COMPANY BACKGROUND
Titan Industries a part of the TATA industries is the organization that brought about a paradigm shift in the Indian watch market when it introduced its futuristic quartz technology, complemented by international styling. With India's two most recognized and loved brands Titan and Tanishq to its credit, Titan Industries is the fifth largest integrated watch manufacturer in the world. The success story began in 1984 with a joint venture between the Tata Group and the Tamil Nadu Industrial Development Corporation. Presenting Titan quartz watches that sported an international look, Titan Industries transformed the Indian watch market. After Sonata, a value brand of functionally styled watches at affordable prices, Titan Industries reached out to the youth segment with Fastrack, its third brand, trendy and chic. The company has sold 100 million watches world over and manufactures 12 million watches every year. With a license for premium fashion watches of global brands, Titan Industries repeated its pioneering act and brought international brands into Indian market. Tommy Hilfiger, Hugo Boss and f c u k as well as the Swiss made watch – Xylys owe their presence in Indian market to Titan Industries. Entering the largely fragmented Indian jewellery market with no known brands in 1995, Titan Industries launched Tanishq, India‘s most trusted and fastest growing jewellery brand. Gold Plus, the later addition, focuses on the preferences of semi-urban and rural India. Completing the jewellery portfolio is Zoya, the latest retail chain in the luxury segment. Titan Industries has also made its foray into eyewear, launching Fastrack eyewear and sunglasses, as well as prescription eyewear and now also the introduction of bags , wallets and belts. The organization has leveraged its manufacturing competencies and branched into precision engineering products and machine building. With over 665 retail stores across a carpet area of over 8,10,072 sq. ft. Titan Industries has India‘s largest retail network. The company has over 311 exclusive ‗World of Titan' showrooms and over 650 after-sales-service centers. Titan Industries is also the largest jewellery retailer in India with over 120 Tanishq boutiques and Zoya stores, over 29 Gold Plus stores and over 150 Titan Eye+ stores. The company has two exclusive design studios for watches and jewellery. They have recently opened up the exclusive FASTRACK stores all over India and are aiming to open 50 stores by 2010. Backed by 4,934 employees, two exclusive design studios for watches and jewellery, 11 manufacturing units, and innumerable admirers‘ world over, Titan Industries continues to grow and sets new standards for innovation and quality. The organization is all geared to repeat the Titan and Tanishq success story with each new offering. Exclusive World of Titan and Fastrack showrooms and over 12,000 outlets in more than 2,554 cities in India make these much-sought-after watches available to the buyers. The watches are also offered internationally in 30 countries, with a special focus on the Middle East and Asia Pacific regions. The after-sales service, a benchmarked operation with a large network of exclusive service centers spread across the country, is one of the operation units with the fastest turnaround time in the world.
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COMPANY VISION & MISSION Our Vision:
―To be a world-class, innovative and progressive organisation and to build India‘s most desirable brands.‖ Our Mission:
―To create wealth for all our stakeholders by building highly successful businesses based on a customer-centric approach, and to contribute to the community.‖
COMPANY’S VALUE & STANDARDS Total customer orientation - Customers take precedence over all else, always. Employee appreciation - We value and respect Titanians and endeavour to fulfil their needs and aspirations. Performance culture and teamwork - At Titan Industries, high performance is but a way of life and is nurtured by teamwork. Creativity and Innovation - Driven by innovation and creativity, we focus on smarter approaches and newer technologies.
Passion for excellence - In all our pursuits, we ceaselessly strive for excellence. Corporate Citizenship - We ensure that a part of our resources is invested in environment and community betterment.
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INDUSTRY OVERVEIW
The fashion accessories market in India is largely dominated by unbranded players, therefore we see a huge market potential for branded players in this segment. Tarun Joshi, director, Crew BOS Products Limited, which has recently entered into fashion accessories retailing through its Crew Republican Retail stores, shares, ―Fashion accessories is a very high growth area as there are hardly any branded players present in this segment. And as the fashion awareness in India grows astronomically, the growth in accessories is a natural progression.‖ As per Joshi, a few years old report estimates the fashion accessories market at around Rs 10,000 crores. The growth rate is estimated at around 20-30 percent per annum. ―However, the actual market size would be much larger. In fact recent studies have projected that fashion accessories is destined to be a very high growth area in India,‖ added Joshi. India is world-renowned for exquisitely designed fashion accessories that are available in a variety of modern and traditional styles. Most models feature a distinct flavour that is unique to the country. The industry constitutes roughly 6,000 enterprises that benefit from a plentiful supply of raw materials sourced from numerous cities and states nationwide. This key advantage has propelled India to become a leading manufacturing hub for different types of fashion accessories. This report focuses on the main types of fashion accessories exported from India – jewellery, fashion bags, wallets, head and neckwear, and belts. Dilip Kapur, director, Hidesign India, the manufacturer and retailer of fashion accessories, largely leather handbags and wallets, said, "The handbag market stands at an approx 1000 crore and is growing at about 20 percent. We have seen a growth of about 23-28 percent.‖ Customers are evaluating their spending, more money get allocated to accessories as they are used more often and complete the look. Currently, fusion in its many variations is the biggest trend around and it will get bigger in future. As more people start to appreciate the value fashion brings to them, they are bound to mix and match the new with the comfortable. Also, television and social media make the latest in fashion available in an instant. The breakeven time in fashion accessories business can vary from brand to brand and the product offering. There are no fixed rules as it all depends on target customer, brand positioning, pricing and the planned marketing strategy. As organized retail expands to tier II and III cities, more people will become acclimatized to shopping in newer formats. As the tier II and tier III cities are showing high growth potential, more and more brands are moving towards these cities. According to industry experts, there is space for a lot more brands to enter in fashion accessories segment as the market is young and growing rapidly. Concluding at the end, Joshi summaries, ―We see Indian fashion accessories industry as one of the fastest growing segments in the fashion industry.‖ ―Branded accessories as a category is growing at 25 per cent annually. Given the limited range in the market place, we see large potential for accessories for the youth, which forms about 55 per cent of the country‘s population.‖ Mr Harish Bhatt, COO-Watches, Titan Industries 11
Fastrack|PAF
With the accessories market growing 15% - 18% year-on-year, and the branded segment in particular seeing a growth of more than 25%, there is an opportunity for Fastrack to expand its portfolio and thus are opening to areas like bags, eyewear and belts. Bags and purses constitute an important category of the fashion accessories industry. While most of the bags are made up of leather, several other fabrics like cotton, denim, and nylon are also used. India is among the top eight countries manufacturing and exporting bags and purses. Indian domestic market for bags, including handbags, college bags, office bags etc. was estimated at Rs 15 billion in value in 2008 which is growing at a scorching pace. The women‘s handbag sector has emerged as a biggest market with a strong 47% market share by volume and 40% by value. Market size by volume
8
40
27
women handbags college handbags office bags gym/sportsbags
25
Market size by value
8
40
27
women handbags college handbags office bags gym/sportsbags
25
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Fastrack|PAF
Bags, handbags and office bags in the premium range are usually purchased through organized sector retail outlets at high streets and malls but mid range price is from the unorganised sector and therefore fastrack wants to capture this gap where the brand value and quality can persist together. Although the presence of brands is certainly limited as 74% of the market is dominated by unbranded players, thus making it a style driven market. Leather bags are very popular with flashy shiny imported synthetic material. Several other fabrics like cotton, denim, and nylon are also popular among the bag buyers. Growing prosperity of middle class -With around 700 million people between 20-60 years of age, India is expected to constitute 53% of the total population by 2020. Indian corporate salaries have grown at 14% per annum, which is considered to be fastest globally. Also the salaries given to % have increased manifolds over the decade or so. In spite of the economic meltdown in recent times, there has been a continuous and sustained shift in consumer demand pattern from basic necessities to spending on lifestyle products and services continues, largely due to: Higher Income ,Younger age profile, Increasing literacy levels ,Increasing exposure and awareness levels ,Higher adaptability to technology, Increasing urbanization ,Changing role of women and children in the decision making process ,Increased demand for better shopping experience ,Impulsive purchase behaviour among youngsters ,Changing fashion trends and increased consciousness, Catch up with International fashion styles . The market share of bags in the accessory industry is very appealing .just after jewellery being the dominant leader it is the bags segment which has a high potential area for growth and as we study that most of the mid price range bags are all unorganised and there is no market leader so therefore it is a good opportunity of fastrack to capture tis section. 1.04
2.27
1.22
0.64
slippers
4.96
belts
8.84
umbrellas
5.29
handbags
29.02
scarves hosiery hats 30.18
jewellery 9.61
3.59
sunglasses small leathergoods
2.99
Branded accessories as a category is growing at 25 per cent annually. Given the limited range in the market place, we see large potential for accessories for the youth, which forms about 55 per cent of the country‘s population. 13
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After accessing the industry and the scope for growth, fastrack made an intelligent step of entering in to such a market. With their annual turnover rising and the company making profits they had the levitate and financial back up system and could use the product development strategy. Fastrack being an existing brand of watches which were affordable as well as fashionable wanted to expand into accessories under this brand .therefore they came up with a range of bags, wallets, sunglasses, wristbands and recently belts also. Growth opportunities included planning new business, downsizing which they did but terminating older business which fastrack did not do. There was a gap between future desired sales and projected sales and corporate management which needed to be developed to fulfil the business goal.
And therefore fastrack wanted to expand its product range and wanted move into new products of accessories. This is a new product to be marketed to our existing customers. Here they develop and innovate new product offerings. Such products are then marketed to the existing customers.
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BCG matrix The Boston Consulting Group (BCG) Matrix is a simple tool to assess a company‘s position in terms of its product range. It helps a company think about its products and services and make decisions about which it should keep, which it should let go and which it should invest in further.
Question Marks Question marks are products that grow rapidly and as a result consume large amounts of cash, but because they have low market shares they don‘t generate much cash. The result is large net cash consumption. A question mark has the potential to gain market share and become a star, and eventually a cash cow when the market growth slows. If it doesn‘t become a market leader it will become a dog when market growth declines. Question marks need to be analysed carefully to determine if they are worth the investment required to grow market share. Dogs Dogs have a low market share and a low growth rate and neither generates nor consumes a large amount of cash. However, dogs are cash traps because of the money tied up in a business that has little potential. Such businesses are candidates for divestiture. Stars Stars generate large sums of cash because of their strong relative market share, but also consume large amounts of cash because of their high growth rate. So the cash being spent and
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brought in approximately nets out. If a star can maintain its large market share it will become a cash cow when the market growth rate declines.
Cash Cows As leaders in a mature market, cash cows exhibit a return on assets that is greater than the market growth rate – so they generate more cash than they consume. These units should be ‗milked‘ extracting the profits and investing as little as possible. They provide the cash required to turn question marks into market leaders. Fastrack comes in the question mark area in the BCG matrix. Products in a growth market with low market share are categorized as Question Mark .Because of growth, these SBUs require a lot of cash to hold their market share and let alone to increase it. If nothing is done to increase the market share, a Question mark will simply absorb large amount of cash in the short run and later, as growth slow down, become a dog. Thus, unless something is done to change its perspective, it becomes a cash trap. Management has to decide which question marks should try to build into stars and which should be phased out. Some serious strategies and brain storming marketing is required for fastrack to obtain its market growth.
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Brand profile
Fastrack as a brand has always been restless like the youth it caters to. There was, is and always will be an urge to do something creative, innovative and ‗hatke.‘ Our watches, sunglasses, bags and accessories prove this fact. Fastrack, in its journey to being a fashion accessories brand has expanded its portfolio to now include not just watches and sunglasses but bags, belts, wallets and wristbands too. With this, it now has enough categories to open a fashion accessories store and that‘s just what they‘ve done! Watches: they are available in different collection. Every season they introduce watches for girls, boys and also a unisex collection to provide their customer with a wide range .they are in a price bracket of Rs.500-Rs3, 000.
Sunglasses: also available in a wide variety of range for girls and boys in different styles and colours .price bracket of Rs.1000-Rs.3, 500.
Bags:
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Designed by the in-house team, the new product categories include Bags: laptop bags, duffels, backpacks, totes, cross-bodies; Belts: Webbing belts, Leatherette belts, canvas belts; Wallets: Nylon and leatherette wallets and Wristbands designed as only Fastrack can. Backpacks never go out of fashion be it for girls or guys. Backpack bags and merchant sports style bags are the comfortable ones for college goers and teens who could sport a stylish look with the trendy bags. Fast track Core bags are for girls, made in nylon in colours of Beige, Red and Black are of price Rs.795. The core backpack bags for guys and girls are in colours of black, green and blue and the price range of these bags is between 1000 to 1500.
Fast Track drawstring bags for guys, who are available in colours of Black, blue & red, costs Rs.495. The drawstring backpack bag for girls in black & blue colours is of price, Rs.995
Fast track core bags for guys with multi-utility gym bag with removable shoulder strap & backpack option are available in the colours of teal, black and olive are in the price for Rs.1695. Gym satchel with removable shoulder strap for girls, available in colours of black, red and navy blue are of price Rs.1095. Fast Track duffle backpack made in canvas for guys are available in the colours of black and blue is of price Rs.1095.
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Fast Track Dispatch messenger with removable laptop sleeve, for guys of colours black and blue are of price, Rs.1395.
Fast Track Drawstring duffle with removable shoulder strap for both guys and girls, are available in brown and navy blue colours for Rs.1695. Fast Track Tote with removable laptop sleeve & shoulder strap for girls in colours of sky blue, brown and grey is of price Rs.1095. Fast Track Large drawstring tote for girls in colours olive green and black is available at the cost of Rs.1195.
Fast Track waist pouch for girls available in colours of black and dark brown are of price Rs.595.
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Store format and layout
The launch of our new categories along with the new exclusive Fastrack stores which is a significant step towards Fastrack becoming an iconic youth brand, perhaps the first Indian one. The brand inaugurated the first ever exclusive Fastrack Store in Pune and plans to open around 50 stores across the country by April 2010and they have been successful in opening 41 exclusive fastrack stores all over India . Staying true to the brands' focus on being where its consumers are, the new Fastrack stores are located in and around popular youth hang outstand that is the reason why the most number of stores they have are is in pune and Hyderabad and the metropolitan cities .in the fastrack stores they majorly have watches, belts bags and sunglasses in wide range is available. The brand has big plans as it has expanded its distribution network apart from selling through TITAN stores, it now retails through store-in-store models, watch retailers and other departmental stores. It has started their standalone retail shops of fastrack products at all the major cities and aim to reach 50 stores by this year end. This is one brand which has got its STP right. The TG is trendy, ambitious, thinks big and wants branded stuff which their friends recognize and fastrack priced it rightly with watches starting from 699/As a strategy, Titan plans to enter into categories and geographies that are not crimped by the slowdown and sees a bright spot in tier II and III cities. Even as retailers across the country categories are slowing planning their expansion, Titan Industries is going all out with its retail plans. Leveraging every product category by converting them into retail formats and therefore the exclusive fastrack stores. Not only this the fastrack accessories can also be found at the exclusive titan stores plus it also retails in the market.
