Crafts International 1.

0 Executive Summary

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Marketing Plan

Crafts International is startup export organization, the products in which Crafts is dealing are Handicrafts. Crafts is developing its network of supplies of handicrafts from the different parts of the country .In conjunction with the local handicrafts manufacturers Crafts is dealing in the Textile handicrafts, Clay, Metal and Jewellery, Hand knitted carpets ,Stone Crafts, Glass, Ceramic and Onyx, Camel and Snake skin products, Pottery, Costume dolls, Shell and bone products and woodwork. In contrary to that we are developing a market plan for our organization to export our products to Germany. The research is done on the German handicrafts markets in this regard centre for business development for developing countries market survey played a vital role in developing the strategies. The market of handicrafts is on boom and Pakistan share is very less existent in German markets. To fill that gap we are concentrating on the premier hand made handicrafts, to compete with the local competitors in Germany along with the big players in the market like China. The Competition is fierce due to bulk of cheap machine made goods by the competitors; the focus of crafts would be on pure craftsmanship and value addition to the consumers. We will sell initially through the local distribution network which includes, wholesalers, importers, under the contract terms. We have to develop the relationship with the retailers in order to penetrate the market.

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Crafts International 2.0 Introduction

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Marketing Plan

Crafts International is the newly born Export organization which deals in the Textile handicrafts, Clay, Metal and Jewellery, Hand knitted carpets ,Stone Crafts, Glass, Ceramic and Onyx, Camel and Snake skin products, Pottery, Costume dolls, Shell and bone products and woodwork. The purpose of building such an export organization is due to the fact that the handicrafts market has been largely ignored by the Pakistani exporters. Our target market is the Germany, The products under the Crafts international Signature would be totally customized to serve the German likings and standards. This would provide Crafts International with an extra ordinary opportunity for market growth as handicrafts and decorative industry is on boom in Germany. The company has developed its market plan which is as under. 3.0 Situation Analysis The need of exporting handicrafts in German market arises by observing the worldwide trend of handicrafts markets and the share of Pakistani handicrafts in the world markets. As per a report from Federal Bureau of Statistics, handicrafts exports dropped 78 percent in the first half of the 2006.Pakistani handicrafts are losing share in global markets. Export of handicrafts between July and December 2005-2006 stood at Rs334 million, which has been reduced to Rs74 million in first half of 2006-2007. World markets are flooded with artificial machine-made handicrafts instead of handmade ones. Far East markets have been conquered by cheap Chinese goods, while Italy is dominating the European markets owing to lesser prices. The Export of Pakistani handicrafts is less to European markets. (www.fibretofashion.com, Pakistani Handicraft export, Anonymous
January 22, 2007)

The Asian manufacturing industry is highly diversified, comprising of several establishments engaged in manufacturing of pottery, ceramics, clay pieces, paintings, sculptures, metal craft, antique furniture, antique jewelry, gems and stones, textiles, paper craft, toys, leather based products. These industries provide additional employment and raise the level of living for both rural and urban populations. The global handicrafts industry accounts for a market share of 100 billion. This industry plays a dominant role in the economic development of the rural mass of every country and earns substantial foreign exchange (Crafts Central, Craft Industry Overview of Global Handicraft Industry) According to Eurostat Statistics, The European Union gifts and decorative articles market was worth about $ 35 billion. During 2000-2004, the market experienced an average percentage growth of 5.0 %. In 2004, Germany was the largest market, accounting for 24.6% of the total EU markets, followed by France (17.2%), the United Kingdom (15.4%), Italy (13.0%), Spain (7.8%), the Netherlands (4.3%), and Belgium (2.5%). In the field of home decorations, there is a growing demand for products with a personal and emotional touch. Consumers are willing to pay a higher price for unusual and special products. EU consumers value the style, quality of construction and functionality of the product. (CBI, Europe markets survey, 2007).

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Crafts International

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Marketing Plan

The main source of wooden gifts and handicrafts is China which is responsible for 35 percent of the total imports. The difference with other exporters is huge. The imports from China are almost 6 times as large as the runners-up. Not only are imports from China are large, they are also rapidly growing at 15 percent since 2000, whereas imports from Italy, Poland, Indonesia and Belgium all showed a decrease since 2000. Other growing sources are India (+15%), Netherlands (+7%) and Thailand (+4%). (EU
MARKET BRIEF 2007, Compiled for CBI by, tuyu Bv, the Netherlands, 2007)

