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A

Major Project Study Report On


Titled
“A Study of Brand Preference towards Men’s Wear”
(Special Reference to Pant & Shirt)
Shirt
Submitted in partial fulfillment for the
Award of degree of

Master of Business Administration


Submitted to
Rajasthan Technical University, Kota
(www.rtu.ac.in)
Session 2008-2010
Under the Guidance of: Submitted By:
Nisha Jain Gaurav Kumar Tiwari
Project Guide & Faculty MBA IVth Sem.

 Vision School of Management


(Affiliated to Rajasthan Technical University & Approved by A I C T E)
Udaipur Road, Chittorgarh (Raj.)
E-mail: vision_mgmt@yahoo.com
Website: www.visionmanagement.org

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Preface

MRP is prepared as the partial fulfillment for Two-Year degree


Program of MBA curriculum of Rajasthan Technical University, Kota. It is
expected from an MBA to possess a good communication & effective presentation
skills.

Objectives of the project report are:-

• To study brand preference.


• To study the consumer behavior.

The research provides an opportunity to a student to demonstrate application of his/her knowledge,


skill and competencies required during the technical session. Research also helps the student to devote
his/her skill to analyze the problem to suggest alternative solutions, to evaluate them and to provide
feasible recommendations on the provided data.

Although I have tried my level best to prepare this report an error free report every
effort has been made to offer the most authenticate position with accuracy.
This report contains a number of additional features.

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DECLARATION

This is to certify that Market Research Project Report on “A


A Study of Brand Preference towards
Men Wear Special Reference to Pant & Shirt”
Shirt submitted by me in Masters of Business
Administration Program from Vision School Of Management, Chittorgarh [Rajasthan technical
university, Kota] is my original work and the project report has not formed the basis for the award of
any diploma, degree, associate ship, fellowship or similar other titles. It embodies the original work
done by me under the able guidance and supervision of Nisha Jain (Guide & Faculty) Vision School
of Management, Chittorgarh.

------------------------------ ----------------------------
Nisha Jain Gaurav Kumar Tiwari
Project Guide M.B.A. IV Sem.
Date--------------------- Date-------------------

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ACKNOWLEDGEMENT

The successful completion of a Market Research Project Report requires guidance & help
from a number of people. I was fortunate to have all the support from my teachers. I therefore
take this opportunity to express my profound sense of gratitude to the all those who extended
their whole hearted help and support to me in completing the project study report work on
A Study of Brand Preference towards Men Wear
Special Reference to Nimbahera

I also express my deep sense of gratitude to Nisha Jain (Guide & Faculty), who has helped
us to do our project. We also thank to other faculty of VSM & respondents for his valuable
help in each stage of the project. Because of his co-operation and continuous guidance
successful completion of this project study report was made possible.
I am sincerely thankful to Dr. A.L. Jain (Director, Vision School of Management) for
allowing me to undertake the report and making available all facilities for the successful
completion of the report besides guiding me to pursue the study on proper line.
I also express my deep sense of gratitude towards Mr. Mukesh Kumawat, Mr. Vibhor
Paliwal, Mr. Rahul Jain, Ms. Pratibha Pagaria, Ms. Shobhika Tyagi (Faculty), P.L.
Dashora (Librarian) & all faculty members.
No Acknowledge would suffice for the support my family members, my training colleagues,
classmates & friends. Lastly, I extend my thanks to all those whose name have not been
mentioned way in successfully carrying out the project report.

ThankingYou:

Gaurav Kumar Tiwari

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EXECUTIVE SUMMARY

The project have to learn both the art and science of retailing by closely following how the other parts
of the world are organizing, managing, and coping up with new challenges in an ever-changing
marketplace. In the project use innovative retail formats to enhance shopping experience and try to
understand the regional variations in consumer attitudes to branded garments. In report put the efforts
in the following aspect to improve its Brand Image:

1. Advertising, promotions, and campaigns to attract customers have to bedesigned and


executed to build loyalty by identifying regular shoppers and offering benefits to them.
2. Efficient management of high-value customers is vital.
3. Monitoring customer needs constantly must be done with long-term relationships in view.
4. It must improve its brand image from discounted good

Retailing sector of India can be split into two segments. They are the informal and the formal retailing
sector. The informal retailing sector is comprised of small retailers. For this sector, it is very difficult
to implement the tax laws. There is widespread tax evasion. It is also cumbersome to regulate the
labour laws in this sector. As far as the formal retailing sector is concerned, it is comprised of large
retailers. Stringent tax and labour laws are implemented in this sector. If the retail industry is divided
on the basis of retail formats then it can be split into the modern format retailers and the traditional
format retailers. The modern format retailers comprise of the supermarkets, Hypermarkets,
Departmental Stores, Specialty Chains and company owned and operated retail stores The traditional
format retailers comprise of Kiranas, Kiosks, Street Markets and the multiple brand outlets. The retail
industry can also be subdivided into the organized and the unorganized sector. The organized retail
sector occupies about 3% of the aggregate retail industry in India.

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Table of Content

 Certificate I
 Preface II
 Declaration III
 Acknowledgement IV
 Executive Summary V
 Table of Contents VI

Chapter No. TITLE PAGE NO.


1 Industry Introduction 1-32

 Company Profile & Their Products 33-46


2 Conceptual Framework 47-75
3 Review of Literature 76-86
4 Research Methodology 87-90

 Data Analysis & Interpretation 91-105

• Finding & Conclusion 106

• Suggestion 107

• Bibliography 108

• Annexure 109-110

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Chapter No.: 01

Indian Textile Industry

The textile industry is the largest industry of modern India. It accounts for over 20 percent of
industrial production and is closely linked with the agricultural and rural economy. It is the
single largest employer in the industrial sector employing about 38 million people. If
employment in allied sectors likes ginning, agriculture, pressing, cotton trade, jute, etc. are
added then the total employment is estimated at 93 million. The net foreign exchange
earnings in this sector are one of the highest and, together with carpet and handicrafts,
account for over 37 percent of total export earnings at over US $ 10 billion. Textiles, alone,
account for about 25 percent of India’s total for ex earnings.

India’s textile industry since its beginning continues to be predominantly cotton based with
about 65 percent of fabric consumption in the country being accounted for by cotton. The
industry is highly localized in Ahmedabad and Bombay in the western part of the country
though other centers exist including Kanpur, Calcutta, Indore, Coimbatore, and Sholapur.

The structure of the textile industry is extremely complex with the modern, sophisticated and
highly mechanized mill sector on the one hand and the hand spinning and hand weaving
(handloom) sector on the other. Between the two falls the small-scale power loom sector.
The latter two are together known as the decentralized sector. Over the years, the
government has granted a whole range of concessions to the non-mill sector as a result of
which the share of the decentralized sector has increased considerably in the total production.
Of the two sub-sectors of the decentralized sector, the power loom sector has shown the faster
rate of growth. In the production of fabrics the decentralized sector accounts for roughly 94
percent while the mill sector has a share of only 6 percent. Being an agro-based industry the
production of raw material varies from year to year depending on weather and rainfall
conditions. Accordingly the price fluctuates too. India's trade in textiles and its share in
world trade can be categorized as follows:

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India’s Trade in Textiles

(1998)

Type India's Share in


World Trade Compound Annual Growth Rate (CAGR) of
different segments

Yarn 22%
Fabrics 3.2% Type CAGR (1993-98)
Apparel 2%
Yarn 31.79%
Made-ups 9%
Fabric 9.04%

Made-ups 15.18%
Over-all 2.8%
Garment 6.795%

Global Scenario

The textile and clothing trade is governed by the Multi-Fibre Agreement (MFA) which
came into force on January 1, 1974 replacing short-term and long-term arrangements of
the 1960’s which protected US textile producers from booming Japanese textiles exports.
Later, it was extended to other developing countries like India, Korea, Hong Kong, etc.
which had acquired a comparative advantage in textiles. Currently, India has bilateral
arrangements under MFA with USA, Canada, Australia, countries of the European
Commission, etc. Under MFA, foreign trade is subject to relatively high tariffs and
export quotas restricting India’s penetration into these markets. India was interested in
the early phasing out of these quotas in the Uruguay Round of Negotiations but this did
not happen due to the reluctance of the developed countries like the US and EC to open
up their textile markets to Third World imports because of high labour costs. With the
removal of quotas, exports of textiles have now to cope with new challenges in the form
of growing non-tariff / non-trade barriers such as growing regionalisation of trade
between blocks of nations, child labour, anti-dumping duties, etc.

Nevertheless, it must be realised that the picture is not all rosy. It is now being admitted
universally and even officially that the year 2005 AD is likely to present more of a
challenge than opportunity. If the industry does not pay attention to the very vital needs of
modernisation, quality control, technology upgradation, etc. it is likely to be left behind.

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Already, its comparative advantage of cheap labour is being nullified by the use of
outmoded machinery.

With the dismantling of the MFA, it becomes imperative for the textile industry to take on
competitors like China, Pakistan, etc., which enjoy lower labour costs. In fact the
seriousness of the situation becomes even more apparent when it is realised that the non-
quota exports have not really risen dramatically over the past few years. The continued
dominance of yarn in exports of cotton, synthetics, and blends, is another cause for worry
while exports of fabrics is not growing. The lack of value added products in textile
exports do not augur well for India in a non-MFA world.

Textile exports alone earn almost 25 percent of foreign exchange for India yet its share in
global trade is dismal, having declined from 10.9 percent in 1955 to 3.23 percent in 1996.
More significantly, the share of China in world trade in textiles, in 1994, was 13.24 percent,
up from 4.36 percent in 1980. Hong Kong, too, improved its share from 7.06 percent to
12.65 percent over the same period. Growth rate, in US$ terms, of exports of textiles,
including apparel, was over 17 percent between 1993-94 to 1995-96. It declined to 10.5
percent in 1996-97 and to 5 percent in 1997-98. Another disconcerting aspect that reflects
the declining international competitiveness of Indian textile industry is the surge in imports
in the last two years. Imports grew by 12 percent in dollar terms in 1997-98, against an
average of 5.8 percent for all imports into India. Imports from China went up by 50 percent
while those from Hong Kong jumped by 23 percent.

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Global factors influencing textile industry

The history of the textile and clothing industry has been replete with the use of
various bilateral quotas, protectionist policies, discriminatory tariffs, etc. by the developed
world against the developing countries. The result was a highly distorted structure, which
imposed hidden costs on the export sectors of the Third World. Despite the fact that GATT
was established way back in 1947, the textile industry, till 1994, remained largely out of its
liberalization agreements. In fact, trade in this sector, until the Uruguay Round, evolved in
the opposite direction. Consequently, since 1974 global trade in the textiles and clothing
sector had been governed by the Multi-fibre agreement, which was the sequel to an
increasingly pervasive quota regime that began with the Short-term arrangement on cotton
products in 1962 and followed by the Long-Term arrangement. After the successful
conclusion of the Uruguay Round in 1994, the MFA was replaced by the Agreement on
Textiles and Clothing (ATC), which had the same MFA framework in the context of an
agreed, ten year phasing out of all quotas by the year 2005. The section that follows takes a
brief look at the history of these protectionist regimes as also a more detailed look at the
MFA and the ATC.

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Multi–Fibre Agreement (MFA)

On January 1st, 1974, the Arrangement Regarding the International Trade in Textiles,
otherwise known as the MFA came into force. It superseded all existing
arrangements that had been governing trade in cotton textiles since 1961. The MFA
sought to achieve the expansion of trade, the reduction of barriers to trade and the
progressive liberalisation of world trade in textile products, while at the same time
ensuring the orderly and equitable development of this trade and avoidance of
disruptive effects in individual markets and on individual lines of production in both
importing and exporting countries. Though it was supposed to be a short-term
arrangement to enable the adjustment of the industry to a free trade regime, the MFA
was extended in 1974, 1982, 1986, 1991, and 1992. Because of the quotas allotted, the
MFA resulted in a regular shift of production from quota restricted countries to less
restricted ones as soon as the quotas began to cause problems for the traders in
importing countries. The first three extensions of the MFA, instead of liberalising the
trade in textiles and clothing, further intensified restrictions on imports, specifically
affecting the developing country exporters of the textile and clothing products.
Increased usage of several MFA measures tended to further erode the trust which
developing countries had originally placed in the MFA.

The MFA set the terms and conditions for governing quantitative restrictions on textile and
clothing exports of developing countries either through negotiations or bilateral
agreements or on a unilateral basis. The bilateral agreements negotiated between
importing and exporting country’s contained provisions relating to the products traded
but they differed in the details. The restraints under the MFA were often negotiated,
or unilaterally imposed at relatively short intervals, practically annually. The quotas
could be either by function or fibre

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Under the MFA, product coverage was extended to include textiles and clothing made of
wool and man-made fibres (MMF), as well as cotton and blends thereof. With regard
to applications of safeguard measures, import restrictions could be imposed
unilaterally in a situation of actual market disruption in the absence of a mutually
agreed situation. However, in situations involving a real risk of market disruption
only bilateral restraint agreements were possible. The Textile Surveillance Body
(TSB) was set up to monitor disputes regarding actions taken in response to market
disruptions.

The MFA permitted certain flexibility in quota restrictions for the exporters so that they could
adjust to changing market conditions, export demands and their own capabilities. The
MFA also provided for higher quotas and liberal growth for developing countries
whose exports were already restrained. The MFA asked the participants to refrain
from restraining the trade of small suppliers under normal circumstances. In general,
developed countries, under MFA, chose not to impose restrictions on imports from
other developed countries

The TSB ensured compliance by all parties to the obligations of bilateral agreements or
unilateral agreements. It called for notification of all restrictive measures. A Textiles
Committee – established as a management body consisting of all member countries –
was the final arbiter under the MFA and worked as a court of appeal for disputes that
could not be resolved under TSB.