The store format is very exclusive and boutique store layout with the dominance of the colours of black white and orange .following is the description of the store layout
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Philosophy
Revealing its new logo for the brand, along with a new range of Fast Track watches; the essence and philosophy of the repositioning being capturing today's fun loving, free spirited youth through the a tongue in cheek colloquial phrase – ‗move on’. Fastrack watches, truly reflecting the look and attitude of today‘s youth. This initiative consists of a fashionable & trendy product range, new affordable pricing, and fresh communication. Targeted at Generation Next, the brand captures the essence and philosophy of today‘s fun loving, free spirited youth through the new positioning encapsulated in a tongue in cheek colloquial phrase - ―How many you have‖? And ―move on‖ Fastrack is positioned as the ultimate fashion accessory for the youth – variety, multiplicity and constant excitement being the order of the day. The brand revealed a new logo signifying the spirit of bonding among today‘s youth. Bijou Kurien, Chief Operating Officer – Watches, Titan Industries Limited said, ―Today‘s youth lives in an instant gratification era.‖
They are ambitious, demanding more out of life – constantly seeking excitement in everything. This generation refuses to be bogged down by one thing for too long. Fastrack, lends itself to this variety seeking attitude of today‘s youth through a new product range that is innovatively styled, boldly designed and distinctly provocative.‖
Perception of the consumer
The target audience for this brand, in the 20-35 age groups include working adults and postgraduate students of both sexes in metros and mini metros. The Fast Track user, in terms of attitude is one who wears an informal dress, wears branded jeans, shirts, sunglasses and branded informal shoes. The Fast Track personality is that of a young, energetic, achievement oriented person, who seeks to express his or her individuality by braking freeform constraints of formal environment, without being a rebel. Built around the Cool concept. According to my primary research we found out that most of the respondents‘ associated fastrack as a cool, trendy, youthful, sporty and also called it value for money. The respondents being young with little disposable income they found fastrack as a pocket friendly plus states a fashion statement which the youth today follows very religiously. It was understood that the users of fastrack are quite satisfied with the brand image of fastrack and with its pricing strategies, but dissatisfied with the varieties. They would want that more emphasis should be given on the design, style and colours. Fastrack was known for its steely look, emphasising that it was sturdy and long-lasting. Fastrack being a part of the TATA and TITAN industries is very much associated with trust and good quality control. A person perceives it to be a value for money products and also with new innovations and collection is in the league of fashion statement and tries to be upbeat as well. 21
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23 40 cool value for money 22
fashionable 15
affordable
From our primary research , we found out that when we asked the respondents they have called fastrack as a cool , fashionable as well as affordable since disposable income is not very high .and yet they called it a value for money , since the brand is not highly priced the consumer is ready to but more products too. Perceptual mapping
High price nike
•
puma
•
FASTRACK
•
Low quality
High quality
Low price
We can see that in the bags category – Nike is the highest in high quality and price followed by puma and de fastrack which is same in quality but varies in the price bracket.
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Building the brand
Fastrack, the brand was re-launched a few years back targeting youth, has become a fashion accessory which boasts of being effortlessly cool. It‘s very difficult to create and maintain loyalty as loyalty in the targeted audience is a very different construct. The brand had to reinventing product or communication constantly. There was no reason for youth to come back to the brand. So, the challenge is much higher as compared to the older age groups. After the release of this brand they had captured a good share of market comprising of the school and college going boys and girls .but after few years they felt that there was a need to move into new dimensions of just owning watches and also getting more coverage of the market. Fastrack conducted research, where they shared products and communication and realised that their price points were really high for their target group. The youth had changed over a couple of years, and based on research, they wanted to create a new identity for this Target Group, which had playful irrelevance as the core of the brand. Based on this, new communication was created where they changed their logo as they said that if they needed to have a different identity, they needed to launch it as an independent identity separate from Titan the brand. The old identity was strongly linked to Titan.
With the research in hand, the marketers at the titan industries came up with a new logo and tag line which would standout the brand and create its own identity in the market . . Research had also shown that the fact that it had the backing of Titan was a positive assurance. However, kids didn‘t like to be serious and sober like their parents. We needed to break away, so we changed the logo to bring in a youthful, spontaneous, energetic and fun identity, but removed Titan from the upfront association in the logo. with titan having the logo of red and white which created a trust bond over the years and gave a sober look to the market and their tag line ‗be more’ it wanted it consumers to be more than just what they were .they were trying to promote titan has not just a watch company but a more class and feel for the watch they were wearing. Whereas the new and refreshing look of fastrack was young and trendy .it shouted out loud to its customers and that they were different and was an outcry and rebellious kind of an image it portrayed. ‗Move on’ is multiplicity from a different level and came from the fact that youth preferred to be uncommitted in these few years that we were targeting. The use of strong bold colours was showing off the company‘s track and far sightedness. Fastrack spoke the same language, hence ‗Move on‘ to keep trying new things.
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Like their tagline also changes with their logos as well as colour theme. The whole attitude of the brand was relaunched.
Be more
Move on
In an in-depth interview with Simeran Bhasin, Marketing Head, Fastrack & New Brands, she talked about the reasons why there was a relaunch of fastrack. The brand took off and did well and then started stagnating in 2001-2003, and that‘s when they decided to do a reality check. Titan had simultaneously launched the steel collection, which was an attempt to contemporise for a Titan audience. But what was happening was the collection in terms of looks, price point and consumer buying behaviour was very similar to Fastrack, including advertising. The parent brand needed to continue in their endeavour to keep it contemporary. They were simultaneously hearing in the market of the huge population of sub-25 and they said why don‘t we move and reposition Fastrack to a younger audience and create a reason for their offering in the youth brand. They went into a research, which lasted a little over two years, where they looked at a core audience of college-goers between 18 and 22 years and then extended audience of 15-25. They conducted research, where they shared products and communication and realised that their price points were really high for their Target Group (TG). They were targeting someone who gets pocket money, which is a nebulous term in India. Some get it, some don‘t. Some get it as maintenance money, while some don‘t get it, but get everything they want. Our average price, which was about Rs 1,700-Rs 1,800, was just too high for that TG. Also, the product they had was not cutting ice with the younger audience because they were now seeing the Esprits and Swatches of the world, which had come at a higher price point but were creating desire for a very different fashion look. Then there were Chinese models priced at sub-500 and very affordable.
They realised that there was a big gap between this sub-500 and Rs 3,000, which is where the fashion brands started. Those‘s where they decided to peg themselves, but were consciously kept 75 per cent of the collection at sub-1500 as no one was present there and it was big opportunity. They had to design watches that were funkier and keep it in line what the fashion brands were creating an aspiration for. They undertook a design overhaul and put in place a design exercise and got around 100 new designs. They decided to re-launch with this collection and drop all the old collections. They launched with new products, a new identity, new advertising and a new logo in June 2005. The year took off so well that they ran out of stock very quickly and they ended the year with a 150 per cent growth and the demand was growing continuously. Next year, they 24
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took another 100 per cent growth. Simultaneously, when Fastrack launched in its new avatar, we launched the first brand extension – eye gear. We signed up John Abraham as the brand ambassador and that too took off with the same price point and similar persona. They had discovered that sunglasses are a different ballgame as it‘s an upfront fashion accessory. Based on their research, they had got the response that people felt sunglasses were only for celebrities, rock stars and people in the fashion industry. and recently the fastback extended their range to bags , wallets , belts and wristbands and geared virat kholi and geneila d‘souza as brand ambassadors .the company felt that both the celebrities are a segment of youth have a rebellious side to themselves and have a different attitude which keeps them crowd apart . When they started the re-launch, Fastrack the brand was worth about Rs 29 crore and they have grown almost ten times of that over the last three years. I think the decisions they have taken have proved that we have been in the right direction. Brand attributes- there has been twin approach of constantly innovating on product design, yet being affordable, and to reach out to consumers in a language that connects. They launched with ‗how many you have’ , which is a grammatically incorrect statement spoken in a colloquial manner. It‘s not our typical fashion brand talking down saying you must look cool and you must look like me. With our advertising, they were able to relate to the youth in a setting they were familiar with. From playful irreverence they moved to playful disruption. The core remained effortlessly cool as they want to project to the consumer unpredictability, friendly flirtatiousness and disruption.
TATA INDUSTRIES LTD.
BLANKET FAMILY NAME
TITAN INDUSTRIES
SEPARATE FAMILY NAME
TITAN (THE BRAND )
INDIVIDUAL NAME
FASTRACK (NO LONGER A SUB BRAND )
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Marketing channel
Matching with the product positioning, fastrack adopted a distribution strategy based on a research conducted by titan who said that of the 8,000 odd retail watch and accessory outlets in the country. The majority of the existing outlets were perceived by the consumers as just stores, not as show rooms of titan. The company voted for the showroom idea and started franchising a network of trendy Titan Showrooms and plus the need of new exclusive fastrack showroom was generated to carve its identity out. They felt the need for such exclusive showrooms, where they can have control on the décor, the ambience, the selection of staff and the level of inventories. According to fastrack this will enable them to upgrade the quality of display of their accessories and also to expand the market for bags.
consumer retailer
manufactrer
in terms of this product, it is from the manufacturing plant that the good are manufactured and transported through roads and railways and are brought to the retailer i.e. to the exclusive showroom of fastrack and are stocked there .after reaching the stores a balance has been maintained in the inventory and they always keep much in stock .it is from here that the consumer can receive his /her product. It is a very simple cycle since they have their in-house design team and manufacturer there is not much of a problem in logistic as well as manufacturing .the point of error is very less since every step from manufacturing to reaching to the customer is much organised and systematic which is a plus point for them. the consumer marketing channel fastrack follows the 1-level channel where the product after manufacturing moves into retail stores and the end product to the consumer .it contains one selling intermediaries between them . The titan industries places considerable emphasis on the selection, cultivation and management of the electronics supply chain, fostering effective business partnerships rather than simply placing purchase orders. The extensive vendor base and supply chain management capability enables them to globally source a wide variety of materials and services, giving our customers a choice of procurement options tailored to their individual cost and quality requirements. As part of a larger supply base management function, supplier approval and development is an integrated process. Beginning with supplier sourcing, where potential suppliers are 26
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evaluated to ensure they meet business, technical and operational needs, supplier development and management program takes an end-to-end approach to supplier management. A comprehensive supplier qualification program provides basis for supplier listing as an approved vendor. This program evaluates potential suppliers in key areas such as organizational quality systems, process control and manufacturing. ew materials sourced from the company‘s existing approved supply base are subjected to a rigid materials qualification process that includes manufacturing and process stability validation. They add value to the new product design engineering team by sourcing new and appropriate components to support the new product introduction process. RAW MATERIALS (OUT SOURSED)
PRODUCTION HOUSE
RETAIL SHOPS
EXCLUSIVE STORES
CUSTOMER
The materials being outsourced which are checked under the quality control system, further sent to the production unit where the product is made from scratch and the finished good is produced with proper labelling and packaging. From here onwards the finished goods are sent to the exclusive showrooms of fastrack and are stocked for the consumers to purchase it. Marketing distribution channels play a big role in the marketing process, the marketing team has to decide to what extent they want to distribute the product and in what market segment they wan to place it. Packaging has the duel function of protecting the product and also of advertising the product, thus it is of great importance to use the right type of packaging. Market coverage decision
Intensive coverage Selective coverage Exclusive coverage
Intensive coverage- is where the manufacturer of a particular product requires that the product receives maximum market exposure in the specific geographic domain. Thus the manufacturer will try exposing it to as many as possible outlets to optimize sales. The products that are usually sold through intensive market coverage is inexpensive, often
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purchased and requires little shopping effort- thus it is also a convenience product. Fastrack uses this market coverage because since their target market is the youth with little disposable Channel integration and system
In the recent times, distribution channels don‘t stand still .new systems and channels have emerged which are as follows:
Conventional marketing system Vertical marketing system Corporate VMS Administered VMS Contractual VMS Horizontal marketing system Integrated multi-channel system
In the case of fastrack, the company an integrated multi channel marketing .this occurs when a firm uses two or more marketing channels to reach out one or more customer segments. it is one in which the strategies and tactic of selling through one channel reflects the strategy and tactics of selling through other channels .by adding more channels, the company can gain more important benefits like the increase in market coverage not only are customers able to shop from the exclusive store but from also other shops where a variety of different products are kept of the same product. Another advantage is the lower channel cost which is beneficial to the company .the third is more customised selling .the gains from adding new channels come at a price, however. New channels typically introduce conflict and problems with control. It may end up competing for the same customer. The new channel may be more independent and make cooperation more difficult.
Value added channel low
high low
Off price stores Market growth rate
boutique
Better department store
Mass merchandise
high
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Causes of channel conflict Goal incompatibility Unclear roles and rights Difference in perception Intermediaries‘ dependence on the manufacturer
Competitor’s analysis Through my research we found out that in term of design Nike would be a competitor for fastrack. Since the price bracket varies but Nike is the leader of the market followed by puma.