There is a great potential for Pakistani handicrafts as they are almost less existent in the European markets, Crafts international took it as an opportunity and is looking for foreign export marketing to Germany. The reason to export our products in Germany is due to fact and reports that Germany is the largest consumer of handicrafts and gifts. 4.0 Market Summary Crafts International possess a research on handicrafts and decorative market in Germany by Centre for the promotion of imports from developing countries which is also known as CBI , In the changing world scenario, craft products exported to various countries form a part of lifestyle products in international market. The impact is due to the changing consumer taste and trends. In view of this it is a high time that the Pakistani handicraft industry should go into the details of changing designs, patterns, product development, requisite change in production facilities for a variety of materials, production techniques, related expertise to achieve a leadership position in the fast growing competitiveness with other countries. The rural craft persons of Pakistan who are the backbone of Pakistani Handicraft Industry has God gifted with inherent skill, technique, traditional craftsmanship but that is quite sufficient for primary platform. However, in changing world market these craft persons need an institutional support, at their places. With over 82 million inhabitants, Germany is the largest market for giftware and handicrafts items in Europe. A member of and situated within the European Union, Germany is supplied with giftware and handicrafts from Germany as well as the surrounding European countries such as France, Italy, Switzerland and the United Kingdom and from other parts of the world like Russia, Latin America, Africa and Asia.(Crafts central, Handicrafts markets in Germany) The size of the total German giftware and handicrafts market varies according to the definition of giftware and handicrafts. With its present size around $ 18 billion it corresponds to a broad definition of giftware and handicrafts that includes the following items as home furnishings, art metal ware, table accessories, Christmas decoration, wood ware and furniture, imitation jewelers, artificial flowers/plants, scents/cosmetics, sweets, toys/computer games, books, discs/videos, watches/jewellery, certain apparel/textile items and others. Handicrafts are classified into two categories: 1. Articles of everyday use 2. Decorative items

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Crafts International

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Marketing Plan

The craftsmen use different media to express their originality. The diversity of the handicrafts is expressed on textiles, metals – precious and semi-precious, wood, precious and semi-precious stones, ceramics and glass. Target Markets 1-House hold formation (New Home Builders) 2-Occasional (Christmas, Birthday, Marriages, Thanks giving) 3-Professional Men (Men in age range of 25 -50) 4-Professioanl Women (Women in age range of 35 and 50) 5-Baby Boomers (People with age 55 and above) 4.1 Market Demographics

The profile for typical crafts international customers consists of the following geographic, demographic and behavior factors. 4.1.1 Geographic Germany has the second largest population in Europe and is seventh largest in the area. The territory of Germany covers 137,847 sq miles (Wikipedia, Germany). The target market would be the population of 40 million inhabitants in the six big cities of Germany Cologne / Rhine Ruhr Area Berlin Munich Frankfurt Rhine Main Area Stuttgart Metropolitan Region Hamburg Metropolitan Region Leipzig-Halle-Dresden (Saxon Triangle)
Source :( wikipedia, Demography pf Germany)

11 million 6 million 6 million 5 million 4 million 4 million 4 million

4.1.2 Demographic Trends Age structure of the Germany is monitored by the "Statistisches Bundesamt" (Federal Statistical Office of Germany). The population of Germany is approximately 82,468,000, making it the 14th most populous country in the world. Germany's population is characterized by zero or declining growth with an aging population and smaller cohort of youths. • 0-14 years: 14.7%

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Marketing Plan

• 15-64 years: 67.3% • 65 years and above 18.0% Population growth rate: -0.033% (2007) Birth rate: 9.8 births/1,000 population (2007) Death rate: 10.52 deaths/1,000 population (2007) Germany with the approximately 20 million older people It is forecast that this ageing effect will continue in the near future. . (Wikipedia, Demography of Germany) The ageing society in the Germany also brings interesting developments for exporters from developing countries like Pakistan. These elderly people form an interesting segment, not only because of their growing number, but also for their considerable spending power. Also, because they have an increasing amount of free time, their spending on house, hobbies and vacations are increasing. Value for money remains an important factor for competing in this segment. New household formation, which is an important engine for growth in the gifts & decorative articles market, is not expected to rise substantially in the near future. The number of households in the Germany is increasing by 0.8 % annually. Through developments like ‘dilution’, family households are getting smaller because of the simple fact that people are having fewer children as 2.9 - 3.0 people per household. It is forecast that the number of households will increase more strongly than the growth of the population size in the Germany.(Eurostat, German Demographics,2006) The increasing household formation will increase the target markets. According to Euro monitor, the number of marriages is an important sales driver in the gifts and decorative articles market, as gifts and decorative articles make up a substantial share of the wedding gifts given. According to Eurostat, the German marriage rate dropped from an average of 6.3 marriages per 1000 inhabitants in 1980 to 5.1 marriages in 2002. Many people today choose to delay their marriage until they are somewhat older. This development has some implications for the gifts and decorative articles market, newlyweds today tend to have well-equipped homes, making wedding This segment of population will play a major part in our product 4.1.3 Behavior Factors Following behavior factors play important role in our target market Linguistic factor The linguistic factor seems obvious. The communication partners can have problems with English, the agreed language of transatlantic business. At first we may think of the German partner as the one who makes mistakes, fails to understand quickly enough, and misses a few things. This point of view is simply conventional and unfair. Successful transatlantic communication is not so much the German side rising up to the level of the American side, but both sides finding common ground, a working modus of communication in the Zone. (Eurostat, German Demographics,2006)