Unsatisfactory experience with several extension protocols of the MFA, retention clauses,
such as “good will”, “exceptional cases”, and “anti-surge” and other trade related factors led
the developing countries to press for the inclusion of the textile issue in the agenda of the
GATT Ministerial meeting.

The eventual outcome of prolonged negotiations was the Agreement on Textiles and
Clothing.

Agreement on Textiles and Clothing (ATC)


The ATC calls for a progressive phasing out of all the MFA restrictions and other
discriminatory measures in a period of 10 years. In contrast to the MFA, the ATC is
applicable to all members of the WTO.

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Four Steps over 10 Years

Steps Percentage of products to How fast remaining


be brought under quota should
GATT (including open up, if
removal of quotas) 1994 rate
was 6%
Step 1 16 percent (minimum 6.96 percent
1st Jan 1995 – 31st Dec 1997 taking 1990 imports annually
as base)
Step 2 17 percent 8.70 percent
1st Jan 1998 – 31st Dec 2002 annually
Step 3 18 percent 11.05 percent
1st Jan 2002 – 31st Dec 2004 annually
Step 4 49 percent (maximum) No quotas left
1st Jan 2005
Full integration into GATT and
final elimination of
quotas , ATC terminates

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Top 10 Exporters (Textile)

Country 1990 1997


Billion US$ % share Billion US$ % share
Hong Kong 7.99 7.68 14.6 9.42
China 7.10 6.82 13.83 8.92
South Korea 6.04 5.81 13.35 8.61
Germany 14.00 13.46 13.05 8.42
Italy 9.80 9.43 12.9 8.32
Taiwan 6.13 5.90 12.73 8.21
USA 5.03 4.83 9.19 5.93
France 7.21 4.65 5.86 5.64
Belgium- 6.54 6.29 7.01 4.52
Luxembourg
Japan 5.88 5.65 6.75 4.35
Total (Top 10) 74.36 71.5 110.62 71.37
World 104.00 100.00 155.00 100.00

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Top 10 Exporters (Apparel)

Country 1990 1997

Billion US$ % share Billion US$ % share


China 9.41 9.14 31.8 21.06
Hong Kong 15.37 14.92 23.11 15.30
Italy 12.07 11.72 14.85 9.83
USA 2.57 2.49 8.68 5.75
Germany 7.82 7.59 7.29 4.83
Turkey 3.44 3.34 6.7 4.44

France 4.65 4.51 5.34 3.54


UK 3.08 2.99 5.28 3.50
South Korea 8.11 7.87 4.19 2.77
Thailand 2.86 2.78 3.77 2.50
Total (top 10) 69.38 67.36 111.01 73.52
World 103.00 100.00 151.00 100.00

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EU Top Ten Suppliers of MFA Clothing: Rank Price

(AGR 1994-96)

1995Ranks and 1996Ranks and Rank Price


CAGR 1994-96
Average Price Average Price

Country Rank in Rank in Avg. Rank in Rank in Avg. Price,


Value Volume Price, Value Volume Ecu/Kg
Ecu/Kg

China 2 1 9 1 1 8 3

Turkey 1 2 2 2 2 6 7

Hong Kong 3 3 6 3 3 5 9

Tunisia 4 7 3 4 6 3 4

Morocco 5 6 5 5 7 4 2

Poland 6 8 2 6 8 1 8

India 7 5 7 7 5 9 10

Bangladesh 8 4 10 8 4 10 5

Romania 9 10 4 9 10 2 1

Indonesia 10 9 8 10 9 7 6

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Post-MFA / ATC Scenario

It is generally believed that quota phase-out can only be beneficial for the industry. In 1993,
a study of seven countries found that the price of cotton yarn per kilo, was cheapest in India
at US$ 2.79, compared to US$ 3.30 in Brazil, US$ 4.19 in Japan, and US$ 3.10 in Thailand.
This was because overall labour and raw material costs are cheaper in India.

However, it should be realised that the opposite can also happen. Removal of quotas may
open new frontiers but will also close captive markets. The EU and the US will no longer be
restrained in buying as much as they want from the cheapest possible sources. Some argue
that the ending of quotas will result in cut-throat competition between developing countries.
Coupled with this is erosion in the growth of markets in industrial countries. Apparent
consumption of textile products, in real terms, remained stagnant during the decade 1985-95.
Purchases become discretionary and fashion-driven. As a result, fashion cycles got shorter
and order-cycles compressed. Retailers order requirements on short-order cycle term and
demand rapid responses to in-season ordering. Hence, they are compelled to secure their
supplies of top-up orders from those in close vicinity.

There is, therefore, a propensity towards sourcing from low-cost countries in the
neighbourhood as also a growth of offshore processing by manufacturers in developed
countries. Regional integration reinforces this.

Further exporters in India fear that freer imports could lead to dumping of low-cost fabrics
from China and other Southeast Asian countries. Thus, the industry needs restructuring on all
fronts. Although the policy framework can be blamed partially for its ills, internal factors are
equally important.

Recent studies indicate that India is beginning to lose out to its rivals. In one survey of US
textile and apparel imports, China and Hong Kong had higher market shares than India. In
certain categories, other Asian low cost producers like Pakistan and Indonesia had higher
market shares and had emerged as close competitors to India. Because many of these
countries depend on imports, however, India can take advantage of home production.

Further, formation of NAFTA means direct competition from the Latin American countries.
The United States has farmed-out offshore processing work to enterprises in Mexico and the
Caribbean Base Initiative countries. Similar relocation has taken place in Europe with

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manufacturers shifting base to Eastern Europe, which provides similar advantages of cheap
labour and proximity.

According to projections by TECS, EU imports of ready-made fabrics will double between


1994 and 2004, as a result of the elimination of quotas. US imports are expected to treble
over the same period.

According to another prediction, apparel output could more than double (i.e. expand by
241%) between 1995 and 2005, compared to an increase of only 114%, without the
agreement on textiles and clothing.

By increasing market access, the ATC will generate multiplier effects in the Indian
economy, eventually feeding back into the textile industry itself. The rise in demand for
exports could increase output and employment in the textile industry. This in turn will
stimulate the agricultural sector to meet the rising demand for cotton. As profits rise, so will
wages, which will act as further stimulus. The export boom in the textile and clothing
industry will also generate considerable foreign exchange.

Given India’s high quota growth rates during the phase-out period, its competitive product
niches and established links with retailers and importers in developed countries, it should
experience vigorous growth in the future. The World Bank predicts a growth rate of 16% per
annum in the coming decade.

Ultimately, the extent that India will benefit from trade liberalisation depends on its current
cost competitiveness, its ability to increase productivity and upgrade quality.

Implications on Indian Exports (Optimistic Scenario)

Yarn

+ Garment exports of Bangladesh increase leading to increase in consumption

of Indian fabric and yarn

+ Exports of Far-East & ASEAN increase further

+ Rationalization in duties of MMF leading to increase in processing of fibres in

India

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Fabric/Made-ups

+ Garmenting dereserved leading to entry of large textile players ensuring

efficient sourcing and increase in the margins

+ Increase in investment for processing

+ Improvement in SAPTA trade

Garments

+ Garmenting and Knitting de-reserved to allow the units to grow bigger to be

able to service large orders and large clients

+ Labor laws in India become industry friendly

+ Garment parks come up in key regions giving a boost to exports

+ Successful Quota Phase-out without exports getting restricted by QRs

Fig in US $ Mn

1994 1998 2002 2005* 2010*


Yarn 590 1780 2333 2701 3131
Made-ups 851 1498 2620 4527 11266
Fabric 1214 1716 2512 3530 7100
Garments 3713 4829 6510 10794 21711
Total 6368 9823 14035 21552 43208
* Projections

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Implications on Indian Exports (Pessimistic Scenario)

Yarn

- Change works to the advantage for S. Korea/ASEAN/Far-East

- Demand for packages increases

- EEC other garment supply countries invest in back-end processes

Fabric/Made-ups

- Environmental Clause impacts

- Investment in processing does not happen

- Blends and synthetic fabrics dominate reducing advantage of Indian cotton

Garments

- Social clause impact leading to ban on some categories, etc.

- SSA is a reality impacting exports of garments from India to USA and EU

- FTA becomes a reality

- Other projectionist measures come up

As opposed to the optimistic scenario, the pessimistic scenario shows a shortfall of nearly US
$4000 mn of exports in year 2005 and the exports are not likely to be much higher than the
present figures. It would also lead to development of textile and clothing industry in the other
nations and India would lose out as a significant player in the industry. This would also stifle
the domestic textile industry which would be in a very weak position to compete with
imports. (These are expected to become cheaper with import duty rationalization as per
international treaties and cost competitiveness of overseas players). Some of the subsidies
currently extended by the Indian government to promote exports which are sector specific
(TUF, 80 HHC) or region specific (EPZS, EOUS) may also need to be withdrawn.

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Fig in US $ Mn

1994 1998 2002 2005* 2010*


Yarn 590 1780 2003 2126 2022
Made-ups 851 1498 2038 2427 3098
Fabric 1214 1716 1931 2050 2154
Garments 3713 4829 5435 5939 6885
Total 6368 9823 11408 12542 14159
* Projections

Conclusions

To effectively tackle the situation India needs to invest in research and development to
develop new products, reduce transaction costs, reduce per unit costs, and finally, improve its
raw material base. India needs to move from the lower-end markets to middle level value-for-
money markets and export high value-added products of international standard. Thus the
industry should diversify in design to ensure quality output and technological advancement.

The weakest links in the entire chain are the power looms and the processing houses. The
latter especially are very important because they are responsible for the highest value addition
in the manufacturing line. A power loom co-operative structure could be evolved for pooling
of common services and functions such as quality testing, marketing, short-term financing,
etc. Further, because of the geographical proximity enjoyed, a cluster approach can be
adopted.

The government also needs to make policy changes like dereserving the small-scale sector so
that it can achieve economies of scale and adopt a synergistic approach.

Handlooms by their very nature can adopt a strategy of "niche” marketing. In this respect,
export promotion, common credit and marketing facilities and more significantly publicity
are important areas for co-operation. Here too, a co-operative structure would be useful
though government agencies should be involved because of their outreach. Newer and more

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innovative forms of involvement are required where decentralisation should be a key
element.

India has made little attempt to forge partnerships – in equity, technology and distribution in
overseas markets. The newer nuances of global apparel trade demand joint control of brand
positioning, distributing and quality assurance systems.

The Indian textile industry has recognised the need for a cradle-to-grave approach when
tackling environmental issues i.e. eco prescription should be applied right from the stage of
cultivation to spinning to weaving to chemical processing to packaging. Here especially
there is great scope for private -public partnerships.

A great deal of work has been done by Indian trade and industry to comply with ecological
and environmental regulations, and so Indian garments can adopt an appropriate label
signifying a distinct quality.

Efficiency and output of handloom and powerloom sectors also needs to be increased. The
clothing sector needs the support of high quality and cost-effective cloth processing facilities.
Modernisation of mills is a must. Human resource is another area of focus. The workforce
must be trained and oriented towards high productivity.

The business environment of the future will be intensely competitive. Countries will want their
own interests to be safeguarded. As tariffs tumble, non-tariff barriers will be adopted. New
consumer demands and expectations coupled with new techniques in the market will add a new
dimension. E-commerce will unleash new possibilities. This will demand a new mindset to
eliminate wastes, delays, and avoidable transaction costs. Effective entrepreneur-friendly
institutional support will need to be extended by the Government, business and umbrella
organisations.

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Opportunities for Indian cotton textile firms
Yarn
India is the leading supplier of cotton yarns to Mauritius, catering to almost 62% of the US$
123 mn worth total cotton yarn imports of Mauritius in 2003. The Mauritian import market
for cotton yarn has witnessed a downward trend in the last few years. Its cotton yarn imports
declined by 6.2% from 1998 to 2003. While Mauritius’ imports of cotton yarns from India
have slided during this period, imports from neighbouring countries South Africa and Zambia
have risen.

Fabrics
Mauritius imports of woven fabrics have declined considerably since 1998 and were worth
almost US$ 70 mn in 2003. India ranked fourth in this market in 2003, with a market share of
6%. While Chinese dominate the Mauritian import market for woven fabrics, South Africa
and Hong Kong are the other major players giving close competition to India in this market.
Indian exporters can focus on improving their competitiveness in exports of dyed fabrics and
knitted fabrics, which are the main items of cotton fabric imports of Mauritius.

Made-ups
Contrary to imports of yarns and fabrics, Mauritius imports of made-ups have risen during
the period 1998-2003. However, made-ups imports are very small in terms of value - worth
US$ 2 mn in 2003. During the period 1998-2003, China emerged as the most dominant
supplier of made-ups to Mauritius. China has been able to displace the erstwhile top suppliers
viz. France and India and accounted for 60% market share in 2003. India ranked fourth in
2003 with a market share of 6%.

If the efforts of the Mauritian Government to revive the domestic textiles industry are
successful, Indian exporters might have an opportunity in this market in the medium term. In
order to increase India’s market share, the following strategy could be adopted:

• Improve performance and presence in terms of quality, cost, delivery and after sales
service.
• Plan strategic tie-ups with Mauritian RMG companies to supply yarn and fabrics.
• Strengthen logistics and supply chain management to provide competitive supply
terms to Mauritian buyers.
• Promote Indian textiles by developing strong relationships with importers, buying
agents and quality inspectors.
• Look at reducing lead times to ensure on-time delivery.

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FOREIGN DIRECT INVESTMENT IN INDIAN RETAIL SECTOR

INTRODUCTION:
The Indian economy was opened to the world in 1990s with the implementation of economic
reforms necessitated by an economic ruin caused by a rigid economic policy.

