Impact of Merchandising on Sales of Luxor Writing Instruments Essay Example

new retail forms, growing consumer price and value sensitivity, diminishing role of man marketing. To protect their profits, companies have primarily responded by cutting their costs, re-engineering their processes and downsizing their work forces.

Yet even if companies succeed in cutting their costs, they may fail to increase their revenue if they may fail to increase their revenue if they lack marketing vision with marketing know-how. It is therefore necessary for companies to formulate broad strategy and define a specific marketing mix and action plan to optimize their long run profitability. The company can build in a set of controls so that it can evaluate results and operate as learning organization constantly improving its marketing know-how.

If we meet today's tougher Indian consumers they are more demanding, inquisitive, discriminating. They are no longer content with planned obsolescence they are no longer willing to tolerate products that break down, they insists on high quality goods they have time, energy and calories; preserve the environment' come from a manufacturer they think is socially responsible. This means that companies have to work harder to gain and keep the confidence of Indian consumers, especially those who have been switching brands.

For firms that have responded well to this challenge, an important milestone has been reached; they are truly consumer-oriented companies practicing the marketing concept. What does this mean: These firms talk to consumers to discover their needs and work hard to satisfy them; and they do this in a systematic, goal oriented manner. Firms operating internationally need to be aware that consumer’s desires and expectations can differ by country. Many times, these expectations are quite dissimilar

from Indian Consumers. For e. g. German's are the world's toughest customers for athletic footwear.

They routinely review product specifications and expect retail sales persons to show them that footwear will perform as advertised Italians Spaniards value high efficiency laundry detergents and are able to discuss minor performance destinations among brands. In contrast American's are more interested in the fashionableness of athletic footwear, and are less fastidious about laundry . Marketing has been a neglected area in India for a number of years due to the existence of protective controls and the prevalence of a seller's market in most products.

However, the recent recessionary trends in our economy as well as the increase in educational levels and sophistication of customers has resulted in many of our businessmen finding themselves in a buyer's market unprepared and indulging in heavy and often ineffective advertising. This is an acceptance of the marketing importance is clearly emerging on the Indian horizon at present. Marketing is not a fixed system of concepts. Rather marketing is one of the most dynamic fields within the management arena. The market place continuously throws out fresh challenges and companies must respond.

Therefore, it is not surprising that new marketing ideas keep surfacing to meet the new market place challenges. In the highly competitive world, only those organizations will survive, who respond positively to the fast changing environment. This is more important for Public sector undertaking which until now were working under the protective cover of the state. The survival of such undertakings including the cooperative sector is at state. Unless these improve productivity, efficiency and introduce professionalism in every aspect of business, the

long term survival is not possible.

Thus, the importance of marketing strategies cannot be ignored strategies are the means of achieving the ends. Based on objectives and when applied to business, they govern the firm’s behavior in respect of acquisition, allocation and effective utilization of resources necessary to achieve the predetermined objectives within the given environmental constraints. In fact, they provide an overall direction for the functioning of an enterprise as well as the accomplishment of the enterprise goals strategy can be devised for a nation, Industry or for a firm.

It may be formulated in different areas of business activities such as marketing, finance, personnel, public relations ; production. However, the formulation of strategy for marketing is one of the most complex, dynamic and challenging functions in any business enterprise. Marketing strategy is complex and dynamic both in terms of inputs and outputs. It is vital from the point of view of setting budgets, projecting cash flows and even deciding what products to make or when to buy.

Marketing strategy plays a crucial role by enabling the company to meet its general objectives that is, to ensure survival at a 'Profit' and success in relation to its competitors, market share, market growth etc. To accomplish these objectives, a sound marketing strategy usually outlines a number of tactics. These may include the lowest cost, control over distribution, product differentiation, effective promotion strategy etc. Thus marketing strategy provides the direction not only for marketing departments but for the overall growth of the firm.

Marketing strategy in contrast to marketing planning is concerned with long term development, implementation of policy, long range plans for achieving

the organizational goals, efforts to meet these challenges and threats and also for securing business survival and success. It implies that marketing strategy is concerned more with the improvement of existing products, development of new products, new methods of production, exploration of new markets etc. than with the cut and thrust of day to day operations, which is the current production and sales.

GROWTH DRIVERS

Export thrust TODAY`S Writing Products Limited Terms of quality of pens, India ranks amongst the best in the world, well ahead of even China. But while China exports Rs 5,000 crore worth pens every year, India barely exports pens worth Rs 200 crore. Indian manufacturers are only now beginning to focus on global market. Today's Writing Products Ltd. export plans are being hastened in the wake of thecompany recently becoming the first Indian pen manufacturer to get its own brand of pens sold in Europe through Poundland, Europe's leading single price retailer.

Poundland, which has over 100 stores and a million walk-in customers, has accepted a pen manufacturer to retain its logo on a specially designed packaging. The new packaging will have the logo `Today's by Poundland' prominently displayed. This is indicative of the trend of international buyers switching to Indian writing instrument products. The company will export pens worth $1 million to Poundland in the next one year, with orders over $2. 10 lakh already being booked.

Another area that is opening up for Indian pen manufacturers is the trend among overseas stationary companies to outsource their pen requirements from India . Industry sources say that in the last six months, several foreign companies, including

Wal-Mart, Office Depot and Staples of the US, which have so far been procuring pens from China, have visited India for outsourcing their pen requirements. While at present China has a market share of 10 per cent of the Rs 50,000-crore global writing instruments industry, India has not been able to corner any significant share of the market. Domestic Market - With growing disposable incomes, consumers are upgrading their purchases and luxury items are gradually finding their way into the shopping baskets of even upwardly mobile middle class consumers. B2B Corporate Segment – For gift and customized writing instruments purposes.