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Crafts International Cultural factor

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Marketing Plan

The cultural factor refers to a cultural conditioning which most people are not aware of. Many people only become aware of a different cultural conditioning when they travel abroad and are confronted with different patterns of behavior and ways of seeing things. Thus the significance of cultural behaviors is "hidden." We often only become aware of this hidden significance when someone fails to do as expected, such as not saying goodbye, or not shaking hands. For this reason, experts on culture, such as the anthropologist Edward T. Hall, refer to culture as “hidden" or "silent language."
(Eurostat, German Demographics,2006)

Individualism Consumers are more likely to create comfortable and up-to-date interiors, which reflect their individual style and requirements. These developments also influence the demand for gifts and decorative articles, particularly in the (home) decorative sector. Consumers appreciate one-of-a-kind items, which personalize their homes. Products that have a personal and emotional link to the consumer, which appeal to multiple senses, including sight, sound and scent, are in demand as consumers seek to make their homes more comfortable and comforting. People are seeking decorative articles which contribute to a positive impact on the mood and emotional atmosphere in their home. Next to ‘improving the quality of life’, the following reasons are important for buyers of gifts and decorative articles: pleasure, beautify the home, education, relaxation, and entertainments. (Eurostat,
German Demographics, 2006)

4.2 Market Needs Crafts International in view of the wide range of products that could be considered as giftware and handicrafts, it is difficult to name standards. Compliance with EU standards and regulations is strongly suggested. There are, however, only few product groups in the giftware and handicrafts field that has to follow standards. It is essential that CElabeling be observed where required. The CE-mark (including conformity statement and technical documentation).While the quality regulations for candles are obligatory assuring a certain level of quality, the toy regulation and the electronic standards have to be observed because of safety considerations: To ensure these we are seeking forward to the following benefits that are important for our customers. Quality Craftsmanship The customers work hard for their money and they mostly don’t enjoy spending on gifts, handicrafts or any decorative unless it gives them inner satisfaction and belief of quality. Well thought out designs The objective is to provide customers with well built unique designs and crafts that may touch their sense of beauty every time they choose our product; Affordability is the key

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Marketing Plan

factor, so crafts international will try to maintain the both objectives simultaneously to provide best utilization of customer’s disposable income. 4.3 Marketing Trends The substantial supply of giftware and handicrafts has transformed the German giftware and handicrafts market into a fiercely price-competitive market place. Nevertheless, innovative and new to market giftware and handicrafts items place still have good market prospects. It is essential for the German giftware and handicrafts marketers to find new products to stay competitive. Although German consumers may be willing to pay a high price for exclusive items they are very price conscious and want value for money. Among traditional gift items, candles, festive items, including Christmas decoration, exclusive gift boxes and gift-wrap, ribbons, nostalgic calendars and all types of scented items have best prospects. The German market shows a strong demand for low-priced candles. Thus imports from Poland and China have increased substantially. The average growth for the overall giftware and handicrafts is estimated at 1-2 percent over the years (CBI, German
Handicrafts Market, 2006)

“Seasonality” plays a major role in the buying patterns of gifts and decorative articles. According to the German statistical Report by Statistisches Bundesamt (Federal Statistical Office of Germany), approximately two thirds of decorative articles are sold in the second half of the year. This has much to do with the fact that people spend more time within their homes in this period. Christmas and New Year are also important sales drivers. In springtime, the garden is more important, especially in the Northern European countries including Germany. The peak periods for the sales of gifts generally revolve around special occasions, such as Christmas and New Year, Valentine’s Day, Easter, Mother’s Day and Father’s Day. (CBI, German Handicrafts Market, 2006) German consumers are generally not very familiar with the different brands of gifts and decorative articles, as can be derived from the high market share for private label products. Most consumers do not believe that famous brands automatically mean better quality. Brand awareness, however, differs per product group. In the Ceramic ware, and Glassware sectors, brand awareness is generally higher than in the other segments, mainly due to the marketing efforts of the manufacturers in these sectors. In the higher end of the market, brand awareness is generally higher. Examples of brand names (mainly operating in the higher segments) are Ginori, Waterford-Wedgwood, and Arc. Advertising is another marketing trend .The trade press and trade fairs are important means for gifts and decorative articles manufacturers to promote their products. This indicates that most manufacturers target their advertising efforts towards specialist buyers and push their products into the distribution chain. The retailers selling gifts and decorative articles to the consumer use the media, catalogues, and Internet and consumer fairs to promote their products. (CBI, German Handicrafts Market, 2006) The market trends show continuous growth in the directions of handicrafts market in Germany .