After that foreign capital has started flowing into the country in the form of foreign direct
investments and foreign institutional investments. In spite of the fears expressed from various
counters India has managed to do well and has been seeing a very respectable growth rates in
its GDP over the last decade.

Though Foreign Direct Investments were allowed by the Indian government in many sectors
the Indian government still keeps the entry of foreign capital restricted in certain sensitive
sectors like agriculture, railways, atomic energy, retail etc. Of these sectors retail sector is
considered to be the most promising and profitable by the foreign investors.

THE PROBLEM AND THE OBJECTIVE

It is widely thought that it is high time that the Indian government remove the restrictions
placed on the FDI in Retail sector to reap the rich benefits it is going to bring as in the case of
other developing countries like China. On the other hand there are widespread fears and
opposition expressed by the local players in the Indian retail sector. In this paper a detailed
analysis is made on the various factors related with the introduction of foreign direct
investment in Indian retail sector and its probable impact on Indian economy over short and
long run. An attempt is also made to suggest the suitable mechanism for introduction of
foreign capital in retail sector in the form of FDIs.

THE CURRENT SCENARIO OF THE INDIAN RETAIL SECTOR

Before discussing the matter of allowing the FDI in the Indian retail sector let us take a look
at the following points that give a detailed account of the current Indian retail sector – its
strengths significance and contribution to the Indian economy.

 The volume of retail turnover is estimated at 4 lakh crore rupees a year, constituting
10% of our GDP. After agriculture, the retail sector is estimated to be the largest single
sector, both in terms of turnover as well as employment.

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 The share of organized retailing in India, at around 2%, is abysmally low,( In fact,
only 4% of Indian retail outlets occupy an area of more than 500 sq ft.) compared to 80% in
the USA, 40% in Thailand, Brazil or 20% in China, thus leaving the huge market potential
largely untapped.
 The recent spurt in the growth of retail sector my be attributed to Mounting earning
levels, education and an international exposure.
 Retailing all the way through non-traditional channels such as Fuel Stations, Direct
Selling and Home Shopping Television is on the rise.
 Contemporary organized retail is petite and fragmented with cast list not being able to
harvest economies of scale.
 However, retailing through formats such as supermarkets, hypermarkets, department
stores and other forte chains are escalating. Top business houses in the country are investing
in the sector. This includes Foodworld, Shopper’s Stop, Crossroads, Globas, Pyramid and
other such outlets.
 FDI in retail trading is not encouraged in any form. However, a few overseas retail
names appearing in the marketplace in the nature of franchisee. In February the government
has announced the entry of FDI in single brand outlets with a cap of 49%
 India has a hefty middle class of 350 million and sophisticated personnel to lever
diverse significant functions like merchandising, sales promotion, inventory management,
purchasing and marketing.
 India also possesses IT skills in the area of supply chain management, database
management and inventory management

EXPERIENCE OF OTHER DEVELOPING NATIONS

A look at how the other developing nations of the world have dealt with the issue of FDI in
retail trade will give a fair idea of the problem and the various possibilities.

The sector is booming in Eastern Europe and a growing number of other emerging markets.
Growth is particularly strong in the new EU members and Asia, including China, Malaysia
and Viet Nam. It also extends to countries like Chile, Brazil, Turkey, Morocco, Saudi Arabia
and South Africa.

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In many of these emerging markets, growth is fuelled by an expanding urban class with rising
household incomes. While consumption patterns, income, market size and structure vary
across countries, generally speaking, those with modern and globalized retail sectors are
seeing more competition and concentration across the board. The benefits abound in these
countries, as UNCTAD research shows. Other benefits include substantial productivity
enhancements in retailing, particularly in supply chain management and in-country logistics.

Brazilian producers, for example, are now part of the global supply chains of Carrefour and
Wal-Mart, lower prices for food and clothing have apparently helped curb inflation. In China,
the introduction of global retailers has not only stimulated demand for local goods to stock
hypermarket shelves but has also provided new conduits for exports, by integrating Chinese
producers into multinational supply chains. Wal-Mart alone plans to hire 150,000 employees
in China over the next five years. , China's agriculture exports to the US nearly trebled from
$3.86bn in 1999 to $9.96bn last year. India, on the other hand has made only a marginal
progress, with its farm exports to America rising from $3.19bn in 1999 to just $4.28bn.

In Viet Nam, the market presence of global retailers has helped raise the quality of goods
provided by local suppliers to international standards. In Saudi Arabia and other Gulf
countries, modern retailing has been associated with the building and operation of large
shopping malls, with knock-on benefits for the local construction and security sectors. Pick´n
Pay, South Africa´s largest supermarket chain, reportedly provides training to small retailers
setting up their own Pick´n Pay Family Stores. It apparently helps local producers comply
with quality standards and invests 7% of its net profits in corporate social responsibility In
many of the developing nations Labour has been retrenched, but re-tooled and made more
productive. That is what happened with development in Thailand, South Korea and now in
China.

The following table gives a comparative view of the three of the worlds important retail
markets India , China and U.S.

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WHY FDI IN RETAIL TRADE IS NEEDED FOR INDIA

In the following section we will analyze the various factors that make the case for FDI in
Indian retail sector attractive. We will also bring forth how most of the fears expressed by the
Indian politicians and local players in the Indian retail market can be safely negotiated.

FDI in retail trade would contribute to a multiplier impact on the economy not only in the
retail sector but also in many other activities such as manufacturing, food processing,
packaging and logistic services. They further point out that far from leading to an influx of
imported goods, foreign companies would source most of their items domestically and would
in fact, use quality Indian products to stock thousands of their outlets in foreign countries,
thus giving a fillip to our manufacturing as well as export.

One of the biggest fear expressed by the opponents of FDI in retail trade is the loss of
employment of millions of small Indian traders. Organised retailing would generate
employment, both direct and indirect, as notwithstanding the capital intensity of modern retail
business, it continues to be labour intensive as well. The above point is substantiated by the
figures given in the figure where by comparing the employment data of India with China and
U.S. (Both the countries have a larger percentage of their labour force employed in the retail
sector.) It would also lead to creation of indirect employment in support activities throughout
the supply chain, starting from producers to packaging, storage, transport and other logistic
services. Further modern retailers are a major source of relatively secure employment,
particularly for women and low-skilled workers. Unlike the informal retail sector, many of
these jobs involve regular working hours and a number of social benefits.

Another argument against FDI is that the larger Multinational retailers will wipe out the small
Indian retailers. However there is no empirical evidence for such a fear. India is not an

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integrated homogeneous market; it is a hierarchy of markets catering to people of many
different income levels and tastes. Entry of sophisticated branded products affects the
unbranded mass market only marginally in a vast poor country such as India. Moreover, in
malls where the large retail chains set up their stores, typically, there will also be many small
shops which will attract people.

Further, the street-corner shops will have some advantages over big stores located many
miles away in shopping plazas. In India, transportation and parking are big problems for
people who want to visit shopping malls.

For them, it is more convenient and cost-effective to purchase many of their daily
requirements from the neighbourhood stores, especially as these establishments stock goods
that are in particular demand in the locality. Hence, the pop-and-mom street corner shops can
very well survive. A comparison between the food and beverage sector and the retail sector
will show this clearly. The existence of hotels, restaurants and food malls has in no measure
taken away the clientele of roadside dhabas and thelawallahs. Both continue to co-exist and
flourish.

Another argument that is pitted against the FDI is that the Multinational retailers will with
their monopsonic powers will sqeeze out the local suppliers and farmers. But International
experience has demonstrated that the only way that farmers can get better prices for their
products is through improvement of the value added food chain The agricultural sector in
India is characterized by poverty. If there is one segment of our society that toils to provide
basic needs, and yet languishes on a pittance it is the agricultural segment. In spite of the fact
that farmers are responsible for putting food on our plates the typical Indian farmer is a poor
man. It is only when food processing and packaging takes off in a big way that we can hope
to give the agriculturist his due. The one concerning backward linkages with the agriculture
sector, efficiency in supply chain that foreign retailers can bring and the huge opportunity in
farm exports. India can attain huge savings by merely improving the supply chain. Some 20-
40% of all fruits and vegetables grown in the country goes waste due to poor transportation,
storage and handling infrastructure. Also, for every rupee that an Indian consumer spends, the
farmer gets only 20-22 paise, as against 70-80 paise in developed markets. If large retailers,
whether domestic or foreign, directly source through farmers, realisations will go up for the
farmers, consumers will have to pay less and the retailers will get higher margins. This can be
seen from the following example of the China.The global retailers taken together buy about

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$60 billion of goods each year from China for exports. Contrast this with India where less
than $1 billion of exports are accounted for by global retailers (mostly metro dairy farm).

HOW SHOULD WE GO ABOUT IT

In the above discussions we have explored various aspects of introducing the foreign direct
investment in the Indian retail sector. However the government should not introduce the
foreign capital in the retail sector all at a sudden. There are many considerations that have to
be taken into account while letting the foreign capital into the Indian retail market.

India can follow the Chinese model, which took 12 years to open and provided infant-
industry-protection to domestic retailers. China first allowed FDI in retail in 1992. The initial
FDI cap was 26 per cent. It took China 10 years to raise the limit to 49 per cent. The 100 per
cent foreign-owned retail stores were allowed only from 2004. Further the foreign chains
were initially permitted to set up stores only in some select cities and local retailers were
encouraged to become big by mergers so that they could compete with the international
groups. India can also devise a roadmap, whereby FDI entry happens in a phased manner,
whereby the process get completed in 8-10 years.

The Indian government could selectively allow FDI in food, dairy and grocery segments of
retail trade. In other areas such as readymade garments and various industrial consumer
goods, the government should make sure that only big domestic retailers are allowed to
compete with small local retailers. Even when FDI is to be allowed in retail food and grocery
sectors, the government would like to put a cap on foreign ownership.

Another strategy would be as follows. Foreigners — if they want to enter — will have to take
local partners to start with. Once the local partners and other local players learn by doing, the
FDI cap can be raised gradually. Foreigners can be allowed to set up 100 per cent foreign-
owned retail chains only after the local players are able to muster enough capital, experience
and expertise to compete with established global giants.

In addition to the above the Indian government and the industry should take adequate steps to
weed out the following deficiencies of the retail sector and make it really attractive.

o Regulations restricting real estate purchases, and cumbersome local laws.


o Absence of developed supply chain and integrated IT management.
o Lack of trained work force.

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o Low skill level for retailing management.
o Intrinsic complexity of retailing – rapid price changes, constant threat of product
o Obsolescence and low margins.
In this connection it is noteworthy to consider the draft ICRIER report that advocated for
49% FDI in retail and opening up of the sector in a phased manner over a period of five
years. Fears about large-scale loss of jobs in the unorganized retail sector due to inflow of
FDI was unfounded, said the study.

Textiles have historically formed an important part of India's economy. Weaving had always
been regarded as one of the major occupations, and India’s cotton and silk production were
among the highest in the world. Colonization brought an end to India’s glorious past, in
textiles as well as other areas. Since this report is for internal consumption, and IEPH has
familiarized us all with this part of India’s textile history, I’ll skim over it. The net result was
that India, once one of world’s leading exporters of textiles, was now forced to become a net
importer. However, by the 1850's Indian enterprise and capital using modern imported
technology had set up its own mills, which by 1875 were exporting modern textiles to
Lancashire. Thus the textile industry was the first in India to actually deserve the label
‘industry’. This overturning of tables also led to the side effect of the English manufacturers
to demand that the newly introduced Factory Acts, to protect industrial labour in Britain,
should also be adopted by India. This agitation succeeded, and with the 1881 factory act India
introduced the labour laws which today are among the biggest stumbling blocks in front of
the Indian industry.

Post independence, in the hey day of Indian planning, the government of India provided
favorable and protective taxes and other regulations to the small-scale sector, as it assumed
that this sector created more employment. Limits on total capacity of mills, lists reserving
certain products for the small scale sector, discriminatory price controls and taxation regimes
etc all contributed to restriction of Large-scale production. However, in following this aim,
the Govt. did not realize the negative impacts in terms of decreased productivity and reduced
competitiveness vis-à-vis the global market. The liberalisation being carried in the 1990’s
also ushered in a new era for India’s textile industry. It led to the relaxation of many of the
constraints previously imposed on the textile sector. Licensing was removed in the early 90`s
by the Statement of Industrial Policy and the Textile Development and Regulation Order. In
1995, India signed the General Agreement of Tariffs and Trade bringing some of its policies

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at par with those at an international level. However, a number of limiting regulations(the
differential taxation for larger mills for eg.) stayed in place till very recently, and some, like
the labour laws, are still in place.

At present, the single biggest factor influencing the textile industry appears to be the end of
the textile quota regime of quantitative import restrictions under the multi-fibre arrangement
(MFA) on 1st January, 2005 under the World Trade Organisation (WTO) Agreement on
Textiles and Clothing. The removal of quotas, seen as an opportunity by many, including the
government, is driving investment and liberalisation in the textile space. In the next section, I
will discuss the problems that face the Indian textile industry in making full use of this
opportunity.