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nike
36
puma adidas unorganised 10 21
The above charts represent the market share of bags industry in India .Nike being the leader shares a very good 36% of the market followed by puma by 21% and then adidas by 10%.the rest of the share that is 33% of the market is unorganised and have a numerous small bag producers who are not branded. Fastrack is the only brand to launch merchandise in the unorganised which is a known brand. Nike
Company profile Nike, originally known as "Blue Ribbon Sports", was founded by University of Oregon track athlete Philip Knight and his coach Bill Bowerman in January 1964. The company initially 29
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operated as a distributor for Japanese shoe maker Onitsuka Tiger (now ASICS), making most sales at track meets out of Knight's automobile. The company's profits grew quickly, and in 1967, BRS opened its first retail store, located on Pico Boulevard in Santa Monica, California. By 1971, the relationship between BRS and Onitsuka Tiger was nearing an end. BRS prepared to launch its own line of footwear, which would bear the newly designed Swoosh by Carolyn Davidson. The Swoosh was first used by Nike in June 1971, and was registered with the U.S. Patent and Trademark Office on January 22, 1974. The first shoe sold to the public to carry this design was a soccer shoe named Nike, which was released in the summer of 1971. In February 1972, BRS introduced its first line of Nike shoes, with the name Nike derived from the Greek goddess of victory. In 1978, BRS, Inc. officially renamed itself to Nike, Inc... Beginning with Ilie Năstase, the first professional athlete to sign with BRS/Nike, the sponsorship of athletes became a key marketing tool for the rapidly growing company. The company's first self-designed product was based on Bowerman's "waffle" design. After the University of Oregon resurfaced the track at Hayward Field, Bowerman began experimenting with different potential outsoles that would grip the new urethane track more effectively. His efforts were rewarded one Sunday morning when he poured liquid urethane into his wife's waffle iron. Bowerman developed and refined the so-called 'waffle' sole which would evolve into the now-iconic Waffle Trainer in 1974. By 1980, Nike had reached a 50% market share in the U.S. athletic shoe market, and the company went public in December of that year. Its growth was due largely to 'word-of-foot' advertising (to quote a Nike print ad from the late 1970s), rather than television ads. Nike's first national television commercials ran in October 1982 during the broadcast of the New York Marathon. The ads were created by Portland-based advertising agency Wieden+Kennedy, which had formed several months earlier in April 1982. Together, Nike and Wieden+Kennedy have created many print and television advertisements and the agency continues to be Nike's primary today. It was agency co-founder Dan Wieden who coined the now-famous slogan "Just Do It" for a 1988 Nike ad campaign, which was chosen by Advertising Age as one of the top five ad slogans of the 20th century, and the campaign has been enshrined in theSmithsonian Institution. San Franciscan Walt Stack was featured in Nike's first "Just Do It" advertisement that debuted on July 1, 1988. Wieden credits the inspiration for the slogan to "Let‘s do it", the last words spoken by Gary Gilmore before he was executed. Throughout the 1980s, Nike expanded its product line to include many other sports and regions throughout the world.
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As of November 2008, Nike, Inc. owns four key subsidiaries: Cole Haan, Hurley International, Converse Inc. and Umbro. Nike's first acquisition was the upscale footwear company Cole Haan in 1988. In February 2002, Nike bought surf apparel company Hurley International from founder Bob Hurley. In July 2003, Nike paid US$305 million to acquire Converse Inc., makers of the iconic Chuck Taylor All Stars. On March 3, 2008, Nike acquired sports apparel supplier Umbro, known as the manufacturers of the England national football team's kit, in a deal said to be worth £285 million (aboutUS$600 million).Other subsidiaries previously owned and subsequently sold by Nike include Bauer Hockey and Starter. Product Nike produces a wide range of sports equipment. Their first products were track running shoes. They currently also make shoes, jerseys, shorts, baselayersetc. for a wide range of sports including track and field, baseball, ice hockey, tennis, association football (soccer), lacrosse, basketball and cricket. Nike Air Max is a line of shoes first released by Nike, Inc. in 1987. The most recent additions to their line are the Nike 6.0, Nike NYX , and Nike SB shoes, designed for skateboarding. Nike has recently introduced cricket
shoes, called Air Zoom Yorker , designed to be 30% lighter than their competitors'. In 2008, Nike introduced the Air Jordan XX3, a high-performance basketball shoe designed with the environment in mind. Nike sells an assortment of products, including shoes and apparel for sports activities like association football, basketball, running, combat sports, tennis, American football, athletics, golf and cross training for men, women, and children. Nike also sells shoes for outdoor activities such as tennis, golf, skateboarding, association football, baseball, American football, cycling, volleyball, wrestling, cheerleading, aquatic activities, auto racing and other athletic and recreational uses. Nike is well known and popular in youth culture, chap culture and hip hop culture as they supply urban fashion clothing. Nike recently teamed up with Apple Inc. to produce the Nike+ product which monitors a runner's performance via a radio device in the shoe which links to the iPod nano. While the product generates useful statistics, it has been criticized by researchers who were able to identify users' RFID devices from 60 feet (18 m) away using small, concealable intelligence motes in a wireless sensor network. The 2010 Nike Pro Combat jersey collection will be worn by Miami, Alabama, Boise State, Florida, Ohio State, Oregon State, TCU, Virginia Tech, West Virginia, and Pittsburgh. Teams will wear these jerseys in key match ups as well as any time the athletic department deems necessary. Headquarters
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Nike's world headquarters are surrounded by the city of Beaverton, but are within unincorporated Washington County. The city attempted to forcibly annex Nike's headquarters, which led to a lawsuit by Nike, and lobbying by the company that ultimately ended in Oregon Senate Bill 887 of 2005. Under that bill's terms, Beaverton is specifically barred from forcibly annexing the land that Nike and Columbia Sportswear occupy in unincorporated Washington County for 35 years, while Electro Scientific Industries and Tektronix get that same protection for 30 years. Nike has contracted with more than 700 shops around the world and has offices located in 45 countries outside the United States. Most of the factories are located in Asia, including Indonesia, China, Taiwan, India, Thailand, Vietnam, Pakistan, Philippines, and Malaysia. Nike is hesitant to disclose information about the contract companies it works with. However, due to harsh criticism from some organizations like CorpWatch, Nike has disclosed information about its contract factories in its Corporate Governance Report. Promotion
In 1982, Nike aired its first national television ads, created by newly formed ad agency Wieden+Kennedy, during the New York Marathon. This was the beginning of a successful partnership between Nike and W+K that remains intact today. The Cannes Advertising Festival has named Nike its Advertiser of the Year on two separate occasions, the first and only company to receive that honour twice (1994, 2003). Nike discontinued airing ads featuring "Revolution" in March 1988. Yoko Ono later gave permission to Nike to use John Lennon's "Instant Karma" in another advertisement.
Sponsorship
Nike pays top athletes in many different sports to use their product and promote/advertise their technology and design. Nike's first professional athlete endorser was Romanian tennis player Ilie Năstase, and the company's first track endorser was distance running legend Steve Prefontaine. Prefontaine was the prized pupil of the company's co-founder Bill Bowerman while he coached at the University of Oregon. Today, the Steve Prefontaine Building is named in his honour at Nike's corporate headquarters. Besides Prefontaine, Nike has sponsored many other successful track & field athletes over the years such as Carl Lewis, Jackie Joyner-Kersee andSebastian Coe. However, it was the signing of basketball player Michael Jordan in 1984, with his subsequent promotion of Nike over the course of his storied career with Spike Lee as Mars Blackmon, which proved to be one of the biggest boosts to Nike's publicity and sales.
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Rafael Nadal is currently sponsored by Nike, Inc. (Note the swoosh under the player's head) Nike is the official kit sponsor for the Indian cricket team for 5 years, from 2006 till end of 2010. Nike beat Adidas and Puma by bidding highest (US$43 Million total). Nike sponsors some of the leading clubs in world football, including the national teams of India, France, Brazil, Portugal, the Netherlands, the United States, andMalaysia.Nike sponsors several of the world's top golf players, including Tiger Woods, Trevor Immelman and Paul Casey. Nike also sponsors various minor events including Hoop It Up (high school basketball) and The Golden West Invitational (high school track and field). Nike uses web sites as a promotional tool to cover these events. Nike also has several websites for individual sports, including nikebasketball.com, nikefootball.com, and nikerunning.com. Through is active website and fan pages on social network websites it has managed to keep the its costumer intact. Price
The Nike merchandise can cost from Rs.300-Rs.12, 000. Between this price brackets all merchandise from sock , clothes , bags, accessory , shoes , sports equipments all come under this prices .
SWOT ANALYSIS – fastrack Strengths
Goodwill in the market – being associated with the TATA industries and the titan industry , the brand had created a goodwill and also a trust among the people on its products . Strong financial position – having a strong financial backup from titan industries , it has helped the brand to enter into new markets and experiment also as they could afford to . New entrant - It is the only Indian brand to enter the bag market with mid price range products , as it is an unorganised market and there is no other brand to challenge in this price bracket
Weakness
Less no. of exclusive stores – the fastrack stores all over India are very few. Like in Delhi there is only one stores . They should have open more exclusive stores so that there is more brand visibility. Limited collection - their bag range has new collection only once a year . They have running models of the bags . With product development they should come with new collection which would give the customer more variety to choose from . 33
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Unorganised market – the accessory industry in India is an unorganised market . This would give the small vendors to make fakes of the brand and sell it which would be like promoting duplication .
Opportunities
Focus on product development – something like bags can be renewed every month . So the brand has great opportunities to focus more on product development , as currently they have one range which is like the running collection all the year along . Increase use of CAD to develop designing capabilities – with the use of CAD (the use of computer technology for the process of design and design-documentation. It is a software, or environments, provides the user with input-tools for the purpose of streamlining design processes; drafting, documentation, and manufacturing processes. It output is often in the form of electronic files for print or machining operations.) Investing in trend forecasting to enable the growth of the brand – since the brand is very youth oriented , the company definitely has great scope to use global fashion and incorporate in their design philosophy .
Threats
Competition in the domestic market – as there is already a competition in the market with big brands , it becomes difficult for the brand to grow or sustain in the market. New entrants – since the mid range prices of bags is a unorganised market , there could be an entry of a challenger which could become a restrain in the sales and growth in the market . Tackle the Chinese invention into the market – since Chinese products available in the market at a lower price range it could impose a threat to the company .
The Five Forces Model
Threats from Potential entrants Suppliers
Competitive
Buyers
Bargaining power
Rivalry
Bargaining power
Threats from Substitutes Porter explains that there are five forces inherent in a market, which wills jointly determine the intensity of competition and profitability of fastrack and the accessory industry. The first 34
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is the threat posed by new entrants, since it is an unorganized market there could be a threat of new entrants who would want to work on the same basis as fastrack probably lower the price range or come up as a competitor and also since the high capital expenditure and confidence of customers represent significant barriers to entry and the market is also sensitive to reputation. However, the emergent of low cost manufactures or better design philosophy do pose a significant threat (as illustrated by figure2). There is an opportunity in the low price/ low economy (fast) sector. May be samonite or VIP could consider introducing a low cost bag range as they are already luggage making section. The second is the threats from substitutes, as there are many make and model of other premium branded bags like puma , Nike , nun , baggit. The third force is the threats from the bargaining power of buyers, is this strong for both fastrack and the accessory industry with a large number of alternative suppliers, hence, the aggressive pricing strategy. This results in a very strong competitive rivalry in the industry. This is intensified as a result of little or no differentiation in the basic product offered. Finally the threats from the suppliers bargaining power, this is fairly high in the accessory industry, due to dual sourcing strategies, using arrange of alternative sources of supply . The five forces analysis gives an improved understanding of the degree of competition within the business environment. The analysis how‘s that the accessory industry is highly competitive, with buyers possessing and exerting a very powerful influence to the large number of substitute brands available to them.
Marketing strategy
Marketing strategy Market share Sub strategy
Nike Leader (new user , new usage ) Counter offensive defence
Puma challenger
Fastrack Follower
Frontal attack , flank attack
Adapter
Since fastrack has adopted a follower‘s strategy i.e. , a strategy of a company which does not directly challenge the market leaders, but attempts to benefit from their innovations and gain a profitable corner of the market. Many companies prefer to follow rather than challenge the market leader .patterns of ‗conscious parallelism are common in the capital intensive , homogenous – product industry .the opportunities for product differentiation and image differentiation are low , service quality is often comparable and price sensitivity runs high .the mood in this industry is against short run grabs for market share because that strategy only provokes retaliation each followers tries to bring some distinctive advantages to its target market – location , services , financing .because the follower is often a major target of attack by the challengers , it must keep manufacturing cost low and its product quality and services high .it must also enter new markets as they open up .under the follower also strategy are divided which are as follows :_ 35
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Counterfeiter Cloner Imitator Adapter
Fastrack under this follows the adapter follower‘s strategy. The adapter takes the leader‘s products and adapts them or improves them .the adapter may choose to sell to different markets , but often it grows into the future challenger . Nike follows the leader in the market and they try to get you new users for their products which would get them high sales and new usages for their products too for the same .being the leader they have to defence their brand in all categories . Like the Counter-Offensive Defense -Responding to competitors‘ head-on attack by identifying the attacker‘s weakness and then launch a counter attack . It is most often done through advertisements‘ of launching new products. Puma being a challenger in the Indian market, they follow the frontal attack strategy that is a direct head-on confrontation .and also the flank attack strategy i.e. they attack the enemy at its weak points or blind spots i.e. its flanks .Ideal for challenger who does not have sufficient resources. Generic strategy
A competitive advantage is an advantage over competitors gained by offering consumers greater value, either by means of lower prices or by providing greater benefits and service that justifies higher prices Following on from his work analysing the competitive forces in an industry, Michael Porter suggested four "generic" business strategies that could be adopted in order to gain competitive advantage. The four strategies relate to the extent to which the scope of businesses' activities are narrow versus broad and the extent to which a business seeks to differentiate its products. Companies can achieve competitive advantages essentially by differentiating their products and services from those of competitors and through low costs. Firms can target their products by a broad target, thereby covering most of the marketplace, or they can focus on a narrow target in the market. According to Porter, there are three generic strategies that a company can undertake to attain competitive advantage: cost leadership, differentiation, and focus.
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Cost leadership
This strategy involves the organisation aiming to be the lowest cost producer within their industry. The organisation aims to drive cost down through all the elements of the production of the product from sourcing, to labour costs. The cost leader usually aims at a broad market, so sufficient sales can cover costs some organisation may aim to drive costs down but will not pass on these cost savings to their customers aiming for increased profits clearly because their brand can command a premium rate. Fastrack is the only brand in the lower price bracket in comparison to its competitors. They being the first branded bags launcher in an unorganised market, they have aimed to keep themselves as a youth brand which can be purchased. Even though they have a very high advertising cost they still do not pass on the cost savings to their customer aiming for increased profits because their brand can command a premium rate in the future. PROMOTIONAL MIX
It‘s very difficult to create and maintain loyalty as loyalty in fastrack target audience is a very different construct. There is absolutely no reason for them to come back to Fastrack tomorrow if they have bought a watch or accessory today, and if something else has caught their fancy. There is so much of pressure on that pocket money – be it tech product or fashion accessory – as the market is flooded with those. Unless each brand is reinventing product or communication constantly, there is no reason for youth to come back to the brand. Fastrack uses many other ways to promote itself in many other ways.
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advertiisng interactive marketing
direct marketing
sales promotion
marketing communication channel
word of mouth
events and experiences
public relation personal selling
Advertising
Print media: The print media have always been a popular advertising medium.