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Crafts International 4.4 Market Access and Growth

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Marketing Plan

EU member states and Asian countries, China in particular, are major suppliers of giftware and handicrafts to the German market. Crafts International is making an approach to the German market have to have comprehensive product literature and data sheets professionally translated into German. Although English is widely understood, a well-prepared translation gives an important marketing edge, particularly in the initial presentation. Crafts International should preferably appoint an agent or distributor who can maintain a stock sufficient to answer short-notice orders. The Growth of Handicrafts is on boom with china as the major supplier to the Germany handicrafts markets the market growth at $ 5,115.5 millions in 2004 and is estimated to grow at this pace .The largest share of 26.4 % is held by Germany in the overall EU markets (CBI, German Market statistics,2004)

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Crafts International 5.0 SWOT ANALYSIS Strengths 6.0 Competition

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Marketing Plan

Opportunities 1-Rising appreciation for handicrafts by consumers in the developed countries 2-Widespread novelty seeking 3-Large discretionary income at disposal of consumer from developed countries 4-Growth in search made by retail chains in major importing countries for suitable products and reliable suppliers. 5-Opportune for agencies to promote marketing activities 6-Use of e-commerce in direct marketing

1-Abundant and cheap labor hence can compete on price. 2-Low capital investment and high ratio of value addition. 3-Aesthetic and functional qualities 4-Hand made and hence has few competitors. 5-Variety of products which are unique 6-Exporters willing to handle small orders. 7-Increasing emphasis on product development and design up gradation

Threats 1-Decline in Pakistan share in international handicrafts markets due to: 2-Better quality products produced by competitors from Europe, South Africa, South Asia, etc. 3-Better terms of trade by competing countries Consistent quality and increasing focus on R&D by competing countries 4-Better packaging and Stricter international standards

Weaknesses 1-Inconsistent quality and Inadequate market study and marketing strategy 2-Lack of adequate infrastructure and communication facilities 3-Capacity to handle limited orders 4-Untimely delivery schedule 5-Unawareness of international standards by many players in the market

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Marketing Plan

German handicrafts market was of $ 5,115.5 millions in 2004 and is estimated to grow at this pace .The largest share of 26.4 % is held by Germany in the overall EU markets German giftware and handicrafts consumption is growing. Thus, there are expectations for additional growth. In general the market shows good business opportunities if prices and quality are competitive and delivery schedules are fulfilled. The competition we could face from local and foreign competitors. 6.1 Local Competitor A few well-established German manufacturers of giftware and handicrafts items are: 1. Koziol GmbH, Erbach 3. Barti GmbH, Garching 5. Duni GmbH & Co. KG, Bramsche 7. Rastal, Hoehr-Grenzhausen 9. Fartak, Lahr 11. GIES Kerzen, Glinde 13. Jet Papier GmbH, Bernau
Source (Germany Bead Stores, Listed by Store Name)

2. Krebs-Glas-Lauscha GmbH, Ernstthal 4. Margarete Steiff GmbH, Giengen 6. WMF AG, Geislingen 8. Rosenthal AG, Seib 10. W. Goebel Porzellanfabrik, Roedental 12. Walther-Glas GmbH, Bad Driburg

6.2 International Competitors Fierce price competition in Germany is intensified by the increasing quantity of Chinese and Asian made products on the market. For Pakistani organizational like Crafts International this situation is exclusive to Pakistani handicrafts items or new-to-market products. This means that firms offering exclusive and niche market giftware and handicrafts could be proved successful. Germany is supplied by giftware and handicrafts from nearly all of the European countries. German firms often import specific product groups from a particular country. Major suppliers of pottery are, for example, Spain and Portugal; fine exclusive stationery comes from Italy, France and Switzerland; candles from Poland, China and Portugal; dried flowers from the Netherlands etc 7.0 Product Offering Crafts International will offer following products in German markets. Handicrafts are characterized as products depicting a cultural trait of a specific region or time and produced by hand or foot having traditional or artistic features derived from the geographical peculiarities of craftsman and generally on small or cottage industry and not on mass production basis. There is following different kinds of handicrafts produced in Pakistan which we will offer to the German Markets.