The industry, hamstrung by years of regulation, is sorely lacking in technological


advancement, and scale of operations, both areas which are critical in bagging a large share
of the world trade in textiles. Overall, there is a low level of modernisation in India in most
elements of the clothing and textiles value chain, especially in weaving and in garmenting.
Among powerlooms, which produce nearly 60% of the fabric output, less than 1% were
shuttleless looms as few as four years back. Even among the organized mill sector, less than
6% have shuttleless looms. These levels are much below those of several developed and
developing countries, which have seen a high replacement rate of old looms with modern
shuttleless looms; more than 80% of looms in Taiwan, Korea and the U.S. are shuttleless.
Even in Pakistan, 62% of looms are shuttleless. This has obvious implications for quality and
efficiency. Also with the years of government policy favouring the small scale sector, the
textile industry in India is of a very fragmented nature. With taxation regimes favouring
smaller units,, Indian garment factories are nowhere close to having the kind of capacities
that exist elsewhere. The larger Indian factories have only 10-20% of the number of machines
found in otherwise comparable Chinese factories. In the quota days this was construed to be
an advantage by some, as Indian industry could cater to niche demands. Post 2005 however,
it has emerged(as expected) as one of the reasons holding India’s textile industry back. There
are other problems in addition to those already pointed out. Infrastructure, a bottleneck which
plagues most Indian industry today is a stumbling block for the textile industry as well.
Chinese companies have the advantage of lower power costs and better power availability
over Indian companies, and they also enjoy shorter lead time to the US, which is an
advantage other countries like Mexico and Turkey which have more efficient port systems or
more favourable locations also possess. The labour laws which prevent retrenchment of

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workers from sick units are another hurdle in the path of competitiveness. Even with all
these problems, Indian textile exports have grown post the 2005 removal of quotas, but this
growth has been a modest 10-11%. During the same period, textile exports from China have
grown at rates in excess of 20%, and from a larger base at that.

The export markets however, still present a considerable opportunity which the Indian
industry should be able to tap. The Chinese threat, while very real, has been offset to some
extent by recent developments. The extremely high growth of Chinese textile exports to the
U.S has resulted in quotas being reinstated for Chinese goods in certain segments. The
European union too has reached an agreement with china which has seen china agreeing to
curtail exports. A school of thought also exists which maintains that companies in the U.S
would prefer to spread out their suppliers, as placing all their eggs in the Chinese basket may
be somewhat risky. The Indian government has also not been entirely blind, introducing
measures such as the national technology upgradation fund and removing the differential
taxation scheme which discriminated against large units. They have also allowed textile units
to build and operate captive power plants, which should ease the power problem. Some
companies are also making use of the SEZ’s to get around labour laws. The domestic market
too, is projected to grow in the coming years. On the whole, indications for the textile
industry are largely positive. But as is the case with every industry, only the well run
companies will be able to make use of this scenario to the fullest.

• Welspun India is Asia's largest terry towel manufacturer and fourth largest in the
world. It supplies to leading global retailers, meeting 15 per cent of Wal-Mart's terry
towel requirements, 85 per cent of Tom Hilfiger's and 100 per cent of Shopko's. It has
plans to double its terry towelling capacity to 23830 TPA, enhance yarn capacity by
25000 spindles and introduce bed linen with a 35 million metres capacity and has
earmarked a Rs 6 billion budget for its expansion plans. Its sales in the year 2005-06
were in the range of 630 crores, growing by around 35% compared to the last year.
• Alok Industries has the largest processing capacity in India and offers fully integrated
facilities for yarn texturising, weaving, knitting, processing, made-ups and garments.
It has initiated plans to expand capacities across all segments by investing Rs 10
billion. It is focusing on home textiles and garments, which will contribute to nearly
50 per cent of its revenues by 2007. It has already got an impressive client list that
includes brandnames such as JC Penney, Tommy Hilfiger, TARGET, Wal-Mart and

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international buying houses such as Britannica Home Fashions, Elite Home Products,
etc. Their sales were in 05-06 were 1285 crores, up by 15% from last year.
• Arvind Mills boasts of a wide product range in value added fabric, from fabric to
garments in denim, shirting and knits. It is a supplier to brands such as GAP, Marks &
Spencer, Levis, Tommy Hilfiger and Nike and is upgrading its garment capacities to
14.3 million pieces per annum. Arvind Mills dominates the Indian denim market with
a 72 per cent share of the estimated 80 million metres denim market. They posted
sales of 1600 crores in 05-06, and while this figure was a decline compared to the
previous year, they have shown an improvement in their operating performance,
leading to a higher PBT.
• Gokaldas exportshas more than 40 factories spreading in 37 locations in India,
manufacturing more than 2.4 million garments per month. The principle source of
revenue for the Company is from export of garments and related products. Almost
95% of their revenues come from exports. Their sales too, saw a growth of 20% to
end the 05-06 financial year at 860 crores
Other major players like Raymond, Siyaram silk mills, mahavir spinning mills etc. have
also shown strong performance in the past two years.

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Colorful fashion trends of India
With the end of the 20th century came the end of all hype which has created a more practical
and pragmatic environment and has given a more stable picture of the fashion business.

In the 50s, 60s and 70s, the Indian fashion scenario wasn't exactly colorless. It was exciting,
stylish and very graceful. There were no designers, models, star or fashion design labels that
the country could show off. The value of a garment was judged by its style and fabric and not
by who made it.

It was regarded as ever so chic and fashionable to approach any unfamiliar tailor, who could
make a garment for a few rupees, providing the perfect fit, finish and style. The high society
lady, who wore it, was proud for getting a good bargain and for giving her name to the end
result.

In 60s, tight 'kurtas', 'churidars' and high coiffures were a trend among ladies. It was an era
full of naughtiness and celebration in arts and music and cinema, manifested by liberation
from restriction and acceptance of new types of materials such as plastic film and coated
polyester fabric.

The 70s witnessed an increase in the export of traditional materials outside the country as
well as within. Hence, international fashion arrived in India much before the MTV culture
with the bold colors, flower prints and bell-bottoms. Synthetics turned trendy and the disco
culture affected the fashion scenario.

It was in the early 80s when the first fashion store 'Ravissant' opened in Mumbai. At that time
garments were retailed for a four-figure price tag. The '80s was the era of self consciousness
and American designers like Calvin Klein became popular. In India too, silhouettes became
more masculine and the 'salwar kameez' was designed with shoulder pads.

With the evolution of designer stores in Mumbai, the elegant fashion design culture was a
trend among Indians along with their heavy price tags. No doubt that a garment with a heavy
price tag was at the bottom stage of fashion. But clients immediately transformed into the
high fashion fold where they were convinced that that the word 'elegant fashion design
culture' means, it had to have a higher price tag.

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Garments were sold at unbelievable prices only because the designers had decided to get
themselves noticed by making showy outfits and getting associated with the right shows,
celebrities and events.

Later, fashion shows shifted to competitive events each attempting to out-do the other in
theme, guest list and media coverage. For any newcomer, the fashion business was the
number one professional art that time.

In the 90's, the last decade of the millennium, a move towards the drastic pairing down
returned with ethnic wears (Today, ethnic wear market in India is accounted to Rs. 9000
crore). This led to the decline and the recession, the push to sell at any cost and keep staying
in the limelight. With heavy cut throat competition and sound awareness of the client, the
inevitable occurred. The price tags, which had once reached at a peak, began their downside
journey.

At those times the downturn was not only being experienced in the price tags of the garments,
but also in the business of fashion shows. More models, choreographers, make-up men,
hairstylists and designers streamed down into their business.

The fun and party time in the Indian fashion scenario had not ended with this, but continued.
It was a point, where it reached at a certain steady level and from there, in the beginning of
the 21st centaury, with new designers and models and some sensible designing; the fashion
hype accelerated its speed.

Indian fashion industry spreads its wings globally

For the global fashion industry, India is a very big exporter of fabrics and accessories. All
over the world, Indian ethnic designs and materials are considered as a significant facet for
the fashion houses and garment manufacturers. In fabrics, while sourcing for fashion wear,
India also plays a vital role as one of the biggest players in the international fashion arena.
India's strengths not only depend on its tradition, but also on its raw materials. World over,
India is the third largest producer of cotton, the second largest producer of silk and the fifth
largest producer of man-made fibres.

In the international market, the Indian garment and fabric industries have many fundamental
aspects that are compliant, in terms of cost effectiveness to produce, raw material, quick

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adjustment for selling, and a wide ranges of preference in the designs in the garments like
with sequin, beadwork, aari or chikkon embroidery etc, as well as cheaper skilled work force.
India provides these fashion garments to the international fashion houses at competitive
prices with shorter lead time and an effective monopoly in designs which covers elaborated
hand embroidery - accepted world over.

India has always been considered as a default source in the embroidered garment segment,
but the changes of rupee against dollar has further decreased the prices, thereby attracting
buyers. So the international fashion houses walk away with customized stuff, and in the end
crafted works are sold at very cheap rates.

As far as the market of fabrics is concerned, the ranges available in India can attract as well
as confuse the buyer. A basic judgmental expectation in the choosing of fabrics is the present
trend in the international market. Much of the production tasks take place in parts of the small
town of Chapa in the Eastern state of Bihar, a name one would have never even heard of.
Here fabric making is a family industry, the ranges and quality of raw silks churned out here
belie the crude production methods and equipment used- tussars, matka silks, phaswas, you
name it and they can design it. Surat in Gujarat, is the supplier of an amazing set of
jacquards, moss crepes and georgette sheers - all fabrics utilized to make dazzling silhouettes
demanded world over. Another Indian fabric design that has been specially designed for the
fashion history is the "Madras check" originally utilized for the universal "Lungi" a simple
lower body wrap worn in Southern India, this product has now traversed its way on to
bandannas, blouses, home furnishings and almost any thing one can think of.

Recently many designers have started using traditional Indian fabrics, designs and cuts to
enhance their fashion collections. Ethnic Indian designs with batik cravat, tie-and-dye or
vegetable block print is 'in' not just in India but all across the world.

In India, folk embroidery is always associated with women. It is a way of their self
expression, and they make designs that depict their native culture, their religion and their
desires. Women embroider clothes for their personal use, and the people linked with the
pastoral profession prepare embroidered animal decorations, decorative covers for horns and
foreheads and the Rabaris of Kutch in Gujarat do some of the finest embroidery.
Embroidered pieces are made during the festivals and marriages, which are appliqué work
called 'Dharaniya'. One of the significant styles of Saurashtra is 'Heer' embroidery, which has

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bold geometric designs, woven on silks. The Mutwa women of the Banni area of Kutch have
a fascinating embroidery where they make fine embroidery works with designed motifs and
mirrors in the size of pinheads, the Gracia jats use geometric designs on the yoke of long
dresses. Moreover, the finest of quilts with appliqué work are also made in Kutch.

Garments embellishment with bead work is another area where it in demand in the
international market. Beads are used to prepare garlands and other accessory items like belts
and bags and these patterns now available for haute couture evening wear too.

According to a survey, in recent times Indian women have given up their traditional sari for
western wears like t-shirts and shorts, as they feel more comfortable in skirts and trousers
instead of saris and salwar kameez. It's been noted that women spend just $165 million on
trousers and skirts against 1.74 billion dollars spent by men on trousers. With more women
coming out to work, the (combined) branded trouser and skirts market has been increasing at
a whopping 27 per cent in sales terms. Women feel that Western clothing is more suitable,
particularly when working or using public tran ation. Many corporate offices are also in favor
of their employees wearing Western wear.

In India, Western inspiration is increasing due to the influence of TV and films. Besides,
shopping malls selling branded clothes have also mushroomed in India and are fascinating
the youngsters. Recently, designer wear is being promoted through store chains such as
Shopper's Stop, Pantaloons, Westside, etc. Companies such as Raymond and TCNS have also
set up their exclusive stores for designer wear.
The market of India fashion industry

Recently, a report stated that the Indian fashion industry can increase from its net worth of Rs
200 crore to Rs 1,000 crore in the next five to ten years. Currently, the worldwide designer
wear market is amounted at $35 billion, with a 9 per cent growth rate, with the Indian fashion
industry creating hardly 0.1 per cent of the international industry's net worth.

According to approximations, the total apparel market in India is calculated to be about Rs


20,000 crore. The branded apparel market's size is nearly one fourth of this or Rs 5,000 crore.
Designer wear, in turn, covers nearly about 0.2 per cent of the branded apparel market.

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At present, the largest sales turnover within the designer wear segment is about Rs25 crore,
with other well-known names having less turnovers of Rs10-15 crore. In view of the
prospects of the Indian fashion industry for growth, the figures are not very hopeful.

The figure of fashion industry

• The organized market for designer apparel is about Rs 250 crore


• Designer wear calculates to less than 1 per cent of the apparel market
• The global market for designer wear is 5 per cent of total apparel market
• The global market for designer wear industry is largely dependent on the small-scale
sector
• Consumers for designer wear have a yearly household income of Rs 10 lakh-plus.
There are 3 lakh such households developing at 40-45 per cent
• Designer wear industry is projected to increase to Rs 1,000 crore by 2015.
• More than 81 per cent of the population below 45 years of the age is fashion
conscious.

Many fashion designers and management experts foresee an average growth of about 10-12
per cent for the Indian fashion industry in the coming years. Though, the growth rate could be
more than 15 per cent, if infrastructural and other logistical bottlenecks and drawbacks are
over come.

India needs more effort to overcome

However, despite the benefits available in India there are also some disadvantages. India is
not a remarkable player in the global market with reference to brands because of its inability
to add value to products. This is observed by the fact that nearly 50 per cent of its exports are
apparel and made-ups where value addition is essential. Likewise, 75 per cent of domestic
apparel market is commoditized and unbranded and very few Indian brands do survive in the
foreign markets. Evidently, the Indian market has not made a strong stand and hence it is
difficult to make Indian brands that can compete with global brands in India.

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Company Profile & Products

Koutons Retail India Ltd.

Koutons Retail India Ltd. is the leading retailer of


readymade and fashion wear brand in the country
today. With more than 1400 outlets across India, it has
a wide range of apparel designs suited for all segments
including corporate, formal and casual dressings.
Koutons aptly creates the conducive environment for a family outing, making family
shopping the best experience at an affordable price - all at one place.