Fastrack keep giving its advertisements in lifestyle or youth magazines and sometimes when they have a new collection or some special offers they also put it up on newspapers. Outdoor advertising: Outdoor advertising is also a very popular form of advertising, which makes use of several tools and techniques to attract the customers outdoors. The most common examples of outdoor advertising are billboards, kiosks, and also several events and tradeshows organized by the company. The billboard advertising is very popular however has to be really terse and catchy in order to grab the attention of the passers by. And the fastrack billboards can be found put up all over Delhi especially at places like the north campus university area on the main road which the company knows that it is a youth centric area and since that is their target segment it puts up there. the brand also does trade shows during the festival area which a key rule to their promotional strategy through which hey engage the youth and make them aware of the brand. Broadcast advertising: Broadcast advertising is a very popular advertising medium that constitutes of several branches like television, radio or the Internet. Television advertisements have been very popular ever since they have been introduced. introduced. Fastrack, the accessory and wrist gear brand from Titan, is unfolding its digital marketing strategy spanning the Internet and mobile. The company has chalked out a multipronged strategy, including the launch of an interactive website, the use of communities on social media sites like Rout and Face book, search marketing, viral videos and mobile campaigns to generate buzz about the brand. Fastrack did not have an official website earlier, but has made live a new website, www.fastrack.in, which 38
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it will launch officially in January 2008. The site represents a virtual college campus. Apart from product information, the site enables visitors to participate in various contests and polls. It will feature user generated content (UGC) in the form of blogs, to write which visitors have to register themselves. The objective (of the site) is to establish a dialogue with the young audience and there are plans to roll out UGC based contests in the near future. Other than the website, Fastrack has also ventured into social media, where it is trying to engage with the youth. Two communities called Bikers on the Fastrack and Life on the Fastrack have been created on Face book. Both groups feature Fastrack products and showcase its latest Bikers Don‘t Cry TVC, apart from discussions among its members. members.Blogworks, the consultancy which handles the social media responsibilities of Fastrack, has developed its brand page on Facebook. The company is supporting Fastrack related communities such as Fastrack Rocks on Orkut by sharing pictures and content with the members. This is all part of digital marketing. Celebrity advertising: The latest ad featuring Genelia D Souza and Virat Kohli, in the lift and in airport showcases the wacky nature of youth. They have been appointed as the brand ambassadors of fastrack bags and sunglasses.
Public relation
Through different mediums of publicity fastrack has found a way through which they are in constant touch with their consumers as well as potential consumers. Fastrack which has achieved a perfect between STP and therefore they have maintained a balance.
Titan’s Fastrack launches PR 2.0 campaign Fastrack has launched a new line of new biker accessories including its Bikers range of eye gear, and the ‗no hands‘ Neon disc range of watches and rugged bags. Apart from the ad campaign on TV featuring John Abraham, they have embarked on leveraging the social media, making Fastrack one of the few companies in India to take the lead on embracing PR 2.0.
Fastrack has come out with the Fastrack social media news room for bloggers. They are using the newsroom to share information and news on Fastrack. It also features social media press releases (Bikers and Neon Disk), Flicker streams of Fastrack gears, social bookmarking buttons, videos, media coverage, product and company information, spokesperson profile, RSS feeds, and more. For the consumers, Fastrack has launched two Facebook groups called Life on Fastrack and Bikers on the Fastrack, which have 121 and 71 members already, as on yesterday. The groups have attracted so many people in such a short time. Fastrack main site – not the usual corporate stiffness but an attractive and very consumeroriented featuring contests, fun stuff, opinion polls among others. They plan to follow up with a Twitter part as well.
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It‘s good to see corporate in India waking up to the new web 2.0 oriented media space of today, otherwise many corporate outside the IT vertical usually do not have a clue about the whole peer-to-peer thingy or have some vague misconception about it. Fastrack has taken a lead on this front with this and it will be interesting to see how much benefit they are able to derive out of it.
Corporate globally have been using the social media, read these corporate blogging case studies, to benefit for their businesses. There have been small organisations that have used the social media as a cost-effective way of competing their rivals with huge marketing communication budgets. In India, only a few seem to have gone on this route. Fastrack‘s initiative is a good start that will encourage others to follow. It also works as gift promotions. Though titan sees watches as a gift promotion tool and provides its customer as a gift purposes .whereas fastrack using a tag line ‗how many do have?‘ showcases that‘s since the students who are low on income but want to be in league with the fashion, fastrack is an affordable fashion accessory brand for fastrack target market. It has launched MyExBox, an online campaign where users can post videos that communicate. The month long online campaign is based on the Fastrack‘s theme ‗Move On‘ and encourages users to vent the reasons why they had to dump someone or something and move on. According to the company, the most viewed video of the week wins Fastrack Merchandise and also a chance to get featured in a Fastrack TV commercial. This makes the campaign go viral as users share the videos with their friends to get more views. Sales promotion
Sponsorship – this this a great tool used by the company in order to create a buzz about the brand. They would help in sponsorship to the students during the festival time where they have their target audience and can promote their brand at a great height .by sponsoring it shows the customer the trust that the brand can levy upon it. Promotion through contest – they have an on going contest on facebook ―the most fashionable profile picture‖ and who ever wins it get free fastrack merchandise .this has been a hot pick among the youth this summer .also during college fest they have contest and games in which they distribute the merchandise as gifts. Push strategy- Fastrack has now pushed past the horizons into newer areas - bags, belts, wallets & wrist bands - as part of its mission to offer the youth everything they need to be cool! Now serving up its vision in six different flavours, enough to fully packed store, fastrack has chosen to 'move on' and throw open the doors of its own stores for its young consumers. The brand store is all set to cater to every need of today's youth as a complete accessories destination having all fastrack gear under one roof. The brand is using different mediums and is pushing through the consumer through social mediums where the youth has the most presence. Communication by the manufacturer is not only directed towards consumers to create demand. A push strategy is where the manufacturer concentrates some of their marketing effort on promoting their product to retailers to convince them to stock the product. A combination of promotional mix strategies are used at this stage aimed at the retailer including personal selling, and direct mail. The product is pushed onto the retailer, hence the name.
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Fastrack uses the pull startegy as its products are available in local retails shops as well as the exculsive showroom of fastrack and world of titan too .
Word of mouth marketing – since the brand is so youth oriented that person to person marketing really helps .they have online chat rooms and blogs which are constantly updating about the brand. The customers are also able to give their feedbacks through this medium.
Communication Model – AIDA
AIDA is a communication model which can be used by firms to aid them in selling their product or services. AIDA is an Acronym for Attention, Interest, Desire, and Action. When a product is launched the first goal is to grab attention and that is what fastrack did by introducing a mid price range of watches for the youth which were affordable as well as created a fashion statement for the youngsters. Once we grab attention we held Interest, through promoting by getting virat kholi and genelia d‘souza as brand ambassadors and coming up with new ranges every half yearly. The third stage is desire, to make the product desirable to the consumer which was done by introducing new accessories by the brand like it introduced bags belts wristbands and sunglasses at the nominal price range .The final stage is the purchase action, and the company has been successful with its strategy and the target customer has purchase the product. Promotion through the Product life cycle. –
As products move through the four stages of the product lifecycle different promotional strategies are employed at these stages to ensure the healthy success and life of the product .Stages and promotion strategies employed. Introduction
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When a product is new the organisations objective will be to inform the target audience of its entry. Television, radio, magazine, coupons etc may be used to push the product through the introduction stage of the lifecycle. Push and Pull Strategies will be used at this crucial stage. Growth
As the product becomes accepted by the target market the organisation at this stage of the lifecycle the organisation works on the strategy of further increasing brand awareness to encourage loyalty. Maturity
At this stage with increased competition the organisation take persuasive tactics to encourage the consumers to purchase their product over their rivals. Any differential advantage will be clearly communicated to the target audience to inform of their benefit over their competitors. Decline
As the product reaches the decline stage the organisation will use the strategy of reminding people of the product to slow the inevitable
Right now fastrack is in its growth stage, where it is in an experimental as well as innovative stage where it is trying to come up with new products and developing the existing ones as well. The brand has been extensively advertising through different mediums and trying to create brand loyalty to come extend.
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Segmentation, targeting and positioning Segmentation
ATTRIBUTES OF EFFECTIVE SEGMENTATION
Identifiable- low class, middle class, high class and niche segment. Accessible- supply chain management and promotional mix Sizeable- metropolitan cities and tier two and three tier cities. Profitable- highly profitable Unique needs- fashionable , youth oriented Durable- long term, medium term and short term.
BASIS OF SEGMENTATION
1. Geographic
Region: Continent- Asia Country- India Size/ population- India- 13,782,976
2. Demographic
Age- 15-25 , 25-30 , 30 above Gender- Male & Female Income- 10000-20000 , 20000-30000 , 30,000 above Occupation- students , young executives , post- graduate students , journalist , sports athletes
3. Psychographic
activities- basketball , swimming , dancing , acting , gymming , gaming Interest- socializing, reading, painting, travelling , adventure sports , theatre, cars/bikes , gadgets , music Opinions- intellectual , reasoning talk , opinionated Personality- ambitious
4. Behavioural
Benefit sought- quality, looks/style, durability Usage rate- heavy, moderate, light 43
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User status- regular, potential, first time user, irregular, occasional Brand loyalty- split loyal, shifting, switches Readiness to buy-aware , neutral Occasion- birthdays, anniversary, festivals, gifting Attitude towards offering- enthusiastic, positive, negative, zealous
TARGETING Niche/concentration marketing strategy of targeting is adopted as fastrack is targeting different segments of the market with one product i.e. bags
Geographic
Continent-Asia Country- India Region- DELHI
Demographic
Age- 15-25, 25-30, 30 & above Gender- male and female Income- 15,000 & above Occupation-students , post graduate students , young professionals , sportspersons
Psychographic
activities- basketball , swimming , dancing , acting , gymming , gaming Interest- socializing, reading, painting, travelling , adventure sports , theatre, cars/bikes , gadgets , music Opinions- intellectual, opinionated
Behavioural
Benefit sought- quality, looks/style, service, Usage rate- medium 44
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User status- first time , ex – user, potential user , regular user Brand loyalty- split loyal, shifting loyal, switchers Readiness to buy-light user Occasion-0ccasional, gifting Attitude towards offering- enthusiastic, positive, zealous, ambitious
POSITIONING POSITIONING
Economy Product centric Product user approach
Fastrack bags will be positioned as the fashion for the youth class with the tagline ―move on‖. The customers will be able to associate the fastrack as a cool, trendy, affordable fashionable accessory.
Fastrack Customer Profile
Fastrack undertakes research into its customers' profiles looking at demographic criteria, such as age and sex, lifestyle, their views on motoring and the way in which they use their fastrack merchandise. The information is used across all areas of the business, from the design and development of the merchandise, to the way fastrack advertises its brands. One thing all fastrack customers have in common is that they like this brand for its affordable fashion. With fastrack having a huge range of sunglasses, watches belts, wristbands, the customer likes the innovation fastrack is trying to get in its product range. Customers who have brought the duffle bags and waist pouch show their interest in sports activities, travelling and adventure sports .the use of the sling and messenger bags by the students show the style statement they want to portray. Val‘s 2
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Fastrack consumer come in the following categories:Strivers: These consumers are the low-resource group of those who are motivated by achievements. They have values very similar to achievers but have fewer economic, social, and psychological resources. Style is extremely important to them as they strive to emulate people they admire. Experience: These consumers are the high-resource group of those who are motivated by self-expression. They are the youngest of all the segments, with a median age of 25. They have a lot of energy, which they pour to physical exercise and social activities. They are avid consumers, spending heavily on clothing, fast-foods, music, and other youthful favourites, with particular emphasis on new products and services.
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Customer relation management CRM is the development and maintenance of mutually beneficial long term relationship with strategically significant customer. it is an IT enhanced value process , which identifies , develops , integrate and focuses the various competencies of the firm to the voices of the customer in order to deliver long term superior customer value at a profit to well identified existing and potential customer .it is a business philosophy based upon individual customers and customised products and services supported by open lines of communication and feedback from participating firms that mutually benefits both buying and selling organisation. CRM is an idea that has began to assume growing significance in today‘s corporate Environment, as it is a vital element in customer satisfaction. As product Differentiation decreases (and such is definitely the case in the watch industry) Companies will have to increasingly use CRM as a means of differentiating Themselves from the competition. It is here that Titan has made headway, perhaps More so than any other Indian company. Apart from the run of the mill customer Databases and direct marketing techniques that most companies employ, Determinants of CRM:Trust -The willingness to rely on the ability, integrity, and motivation of one company to serve the needs of the other company as agreed upon implicitly and explicitly. Value - The ability of a selling organisation to satisfy the needs of the customer at a comparatively lower cost or higher benefit than that offered by competitors and measured in monetary, temporal, functional and psychological terms.
In addition to trust and value, salespeople must :
Understand customer needs and problems; Meet their commitments; Provide superior after sales support; Make sure that the customer is always told the truth (must be honest); and Have a passionate interest in establishing and retaining a long-term relationship (e.g., have long-term perspective).
Stages in the development of a Customer Relationship
The Pre-relationship Stage
The event that triggers a buyer to seek a new business partner.
The Early Stage
Experience is accumulated between the buyer and seller although a great degree of uncertainty and distance exists.
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The Development Stage
Increased levels of transactions lead to a higher degree of commitment and the distance is reduced to a social exchange.
The Long-term Stage
Characterised by the companies‘ mutual importance to each other.
The Final Stage
The interaction between the companies becomes institutionalized.
Stages in the Development of a Key-Account Relationship High
Synergistic KAM
Partnership Degree of involvement
Mid-KAM Early-KAM
Low
Pre-KAM Transactional
Collaborative Nature of customer relationship (Millman and Wilson, 1995)
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Models of Customer Relationship Management The Evans and Luskin (1994) model for effective Relationship Marketing
Relationship marketing inputs Understanding customer expectations Building service partnerships Empowering employees Total quality management •
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•
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Relationship marketing outcomes Customer Satisfaction Customer loyalty Quality products Increased profitability •
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•
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Assessment state Customer feedback Integration •
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(Evans and Luskin, 1994)
Relationship marketing inputs- the sales person as well as the marketers should try to understand that what is the expectation of the consumer in terms of the product , variety , service , the store environment , the sales person knowledge about the product his behaviour of treating the customers should be kept in mind while formulating the customer relation strategy .the brand should also try to empower its employees which would give them the motivation to sell the products more and increase the sales . The management should take some steps about to increase and maintain a high quality of management which is plus point on the company. Select an appropriate offering ; Customise the relationship; Link the solutions with the customer‘s needs; Discuss customer concerns; Summarize the solution to confirm benefits; and Secure commitment.