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Crafts International • Textile based handicrafts

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Marketing Plan

Hand printed textiles including block and screen printing, hand printing by pen, tie and die are used in products ranging from bed-covers to sheets, dress material to upholstery and tapestry. The famous embroidered articles of silk and cotton often embellished with mirrors, shells, beads, and metallic pieces. • Clay, Metal and Jewellery Brass, copper, bronze, metal is used for a variety of wares and in a variety of finishes. Scintillating ornaments are available in a wide range of patterns, styles and compositions. Made from precious metals, base metals, precious and semi-precious stones; these ornaments have traditional as well as modern styles. • Woodwork

Wooden articles in Pakistan range from the orient ally carved to the absolutely simple. One can find toys, furniture, decorative articles, etc. bearing the art and individuality of the craftsman. • Stone Craft

The intricately carved stoneware made of marble, alabaster or soapstone • Glass ,Ceramic and Onyx

Glass, ceramic and onyx products are a fast upcoming segment in the handicrafts from Pakistan • • • • • Camel and Snake skin Products Pottery Hand knitted carpets Shell and bone products Costume dolls

Craft concentration Areas:

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Marketing Plan

A wide range of handicrafts are produced in all the four provinces of Pakistan and Azad Kashmir, Punjab is richly famous for its traditional crafts ,with Sindh, Balochistan and NWFP have unique traditions of handicrafts . 8.0 Critical Issues As a startup export organization, Crafts international have some critical issues to face that are as follows:8.1 Matching products and the product range Matching products and the product range is critical because a German importer can select a suitable business partner if he/she knows exactly what range we can offer. A precise review of the product range, therefore, aims at identifying the most suitable candidates out of the many potential customers. A product range consists of several product groups (range width), each with several different products (range depth). One product can have several variations. 8.2 Product design In general, the gifts and decorative articles market is becoming more seasonal, taking its lead from the fashion industry. According to Euro monitor, product innovation and design are important growth drivers in the gifts and decorative articles market. The different consumer groups all have their own requirements. Also, between countries there can be profound differences, as Euro monitor puts it; success of a particular design in one market is no guarantee of its success in another market. We should point out that taste and design preferences are very personal. 8.3 Presentation of our products A German importer for Crafts International products can only select us as a suitable business partner if he/she knows exactly what range we can offer. It is therefore wise to compose a list all the products we produce, together with their varieties. Furthermore, state their color, size, the period in which we are able to supply them and the packaging method. This enables potential customers to make an appraisal of our complete product range. It is very important to keep the list up-to-date. The presentation of our products and its range should be flexible, so that adjustments and changes can be made, if the need arises. 8.4 Packing of our products Besides a protective function, packaging is also very important when selling the product. An attractive design can have a sales promoting affect. Today’s consumers want to know what they are buying. Therefore, it is important, as a minimum, to mark the product name, special materials used in the production, name or sign of the producer, country of origin. The label on the article has to provide these data in a language comprehensible in the target market.

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Marketing Plan

8.5 Building up a relation with a suitable trading partner

Among the many potential customers, we must identify those who match our own company profile and product range and are therefore most suitable for building up a relationship. Checking our potential trade partners’ financial status, credibility, and reliability would be a good source for information about our (potential) trading partners. In this regard we found Dunn & Bradstreet (http://www.dnb.com). It is the company which has specialization in sourcing reliable, consistent and objective credit information about potential trading partners. At the end of the identification phase, it should be possible for us to select the names and addresses of suitable trading partners. Generally, a concise but detailed inquiry improves the chances of precise identification. 8.6 Drawing up an offer There are two different kinds of offers which we can make to our potential trading partners General and specific. The purpose of a general offer is to make the first contact with potential trading partners with whom we are not yet personally acquainted. A general offer consists of sending a short profile of our own company and a summary of our products range. A specific offer is legally binding for a certain period. We must therefore be capable of fulfilling the terms of such an offer. We should make up a specific offer only when we know the business partner personally or after we have made the initial contact. A specific offer should consist of two parts: a written offer and a product sample. 8.7 Quotations It is best for us to quote prices on an FOB or CIF basis in US$, We know that the exchange rate between the US$ and the €(Euro)varies, influencing the eventual prices at the moment of transaction. Due to these fluctuating exchange rates, we would not guarantee the product prices over an extended period of time, but we will quote prices linked to a date and exchange rate. Regarding the final price of the product, transactions we must always be subject to a final confirmation. This avoids problems with fluctuating exchange rates.
8.8 Handling the contract

Differing customs, habits and traditions can cause problems in business relationships, even after both partners have carried out sound preliminary investigations. To prevent problems, we will make use of a contract. This written agreement is common practice in most Western countries. Many partners would be satisfied with a simple letter of agreement, some even with verbal arrangements (which are legally binding for the parties). But the safest way is to write

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Crafts International 8.9 Contract terms: • • •

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Marketing Plan

We would use following contract terms The delivery conditions according to Incoterms. When delivering for the first time, we will deliver the goods free of commission and freight-paid.