Koutons was born in 1991 as Charlie Creations and are now Koutons Retail India Ltd.
Koutons started primarily as a denim brand but are today manufacturing and selling complete
men, women and kids wardrobe under the brand name Koutons, Les Femme and Koutons
Junior respectively. Another brand from the stable of Koutons is Charlie Outlaw, which
caters to the teens of the country with apparels including jeans, T- shirts, jackets etc. Koutons
Brand is catering to the Upper & Upper Middle Class of Society with a vast target age group
between 18-60 years.

"Value for Money and High on Fashion" being their USP, Koutons has given the brand an
extension delving into specific consumer segments. The garments are made keeping in view
the overall need of the niche market and the basic/fashion demand of the Indian masses. Our
product range also caters to the tastes of all segments. Our Brand is placed as the most
dynamic brand of India.

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Products

KOUTONS MENSWEAR

KOUTO The well known apparel house, Koutons Retail India

NS Ltd. has unveiled their latest collection of menswear.


This collection offers a wide range of formal and
informal clothing for men for the age group of 18
years and above. Known for their comfort and
durability the brand has become synonymous with
'fashion and quality' at affordable price'. The
collection caters to men which includes the working
professionals.

The collection includes the shirts, T-shirts, pull overs, sweat shirts ,denim and non-denim
trousers, cargo and shorts for men in trendy yet formal shades the collection also offers a
variety of fabrics to choose from. The basic formal shirts are available in linen and cotton
fabrics. The range is also available in blended fabrics. The special product range wrinkle
resistant flaunts ten to twelve colors to choose from. Using wrinkle-resistant technology the
company has sought to introduce a new breed of weaved hundred percent cotton fabric and
blended cotton.

The latest collection of Koutons menswear is a range created for today's generation of men
who wear what they like and firmly believe in themselves. The collection is for those who
like to blend comfort with style.

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Peter England : Honestly Impressive

Peter England was initially positioned as an “Honest Shirt”. It was a very precise campaign
that categorically told the TG that the brand is of
good quality and honest- to – goodness price. The
strategy clicked and has to click because the product
was very good and the price was excellent. It just fit
in to ones budget. The TG for the brand was the 24-
28 ambitious and career oriented youth.

In order to make sure that the excitement remains, Peter England came out with various
ranges and varieties of shirts. The brand also extended to trousers with the same positioning.
Although some of the variants like English Cottons compromised on quality , the brand still
enjoys a good equity in the TG’s mind.
In 2002 the brand made a slight makeover. The positioning changed to “Honestly
Impressive”. The aim is to make the brand more than just value for money proposition but
also as a lifestyle brand. It has maintained its value proposition unchanged.
Peter England is a brand that clearly shows a marketer that it is possible to sell... Honestly.

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Cotton County

History of the Company

The parent company Cotton County Retail Ltd. is a wholly owned subsidiary of Nahar
Industrial Enterprises which was set up in 1949.

The promoters' belief of "Where commitment leads, achievement follows" has led to
tremendous growth with the company involved in spinning weaving, processing and
garmenting and supplies to some of the biggest brands in the world like Marks and Spencer,
GAP, Tommy Hilfiger and Armani. Nahar Industrial Enterprises Limited is an "Integrated
Textiles Player". The company is engaged in manufacturing right from yarn, griege (?) fabric
to processed fabric to readymade garments in the domestic market. Processed fabric is sold to
companies/brands like Madura garments, Raymond's Color Plus, Allen Solly, Louis Philippe,
Provogue, Pantaloon. In the export market, NIEL's clientele includes names like GAP,
Oshkosh, Ann Taylor, M&S, Liz Claiborne, Timberland, Algle (?), Tommy Hilfiger etc.

In NIEL.., a wholly owned subsidiary Cotton County Retail Ltd. was set up for its foray into
retailing. The Brands Cotton County, Femme, Tazo etc. are retailed through Executive Brand
Outlets under the name and style of Cotton County and as on... there were.600.. outlets,
located across India in.425..cities and 21.states & 1 Union Territory. The retail network is
largely operated through Franchisees.

Company Profile

Nahar Industrial Enterprises Limited is an “Integrated Textile Player”. The company is


engaged in manufacturing right from yarn to griege fabric to processed fabric to readymade
garments in the domestic market. Processed fabric is sold to companies/brands like Madura
Garments, Raymond’s Color Plus, Allen Solly, Louis Philippe, Provogue, Pantaloon. In the
export market, NIEL’s clientele includes names like GAP, Oshkosh, Ann Taylor, M&S, Liz
Claiborne, Timberland, Algle, Tommy Hilfiger etc.

Nahar Industrial Enterprises has floated a wholly owned subsidiary Cotton County Retail
Ltd. for its foray into retailing.

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The parent company is already involved in spinning, weaving, processing and garmenting
and supplies to some of the biggest brands in the world like Marks and Spencer, GAP,
Tommy Hilfiger and Armani.

Quality

Unlike many other enterprises and business organizations, Quality is not just an ordinary
word with very little or no meaning. For Cotton County, Quality has a significant importance
of its own which can describe the potential of the company in no time. We believe ‘If the
quality is good, there is room for Cotton County to survive in this corporate world. However,
if little attention is paid on Quality, then survival for Cotton County in this competitive era
will be a lot difficult.’

Hence, without giving any second thoughts, we have given Quality, our top priority. Today
Quality is something that is evident in all the spheres of the Company – even the products it
sells, the work culture, and the various departments of the Company. Our Parent Company,
Nahar Industrial Enterprises Limited has been awarded ISO 9002/IS 14002 Certification and
Okotex Certification.

For us, Quality is the ability of our products to be able to satisfy our users. And to ensure this,
the garment goes through various Quality checks in order to ensure utmost customer
satisfaction

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Quality can be mainly seen in 3 different spheres of the Company :
1. Customers

• We aim to do everything that satisfies our customer needs and expectations.


• We make only those commitments that we fully understand and we believe we can meet
than .
• Also, meeting our commitments made with customers on time.

2. Performance Driven

• We confirm that all our garments meet the agreed requirements.


• We constantly monitor and improve our business’s garments, services, organization and
employee performance.

• We make sure that we achieve the goals set by us for the future.
• We confirm that our working environment is 100% employee friendly.

In short, Our Commitments are towards our customers, business and society.

Mission/Vision

Mision

We aim to meet the aspirations of our customers through our offerings of contemporary
fashion and international quality at affordable prices. We look at every Indian as our
customer and will operate on a Pan-India basis in Metro, Tier I, Tier II and Tier III cities and
towns. We will create a leadership position in this field by growing faster than competition.
We will achieve our goals of customer satisfaction through product excellence and our
growth objective through employee motivation and prudent financial policies for investor
satisfaction.

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Vision

•To be pro-active in assessing customer needs and to deliver


quality products.
•To grow as a leader ahead of the competition through internal
performance achievements.
•To stand by our commitments to our Vendors, Franchisees and
Employees.

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ESS AAY Fashion India Pvt. Ltd. Clothing
company was founded in 2001 by Sanjay Tayal
and Ajay Tayal after taking extensive training in
the field of garment production, fashion and
quality.

There was an air of optimism in the industry and it saw the brand charly outlaw as one of the
emerging new labels.

Charly outlaw initially launched with formals , after indepth research and market response it
gradually moved on to casuals and clubwear with stylized slim fits.

The Key Factor is that the dous at Charly outlaw are constantly re-inventing and developing
new styles in a way of patters and fits. The fabrics and accessories are usually sourced from
different parts across the country and are exclusively programmed for charly outlaw. The
brand has a complete over block printing, screen printing and embroidery. It gives every style
exclusivity.

The Aim of Charly outlaw has always been to design leading edge clothing and to be able to
manage their stores at a reasonable price.

The Price factor is very competitive in their stores.

The Brand currently has its presence in market with almost 50 stores it aims to reach out to
more consumers through all stores across the major metros in maharashtra, delhi,
haryana, punjab, west bengal, bihar etc.

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ESS AAY Fashion India Pvt. Ltd. Clothing company was
founded in 2001 by Sanjay Tayal and Ajay Tayal after
taking extensive training in the field of garment
production, fashion and quality.

There was an air of optimism in the industry and it saw


the brand allen cooper as one of the emerging new labels.

Allen Cooper initially launched with formals , after indepth research and market response it
gradually moved on to casuals and clubwear with stylized slim fits.

The Key Factor is that the dous at Allen Cooper are constantly re-inventing and developing
new styles in a way of patters and fits. The fabrics and accessories are usually sourced from
different parts across the country and are exclusively programmed for allen cooper. The
brand has a complete over block printing, screen printing and embroidery. It gives every style
exclusivity.

The Aim of Allen Cooper has always been to design leading edge clothing and to be able to
manage their stores at a reasonable price.

The Price factor is very competitive in their stores.

The Brand currently has its presence in market with almost 50 stores it aims to reach out to
more consumers through all stores across the major metros in maharashtra, delhi, haryana,
punjab, west bengal, bihar etc.

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Priknit Retails Limited- A Profile

OVERVIEW

Priknit is one of the leading men’s wear integrated apparel manufacturing and retail
companies of India. Priknit has established itself in the business of designing, manufacturing
and retail of apparels under the Priknit brands through a network of 152 plus exclusive brand
outlets across 141 cities in India. The Company clocked a turnover of 290 crores in financial
year 2008-2009 which is a growth of over 70 % over last year sale. Priknit Retail Limited, led
by its founder and Managing Director, Sh. Vijay Kumar Ghai is one of North’s leading
business houses with multiple businesses spanning across the consumption space. While
retail forms the core business activity of Priknit retail, company is also present in,
manufacturing & trading of knitted cloths, woolen garments etc. Started in 1983 when
founder Sh. Vijay Kumar Ghai set up a small hosiery unit .From the inception in 1983 Priknit
was eying big and now in year 2009 it has established a manufacturing unit (having a
capacity to manufacture approximately 2.5 million pieces of apparel per annum). Since then
our manufacturing and finishing capacity has increased significantly. Currently the Company
has in-house manufacturing/finishing units and warehouses which are spread across various
locations in and around Ludhiana.
Company has also entered into fabricating agreements with various manufacturing units to
which we outsource stitching of certain apparels. Our manufacturing and finishing facilities
are backed by adequate facilities for product testing, apparel development, design studio and
sampling infrastructure to ensure high quality apparels for our customers. Brand Priknit have
grown significantly in the recent past & has become a house hold name in the northern &
eastern markets... The strength of brand Priknit has significantly contributed to the success of
its business. Priknit brand is positioned as a brand in the middle to high fashion segment,
offering a complete range of a man’s wardrobe (in the age group of 18 to 45 years) ranging
from semi formal to casual and party wear. Priknit is also present in women segment as a
casual brand targeted at fashion conscious young women in the age group of 18 to 35 years
and is positioned as a fashionable and contemporary, value for money brand. Priknit as of

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now is well positioned to capture considerable growth opportunities in India’s apparel
manufacturing and retail sectors, because of our following key strengths:
EXCLUSIVE BRAND OUTLETS. ,
Priknit operate on a model of marketing its apparels directly through a chain of exclusive
brand outlets and thus are independent of external marketing pressures attributable to the
national chain stores, multi brand outlets and other intermediaries. This enables it to focus its
strategies and efforts towards quality maintenance and customer satisfaction without the
interference of any external agency. This model also enhances the brand equity and recalls
value of brand and also allows us to undertake line extensions, as the shelf space on each of
the exclusive brand outlets is controlled by the company.

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MONTE CARLO

A “ never-seen-before” range of half, rollup sleeve shirts is


highlight of the Monte Carlo’s latest collection – “Spring summer 2010” that was unveiled
recently. Promising a soothing sense of style and fashion, the new range comprises elegantly
designed trousers, the vibrant T shirts, the striking sandos and a wide variety of tracksuits and
Bermudas.

For the fashion enthusiast men, the Monte Carlo’s S/ S 10 range is there to add both
‘ethnicity and authenticity’ to men wardrobe. The range not only contains a romantic,
spiritual and poetic appeal to the silhouettes but virtually offers a style therapy for the season.

Spokesperson of the company says the new range has a fresh “taste for fashion” and is bound
to cater to every need of fashion enthusiasts. “While drawing this summer collection we
concentrated mainly on presenting a “never-seen -before” collection.
In T-Shirts category the latest collection comprises variety of colour, style detailing and
graphics and is further subdivided into sinker and pique T -shirts, all available in solid
colours, bright auto stripes. To capture the interest of both modern and classic fashion
enthusiasts while slim fit crew neck range has a shade card ranging from off whites and light
beiges to bright raspberry and tomato reds , the subtle duo tone stripe T-shirts with patch
work are there for those wanting classic trends . The range is further supplemented by bold
coloured auto stripes having woven details as well as graphic chest prints. “We hope it would
in any case capture everyone's style and imagination”, said the spokesperson.

Yet another category of collar T shirts and Polo ‘T’ shirts offers a range that has been drawn
after a variety of experimentation with colours. Horizontal stripes make it for the most sought
after “Indigo collection”, the leisure or casual, moods are flows vividly in combo of ‘Off
White and Pale Plum’, ‘Raspberry and Black’. Also available in latest collection are full and
half placketed, round neck, V neck, contrast collared with hoods – all set to take style and
fashion to next level.
The spokesperson said the company has sought to introduce a new article in “never out of
stock” range available in trousers section. The men could choose from among the wrinkle
free cotton linen trouser as well as denims. “With our formal trouser range we aimed at

50 | P a g e
young achievers and upscale urbanites. In addition sports lower can match their sporty mood
with denim cargo shorts made up from stylish quality fabrics”, she / he added.