Relationship marketing outcomes – as from the inputs from the front end of the stores they try to understand the customer satisfaction level, and what is the type of customer loyalty their consumers are following and on that basis they try to strategise their products and promotional activities as how to retain their loyal customer and get more potential clients and make them loyal customer. In their work they also find that how they should improve the quality of the products which will help in increased profitability of the brand. Assess customer satisfaction; Take action to ensure satisfaction; Maintain open, two-way communication; and Work to add value and enhance mutual opportunities. Assessment stage – through feedback from the management can evaluate itself and improve on their customer relationship management. They follow a service philosophy: The 3 R‘s 49
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Repair the hurt feeling of the customer
Repair the product
Repair the damage to Titan‘s reputation
Customer care service
Spread across India, with 786 service contact points across 343 towns, Titan Industries‘ service centre network is committed to deliver a satisfying post-sales experience to all the customers.
The Care Centres are attached to the World of Titan and Authorised Service Centers are attached to the ‗Multi- brand outlets‘, both offer quick and high-quality repairs for all types of products currently sold by Titan with a six-month service guarantee. At the Titan Care Centres, all repair activities follow a strict and systematic process that is controlled and measured through an ISO audit system. To ensure good quality, faster turnaround time and customer satisfaction, Titan Industries has various schemes in place. A post service follow-up (for major repair activity) is mandatory to complete the cycle of customer satisfaction. Titan's loyalty Signet program - where customers can redeem their points – is part of Titan‘s effort to retain and value its loyal customers. Titan Customer Service also markets spares and accessories, such as batteries, leather and metal bracelets to all outlets that sell Titan, Sonata and Fastrack watches. Staffs actively encourage customers to use only original spares in order to ensure quality and satisfaction. Titan Customer Service, with the ISO 9001 & 14001 certification, focuses on the best postsale experience and complete customer contentment. Watch Care Centre-New look In keeping with the new retailing format, Service too has explored new formats for the WCC's.The first format experimented was at Rajahmundry. The response has been overwhelming, from both the customers as well as the franchisee.
Services offerings
Stand by watch.
Home delivery.
Extended maintenance guarantee.
Wide range of bracelets collection.
Signet Redemption & New Enrolment.
Repair status – for their customer relief, the company has developed a systematic method on their customer care website. they have made provision for the knowing at what repair status their product i.e. if a customer has given a product for repair, he will be given a customer reference id no. and for the customer to know the repair status he would just have to type the id no. on its website and an automated message would be generated telling the repair status of the product.
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Feedback service – It is another feature on their website where their customers can write back their complains or comments on the after sales services by the company which further helps the company to work on their customer relation management. Product care info – the company also features a segment on their websites where they have the Do‘s and Don‘ts and tips given on the website for their various products .this further helps the consumer to know how and in what ways they can take precautions for a higher level of sustainability of their products. Online stylist – on the fastrack facebook page , they have a unique feature in which by answering some questions , it will generate on the basis of our answer which sunglasses we should buy which is a great way to make the customer choose from a wide variety . Future recommendations:
They should develop a loyalty program for their customers who would help them to evaluate their brand as well as give some kind special offer to their loyal consumers. Create a club membership program Create frequency programs- providing rewards to customers who buy frequently and in substantial amounts.
Corporate social responsibility
Titan Industries has a clearly defined policy for Corporate Social Responsibility (CSR). As part of the company‘s CSR initiative, the manufacturing units of Watch, Jewellery and accessory Divisions at Hosur have acquired the certifications ‗ISO 9001: 2000 Quality Management System Standards‘ and ‗ISO 14001:2000 Environment System standard‘ emphasising the efforts to be an ecologically responsible organisation. The company‘s diverse CSR initiatives include:
Children‘s education
Enabling the disabled
Artisan parks
Women‘s empowerment
Environment management programmes
Miscellaneous community initiatives
Titan Industries‘ community initiatives are committed to build partnership for social development, focus on sustainable initiatives and improve the quality of life of the communities where the initiatives operate. With a dedicated force of 250 enthusiastic 51
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employee volunteers, the company has formed a Community Development Forum . This forum works towards mobilising society and volunteers to make the community initiatives a success. The company‘s miscellaneous community development activities include orphanage support, HIV/Aids awareness, village adoption, vision improvement program, a program to provide work to rural unemployed women, community rehabilitation, tsunami relief work, eradication of child labour and environment protection, to name a few. The company has made a positive change in the lives of over 2000 people. Corporate responsibility begins at home
Titan Industries believes that corporate responsibility begins with the employees. The company ensures that the harmony, peace and inclusive approach at work place are maintained. Efforts are made to engage the employees in programs designed to fulfil our ecological and social responsibility. Various work-place initiatives are conducted to achieve this: War on Waste - an initiative that reduced the impact of manufacturing operations on the environment. At Titan Industries, Corporate Social Responsibility is more than philanthropy it is an internal process that reflects the soul of the company. Successful CSR programmes:
Titan Industries has embarked on and completed several community development programmes as part of its CSR initiative. A few among these successful projects are: Titan Scholarship - for students in Dharmapuri and Krishnagiri districts (Tamil Nadu), based on academic performance and socio-economic background for over 550 students form the economically backward section Titan Township – a sustainable community in Hosur (Tamilnadu), that provides housing to 1300 residents collaborating with NGOs MCA and Ashraya Employment - to over 120 physically challenged people Karigar Park – a social entrepreneurship project with six parks, benefiting over 400 artisans Titan School and Titan Foundation for Education - a primary school with over 550 students, expanding to classes IX and X with a provision to accommodate 160 more students Meadow Project (Myrada) – a collaborated effort with self-help groups of rural women to provide gainful employment to more than 400 rural women in and around Hosur (Tamil Nadu) Recognition of CSR:
As an appreciation of its significant contribution to the community welfare, Titan Industries has received the ‗President of India‘s Award' for employing the disabled. Titan Industries, a signatory to the Global Compact, is a recipient of the prestigious ‗Helen Keller Award‘ and the ‗Mother Teresa Award‘. The company has also been ranked as one of the top four, top ten and Top eleven companies in the ‗Karmayog CSR Rating of India‘s Top 500 Companies‘ in December 2007, 2008 and 2009 respectively. Other noteworthy awards for CSR include: • FICCI-SEDF Award for Social Responsibility • The Rotary Club of Bangalore Award for Corporate Citizenship • The PHDCII Award for Good Corporate Citizenship
Ranked among the nation's best corporate citizens, Titan Industries is committed to take on the social responsibility and fulfil it with dedication.
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Pricing strategy Price is not just a number on a tag .price comes in many ways and performs many functions as well .price has been the major determinants of a buyers choice. And this is still the case with large segments of buyers across the globe. Companies do their pricing in a variety of ways. In small companies, prices are often set by the boss. In large companies, pricing is handled by division and product line managers. Many economists assume that consumers are ―price takers‖ and accept prices at ―face value‖ or as given. marketers recognize that consumers often actively process price information , interpreting prices in terms of their knowledge from prior purchasing experience , formal communication , informal communication , point of purchase or online resources or other factor .purchasers decision are based on how consumers perceive prices and what they consider the current actual price to be – not the marketers stated price .
Setting the price objective
Determining the demand
Estimating cost
Analyzing competitor's cost, price and offer
Setting a price method
Selecting a final price
Setting the price objective
Partial cost recovery — a company that has sources of income other than from the sale of products may decide to implement this pricing objective, which has the benefit of providing customers with a quality product at a cost lower than expected. Competitors without other revenue streams to offset lower prices will likely not appreciate using this objective for products in direct competition with one another. Therefore, this pricing objective is best reserved for special situations or products. Profit margin maximization — seeks to maximize the per53
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unit profit margin of a product. This objective is typically applied when the total number of units sold is expected to be low. Profit maximization — seeks to garner the greatest dollar amount in profits. This objective is not necessarily tied to the objective of profit margin maximization. Revenue maximization — seeks to maximize revenue from the sale of products without regard to profit. This objective can be useful when introducing a new product into the market with the goals of growing market share and establishing long-term customer base. Quality leadership — used to signal product quality to the consumer by placing prices on products that convey their quality. Quantity maximization — seeks to maximize the number of items sold. This objective may be chosen if you have an underlying goal of taking advantage of economies of scale that may be realized in the production or sales arenas. Status quo — seeks to keep your product prices in line with the same or similar products offered by your competitors to avoid starting a price war or to maintain a stable level of profit generated from a particular product. Survival — put into place in situations where a business needs to price at a level that will just allow it to stay in business and cover essential costs. For a short time, the goal of making a profit is set aside for the goal of survival. Survival pricing is meant only to be used on a short-term or temporary basis. Once the situation that initiated the survival pricing has passed, product prices are returned to previous or more appropriate levels
Determining the price:
Price elasticity of demand Each price will lead to a different level of demand and will therefore have a different impact on companies marketing objectives. The relationship between price and demand is captured in a demand curve. In the normal case, the two are inversely related: the higher the price, the lower the demand. In the case of prestige goods, the demand curve sometimes slopes upward. However if the price is too high, the level of demand may fall
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Price sensitivity: the demand curve shows the markets probable purchased quantity at alternative prices. In sums the reactions of many individuals who have different price sensitivities. The first step in estimating demand is to understand what affects price sensitivity. Generally speaking, customers are less, price sensitive to low cost items or items they buy infrequently. That is also less prised sensitive when 1. There a re few or no substitutes or competitors; 2. They are not readily noticed the higher price: 3. they are slow to change their buying habits; 4. they think the higher the prices are justified and 5. Prices only a small part of the total cost of obtaining, operating, and servicing the product over its lifetime. Price elasticity depends on the magnitude and direction of the contemplating price charge. It may be negotiable with a small price change and substantial with a large price change. It may differ for a price cut vs. a price increase, and then maybe a price in different band within which price changes have written or no effect. Estimating cost
a companies costs take two forms , fixed and variable .fixed cost ( also known as overhead ) are cost that do not vary with production level or sales revenue .a company must pay bills each month for rent , heat , interest , salaries and so on regardless of output . Variable cost varies directly with the level of production. For egs, each hand calculator produced by TI incurs the cost of plastic, micro processor chips, and packaging. These costs tend to be constant per unit produced, but they are called variable because their total varies with the number of units produced.
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Total costs consist of sum of the fixed and variable costs. For any given level of production. Average cost is a cost per unit at that level of production; it equals totally cost divided by production. Management wants to charge a price that wills atleast cover the total production costs at a given level of production. There is more cost than those associated with manufacturing. to estimate the real profitability of selling to different types of retailers or customers , the manufacturer needs too use ACTIVITY BASED COST (ABC) accounting instead of standard cost accounting .ABC accounting tries to identify the real cost associated with serving each customer . Target costing – cost change with production scale and experience. And they can also change as a result of concentrated effort by designers, engineers, and purchasing agents to reduce them through target costing. market research establishes products desired functions and the price at which the product will sell , given its appeal and competitors ‗s prices , deducting the desired profit margin from this price leaves the target cost .the marketer must achieve. Analyzing Competitors Costs, Prices, and Offers
By considering the nearest competitor‘s price so that the firm can charge (competitors‘ price as benchmarking). Within the range of possible prices determined by market demand and company cost, the firm must take the competitor‗s cost, price and possible price reactions into account.
Selecting prise method Mark up- Pricing- it is the pricing is based on the idea that most businesses mark up their products to twice the actual cost. So, if a product‘s wholesale cost were$1.00, the business would simply mark the price at $2.00 and place it on the shelf for sale.