8.10 Contract fulfillment We will follow these contract fulfillment procedures:• We will procure the delivery documents in good time. • If there is a supply agreement, we will comply strictly with all parts. • If we cannot comply with any part of the agreement (e.g. due to delivery delays or quality problems), we will inform the customer clearly and in good time. • We will Co-operate on a partnership basis and seek a common solution if conflicts arise. • We will fulfill the contract in high priority, particularly when delivering for the first time. 8.11 Terms of payment The determination of payment conditions for a regular export transaction is part of the package of negotiations between crafts International and its buyer. We would demand the largest possible guarantee of financial coverage for the goods we supply according to the sales contract. We will use the irrevocable method for our first trading. Then further Letter of Credit (L/C) and then, later on, we will trade on the basis of “documents against payment” (D/P) 8.12 Sales promotion One of the major critical success factors for us would be to offer sales promotion. The objective of sales promotion is to increase sales. Methods of sales promotion are i.e. giving free samples, discounts, coupons, etc. Sales promotions develop and expand customer relations, which obligate the selling company to take good care of existing customers (continuity). This would includes expressions of thanks to business partners, regular updates on the product range; supplying brochures of the product range may be useful for promoting sales just like keeping business partners up-to-date on recent product development 9.0 Marketing Strategies The key to marketing strategies is focusing on the delivery of premier hand made articles to the consumers .Crafts International is the organization which would serve the different segments depending upon their category, like the German markets will be considered

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Marketing Plan

Niche for us as we will target the group of people who are actively involved in household formation, newly wed couples who would also be the part of target market, as they are more interested in decorating their homes, Thirdly we would be good option for youngsters in our jewelry category , to fulfill their fashion needs , to serve all these markets we need to develop a marketing strategy of positioning our products keeping in minds our market objectives we have developed our marketing mix of price ,distribution which is in the report. 9.1 Mission Crafts International has a mission to provide a sense of belongingness to personal aesthetics by providing the premier products of true craftsmanship .With a strict adherence to this maxim, success will be ensured; Our products will exceed the expectation of the customers. “Premier Craftsmanship” “We will change your view of beauty” 9.2 Target Markets The target markets are divided into following types 1-House hold formation (New Home Builders) 2-Occasional (Christmas, Birthday, Marriages, Thanks giving) 3-Professional Men (Men in age range of 25 -50) 4-Professioanl Women (Women in age range of 35 and 50) 5-Baby Boomers (People with age 55 and above) 1-House hold formation (New Home Builders) New household formation, which is an important engine for growth in the gifts & decorative articles market, is not expected to rise substantially in the near future. The number of households in the Germany is increasing by 0.8 % annually. Through developments like ‘dilution’, family households are getting smaller because of the simple fact that people are having fewer children as 2.9 - 3.0 people per household. It is forecast that the number of households will increase more strongly than the growth of the population size in the Germany.(Eurostat, German Demographics,2006) The increasing household formation will increase the target markets. According to Euro monitor, the number of marriages is an important sales driver in the gifts and decorative articles market, as gifts and decorative articles make up a substantial share of the wedding gifts given. According to Eurostat, the German marriage rate dropped from an

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Marketing Plan

average of 6.3 marriages per 1000 inhabitants in 1980 to 5.1 marriages in 2002. Many people today choose to delay their marriage until they are somewhat older. This development has some implications for the gifts and decorative articles market, newlyweds today tend to have well-equipped homes, making wedding this segment of population will play a major part in our product 2-Occasional (Christmas, Birthday, Marriages, Thanks giving) Seasonality plays a major role in the buying patterns of gifts and decorative articles. According to the Report by “Statistisches Bundesamt" (Federal Statistical Office of Germany), approximately two third of the decorative articles is sold in the second half of the year. This has much to do with the fact that people spend more time within their homes in this period. Christmas and New Year are also important sales drivers. In springtime, the garden is more important, especially in the Northern European countries including Germany. The peak periods for the sales of gifts generally revolve around special occasions, such as Christmas and New Year, Valentine’s Day, Easter, Mother’ 3-Professional Men Men between the ages of 25 and 50 who are professionals, They earn in excess annually, They seek to enjoy their home and communicate a "successful" image and message to their contemporaries. They buy big when they receive a promotion, a bonus, or an inheritance. They will be part of our target market. 4-Professional Women The most dominant segment of the five is comprised of women in the age range of 35 to 50. They are married, have a good combined income, own at least one home, and are socially active at and away from home. They have discretionary income and their home and how it looks is a priority. The appearance of where they live communicates who they are and what is important to them. They spend lot of money on house hold decorative items .They will be the part of our target market. 5-Baby Boomers This group, typically ranging in age from 50 to 65, is going through a positive and planned life transition. They are changing homes (either building or moving) or remodeling due to, retirement plans, general downsizing desires, or to just get closer to the golf course. Their surprisingly high level of discretionary income is first spent on travel, with decorating their home a close second. They will contribute to a good extent to our target market.