Another highlight of the summer range is tracksuits and Bermuda sets. Be it placketed, full
zipped, half zipped, round neck, collared or raglan sleeve with chest prints , all is there in
new range . “In other words you name it and there you find it in collection”. Furthermore, the
collection of sandos stands out as it offers fashion icons a perfect balance of style, fashion
and sensibility. For the fashion enthusiast men, the Monte Carlo’s S/ S 10 range is there to
add both ‘ethnicity and authenticity’ to men wardrobe. The range not only contains a
romantic , spiritual and poetic appeal to the silhouettes but virtually offers a style therapy for
the season.
Latest among all the new range has sought to redefine slim denims with a new addition of
purple, grey, deep red, pinks to the classics in the leg wear segment. Sequins and
embellishments have been given exclusivity, prints highlighted with little touchups and satins
and georgettes have been added to impart all new look to the pleated, ruffled, tuck detailed
tops. “This year designers have laid special emphasis on reaching perfection in detailing,
finishing’s there by leaving no room for vagueness”, said company spokesperson.

Adding variety to the Alpha Collection S/S 10 Wardrobe, Indian Kurtis in block printed
details enriched with brocade and laces are there to cater to men having keenness for
Indianinised wardrobe designed in a variety of colours including Green, mauves, blues, deep
red , refined shades of wine and pink , and all time essentials – the Black and white.

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52 | P a g e
Chapter - 02

Conceptual Frame Work

ALL ABOUT BRANDING

The term brand means different things to the different roles of buyer and seller, with buyers
generally associating brand with a product or service, and merchants associating brand with
identity. Brand can also identify the company behind the specific product -- that's not just a
biscuit, that's Britannia biscuit. This use of brand puts a "face" behind the name, so to speak,
even if the "face" is the result of advertising copy and television commercials. This use of
brand also says nothing of quality, just the buyer's exposure to the brand's PR and media
hype. For the typical merchant, branding is a way of taking everything that is good about the
company -- positive shopping experience, professionalism, superior service, product
knowledge, whatever the company decides is important for a customer to believe about the
company -- and wrapping these characteristics into a package that can be evoked by the brand
as signifier.

Introduction to Branding

The American Marketing Association defines a brand as “A name, term, sign, symbol or
design or a combination of them, intended to identify the goods and services of one seller or
group and to differentiate them to those for competitors”. A brand is thus a product or service
that’s adds a Dimension that differentiates it in some way from other products or services
designed to satisfy the same need. These differences may be functional, rational, or tangible-
relate to product performance of the brand.

Branding has been around for centuries as a means to distinguish the goods of one producer
to those of another. The earliest signs of branding can be traced to Europe where the
medieval guilds required that craftsmen put trademarks on their product to protect themselves
and producer against inferior quality substitutes. Also in fine arts branding began with artists
signing their works. Brands today play a number of important roles that improve the
consumer’s lives and enhance the financial value of firms.

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Brands identify the source or maker of the product and allow consumers-either individual or
organizations- to assign responsibility to a particular manufacturer or distributor. Consumers
may evaluate the identical product differently depending how it is branded. Consumers lean
about the brand with its past experience and the marketing program. As consumers lives
becomes more complicated, time starved the ability of brand to simplify decision making is
invaluable. Brands also perform valuable functions for the firm. First they simplify the
product handling and tracing. Brands help to organize inventory and accounting records. The
brand name can be protected registered trademarks. The intellectual property rights ensure
that the firm can safely invest in the brand and can reap the benefits over a long period of
time.

Brands can signal a certain level of quality so that satisfied buyers can easily choose the
product again. Brand loyalty provides predictability and security of demand for the firm and
creates barriers to entry that makes it difficult for other firms to enter the market. This brand
loyalty can translate into willingness to pay higher price. In this sense branding can be seen
as powerful means to secure a competitive advantage. Brands represent enormously valuable
pieces of legal property that can influence consumer’s behavior. Strong brand results in better
earnings and profit performance for firms, which in turn, creates greater value for
shareholders.

How do you “BRAND” a product? Although firms provide the impetus to brand creation
through marketing programs and other activities, ultimately a brand is something that resides
in the mind of the consumers. A brand is a perpetual identity that is rooted in reality but
reflects the perceptions and perhaps even the ultimate choice of the consumers. Branding is
endowing products and services with the power of brands. To brand a product, it is necessary
to teach the consumers “who” the product-by giving a name. Branding involves creating
mental structures and helping consumers organize their knowledge about products and
services in a way that clarifies their decision making and in process provides value to the
firm.

Branding can be applied virtually anywhere a consumer has a choice. It is possible to brand:

• A physical good (Nestle soup, Pantene shampoo or Maruti Swift),


• A service (Kingfisher Airlines, TATA AIG medical insurance),
• A store (Big Bazaar, BATA stores,etc),

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• A place (The state of Kerala, Pushkar Mela),
• A person (Shahrukh Khan, Sachin Tendulkar),
• An organization (UNICEF or BCCI),
Brand is the proprietary visual, emotional, rational, and cultural image that you associate with
the company or a product. When you think of Volvo, you think of safety. When you think of
Nike, you think of Michael Jordon or ‘Just Do It’. When you think of IBM, you think of ‘Big
Blue’. The fact that you remember the brand name and have positive associations with that
brand makes your product selection easier and enhances the value and satisfaction you get
from product.

While Brand X cola or even Pepsi-Cola may win blind taste tests over Coca-Cola, the fact is
that more people buy Coke than any other Cola. The fond memories of childhood and
refreshment that people have when they drink Coke is often more important than a little bit
better cola taste. It I this emotional relationship with brands that make them so powerful.

Purpose of Branding
The purpose of branding is to create a powerful and lasting emotional connection with
customers and other audiences. A brand is a set of elements or “brand assets” that in
combination create a unique, memorable, unmistakable, and valuable relationship between an
organization and its customers. The brand is carried by a set of compelling visual, written and
vocal tools to represent the business plan and intentions of an organization.

Branding is the voice and image that represents your business plan to the outside world. What
your company, products and services stand for should all be captured in your branding
strategy, and represented consistently throughout all your brand assets and in your daily
marketing activities

The brand image that carries this emotional connection consists of the many manageable
elements of branding system, including both visual image assets and language assets. The
process of managing the brand to the business plan is important not only in “big change
situation” where the brand redefinition is required, but also in the management of routine
marketing variables and tactics. This does not have to be a “ground-up” situation where there
are wholesale changes to the business. Rather it is more common that specific changes to the
changes to the business plan are incremental and the work of the brand strategist and designer

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is to interpret these changes and revise the branding strategy and resulting brand assets and
define their use in the full range of marketing variables.

Brand Identity

Brand Identity includes brand names, logos, positioning, brand associations, and brand
personality, brand toons etc. A good brand name gives a good first impression and evokes
positive associations with the brand. A positioning statement tells what business the company
is in, what benefits it provides and why it is better than the completion? Brand personality
adds emotion, culture and myth to brand identity by the use of a famous spokesperson (Bill
Cosby-Jello), a character (Pink Panther), an animal (the Merrill lynch bull) etc.

Brand associations are the attributes that costumer thinks of when they hear or see the brand
name. McDonalds television are a series of one brand association after another, starting in
yellow arches in the low right corner of the screen and following with associations of Big
Mac, Ronald MacDonald, kids, happy meal, food quality etc. The first step in creating a
brand for your company is branding workshop.

How do we determine our Brand Identity?

Brand has been called the most powerful idea in commercial world, yet few companies create
a brand identity. Do you want your company’s brand identity created for you by competitors
and unhappy customers? Of course not. Our advice to executives is to research their
customers and find the top ranked reasons that the customers buy their product rather than
their competitors. Then, pound that message in every ad, in every news release, in
communications with employees and in every sales call or media interview. By continuous
repetition of messages customer will think of your product and then buy it.

Tools for Building Brand Identity

Brand builders use a set of tools to strengthen and project the brand image; Strong brands
typically exhibit an owned word, a slogan, a color, a symbol, and set of stories.

Owned Word

A strong brand name should trigger another word, a favorable one. Here is the list of brands
that own a word:

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Slogan

Many companies successfully added a slogan or tagline to their brand name which is repeated
in every ad they use. Here are some well-known brands slogans, which people on the street
may easily recall or recognize:

COMPANY SLOGAN

British Airways “The world’s favorite airline”

Ford “Quality is our number one job”

LIC “Jeevan ke saath bhi jeevan ke baad bhi”

Colors

It helps for a company or a brand to use a consistent set of color to and in the brand
recognition. Caterpillar paints all its construction equipments yellow. Yellow is the color of
Kodak film. IBM uses blue in its publications, and IBM is called “Big Blues”.

Symbols and Logos

Companies would be wise to adapt a symbol or logo to use in their communications. Many
companies hire a well-known spokesperson, hoping that his or her quality transfer to the
brand. Nike uses Michael Jordon who has worldwide recognition and likableness, to advertise
its shoes. Sporting goods manufacturers sign contracts with top athletes to serve as their
symbols, even naming the product after them.

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Cartoons and Animations

A less expensive approach is to develop a character, animated, to etch the brand’s image into
customer’s mind. The advertising agency Leo Burnett has successfully created a number of
memorable animated characters. Here are some well known brand cartoons which people
may recognize:

Company Cartoon or Animation

ICICI Prudential Chintamani

Amul Butter Utterly Butterly Girl

McDonalds Ronald

All Out mosquito Repellent Louis

Pillsbury Doughboy

7 Up Fido Dido

Objects

Still another approach is to choose an object to represent a company or brand. The travelers’
insurance company uses an umbrella, suggesting that buying insurance is equivalent to
having an umbrella available when it rains. The prudential insurance company features the
rock of Gibraltar, suggesting that buying an insurance is equivalent to “owing a peace of rock
“which is of course, solid ad dependable. Companies have developed many logos or
abstracts, which are easily remembered by people. Even the way the brand name is written
makes a brand recognizable and memorable.

Brand Effectiveness

With an increase in global competition, branding has become a source of competitive


advantage. In rapidly evolving market for consumer, and industrial products and services, the
source of next generation competency will be branding. In this briefing we demonstrate how
to calculate the brand strength, the price premium associated with the products categories,
and type of customers attracted to the “Premium Products”. Marketers who match their brand
with customers needs will have a sustainable competitive advantage.

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Measuring Brand Effectiveness

There are many metrics to measure the potential of and actual effectiveness of brands. The
simplest way is to apply the concept of what we call the 4 D’s of Branding; differentiation,
distinctiveness, defendable, digit-able.

• Distinctiveness: your brand should be distinct when compared to your competitors


and to all spoken and visual communications to which your target audiences will be
exposed. The more unique and distinct your communications, the wider the filed of
effective competitive strength it will have. There are simple means to apply to test the
distinctiveness of your brand.
• Differentiation: the brand strategy and brand assets must set you’re offering apart
and clearly articulate the specific positioning intent of your offering.
• Defendable: you will be investing in creating your brand assets and in all cases your
brand must have proprietary strength to keep others from using close approximations.
This applies to your trade names and other proprietary words as well as to your logos,
symbols and other visual assets.
• Digit-able: in most businesses there is strong and growing element of electronic
communications and commerce that dictate all brand assets be leveraged effectively
in tactile and electronics form. This goes for all brand assets.
Much of the brand manager’s work is to build a brand image. But its job doesn’t stop there.
The rand manager needs to make sure that brand experience matches the brand image. Much
can go wrong. A fine brand of canned soup described in a full page color ad may be found in
dented and dusty condition in the bottom shelf of a supermarket. The ad describing a gracious
hotel chain is belied by the behavior of a surly concierge.

Building brand therefore calls for more than brand image building. It calls for managing
every brand contact that customer might have with brand. Since all the employees,
distributors and dealers can affect brand experience.

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Brand and Reputation

A brand exists in the mind, or not at all. The mind it exists in may be that of a customer, a
potential customer, an interested observer, a disinterested observer... or almost anybody.

Awareness of a brand may be irrelevant to any purchasing decision that an individual may
make. People are aware of the Mercedes car brand, but cannot envisage any circumstance
under which they would (could!) buy a Mercedes. They are aware of Marlboro (and scores of
other cigarette brands) but as a non-smoker they will never convert their awareness into
purchase. Male with no children are not targeted by Pampers or Huggies but still are aware of
the brands.

People wear many hats. But are or not a potential customer. People may be an employee, an
investor, a citizen, a husband and so on. They hate McDonald’s hamburgers but might love
their stock market record and therefore be a potential customer for their stock. They will
never buy a Boeing 777 but might be impressed by the aircraft and favor an airline that flies
them. They have no idea what an Intel chip is, but might be persuaded that it is a good thing
to have in my PC and therefore buy a computer from a company that uses them.

Brand Aware argues that there is no difference between "Brand" and "Reputation". Some
conventional wisdoms state that customers buy brands, but that investors buy reputations.
Those potential employees join companies because of their reputation, that the media and
other "stakeholders" judge a company on its reputation in some way as a distinct concept
from its brand. This part argues that such distinctions are fallacious for all companies, but
especially for single brand companies such as a McDonalds, a Coca-Cola, a Compaq or a
Shell. These companies’ reputations are part and parcel of their brand. Their brands are their
reputation.

The Brand
To any individual a brand (in his mind) is a complex combination of experiences, beliefs,
perceptions and associations that have grown up over time. For example Coca-Cola is a
company brand, a product brand, a service brand and a brand with a long history. It is a brand
which may represent (to any one individual) diversity, internationality, technical excellence,
financial strength etc. etc. It may also mean insensitivity, environmental pollution, abuse of
power and other negative perceptions.