NATURE OF THE INDUSTRY

Alliances - Most of the domestic players have strategic alliances with global players. The alliances can be for strategic reasons like Marketing arrangements (Luxor India –Sanford group –Parker, Waterman), technology transfer (Rotomac India with Mitsubishi Japan) and tapping export markets.

Seasonal demand drivers - Schools and examinations, Gifting Occasions (Corporate) Pricing and Margins Traditionally, pen industry experts say that mass-based pens have a profit margin between 10 per cent to 15 per cent. The Parkers make 15 per cent, which goes up to 20 per cent in the school and college opening season. But for the high-end pens like Waterman, the margins vary between 30 per cent to 35per cent. Pricing segmentation - In India the Parker portfolio is broadly divided into functional (Beta, Vector and Reflex priced between Rs 50 and Rs 400) and highline range (Sonnet, Riatio and Frontier priced between Rs 350 and Rs 8,600).

At the US-based $2billion Sanford Group, the makers of Waterman, pens start at Rs 2,000 (for thecheapest range) while

its 18-carat gold limited edition pen retails at Rs 400,000.

Sales will be backed by heavy advertising and Luxor plans to have an outlay of between 15 per cent to 20 per cent of sales. With expectedly low volumes for its high-end brands, the pens will be imported from the US till volumes ‘justify’ it. As of now Luxor will only market them. The import duty on pens is almost 60 per cent. Writing Instruments Industry in India The pen-maker also has plans to treble its existing network of Parker Shop N Shops in the next 14 months. They are in the process of tying up with major departmental stores and high-traffic life-style establishments.

Driving its targeted growth will be the Parker brand, which already accounts for around half of Luxor Writing’s turnover. Luxor Writing’s focus on Parker is expected to lead to a larger utilisation of the brand’s installed capacity of 15 million a year. Also, a shift in favour of Parker away from low priced brands like Luxor, Pilot and Papermate, would mean better realisation for the company. For Parker, LWIL has achieved manufacturing indigenisation to the tune of 80 per cent, with products falling in the range of Rs 65-500 being produced locally.

The remaining 20 per cent, which falls in the premium segment, will continue to be imported. Import duties of writing instruments priced under Rs 100 average 40 per cent, while duties to the tune of 60 per cent have to be coughed up for importing models priced above Rs 100. LINC Pen and Plastics Ltd Linc is a premier manufacturer of quality writing instruments having three

manufacturing bases and seven branch offices to support its activities. On the export front, Linc has a sizeable presence in Asia and other parts of the world. Linc is a major exporter of "ball-pens", "refills", "ball-pen tips" etc. o a number of countries.

To cater the need of highly demanding domestic market Linc has business associations with international giants like Mitsubishi Pencil Co. Ltd, Japan for their uni-ball range and Bensia of Taiwan for their pencils and ball pens. Having a strong presence in the mass segment (below Rs 10 segment), Linc has made a major foray into the high quality market through both assembling and manufacture of some of Mitsubishi's new products in the roller and gel pens segment. The Japanese company is a world leader in Uni-ball pens.

The prime objective of tying up with an international player in the fast evolving writing instruments market was the scope for manufacturing these products at home. Linc is now fully equipped to manufacture these products at its modernised factories in Goa and Kolkata. The company now markets some 15 roller and gel pens of Mitsubishi, which contribute 25 per cent to the total sales turnover of the company. Linc has more than 50 products in its armoury, and is well geared to cater to the vast Indian market for writing instruments, set to grow at an annual average of 15 per cent.

Financials -Revenues of Rs. 62 Crores with exports of Rs. 8 Crores with a PAT Rs. 2 Crores in 2002-2003 (Revenues in 1998-99 was Rs. 2. 2 Crores) Writing Instruments Industry in India LINC – strategic alliances - Bensia of

Thailand (for non-sharpening pencils) and Mitsubishi (writing instruments company) of Japan for the Uniball variety were continuing with great success. Today's Writing Products Limited -while the promoters own about 54 per cent stake in the company, its partner, MonAmi, Korea's leading writing instruments and stationery manufacturer, has 13 per cent.

The rest is with the public. As part of its plans to increase focus on the burgeoning export market for gel pens, Today's Writing Products Ltd, a major player in the pen sector, is planning to set up an exclusive plant.Rotomac today is a leading manufacturer of writing instrument and has now increased the product portfolio under its umbrella. Montex pens The export of the Company's products is to countries that span all of five continents. The company has been primarily in exports for the last few years, but has recently entered the Indian Market, and true to form, has turned out to be one of the leading pen manufacturing brands in the Country. Calcutta based Schefields had a turnover of Rs 10 crore in 1998-99, with around 40 per cent of the revenues coming from exports.

Schefields had started off as an export oriented unit with a factory near Calcutta, exporting most of its products to the west Asian countries. Later the market expanded to Russia, Europe and USA. Schefields is one of India's leading manufacturer and exporter of Gel Pens and Ball Point Pens. It consists of the two companies Schefields Exports and Schefields Ltd. , each of which offers a unique line of products. Schefields gel pens and ball pens have been widely accepted because of the excellence in quality.