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Marketing Plan

9.3 Positioning Crafts international will position it as a premier Handicrafts Company, Who would create an image of “Conceptualizing the Beauty”. Its innovative hand made crafts will really serve the purpose of real sense of satisfaction among the customers. 10.0 Strategies We will use following strategies in our marketing mix 10.1 Marketing Mix Our Marketing mix consist of following categories 1-Price The price of our products will be on the per unit basis, it will depend on the category of the product, the type of work, the more precious craft work will be charged higher in comparison to the other products. 2-Distribution In Germany, the giftware and handicrafts are distributed through seven major channels. 1. 2. 3. 4. 5. 6. 7. Wholesalers Importers/distributors Commission agents/sales representatives Department stores Mail-order Internet sales Tele-shopping

We will use these seven channels of our product distribution 1-Wholesalers: Besides offering wide range of goods to retailers for direct sales, this channel also supplies large quantities of individual articles. They are very particular in maintaining consistency in the kind of products and their quality. One of the distinguishing features of wholesalers is to provide distribution and storage facilities. Specialized wholesalers deal in sales to retailers as well as to final consumers. They maintain high quality standards and but have a narrower and in-depth range of arts and crafts.

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2-Importers/distributors Most giftware and handicrafts companies use importers/distributors to market and sell their giftware and handicrafts lines. They buy and sell on their own account. Thus, the companies take advantage of the distributor's expertise, his sales force and his existing distribution channels. Distributors call on giftware and handicrafts retailers, purchasing groups and supermarkets. The distributors' mark-up varies depending on the giftware and handicrafts item, but at least 50 percent. While the mark-ups vary according to the distributor; they usually also depend on the exclusivity of a product and on its competitiveness in the overall giftware and handicrafts market According to a report of CBI, Germany hosts more than 45,000 giftware and handicrafts retailers. Several retailers import directly from all over the world and sell to the German customer. Usually these are small companies looking for items new to the market and handling small orders only. 3-Commission agents Commission agents provide companies with direct access to the German market and direct control. Independent commercial agents are normally working on a 15 percent commission and operate on a regional basis. They concentrate on specialist retailers, purchasing groups and department stores. Commission agent contracts are based on stringent EU and German regulations. In order to facilitate market entry efforts by the agents their initial commission is often a few percent higher than the "usual" commission. These additional payments are to reimburse the agent for substantial advertising and any special efforts facilitating the new product's market entry. 4-Department Stores We are also interested in establishing business contacts with major department stores. Department stores in particular, prefer to deal directly with manufacturers. Their buyers are very specialized and only handle a limited range of products. At some occasions department stores also buy through independent commercial agents. Quite often they have their own buyers as well as a few agents that usually work with them and who know their assortments. If a department store decides to import a particular giftware and handicrafts item, it places bulk rather than small orders. 5-Mail Order On an average, each German consumer buys products totaling to $300 each year from mail-order houses. There are about 200 mail order companies in Germany. In Europe, Germany is the largest mail order market, followed by Great Britain and France. The total European market volume for mail order products is estimated at approximately 50 billion. Of the 20 major mail order companies in Europe, 12 have their headquarters

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Crafts International

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Marketing Plan

located in Germany. Among them are the world's largest mail order companies: Otto Versand in Hamburg and Quelle Schickedanz AG & Co. in Fuerth. (Crafts Central, German Markets). They will be our prospect distributors. 6-Internet Sales Germany has become the market leader among the EU countries with regard to sales over the Internet. It is anticipated that by then German electronic sales, which are estimated to reach a volume of $250 billion worldwide in 2007, become second in the worldwide ranking after the United States and before Japan. A typical German Internet user and a major German mail-order publication is between 20-39 years old, is highly educated and earns more money than the average German consumer. This age group consists of about 4.5 million Germans. Seventy percent of these consumers are male. Already today, the Internet is a major sales channel for German mail-order houses (Crafts Central, German Markets).Internet sales will be a major part our distribution in future. 7-Teleshopping QVC and HOT are the two tele-shopping channels in Germany. They operate all over Germany and offer various types of giftware and handicrafts; jewellery, fashion, health, beauty; household consumer goods; collectibles and home accessories. They are our prospect distributors.