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Perceiving the brand:

An individual builds up his perceptions of a brand via a wide range of communications


channels. They are as follows:

• Experience: The most powerful influence is experiential. This is when the


individual actually has a "Brand experience". The most obvious are: -
 He visits a McDonald’s restaurant or a Shell petrol station.
 He buys a Coca-Cola branded product or service.
 He views a Coca-Cola bottler's facility.
 He visits a corporate website.
 He attends an interview at the company.
 He contacts the company office for information.
 He meets an employee of the company.
 He buys a share in the company, etc.
• Advertising: Over time an individual who lives in a country in which the
company/brand is active, or travels to one on business or vacation, will be
exposed to their advertising. This advertising may be in a wide range of media:
 TV commercials for products and services
 Recruitment ads inviting employment applications
 "Corporate" TV commercials promoting the company's "reputation"
 Web based advertising
 An ad for the company’s branded products or services in a wide variety of print
media.
 Billboards on highways
 Radio
 Point of sale etc.

• Media reports and stories: Individuals will be exposed to a wide variety of


reports about companies in the media (print and broadcast) where the editorial
content is only partly influence able by the company (in some cases) or not at

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all (in most cases). These stories will come from a variety of primary and
secondary sources: -
 Press releases
 Press conferences
 Reporting of "events"
 Investigative journalism
 Stories passed to the media by third parties (Non governmental organizations
etc.)
• Professional/business interest: For some individuals to interface
professionally, or from a specific business need, with famous companies (or to
observe them) is part of their job. They will usually procure their information
from a variety of sources and via a variety of channels of communication.
These individuals have a special interest in the companies and they include: -
 Financial analysts and journalists with an interest in share performance
 Existing or potential suppliers of products and services
 Existing or potential industrial/commercial customers
Building the Brand

The art of marketing is largely art of brand building. When something is not a brand, it will
probably be viewed as a commodity. Then price is the thing that counts. When price is the
only thing that counts then the low cost producer wins. But just having a brand is not enough.
What does the brand name mean? What associations, performances and expectations does it
evoke? What degree of preferences does it create?

Choosing a Brand Name

A brand name first must be chosen then its various meanings and promises must be built up
through brand identity work. In choosing a brand name, it must be consistent with the value
positioning of the brand. In naming a product or service the company may face many
possibilities: it could choose name of the person (Honda, Calvin Klein), location (American
airlines), quality (Safety stores, Healthy choice), or an artificial name (Exxon, Kodak).

Among the desirable qualities of a brand name. Some are:

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• It should suggest something about the product benefits.
• It should suggest product qualities such action or color
• It should be easy to pronounce, recognize and remember; short names help a lot
to recognize the product to the customers.
• It should be distinctive.
• It should not carry poor meanings in other countries and languages etc.

Building Positive Associations

The best known brand names carry associations. For example, here is a list of words that
people say they associate with McDonalds:

• Kids
• Fun
• Happy Meal
• Ronald Mc. Donald
• Quality
• Toys
In trying to build a rich set of positive associations for a brand, the brand builder should
consider five dimensions that can communicate meaning:

• Attributes: A strong brand should trigger in buyers mind certain attributes. Thus a
Mercedes automobile attributes a picture of well-engineered car that is durable,
rugged and expensive. If a car brand does not trigger any attribute, then it would be a
weak brand.
• Benefits: A strong brand should suggest benefits, not just features. Thus Mercedes
triggers the idea of well performing car that is enjoyable to drive and prestigious to
own.
• Company Values: A strong brand should connote values that the company holds.
Thus Mercedes is proud of its engineers and engineering innovations and is very
organized and efficient in its operations. The fact that it is a German company adds
more pictures in the mind of the buyers about the character and the culture of the
brand.

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• Personality: A strong brand should exhibit some personality traits. Thus if Mercedes
were a person we would think of someone who is middle age, serious, well-organized
and somewhat authoritarian. If Mercedes were an animal we might think of lion or its
implied personality.
• Users: A strong brand should suggest the type of people who buy the brand. Thus we
would expect Mercedes to draw buyers who are older, affluent and professional.
In summary, brands when their very name connotes positive attributes, benefits, company
values, personality and users in the buyer’s mind. The brand builder’s job is to create a brand
identity that builds on those dimensions.

Choosing Brand Elements

Brand elements are those trademarks devices that serve to identify and differentiate the brand.
Most strong brands employ multiple brand elements. Nike has distinctive “swoosh” logo, the
empowering “Just Do It” slogan and the mythological “Nike” name based on the winged
goddess of victory.

Brand element can be chosen to build as much as brand equity as possible. The test of the
brand building ability of these elements is what consumers think or feel about the product if
they only knew about the brand element. A brand element provides positive contribution to
brand equity.

Brand Element Choice Criteria

There are six criteria in choosing brand element. The first three can be characterized by brand
building in terms of how brand equity can be build through judicious choice of brand
element. The latter three are more defensive and are concerned with how the brand equity
contained in the brand element can be leveraged and preserved in the face of various
opportunities and constraints.

• Memorable: How easily is the brand element recalled? How easily recognized? Is
this true at both purchase and consumption? Short brand name like tide, Nike can
help.
• Meaningful: To what extent is brand element credible and suggestive of the
corresponding category? Does it suggest something about a product ingredient or a
type of person who might use the brand?

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• Likeability: How aesthetically appealing does consumers find the brand element? Is
it inherently likeable visually, verbally, and in other ways? Concrete brand names
such as Wheel, Sunsilk etc evoke much imagery.
• Transferable: Can a brand element be used to introduce new products in the same or
different categories? To what extent does the brand element add to brand equity
across geographic boundaries and market segments?
• Adaptable: How adaptable and updatable is the brand element? Betty corker received
8 makeovers through the years-although she is 75 yrs old, she doesn’t look a day over
35.
• Protectable: How legally protectable is the brand element? How competitively
protectable? Can it be easily copied? It is important that names that become
synonymous with product categories such as Kleenex, Xerox, Jell-O, etc retain their
trademarks rights and not become generic.

Brand elements can play a number of roles. If consumers do not examine much information
in making their product decisions, brand elements should be easily recognized and recalled
and inherently descriptive and persuasive. Memorable or meaningful brand elements can
reduce the burden on marketing communications to build awareness and link brand
associations. The different associations that arise from likeability and appeal of the brand
elements may also play a critical role in the equity of brand.

What is Brand Equity?

There is no universally accepted definition of brand equity. The term means different things
for different companies and products. However, there are several common characteristics of
the many definitions that are used today. From the following examples it is clear that brand
equity is multi-dimensional. There are several stakeholders concerned with brand equity,
including the firm, the consumer, the channel, and some would even argue the financial
markets. But ultimately, it is the consumer that is the most critical component in defining
brand equity. Some researchers in the field of marketing have defined brand equity as
follows:

• Lance Leuthesser, et al (1995) writes that "… brand equity represents the value (to a
consumer) of a product, above that which would result for an otherwise identical

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product without the brand's name. In other words, brand equity represents the degree
to which a brand's name alone contributes value to the offering (again, from the
perspective of the consumer)."
• The Marketing Science Institute (1988) defines brand equity as, "The set of
associations and behaviors on the part of the brand's customers, channel members,
and parent corporations that permit the brand to earn greater volume or greater
margins than it could without the brand name and that gives the brand a strong,
sustainable, and differentiated advantage over competitors."
Brand equity can be defined as three distinct elements:

• The total value of a brand as a separable asset -- when it is sold or included on a


balance sheet.
• A measure of the strength of consumers' attachment to a brand.
• A description of the associations and beliefs the consumer has about the brand.
Of those three concepts, the first can be classified as "brand valuation," the second "brand
loyalty," and the third "brand description." Brand loyalty will be a factor that affects the
overall brand value, and brand description will usually affect or explain some of the brand
loyalty. Because of the importance of each of these elements of brand equity, they will each
be briefly explained.

Brand Equity as Brand Value.

Brand value involves actually placing a dollar or rupee value on a brand name. The reasons
for doing this are usually to set a price when the brand is sold and also to include the brand as
an intangible asset on a balance sheet (a practice which is not used in some countries). While
there are many methods for making this measurement, some of which will be described
shortly, it is important to note that there is a significant difference between an "objective"
valuation created for balance sheet purposes, and the actual price that a brand may get when
sold?

A brand is likely to have a much greater value to one purchaser than another depending on
the synergy that exists. For acquisitions, the value of a brand to a certain purchaser is often
estimated through scenario planning. This involves determining what future cash flows the
company could achieve if it owned and took advantage of the brand.

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What this means is that there is no such thing as an absolute value for a brand, and brand
value needs to be considered as only one component of the overall equity of a brand.

Brand Equity as Brand Loyalty

Loyalty is a core dimension of brand equity and is a way to gauge the strength of a brand. It
represents a barrier to entry, a basis for a price premium, and time to respond to competitive
innovations. The variety of measures used for brand loyalty usually is a combination of one
or more of the following:

• Price/demand measures--focus on a brand's ability to command a higher price or


make consumers less sensitive to price increases than price increases for competing
brands.
• Behavioral measures--focus on consumers' behavior.
• Attitudinal measures--focus on general evaluative measures such as 'liking' or
'disliking.'
• Awareness measures--focus on identifying a brand as being associated with a product
category.
• Brand Loyalty and Equity refer to the notion that some brands are "stronger" or better
than others.

An example of this sort of belief is:

“If the businesses were split up, I would take the brands, trademarks and goodwill, and you
could have all the bricks and mortar - and I would fare better than you.”

The optimism for the concept can be stated on the fact that when one would say as a
predictor of future financial performance, brand equity, if reported, would be valuable for
capital marketers and shareholders. Brand equity has the potential to become the set of
measures of business performance that matter most.

The motivation for brand equity comes from the observation that many marketing efforts
"realize" benefits; such as sales or profit and these are accounted for in the firm’s profit and
loss figures. However, there is the possibility that management might choose between taking
realized benefits and "storing" them future. One of the most common times this argument is
used is when discussing the role of advertising versus sales promotion. You could spend lots

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of money on advertising, see no immediate effects, but you could save your job by saying
that you had "built the brand". At least one advertising agency offers to partner companies in
this sort of activity.

So marketing strategies could be putting money into (or out of) the brand equity bank
account. But the question is as always how do we know? That is are we actually building the
brand with all our advertising (or other brand building 4 p’s decisions e.g., limited / premium
distribution rights, high price, fancy packing, after sales service, extended warranties).So,
hopefully you have got the idea - theories about brand loyalty and equity are used to represent
aspects of brand strength.

This "strength" can take a number of forms, e.g., consumers predominantly buying your
brand, which might be represented by a high share of category requirements, or high
proportion of sole-buyers.

Consumers saying good things about your brand, e.g., having a positive brand Attitude, it
might be the ability to charge a price premium. It might be the ability to not be substituted
when out of stock. Future strength might be in terms of some sort of long-term competitive
advantage or the ability to sustain brand extensions.

One of the things is that as with many concepts in marketing, is that there are many different
definitions and viewpoints on what exactly brand equity is and how to measure it. So that is a
problem. We need to be clear just what people mean when they talk about brand equity or
brand loyalty, or building brands.

Brand loyalty / Equity advocates

One of the ruses used by proponents of brand equity or loyalty is to claim that these measures
do not capture all the important aspects of brands strength. But this is an evasion. We want to
be able to detect that our efforts are doing something to the brand, and so we need to know
ways that this might show up in.

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Brand Equity as Brand Description

Brand description, the final component of brand equity, concerns the actual attributes of the
brand. These attributes or associations are major creators of brand loyalty. A wide variety of
techniques exist for matching consumer associations with perceptions of a brand. These
techniques can be both qualitative and quantitative. They work by getting the respondent to
link each brand with pictures or words. These attributes then can be measured with multi-
dimensional scaling to position the attributes relative to one another.

Qualitative Measures of Brand Equity


The Brand Equity Ten are ten sets of measures grouped into five categories, which attempt to
gauge the strength of a brand. The first four categories represent customer perceptions
of the brand along the four dimensions of brand equity- loyalty, perceived quality,
associations and awareness. The fifth includes two sets of market behavior measures.

Loyalty
Price Premium: A basic indicator of loyalty is the amount a customer will pay for a
product in comparison to other comparable products. A price premium can be
determined by simply asking consumers how much more they would be willing to pay
for the brand.

Customer Satisfaction: A direct measure of customer satisfaction can be applied to


existing customers. The focus can be the last use experience or simply the use
experience from the customer's view.

Perceived Quality and Leadership Measures


Perceived Quality is one of the key dimensions of brand equity and has been shown
to be associated with price premiums, price elasticities, brand usage and stock return.
It can be calculated by asking consumers to directly compare similar brands.

Leadership/Popularity has three dimensions. First, if enough consumers are buying


into the brand concept it must have merit. Second, leadership often taps innovation
within a product class. Third, leadership taps the dynamics of consumer acceptance.
Namely, people are uneasy swimming against the tide are a likely to buy a popular
product. This can be measured by asking consumers about the product's leadership
position, its popularity and its innovative qualities.

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Associations/ Differentiation Measures
Perceived Value: This dimension simply involves determining whether the product
provides good value for the money and whether there are reasons to buy this brand
over competitive brands.

Brand Personality: This element is based on the brand-as-person perspective. For


some brands, the brand personality can provide links to the brands emotional and self-
expressive benefits.

Organizational Associations: This dimension considers the type of organization that


lies behind the brand.

Awareness Measures
Brand awareness reflects the salience of the product in the consumer's mind and
involves various levels including recognition, recall, brand dominance, and brand
knowledge and brand opinion.

Market Behavior Measures


Market Share: The performance of a brand as measured by market share often
provides a valid and dynamic reflection of the brand's standing with customers.