This pricing works very well for many businesses, particularly those who buy custom-made products for resale. The concept is also useful for visiting competitors and estimating their wholesale cost. If they sell something for $2.00, then maybe it cost them $1.00 to buy from a supplier. If you are paying more for a similar product, perhaps you can get a different supplier. Unless the competitor is a huge retail chain buying quantities at discount prices, you should be able to roughly match competitor costs. Cost-Plus Pricing - Cost-Plus Pricing is based on the owner knowing the exact ―unit product cost‖ (UPC) of every product sold. Unit product cost is the direct cost of the product as it is sold to the customer. It includes acquiring the product from a wholesaler plus its in-ship freight cost plus the cost of everything that is done to it (alterations, painting, packaging, etc.) to prepare it for sale. For example, the unit product cost for food served in a restaurant includes the direct cost of all the ingredients plus the condiments and materials needed to serve the plate of food to the customer. The price charged for the menu item must include the unit product cost plus a mark-up to pay for the indirect cost of the space, furnishings,2 equipment, labour, and services required to prepare and provide the serving. Then, profit is 56
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added on top. Cost-Plus Pricing requires the owner to keep detailed records of direct costs and to monitor them frequently to detect changes. This information enables the owner to react quickly to changes in supplier costs and the competitive price environment. Competitive Pricing - Competitive Pricing involves observing several competitors prices and setting your prices in the same general range. Competitors chosen for the survey must offer products very similar to yours to similar customers. The closer a product is to serving a generic function (like a gallon of gasoline) the greater role competitive pricing performs. If there is not much difference that customers can discern between products, they have a certain range of price expectations that must be met to obtain their business. Businesses using Competitive Pricing must be careful, however, because the competitor‘s cost structur e is unknown. The competitor might have a lower cost structure that generates more cash to use in other areas of competition. If a new business uses a Competitive Pricing strategy, the owner must be sure the price is enough to cover all costs and make a suitable profit. A potential negative outcome of Competitive Pricing is a ―price war.‖ In a price war, some businesses lower prices in an attempt to attract more customers. This prompts a reaction from competitors and they drop their prices even lower. The result is a downward price spiral for all businesses until the weakest businesses fail. Market Pricing – it is the practice of charging the highest price the customer will bear. While this method results in the highest profit for the business, the danger is the customer will walk away and never return. Market Pricing can be used by businesses that have a nearmonopoly in the market – customers must come to them or they will not be able to obtain the product at all. This form of pricing may be used by businesses that have a patented product (e.g. a pharmaceutical company) or those with high technology (e.g. an aircraft navigation system) or companies with a closely associated product and limited competition (e.g. popcorn at a movie theatre.) Penetration pricing — used to gain entry into a new market. The objective for employing penetration pricing is to attract and grow market share. Once desired levels for these objectives are reached, product prices are typically increased. Penetration prices will not garner the profit that you may want; therefore, this pricing strategy must be used strategically. Let‘s say you have created a new hot and spicy mustard product. Your market research indicates that the price range for competitors‘ mustards is $1.89 to $2.99. Since numerous mustards are already available and you are new to the mustard market, you decide to use penetration pricing to entice customers to purchase your mustard. Therefore, you price your mustard at $1.85 for the first six months because it covers your cost of production yet is lower than what you believe is a good price for your product and is below the lower end of the market range, which should entice people to purchase your mustard over the other higherpriced mustards. The strategy of penetration pricing can be used when your pricing objective is either revenue or quantity maximization. The lower price set on products by using penetration pricing is done to entice the maximum number of customers possible to purchase your product. Large numbers of customers purchasing your product should maximize your revenue and the quantity of product sold. If the price were higher, you would expect fewer purchases, thus leading to lower revenues. 57
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Product bundle pricing — used to group several items together for sale. This is a useful pricing strategy for complementary, overstock, or older products. Customers purchase the product they really want, but for a little extra they also receive one or more additional items. The advantage of this pricing strategy is the ability to get rid of overstock items. On the other hand, customers not wanting the extra items may decide not to purchase the bundle. This strategy is similar to product line pricing, except that the items being grouped together do not need to be complementary. For example, you have remaining stock of Christmas-related items after the holidays. If you prefer not to store these items until next year, you could put a variety of items in a small bag and sell the bag at a discounted price. Product bundle pricing can be employed with revenue maximization or quantity maximization objectives since bundling products may result in the sale of products that may have gone unsold. Quality leadership can be achieved since some customers will appreciate having the opportunity to purchase a group of items at a discount. The partial cost recovery or survival objectives can be fulfilled from a product bundling pricing strategy when products likely would have gone unsold otherwise and selling the products at a discount allows you to recover some portion of the production cost or generates enough of a profit to stay in business or keep from having to remove the product from market. Product line pricing — used when a range of products or services complement each other and can be packaged together to reflect increasing value. This pricing strategy is similar to the multiple pricing strategies. However, rather than purchasing a greater quantity of one item, the customer is purchasing a different item or service at a higher price that is still perceived as a value when compared to the price for the individual product or service. Let‘s say that in your farm market you sell jams, syrups, and pancake mixes, among other items. These items can be considered complementary since people usually put jam and syrup on pancakes. In addition to selling each of these items individually, you could create a gift box that packages one of each item together. The price for this gift box would be slightly less than what a customer would pay in total when purchasing each of the same items individually. The product line pricing works well with the profit maximization and quality leadership pricing objectives since you are increasing profit by encouraging the purchase of a greater number of products that may not have been purchased individually. Additionally, some customers will value the ability to purchase a group of complementary products. Skim pricing — similar to premium pricing, calling for a high price to be placed on the product you are selling. However, with this strategy the price eventually will be lowered as competitors enter the market. This strategy is mostly used on products that are new and have few, if any, direct competitors when first entering the market. Let‘s say you develop a carbonated, flavoured, milk-based beverage packaged in 10-ounce plastic bottles. Since there are few drinks of this sort on the market, you could use skim pricing until more products come to market. Knowing that other similar beverage products will likely enter the market within a year or two, you may decide to price at $1.95 per bottle when your product debuts. Assuming that other similar beverages have come to market after a year, you then lower the price of your drink to $1.55 to remain competitive. The skim pricing strategy should be reserved for when your pricing objective is profit maximization, revenue maximization, or profit margin maximization. Employing this strategy when your product is new on the market and there is 58
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no competition generates greater revenue, profit, and profit margins since you are the only one selling the product — customers must buy from you if they want what you are selling. You must use caution, though, so as to not price so high though that customers aren‘t willing to buy your product even though there are no competitors. Fastrack follows the competitive pricing where it analysed who its competitors was and how it priced its merchandise lower than its competitors to gain more sale profitability.
Selling a final price
Selecting the final price: The company must consider additional factors such as a. Impact of other marketing activities: the final price must take the brand‘s quality, advertising media, channel selection and services provided. Since our brand is very youth oriented and has to be affordable it will use TV as a medium for advertising and that cost shall be inculcated in the price of each bag. b. The salespeople quote prices that are reasonable to customer and profitable to the company •
Risk and gain sharing pricing: the company must aware ―the risk of pricing‖ such as consumers will see uncompetitive price for homogenous products or loss of customers if it does not deliver the full promised value for non homogenous products.
•
Companies usually do not set a single price, but rather a pricing structure that reflects variation in:
a. Geographical pricing: the company decides how to price its products to different customers in different locations and countries like the Barter, Compensation deal and offset .since it‘s a youth brand most of the pricing is done in keeping with the monthly disposable income of the target consumer as well as his the readiness of the consumer to buy a bag at a given price. b. Price discounts and allowance: most companies will adjust their list price and give discounts and allowances for early payment, volume purchases, and off-season buying c. Promotional pricing: companies can use several pricing techniques to stimulate early purchases or attract customer‘s attention such as loss leader pricing, special event pricing, longer payment terms. d. Differentiated pricing or price discrimination: companies often adjust their basic price in customer segment pricing (adult vs. child), product form pricing (1 for $10, 2 for $15), location pricing and time pricing 59
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PRODUCT DEVELOPMENT For the second semester project , we are supposed to do a product development for a brand .the brand I have chosen is fastrack which is an Indian brand under the titan industries .the reason I took this brand was because it‘s a very youth oriented brand and is an affordable fashion accessory . But I saw a gap in their merchandise. I decided that since their watches and sunglasses are so popular among the youth, and their bag range which was introduced just 2 years back did not show much variety and I felt that there was a scope for a new range which should be introduced in the market. And that is the department I will be doing my product development (PD) on. Since there is a whole process to the PD, my first step was to look at the fashion forecast for the spring/ summer ‘12. After doing my research I decided to go with the inspiration of ‗fun form‘ from the textile view. Taking my inspiration from there, I analysed it and created a theme ‗TRANCE‘ – unleash urn playful side. The inspiration talked about releasing your creative energies to a spontaneous experiences to bring out the child in you .its about experiments in a multi disciplined arena. From the theme to use it on my products i.e. bags, I felt that there would be a strong influence of the 60‘s and the hippie culture, a movement which took place through out the world. it was experimenting, breaking boundaries and creating your identity .so I have used this inspiration and come out with new range and designs of satchels, sling, shoulder, messenger, laptop and handbags which will portray a causal as well as artistic outburst in its design and prints n the bags which is in tune to the brands design philosophy and its target market.
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Financial statements Titan industries Balance Sheet of Titan Industries
------------------- in Rs. Cr. ------------------Mar '06
Mar '07
Mar '08
Mar '09
Mar '10
12 12 months months
12 months
12 months
12 months
Total Share Capital
82.28
44.39
44.39
44.39
44.39
Equity Share Capital
42.28
44.39
44.39
44.39
44.39
Share Application Money
0.00
0.00
0.00
0.00
0.00
Preference Share Capital
40.00
0.00
0.00
0.00
0.00
Reserves
150.30 283.06
391.78
506.85
679.99
Revaluation Reserves
0.00
0.00
0.00
0.00
Net worth
232.58 327.45
436.17
551.24
724.38
Secured Loans
148.84 172.67
188.11
116.76
72.79
Sources Of Funds
0.00
Unsecured Loans
119.09 74.34
69.78
58.65
0.00
Total Debt
267.93 247.01
257.89
175.41
72.79
Total Liabilities
500.51 574.46
694.06
726.65
797.17
Mar '06
Mar '08
Mar '09
Mar '10
12 12 months months
12 months
12 months
12 months
420.42 515.48
558.07
593.04
624.33
Mar '07
Application Of Funds
Gross Block Less: Accum. Depreciation
243.97 264.34
285.61
318.56
Net Block
176.45 251.14
272.46
274.48
361.70 262.63
Capital Work in Progress
19.56
15.97
9.99
19.52
12.29
Investments
27.02
27.02
47.39
7.66
7.63
Inventories
374.39 677.48
1,021.09
1,202.69
1,340.33
Sundry Debtors
90.12
92.06
96.45
106.22
93.61
Cash and Bank Balance
38.29
50.73
Total Current Assets
502.80 820.27
51.91
54.69
61.72
1,169.45
1,363.60
1,495.66
Loans and Advances
150.96 179.06
111.34
128.82
200.99
Fixed Deposits
0.00
0.00
0.00
125.00
0.00
Total CA, Loans & Advances
653.76 999.33
1,280.79
1,492.42
1,821.65
Differed Credit
0.00
0.00
0.00
0.00
Current Liabilities
363.89 571.26
842.68
974.00
1,172.28
Provisions
26.72
73.90
93.44
134.74
Total CL & Provisions
390.61 723.22
916.58
1,067.44
1,307.02
Net Current Assets
263.15 276.11
364.21
424.98
Miscellaneous Expenses
14.31
0.00
0.00
0.00
Total Assets
500.49 574.45
694.05
726.64
797.18
Contingent Liabilities
64.22
76.01
58.41
65.46
72.19
Book Value (Rs)
45.55
73.77
98.26
124.18
163.19
Mar '09
Mar '10
key Financial Ratios of Titan Industries
0.00 151.96
4.21
514.63
------------------- in Rs. Cr. -------------------
Mar '06
Mar '07
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Investment Valuation Ratios
Face Value
10.00
10.00
10.00
10.00
10.00
Dividend Per Share
3.00
5.00
8.00
10.00
15.00
Operating Profit Per Share (Rs)
35.01
41.81
59.76
78.10
98.29
Net Operating Profit Per Share (Rs)
347.41 481.08
687.29
874.48
1,053.05
Free Reserves Per Share (Rs)
32.14
61.70
85.95
110.68
148.39
Bonus in Equity Capital
--
--
--
--
--
Operating Profit Margin (%)
10.07
8.69
8.69
8.93
9.33
Profit Before Interest And Tax Margin (%)
8.69
7.46
7.71
7.84
8.02
Gross Profit Margin (%)
8.50
7.85
7.72
7.85
8.04
Cash Profit Margin (%)
6.32
5.59
6.01
5.73
6.75
Adjusted Cash Margin (%)
7.52
5.73
6.01
5.73
6.75
Net Profit Margin (%)
4.98
4.40
4.92
4.08
5.34
Adjusted Net Profit Margin (%)
6.19
4.54
4.92
4.08
5.34
Return On Capital Employed (%)
27.07
29.20
34.19
42.68
48.67
Return On Net Worth (%)
31.65
28.81
34.45
28.83
34.55
Adjusted Return on Net Worth (%)
49.76
30.00
35.27
32.84
35.39
Profitability Ratios
Return on Assets Excluding Revaluations
8.26
72.82
98.26
124.18
163.19
Return on Assets Including Revaluations
8.26
72.82
98.26
124.18
163.19
Return on Long Term Funds (%)
40.07
39.64
43.48
46.80
48.67
Current Ratio
1.08
1.04
1.12
1.31
1.39
Quick Ratio
0.70
0.42
0.27
0.26
0.35
Debt Equity Ratio
1.60
0.75
0.59
0.32
0.10
Long Term Debt Equity Ratio
0.76
0.29
0.25
0.20
0.10
Interest Cover
4.58
6.72
11.78
10.54
15.26
Total Debt to Owners Fund
1.60
0.75
0.59
0.32
0.10
Financial Charges Coverage Ratio
4.89
5.85
6.77
5.14
7.05
Financial Charges Coverage Ratio Post Tax
3.94
4.63
5.56
3.93
5.89
Inventory Turnover Ratio
3.94
3.16
3.06
3.29
3.53
Debtors Turnover Ratio
17.57
23.44
32.37
38.31
46.78
Investments Turnover Ratio
4.09
3.26
3.06
3.29
3.53
Liquidity And Solvency Ratios
Debt Coverage Ratios
Management Efficiency Ratios
Fixed Assets Turnover Ratio
7.92
10.68
6.17
7.33
8.33
Total Assets Turnover Ratio
2.93
4.18
4.84
5.85
6.37
Asset Turnover Ratio
3.49
4.72
6.17
7.33
8.33
Average Raw Material Holding
34.72
34.62
31.16
26.81
24.99
Average Finished Goods Held
66.42
90.80
104.30
100.77
90.75
Number of Days In Working Capital
64.50
46.55
42.98
39.41
39.63
Material Cost Composition
66.83
75.89
79.70
75.76
76.18
Imported Composition of Raw Materials Consumed
24.21
29.68
56.37
45.06
66.15
Selling Distribution Cost Composition
10.54
9.99
8.15
7.94
7.66
Expenses as Composition of Total Sales
6.31
5.64
4.66
3.41
2.17
Dividend Payout Ratio Net Profit
21.95
27.69
27.64
32.66
31.01
Dividend Payout Ratio Cash Profit
17.18
21.76
23.08
25.87
25.01
Earning Retention Ratio
82.46
73.18
73.00
71.32
69.72
Profit & Loss Account Ratios
Cash Flow Indicator Ratios
Cash Earning Retention Ratio
85.64
78.78
77.37
76.70
75.47
Adjusted Cash Flow Times
2.41
2.01
1.40
0.79
0.23
Mar '06
Mar '07
Mar '08
Mar '09
Mar '10
Earnings Per Share
16.77
21.16
33.85
35.81
56.39
Book Value
45.55
73.77
98.26
124.18
163.19
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Profit loss account Mar ' 10
Mar ' 09
Mar ' 08
Mar ' 07
Mar ' 06
4,674.42
3,881.75
3,050.85
2,135.47
1,468.73
Material consumed
3,449.39
2,762.19
2,133.90
1,374.43
909.05
Manufacturing expenses
23.58
25.10
19.87
17.15
13.48
Personnel expenses
275.64
234.20
189.66
157.40
109.41
Selling expenses
358.21
308.29
248.94
213.43
154.83
Administrative expenses
131.34
205.38
193.22
187.98
134.86
Expenses capitalised
-0.04
-0.09
-0.02
-0.52
-0.89
Cost of sales
4,238.12
3,535.06
2,785.58
1,949.86
1,320.73
Operating profit
436.30
346.68
265.27
185.61
148.00
Other recurring income
11.78
5.26
1.77
7.75
7.16
Adjusted PBDIT
448.08
351.94
267.05
193.36
155.15
Financial expenses
63.52
68.46
39.44
33.07
31.71
Depreciation
60.08
41.76
29.73
25.59
19.66
Other write offs
-
-
-
-
-
Adjusted PBT
324.48
241.73
197.87
134.70
103.78
Tax charges
68.08
60.68
44.02
37.32
12.34
Adjusted PAT
256.40
181.05
153.86
97.38
91.45
Non recurring items
-3.16
-11.17
-6.16
-3.04
-16.90
Other non cash adjustments
-2.92
-10.92
2.57
-0.20
-0.93
Reported net profit
250.32
158.96
150.27
94.13
73.62
Earnings before appropriation
461.35
377.51
281.20
171.63
103.24
Equity dividend
66.58
44.39
35.51
22.19
13.32
Preference dividend
-
-
-
0.39
2.72
Income Operating income
Expenses
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Mar ' 10
Mar ' 09
Mar ' 08
Mar ' 07
Mar ' 06
Dividend tax
11.06
7.54
6.04
3.83
2.25
Retained earnings
383.71
325.58
239.65
145.22
84.95
Nike Inc. Period Ending
31-May-2010
31-May-2009
31-May-2008
Cash And Cash Equivalents
3,079,100
2,291,100
2,133,900
Short Term Investments
2,066,800
1,164,000
642,200
Net Receivables
2,898,600
3,156,300
3,022,500
Inventory
2,040,800
2,357,000
2,438,400
Other Current Assets
873,900
765,600
602,300
Total Current Assets
10,959,200
9,734,000
8,839,300
Long Term Investments
-
-
-
Property Plant and Equipment
1,931,900
1,957,700
1,891,100
Goodwill
187,600
193,500
448,800
Intangible Assets
467,000
467,400
743,100
Accumulated Amortization
-
-
-
Other Assets
-
-
-
Deferred Long Term Asset Charges
873,600
897,000
520,400
Total Assets
14,419,300
13,249,600
12,442,700
Accounts Payable
3,218,200
2,902,100
2,200,200
Short/Current Long Term Debt
146,000
374,900
179,600
Other Current Liabilities
-
-
941,700
Total Current Liabilities
3,364,200
3,277,000
3,321,500
Long Term Debt
445,800
437,200
441,100
Other Liabilities
-
-
-
Deferred Long Term Liability Charges
855,300
842,000
854,500
Minority Interest
-
-
-
Negative Goodwill
-
-
-
Total Liabilities
4,665,000
4,556,000
4,617,100
-
-
-
Assets
Current Assets
Liabilities
Current Liabilities
Stockholders' Equity
Misc Stocks Options Warrants
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Redeemable Preferred Stock
300
300
300
Preferred Stock
-
-
-
Common Stock
2,800
2,800
2,800
Retained Earnings
6,095,500
5,451,400
5,073,300
Treasury Stock
-
-
-
Capital Surplus
3,440,600
2,871,400
2,497,800
Other Stockholder Equity
214,800
367,500
251,400
Total Stockholder Equity
9,753,700
8,693,100
7,825,300
Net Tangible Assets
9,099,100
8,032,200
6,633,400
1) LIQUIDIT Y RATIO
Current
2010
2009
2008
Current Assets
1,09,59,200
97,34,000
88,39,300
Current Liabilities
33,64,200
32,77,000
33,21,500
Current Ratio
3.2576
2.9704
2.6612
2010
2009
2008
13,01,100
12,79,200
12,95,600
97,53,700
86,93,100
78,25,300
Ratio
2
SOLVENCY/LEVERA
)
GE RATIO
Debt Equity Ratio
Debt
Equity
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Debt Equity Ratio
3)
0.1334
0.1472
0.1656
2010
2009
2008
91,95,900
89,87,700
87,08,900
1,90,14,000
1,91,76,100
1,86,27,000
Gross Profit Ratio
48.36%
46.87%
46.75%
Net Profit Ratio
2010
2009
2008
19,06,700
14,86,700
18,83,400
1,90,14,000
1,91,76,100
1,86,27,000
10.03%
7.75%
10.11%
PROFITABILITY RATIOS
(A
Gross Profit Ratio
)
GP
Sales
(B )
NP
Sales
Net Profit Ratio
4)
EFFICIENCY/TURNO VER RATIOS
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(A
Asset Turnover Ratio
2010
2009
2008
1,90,14,000
1,91,76,100
1,86,27,000
1,44,19,300
1,32,49,600
1,24,42,700
1.3186
1.4473
1.4970
2010
2009
2008
98,18,100
1,01,88,400
99,18,100
20,40,800
23,57,000
24,38,400
4.8109
4.3226
4.0675
)
Sales
Total Assets
Asset Turnover Ratio
(B
Stock Turnover Ratio
)
Cost of Sales
Average Stock
Stock Turnover Ratio
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Recommendations
Fastrack need to keep renewing its products every season which will further increase profitability and will provide the customers new variety every season .since their price bracket is nominal the consumer would not mind in buying more bags .