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Marketing Plan

11.0 Financials Following are our sales forecast for five years. The figures are conservative and they will steadily rise, as long as our target market increases the sales will increases gradually. 11.1 Sales Forecast Sales forecast product wise
Sales in Dollars $ Textiles Handicrafts Clay,Metal and jewellary woodwork stone craft glass, ceramic and onyx camel and snake skin products pottery hand knitted carpets costume dolls shell and bone products Total sales Direct Cost of sales Textiles Handicrafts Clay,Metal and jewellary woodwork stone craft glass, ceramic and onyx camel and snake skin products pottery hand knitted carpets costume dolls shell and bone products Total cost of sales 2007 $ 6000 $ 8500 $ 12000 $4000 $ 3000 $ 4000 $ 2500 $ 7800 $ 3600 $ 2000 $ 53400 2007 $ 3800 $ 2500 $ 8500 $ 1010 $ 1500 $2300 $1800 $3500 $1100 $820 $26830 2008 $ 7100 $ 9400 $15000 $4200 $3600 $5000 $3000 $8200 $4000 $2500 $62000 $2008 $4300 $2800 $7500 $1250 $2200 $2600 $1900 $4000 $1500 $1300 $29350 2009 $ 8500 $ 10200 $16300 $5500 4500 $6000 $4000 $9000 $5600 $3000 $72600 $2009 $5000 $3200 $9000 $1620 $2580 $2752 $2500 $5622 $2200 $1600 $36074 2010 $ 9500 $ 11600 20000 $7000 $5000 $7500 $5500 $10000 $6200 $4000 $86300 2010 $5200 $3600 $9800 $1800 $3000 $3200 $3500 $7000 $3200 $2300 $42600 2011 $ 11000 $ 13000 $25000 $10000 $6000 $8500 $6500 $12300 $8000 $5600 $105900 2011 $5400 $4400 $10230 $2500 $3600 $3800 $4000 $8500 $4500 $2900 $49830

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Crafts International

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Marketing Plan

11.2 Gross Margin The objective is to maintain the gross margin from 48-53%
Gross Margin
Sales Direct cost of goods Other Cost Total cost of goods sold gross margin gross margin % 2007 $53400 $26830 $0 $26830 $26570 49.7 2008 $62000 $29350 $0 $29350 $32650 52.6 2009 $72600 $36074 $0 $36074 $36526 50.3 2010 $86300 $42600 $0 $42600 $41000 47.5 2011 $105900 $49830 $0 $49830 $56070 52.9

11.3 Breakeven Analysis Break even analysis is $2200 which will be required in monthly sales revenue to reach the break even point.

Breakeven point = Where line cuts zero Break even analysis Monthly units break even Monthly sales break even Per unit price $2.4 900 $2200

11.4 Marketing Expenses The monthly expenses are estimated at average $350 which includes brochures, and reading material relevant to the product.

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Marketing Plan

12.0 Controls The purpose of Crafts international marketing plan is to serve the purpose of guide for the organization. The following areas will be monitored to gauge the performances     Revenue monthly and annually Expenses monthly and annually Customer satisfaction New product development

13.0 Contingency Planning Difficulties and risk  An entry of more cheap goods in the market by the established competitors Worst case Risks Include  Determining that the business cannot support itself on ongoing basis  Having to liquidate equipments or intellectual capital to cover the liabilities.

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14.0 References C 1-Centre for the promotion of imports from developing countries (www.cbi.nl) 2-CBI, Europe markets survey, 2007(www.cbi.nl/marketinfo)
3-MARKET BRIEF 2007, Compiled for CBI by, tuyu Bv, the Netherlands, 2007(www.cbi.nl/eugift.pdf) 4-CBI, German Handicrafts Market, 2006(www.cbi.nl/germanmkt) 5-Crafts central (www.craftscentral.com) Crafts central, Handicrafts markets in German (www.craftscentral.com/worldwideinfo.html)

Crafts Central, Craft Industry Overview of Global Handicraft Industry
(www.craftscentral.com/worldwideinfo.html) E

7-Eurostat, German Demographics, 2006(www.cbi.nl/eurostat)
F

8-www.fibretofashion.com, Pakistani Handicraft export, Anonymous January 22, 2007
G

9-Germany Bead Stores, Listed by Store Name (www.howtogermany.com)
W .10-Wikipedia, Germany (www.wikipedia.org/germany)

11-Wikipedia, Demography of Germany (www.wikipedia.org/demography_of_germany)

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