They need to work on their customer relation management and should create new loyalty programs which would help them to retain their costumers.
They need to open more exclusive showroom of fastrack to show more visibility of the brand.
Their retail operations need to be revised and they should see into the problem of the retail functions and try to organise it in a more systematic manner.
They should launch more ranges in their exciting products .
They should also formulate a system by which they can keep a track of their goods distribution and sales in the retail sector .
Limitations
This study was conducted in Delhi and NCR only. The time period for this study was 5 months. the sample size was just limited to 70
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Bibliography: 1. www.fastrack.in 2. Aaker A., Kumar, V., Day, G.s., (1997): Marketing Research., John wiley and Sons Inc.,P. 776. 3. A. Simons, Donald B. Irwin and Beverly A. Drinnien 1987 Online article of Maslow‘sHierarchy Needs of Consumer Behavior. West Publishing Company, New York. 4. Baker, M. (2002). "A Composite Model of Buyer Behaviour", Journal of ConsumerBehavior , Vol.1 (1), pp.85-109. 5. Babin, B. J., Darden, W. R., & Griffin, M. 1994. Work and/or Fun: Measuring Hedonic and Utilitarian Shopping Value. Journal of Consumer Research, 20(4): 644-656. 6. Bovey, c. L., Thill, J.V., (1992): Marketing. McGraw-ill, Inc., P. 761. 7. Philip Kotler, Abraham Koshy (2009): Marketing Management, Pearson Education., p.154, 159-165 8. www.learnmarketing.com 9. www.titanworld.com 10. www.tutor2u.com 11. www.retailindia.com 12. www.finance.com 13. www.financenet.com 14. www.youtube.com
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Annexcture PEARL ACADEMY OF FASHION FASHION MARKETING – SEMESTER 2 Questionnaire Objective -
to understand the bags market and its demand in India
-
to analyse the awareness of TITAN fastrack in the market
-
to find out the consumer psychographics
Name: Age:
18 &below 18- 25 25-35 35 & above
Profession:
Student ( school/ college) Working Self employed Unemployed
Sex:
Male female
Address :__________________________________________________________________________ ___________________________________________________________________________ ____________________________________________ Monthly income: ________________ Education qualification: _____________________ Hobbies: ____________________________________________________________________ 70
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Q1.what is the first word that comes in your mind when u hear the word ―titan fastrack ―?
Q2.what kinds of bags do you like to buy? (Can tick more than one)
backpacks handbags duffle bags messenger bags tote bags laptop bags shoulder bags Waist pouch Satchel Hobo top handle drawstrings bag wallet
Q3.what kind of material do you prefer your bags are made up of? (Tick only 2)
PU leather PVC leather Waterproof Canvas Cotton /jute Nylon Polyester Suede
Q4.where do you buy your bags from?
Malls Exclusive stores Department stores Online
Q5. What are the features you look in a bag? (Tick 1) 71
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Style Price Quality Colour
Q6. What brand of bag do you buy?
Q7. How often do you buy a bag?
Monthly Quarterly Yearly
Q8. Rate in order of importance of these factors into account when choosing their handbag or wallet (1 – highest and 10 – lowest) ( ) Fashion ( ) Colour ( ) Style ( ) price ( ) Material ( ) Stitching quality and finishing ( ) Ease of use ( ) Sustainability Q9. What makes you to buy a handbag? Appealing designs Attractive patterns Lucrative colour schemes Daily requirements Q10.how long do you use a handbag? 2 months 6 months 1 year More than 1 year
Q11.how much is you willing to pay for a bag? Rs.500 Rs500-1000 Rs.1000-1500
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Rs.1500 &above
Q11.do you own a fastrack watch? Yes No
Q12.if yes, how many do you have? _____________ Q13.would you like the idea of a matching bag and watch which would compliment each other? Yes No
Q14.how much do you spend on bags and watches annually? Rs1000-5000 Rs5000-10000 Rs.10000&above
Q15.do you like adventure sports? Yes No Q16.what kind of music do you like? ______________________________________________
Q17.what is the purpose of a bag for you?
Carrying book Daily use Travelling Sports Fashion statement Other ___________________
Q18. Would you like fastrack to come out a new range of bags and watches matching?
Yes No
Q19.do you like adventure sports? Yes
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Q20.what kind of music do you like?
Q1. What is the first thing that comes into your mind when you say the word‖ titan fastrack ‖?
23
40
cool value for money fashionable affordable
22
15
From the above data we found that most the respondents feel that fastrack is a cool brand – 40%, 23% say it is a value for money , 22% have found it vey fashionable brand and 15% have found the brand very affordable as it is in nominal price range .
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Q2. What kinds of bags do you like to buy? (Can tick more than one) yearly half yearly 17
monthly 25
28
The above diagram is describing the types of bags the respondents usually carries or prefer carrying -the handbags, wallets, shoulder bag, backpacks and laptop bags are the most in use by the respondents .this showed us the various kinds of bags the respondent is more comfortable and uses or purchases more often than any other which further helps us to forecast what kind of bags we should introduce the next season.
Q3. What kind of material do you prefer your bags are made up of?
7
PU leather
9
25
PVC leather waterproof
8
canvas 8
7
cotton/jute nylon polyester
16
suede
20
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The above pie charts represents the choice of material the consumer likes his bags to made up of .the top three were – PU leather – 25% , waterproof – 20% and 16% - canvas . Q4. Where do you buy your bags from? 30 25 20 15 10 5 0 malls
department stores
exclusive showroom
online
The above charts represents that from where do the respondents usually buy their bags .malls – 26%, department stores -20%, exclusive showroom – 10% and online 6% .it shows that online services are not preferred by the consumers.
Q5.how often do you buy a bag?
17 25 yearly half yearly monthly
28
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The diagram is representing the buying behaviour of the consumers in a year and how often do they purchase a bag for use.
Q6. Rate in order of importance of these factors into account when choosing their handbag with 1- least important and 5- very important material sustainability ease of use siching qlty price style colour fashion 0
5
10
15
20
25
It represents that most of the respondents feel that fashion style sustainability and material are the top priority for a consumer while purchasing a bag and price is not very important. Q7.what makes you buy a bag?
3 9 23 attractive designs daily requirement attractive patterns colour schemes
35
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The pie chart represents that what is it in a bag that they buy it so often and it is the daily requirements which is reason for a purchase of a bag. Q8.how much is you willing to pay for a bag?
9 17 Rs500 Rs500-1000 11
Rs1000-1500 Rs1500 above
20
It shows us how much a customer is willing to pay for a bag and it also represents the respondent‘s disposable income. Q9.do you own a fastrack watch?
26 yes no 44
44% of the respondents owned fastrack merchandise
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Q10. Would you like the idea of a matching bag and watch which would compliment each other?
20
yes no
50
The respondents did not like the idea of a matching bag and a watch collection. They felt it is not something they would try it. Q11. How much is your disposable income or your pocket money monthly?
15
19
Rs. 5,000 Rs.5000-10000 Rs.10000 above
36
Most of the respondent‘s disposable income monthly comes in the price bracket of Rs5000-Rs10000
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Q12. What is the purpose of a bag for you?
11 20
carrying books daily use travelling sports 17
fashion statement
5 9
Q13.do you like adventure sports?
12
yes no
58
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In depth interview EXCHANGE4 MEDIA.COM it’s very difficult to create and maintain loyalty as loyalty in our target audience is a very different construct. There is absolutely no reason for them to come back to Fastrack tomorrow if they have bought a watch today, and if something else has caught their fancy. There is so much of pressure on that pocket money – be it tech product or fashion accessory – as the market is flooded with those. Unless each brand is reinventing product or communication constantly, there is no reason for youth to come back to the brand. So, the challenge is much higher as compared to the older age groups. Simeran Bhasin, Marketing Head, Fastrack & New Brands
Q. Please give us a background on the brand Fastrack. A. Timex had entered the Indian market through a joint venture with Titan and that was our offering for the youth market. When that JV broke off in 1997 and Timex went independent, there was a gap in our portfolio and it only made sense to fill that need through our offering. Fastrack was launched as a range of watchwa under Titan and called Titan Fastrack. Subsequently, it grew from a range to a sub-brand, where Titan was upfront in the logo and the association was strong. In everything we did, including advertising, we used the jazzy version of the Mozart tune, which is Titan‘s signature tune. So, the link with Titan was very strong. When we launched, we targeted predominantly the early jobber 23-30 year-old male executive. It was only a year or two later that we launched a line for women. Q. So, how did things change and why was the brand re-launched? A. We took off and did well and then started stagnating in 2001-2003, and that‘s when we decided to do a reality check. Titan had simultaneously launched the steel collection, which was an attempt to contemporise for a Titan audience. But what was happening was the collection in terms of looks, price point and consumer buying behaviour was very similar to Fastrack, including advertising. The parent brand needed to continue in their endeavour to keep it contemporary. We were simultaneously hearing in the market of the huge population of sub-25 and we said why don‘t we move and reposition Fastrack to a younger audience and create a reason for our offering in the youth brand. We went into a rejig, which lasted a little over two years, where we looked at a core audience of collegegoers between 18 and 22 years and then extended audience of 15-25. Q. Please elaborate on your re-launch. A. We conducted research, where we shared products and communication and realised that our price points were really high for our TG. We are targeting someone who gets pocket money, which is a nebulous term in India. Some get it, some don‘t. Some get it as maintenance money, while some don‘t get it, but get everything they want. Our average price, which was about Rs 1,700-Rs 1,800 was just too high for that TG. Also, the product we had was not cutting ice with the younger audience because they were now 81
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seeing the Esprits and Swatches of the world, which had come at a higher price point but were creating desire for a very different fashion look. Then there were Chinese models priced at sub-500 and very affordable. We realised that there was a big gap between this sub-500 and Rs 3,000, which is where the fashion brands started. That‘s where we decided to peg ourselves, but we consciously kept 75 per cent of our collection at sub-1500 as no one was present there and it was big opportunity. We had to design watches that were funkier and keep it in line what the fashion brands were creating an aspiration for. We undertook a design overhaul and put in place a design exercise and got around 100 new designs. We decided to re-launch with this collection and drop all the old collections. Q. How did you handle the re- jigging of Fastrack’s brand identity? A. The youth had changed over a couple of years, and based on research, we wanted to create a new identity for this TG, which had playful irrelevance as the core of the brand. Based on this, new communication was created where we changed our logo as we said that if we need to have a different identity, we need to launch it as an independent identity separate from Titan the brand. The old identity was strongly linked to Titan. Q. Did it also have to do with the fact that people knew Fastrack as a brand from Titan, hence you could risk going independent? A. Awareness of Fastrack was very low and was linked to Titan. There was no independent identity. Research had also shown that the fact that it had the backing of Titan was a positive assurance. However, kids didn‘t like to be serious and sober like their parents. We needed to break away, so we changed the logo to bring in a youthful, spontaneous, energetic and fun identity, but removed Titan from the upfront association in the logo. We, however, kept it at the bottom, saying it‘s a Titan product. This helped carry the assurance of the trusted Titan brand. We stopped using the Mozart tune in advertising as we didn‘t want any strong upfront.
We launched with new products, a new identity, new advertising and a new logo in June 2005. The year took off so well that we ran out of stock very quickly and we ended the year with a 150 per cent growth and the demand was growing continuously. Next year, we took another 100 per cent growth. Simultaneously, when Fastrack launched in its new avatar, we launched the first brand extension – eye gear. We signed up John Abraham as the brand ambassador and that too took off with the same price point and similar persona. John was the ambassador as we felt a relatively lesser known category like eye gear in India needed a face to make the category relevant and bring it into peoples‘ consideration. The penetration of sunglasses in India is 5 per cent. The size of the market could be around Rs 500 crore. We have discovered that sunglasses are a different ballgame as it‘s an upfront fashion accessory. Based on our research, we had got the response that people felt sunglasses were only for celebrities, rock stars and people in the fashion industry. Q. Do you think a communication could address the issue of hesitance and help people to feel more comfortable wearing sunglasses? A. We have been toying around with this idea and in ‗Johnny don‘t cry‘ ad, we didn‘t talk about fashion but function, which said if you wear sunglasses on a bike, you won‘t have tears as sunglasses would protect you from dust. However, we are a fashion and a fun 82
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brand, so we can‘t get so serious to talk about protection, which we did in one ad. We have chosen to talk back about fashion and looks for the Fastrack brand. Otherwise, we will have a split personality as watches don‘t talk about functionality, but all the fun stuff.
We needed to drive more synergies and move towards a common communication. Across the world, too, fashion brands have a common theme of communication across categories. The brand should have the same look and not look like two brands when out in the market. If you have to drive synergies, then you must have one look, one tone, one voice and a single message going out. Perhaps, if sunglasses contributed to 80 per cent of the market, then the call would be different, but the fact remains that we are a watch brand to begin with and watches are and for quite sometime to come would be our mother category. When we do on ground activity, we do eye gear trials to induce people and that‘s when we talk function. But when using mass media, we will t alk the same language across categories. Q. Do you think after the re-branding, Fastrack is on the right track? A. Sunglasses and watches had been growing 100 per cent for the first 2-3 years after the relaunch. Last year, we took in growth of 50 per cent after three years of growing at 100 per cent. When we started the re-launch, Fastrack the brand was worth about Rs 29 crore and we have grown almost ten times of that over the last three years. I think the decisions we have taken have proved that we have been in the right direction. Today, the brand is present in over 3,000 outlets in the country and continuing to grow strong. Fastrack is actually among the few brands where people come asking for the brand. We have adopted a fashion based strategy, where we launch about 3-4 collections in a year in both categories. From this year, for greater synergies we have worked on a common theme for both categories and product. Collection-based strategy has helped us very well. We have consumers today who are so fanatic about the brand that they buy a watch from every single collection. Q. Tell us about your foray into the digital medium and experiments with social media. A. The involvement of the Fastrack consumer in the brand is very high. To cash in on that, over one and a half years back, we embarked on the digital media. In this day and age, where social media is growing, it‘s an anathema for a youth brand to not have its own website. We got in place our website and a couple of months ago we embarked on using social media as a means to engage with our consumers. Social networking sites are a completely different ballgame, where you can‘t intrude and do banner advertising. We use that media to essentially watch, learn and observe and listen to what consumers are saying and participate without intruding.
Communities are a big thing where consumers start on their own based on their interests. On Orkut, we realised that even before we started our websites consumers had established 15-20 communities of Fastrack. They had members joining and growing month on month. Today, on Orkut we have over 50 communities started by consumers who are fans of Fastrack watches and sunglasses. On Facebook, we have taken a slightly different act as it‘s a far more niche social networking site. We started our own communities – ‗Life on the Fastrack‘ and ‗Bikers on the Fastrack‘. We have started a brand page where we put up whatever is happening on the brand – new campaigns, new forums or anything that Fastrack wants to discuss. We keep in touch with communities 83
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started by other users to let them know that if they want authentic information, they don‘t have to go searching online, but they can get it from us and get first hand information.
Recently, we started a process wherein before launching a collection we take feedback from a panel of consumers online by sending a questionnaire and product pictures. We do this with people who are members of one or more of our communities. It‘s quite a pleasure to get these frank opinions, because compared to traditional research, online is a very casual medium as compared to the traditional. Q. Is it difficult to create a loyal customer in the TG that you are targeting? A. It‘s very difficult to create and maintain loyalty as loyalty in our target audience is a very different construct. There is absolutely no reason for them to come back to Fastrack tomorrow if they have bought a watch today, and if something else has caught their fancy. There is so much of pressure on that pocket money – be it tech product or fashion accessory – as the market is flooded with those. Unless each brand is reinventing product or communication constantly, there is no reason for youth to come back to the brand. So, the challenge is much higher as compared to the older age groups.
We have been fortunate so far, and I say so far, because if we have a loyal base, it may not be true one month down the line. We recently conducted a customer satisfaction study and found that our base of loyal customers is much higher than the benchmarks we have seen in some of the other brands. We are proud to say that our loyal consumer base suggests that 91 per cent would recommend Fastrack, 85 per cent would themselves buy the brand, which is high as compared to other watch and youth brands. Q. What do you think are the attributes that helped the brand click and connect in the market? A. I think it has been twin approach of constantly innovating on product design, yet being affordable, and to reach out to consumers in a language that connects. We launched with ‗how many you have‘, which is a grammatically incorrect statement spoken in a colloquial manner. It‘s not your typical fashion brand talking down saying you must look cool and you must look like me. With our advertising, we were able to relate to the youth in a setting they were familiar with. Q. Why did Fastrack change its tagline to ‘Move on’ recently? A. We had embarked on an exercise a year ago with Santosh Desai, where the brief to him was that we have two categories, and in future as fashion brands we want to extend to more categories. At that point of time, we had different advertising and were not on the same theme. We were uncomfortable with continuing with that as we felt the need to synergise and bring the category together.
‗How many you have‘ worked well for watches, but not as strongly for sunglasses. It would have not worked for sunglasses as penetration is only 5 per cent. Based on that, we worked with Santosh saying we need a platform that works for all our brands across accessory categories and bring synergies between categories.
We also looked at the brand identity and whether any change was required for that, as a result we refined our brand identity as research showed it needed a bit of tweaking and sharper focus in terms of its interpretation. From playful irreverence we moved to playful disruption. The core remained effortlessly cool as we want to project to the consumer 84
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unpredictability, friendly flirtatiousness and disruption. ‗Move on‘ is not very different from ‗how many you have‘ as the tagline came from multiplicity – the consumer truth being that youth get bored of the same thing and category truth being that you can‘t be happy with just one. ‗Move on‘ is multiplicity from a different level and came from the fact that youth preferred to be uncommitted in these few years that we were targeting. It‘s only at a later stage that one starts firming decisions, be it career or marriage. The change was to pre-empt ourselves, so while ‗how many you have‘ worked very well for us, we needed to change ourselves before the market told us to do so. If preference to remain uncommitted is the truth of the consumer, Fastrack must speak the same language, hence ‗Move on‘ to keep trying new things.
Full Interview with Bhaskar Bhat CIO: CIO: What is the vision that drives Titan Industries? Bhaskar Bhat: We are working on an objective: achieving a $1-billion turnover by 2009-10 and exceeding that significantly thereafter. By that time, we also have the desire to become an institution which is healthy, wealthy, sharing and caring, one that will be the envy of Indian corporates.
It is not just in terms of scale - not just about creating a billion-dollar company. Wealth is about financial health; and health is about sustained, long-term growth. Sharing means that we will share our wealth with all our stakeholders, and caring means that we will care for the individual, the environment and the community. Becoming the envy of Indian corporations means that we want all people - associates, employees and customers - to be touched. We want people to own our brand, work for our company, and associate with us. Even if we are just a billion-dollar company and if there are other companies that have a turnover of $10 billion, it doesn't matter. People must say, "I wish to work for Titan. I wish to buy its products, do business with it, and run a franchise store for Titan." CIO: Has the growth of IT in your organization been a process that is parallel to Titan’s manufacturing and retail expansion?
Bhaskar Bhat: I think that during some years, IT has outpaced expansion in terms of investments. But overall, if you take the last five years, it has kept pace. Sometimes, you have to outpace to be able to prepare yourself for the future, especially with something like IT. Similarly in HR, sometimes you have to recruit the talent that is required to run your future vision. And not only has it gone as per plan, it has gone as per strategy. We have an operating plan for a year, apart from our strategy. Our strategic plan covers five years, but IT strategy can't be embedded because technology is changing so rapidly. You have to be flexible and nimble, but, at an overall level, you need to create an information culture. CIO: What is Titan Industries’ current IT budget?
Bhaskar Bhat: Normally, we are in the Rs 10 crore per annum bracket. I think that this year, it will be around Rs 8 crore-10 crore. But overall, including revenue expenditure for software and 85
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associated heads, it is around Rs 15 crore per annum. As a percentage of turnover, we spend around 1 percent on IT. As a percentage of turnover, I don't think that it will grow much, and I expect IT spending to generally account for around 0.5-1 percent. CIO: Could you comment on the role of IT, specifically in managing your distribution channels? Bhaskar Bhat: I think that the greatest impact of IT has been in the supply chain and distribution channel. It starts with our entire business, which is based on consumer understanding. Our brands are our most important assets. Therefore, enriched consumer understanding helps us to derive greater value from our brands.
All the action is in the marketplace as far as we are concerned. Capturing that transaction - or non-transaction, so that we can find out why a consumer didn't buy our product - is critical to building a competitive advantage. Therefore, we have processes and technologies to align manufacturing with the marketplace requirement. So, everything is marketplace driven and for that to happen, IT becomes a key bridge between the marketplace and the backend. CIO: What about the progress of technology in Titan’s product development cycle?
Bhaskar Bhat: Ours is a lifestyle product and in this category, design plays a very key role - and this is just on the outside. But, if you take a watch, all the internal moving parts have to be engineered to perfection. So, IT has helped convert the creative output of a designer into an engineering and factory-floor manufacturable product. In the development of significantly advanced technological products like Edge, the slimmest watch in the world, IT has played a significant role both with respect to the design of the technical parts of the watch and in the aesthetics. CIO: How do you see technologies like RFID, especially with your growing retail network? Bhaskar Bhat: We have been evaluating RFID and feel that it will play a very crucial role across all our products because you can embed so much on the products using RFID. You can extract a lot of information and it is a very attractive area of opportunty for us. We will start with jewelry and tracking of inventory. For instance, we provide a guarantee for our watches and if there is any defect, the consumer can bring it back. Using RFID, we can get information on when the watch was produced, the batch number, and so on. We already have pilots running for jewelry, and plan to do something with RFID and watches next year. CIO: Tell us about your vision for Titan’s IT department? What are the challenges you foresee for it with Titan’s global expansion? Bhaskar Bhat: Actually, our global expansion plans will not make any difference to our IT setup. For instance, we have opened an office in Hong Kong, and the people there are seamlessly connected to our SAP systems. We are also building portals for all our distributors to use. Nowadays, people are talking about the death of distance. The vision for the IT department is to build a robust information system and to align the same with the business needs of the organization, so that the company's future requirements are met. CIO: What challenges have you faced in developing synergies between your IT and HR departments, with the danger of losing talent to IT-services companies?
Bhaskar Bhat:
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We have got specific programs for this. First of all, we have addressed the problem of attrition at a very basic level by creating a separate pay and perks system focusing on the IT staff, differentiating them from the rest of the organization. Additionally, the IT function is so attractive within Titan that people from other departments have begun to move to IT. So, we have created a mobility policy in HR, which enables employees who are qualified to work on IT projects to do so. But, the culture-enabling thought in the organization is most important that IT is integrated into the company and that IT people are seen as part of the team. So, it is not just the money or the job that makes them work with us; it is the culture that we have created that makes them want to work for Titan. Therefore, I wouldn't want to bracket it as just an HR initiative. There is a strong sense of belonging that we have created, and this ultimately helps us to tackle attrition. CIO: What motivates a manufacturing company like Titan to keep IT in-house?
Bhaskar Bhat: We have benefited a great deal by keeping IT in-house. It is not just about cost-cutting. We feel that IT is such a critical function that we don't want to outsource it. The way we are growing, there are fire-fighting issues, development issues and long-term issues.
If you have an IT team that is in-house, it will be totally aligned to the vision of the company. The sheer commitment of the IT employees will help us achieve our goals faster and in an easier manner. If you outsource it, it is seen as a business. When it is done in-house, the commitment of the people working on the IT project is higher. This again is created by the sense of belonging. We have people who visit the shop floor at midnight to see if the disaster recovery systems are working. This sort of commitment is not something that you can get if you outsource.Another problem with outsourcing is that creativity doesn't blossom. We have IT people working with brand managers of the jewelry business, who are telling them how IT can solve issues. You can outsource something like traveling, but business driven creative solutions will only emerge when things are done in-house. CIO: How do you see the role of a CIO evolving?
Bhaskar Bhat: The CIO has access to information as well as processes in our company. He is involved in the development of business plans. I think that the CIO's strategic role is increasing, and it will grow further in terms of strategy development. Because of process orientation and process knowledge, our CIO is already the corporate quality head. The CIO here also handles the knowledge and business excellence management role, and this is a very strategic role. The CIO can also play a major role in the think tank of the company, which mostly comprises the top management. But since the top management is very much hands-on in running the company, the CIO is in the best position to stand apart and facilitate the thinking process of the company. CIO: Could you offer some insights into how Titan manages the supply chain?
Bhaskar Bhat: Today, the company is able to collect data on every single sale. We have developed advanced forecasting tools, which can take this past data and help us to forecast what will happen in the future. These forecasts are then vetted by our sales people. Since the entire supply chain rides on the IT backbone, this knowledge can be fed back to the manufacturing units and is used to design better products. 87