Price and Distribution indices: Market share can prove deceptive when it increases
as a result of reduced prices or promotions. Calculating market price and distribution
coverage can provide or more accurate picture of the product's true strength. Relative
market price can be calculated by dividing the average price at which the product was
sold during the month by the average price at which all the brands were sold.

Managing Brand Equity


Consistency is the key to successfully building and managing brand equity. Having a long-
term outlook and projecting a consistent image of your brand to the customer will maximize
the results of building brand equity. It is critical for managers to realize that brand equity can
have positive as well as negative effects on a product or company. In the end, it is the
customer that truly defines what brand equity means.

If management feels it is necessary to change the direction of a brand or change a product it


must be careful not to change too quickly. There are many examples of companies that have
changed a product or brand too much or too quickly. On these occasions, consumers met

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changes with adverse reactions. The most famous example is Coca-Cola. They changed the
formula of their flagship product Coke, and consumers reacted so poorly to the new product
that the old formula was reintroduced and the new formula eventually was discontinued. The
consumer through the product experiences brand equity. The product has certain attributes or
characteristics that deliver the equity to the consumer. If any of these attributes are changed
or eliminated, the equity delivered to the consumer is also changed.

Managing brand equity is a continual process with long-term implications. Unfortunately,


many brand managers are forced to focus on short-term goals such as market share and
profits. Many programs that are implemented to boost short-term sales or market share may
be detrimental to the long-term viability of the brand. For example, Proctor & Gamble has
started to test market a program to move away from using coupons to a system of every day
low prices. This is, in part, because consumers may become loyal to the coupon or promotion
and not to the product itself. Constant promotional programs erode margins and eventually
brand loyalty. Ultimately, brand equity is damaged.

In 1988, Graham Phillips, Chairman of Ogilvy and Mather Worldwide, said, "I doubt that
many would welcome a commodity marketplace in which one competed solely on price,
promotion and trade deals, all of which can be easily duplicated by competition. This would
lead to ever decreasing profits, decay, and eventual bankruptcy. About the only aspect of the
marketing mix that cannot be duplicated is a strong brand image." This quote clearly
demonstrates the importance of managing brand equity. In many categories, brand equity is
the only point of differentiation between products.

Many people may think that building and maintaining brand equity is solely the responsibility
of brand managers, but it is actually a cross-functional team effort. Financial managers are
important because they can fully analyze the costs of maintaining and building brand equity.
For example, launching a new brand is extremely consuming in terms of money and time. It
may be more cost effective to extend a current brand than introduce a new brand. Marketing
research is critical for many obvious reasons. It develops most, if not all, of the research and
data that companies will use for deciding strategic issues. Marketing research can also help
determine how brand equity is actually measured. Once a definition of brand equity is
established, the responsibility of tracking.

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The World Strongest Brand Share 10 Attributes

• The brand excels at delivering the benefits consumers truly desire.


• The brand stays relevant.
• The pricing strategy is based on consumer perceptions of value.
• The brand is properly positioned.
• The brand is consistent.
• The brand portfolio and hierarchy makes sense.
• The brand makes use of and co-ordinates a full repertoire of marketing activities to
build equity.
• The brand is given proper, sustained support.
• The brand’s manager understands what the brand means to customers.
• The company monitors source of brand equity.
Branding benefits buyers as well as sellers in the following manner

To Buyer:

• Help buyers identify the product that they like/dislike.


• Identify marketer
• Helps reduce the time needed for purchase.
• Helps buyers evaluate quality of products especially if unable to judge products
characteristics.
• Helps reduce buyers’ perceived risk of purchase.
• Buyer may derive a psychological reward from owning the brand, i.e., Rolex or
Mercedes.

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To Seller:

• Differentiate product offering from competitors


• Helps segment market by creating tailored images, i.e., Contact lenses
• Brand identifies the companies’ products making repeat purchases easier for
customers.
• Reduce price comparisons
• Brand helps firm introduce a new product that carries the name of one or more of its
existing products...half as much as using a new brand, lower co. designs, advertising
and promotional costs. Example, BPL telephones.
• Easier cooperation with intermediaries with well known brands
• Facilitates promotional efforts.
• Helps foster brand loyalty helping to stabilize market share.
• Firms may be able to charge a premium for the brand.

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Consumer is a broad label that refers to any individuals or households that use

goods and services generated within the economy

What is Consumer Buying Behavior?

Introduction to Consumer Behaviors

The study of Consumer Behaviors is quite complex, because of many variables involved and
their tendency to interact with & influence each other. These variables are divided into
three major sections that have been identified as the most important general influences
on Consumer Behaviors. Imagine three concentric circles, one at the outer most, one in
the middle & one at the inner most, and they represent the following:

External Environmental Variables Influencing Behaviour : These are the factors controlled by
external environments like the following form the basis of external influences over the
mind of a customer (outer circle) :

1. Culture, and Sub-culture,


2. Social Class, and Social Group,
3. Family, and Inter-Personal Influences,
4. Other Influences (which are not categorized by any of the above six, like geographical,
political, economical, religious environment, etc.).

Individual Determinants of Behavior: Major individual determinants of Consumer Behavior


are portrayed in the middle ring. These are the human mind and its attributes. These
variables are personal in nature and they are influenced by the above set of external
factors and in turn influence the way consumers proceed thro’ a decision making process
regarding products & services. They are:

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1. Personality & Self-concept,
2. Motivation & Involvement,
3. Perception & Information Processing,
4. Learning & Memory,
5. Attitudes.

The Consumer Decision Making Process: The buying decision comes as a product of the
complex interaction of the external factors and the personal attributes. The inner most
circle denotes the consumer decision making process regarding products & services,
whose major steps are :

1. Problem Recognition,
2. Information Search,
3. Evaluation of Application,
4. Purchase Decision,
5. Post-Purchase Behavior.

Marketers are frequently uncertain about the variables that are at play influencing & affecting
consumers. Sometimes this occurs because they don’t clearly understand the extent of
variables that might be having an influence. The details of all external, internal,
environmental, economical etc. are discussed above. Sometimes some variables are not
directly observable. Other times variables are known to the marketers but their exact
nature & relative strength of influence is not apparent. In these circumstances, it is useful
to understand the above mentioned concepts and how the consumers behave, so that their
decision making process can be predicted to a reasonable extent. The human mind being
as complex as it is, the understanding of the buying behavior of the consumers becomes
a continuous activity of application of various theories & concepts by the marketers.

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The Consumer Behaviors Theory

An understanding of how the theory of consumer behavior and its application tools
evolved over the years will enable us to appreciate the validity of the theory and give us a
guidance in its practical application. Consumer behavior, like all human behavior is very
complex. But the consumer behavior theory, like all theories is a simplified & abstract
representation of reality. The more simplified picture of consumers provided by the
theory helps us enormously to understand the consumers. It not only helps us to think
about consumers, but also provides us with a language to talk about them. This language
is very useful, because to be effective in an organization – for profit or non-profit – one
has to persuade others to accept his ideas. And in fact, lack of this language has been one
of the greatest drawback of the modern marketers.

Market Research or Marketing Research (MR) has been developing since


“MARKETING” which brings together all customer elements, grew out of the concept of
“SALES” in the early fifties. The theory of consumer behavior draws heavily upon the
famous psychologist Sigmund Freud, particularly with respect to the emotional,
psychological, mental, subjective or non-utilitarian aspects of buying decision or behavior
of a consumer. The theory represents the hidden order in this very complex activity,
which we call consumer behavior. On the surface, this highly complex & varied display
of behavior by consumers seems essentially unexplained. But slowly as the theory
develops.

Now, what is the magic stuff called consumer behavior theory that does all these
wonderful things. It’s not just a theory, as explained earlier, but more than that. It helps us
to make better marketing decisions for profit & non-profit organizations. Thus we can
examine the characteristics of a theory that enables us to do so. Researchers G Zaltman
and M Wallendorf have came out with the most important attributes of a good & sound
theory, after very close and careful thought.

These are the following :

A theory which does both: explains how consumers buy & predicts what consumers will buy.
It unifies previously unrelated areas of knowledge, for example, it relates to information that
consumers get from advertising so as to decide what brands they buy.

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The theory is simple. If not, it can be so complex that we can’t understand well enough to
apply it to our practical problems.
It is testable so that we can verify whether the theory is valid and therefore dependable.
Implied in the previous characteristic, it is supported by the facts. This means, to lay the
theory up against data describing how consumers buy in the market and thereby
determine if the facts confirm the theory. If they don’t, then either the theory should be
modified till the facts do verify it or abandon the theory.
The theory is general, which means that it can be applied to a wide range of products &
services. If it is not, then it won’t be very useful.
It has heuristic value, meaning that it poses new questions for us that had not been previously
asked. While trying to answer these questions, new knowledge is created and that
becomes the part of the theory.
It is internally consistent. This means that the theory is internally free from logical in
congruencies or else the prediction will be doubtful & flawed. Lack of this quality will
make the theory a dangerous tool.
It is original. If not, it adds little to the existing knowledge.
It is plausible. If not, it can’t be seen by others as making any sense, and hence, they will not
likely to accept the theory and so it won’t be useful.

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Definitions:
Consumer Behavior (or Buyer Behavior) is broadly defined by various scholars & researchers
as:

It’s the behavior displayed by the consumers during the acquisition, consumption and
disposition of products, services, time and ideas by decision making units.
It is the body of knowledge which studies various aspects of purchase and consumption of
products and services by individuals with various social and psychological variables at
play.
The behavior that the consumers display in searching for, purchasing, using, evaluating and
disposing of products and services that they expect will satisfy their needs.
The process and activities people engage in when searching for, selecting, purchasing, using,
evaluating, and disposing of products and services so as to satisfy their needs and
desires.
The activities directly involved in obtaining, consuming, and disposing of products and
services, including the decision processes that precede and follow these actions.
The American Marketing Association (AMA) defines consumer behavior as “The dynamic
interaction of cognition, behavior & environmental events by which human beings
conduct the exchange aspect of their lives.

The study of consumer behavior involves search, evaluation, purchase, consumption and
post purchase behavior of the consumers and includes the disposal of purchased products
keeping environment and personal characteristics in mind.

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Definition of Buying Behavior:
Buying Behavior is the decision processes and acts of people involved in buying and using
products.
Need to understand:
• Why consumers make the purchases that they make?
• What factors influence consumer purchases?
• The changing factors in our society.
Consumer Buying Behavior refers to the buying behavior of the ultimate consumer. A firm
needs to analyze buying behavior for:

Buyer’s reactions to a firms marketing strategy has a great impact on the firm’s success.
The marketing concept stresses that a firm should create a Marketing Mix (MM) that satisfies
(gives utility to) customers, therefore need to analyze the what, where, when and how
consumers buy.
Marketers can better predict how consumers will respond to marketing strategies.

Factors influencing consumer behavior

Consumer purchases are influenced strongly by or there are four factors.


01. Cultural Factor
02. Social Factor
03. Personal Factor
04. Psychological Factor.

01. Cultural Factor:-


• Cultural factor divided into three sub factors (i) Culture (ii) Sub Culture (iii) Social Class

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Culture:-
The set of basic values perceptions, wants, and behaviors learned by a member of society
from family and other important institutions. Culture is the most basic cause of a
person’s wants and behavior. Every group or society has a culture, and cultural
influences on buying behavior may vary greatly from country to country.

Sub Culture :-

A group of people with shared value systems based on common life experiences and
situations.
Each culture contains smaller sub cultures a group of people with shared value system based
on common life experiences and situations. Sub culture includes nationalities, religions,
racial group and geographic regions. Many sub culture make up important market
segments and marketers often design products.

Social Class:- A

Almost every society has some form of social structure; social classes are society’s relatively
permanent and ordered divisions whose members share similar values, interests and
behavior.

Social Factors:-

A consumer’s behavior also is influenced by social factors, such as the (i) Groups (ii) Family
(iii) Roles and status

Groups :-

Two or more people who interact to accomplish individual or mutual goals.


A person’s behaviors are influenced by many small groups. Groups that have a direct
influence and to which a person belongs are called membership groups.
Some are primary groups includes family, friends, neighbors and coworkers. Some are
secondary groups, which are more formal and have less regular interaction. These
include organizations like religious groups, professional association and trade unions.

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Family:- Family members can strongly influence buyer behavior. The family is the most
important consumer buying organization society and it has been researched extensively.
Marketers are interested in the roles, and influence of the husband, wife and children on
the purchase of different products and services.

Roles and Status :-


A person belongs to many groups, family, clubs, and organizations.
The person’s position in each group can be defined in terms of both role and status.
For example. M & “X” plays the role of father, in his family he plays the role of husband, in
his company, he plays the role of manager, etc. A Role consists of the activities people
are expected to perform according to the persons around them.

Personal Factors:-

It includes

Age and life cycle stage


Occupation
Economic situation
Life Style
Personality and self concept.

Psychological Factors:-

It includes these Factors.

Motivation
Perception
Learning

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Chapter - 03

Review of Literature

Brand Preference

“Customers buying products are buying utility, function, and performance as much as
image and status” (Terpstra and Sarathy, 1997, p. 375). Actually, Customer merchandise has
implications more than their utilitarian, functional, and commercial significance
(Czikszentmihalyi and Rochberg-Halton, 1981; Ericksen, 1996; Leigh and Gabel, 1992;
Levy, 1959; Mick, 1986). Consumers do not “consume products for their material utilities but
consume the symbolic meaning of those products as portrayed in their images” (Elliot, 1997,
p. 286). Therefore, the acquired goods are not only “bundles of attributes that yield particular
benefits” (Holt, 1995, p. 1) but also indications of symbolic meanings to the public.
Consumers are more likely to use brands to express how they are either similar to or different
from people of their in-group (Markus and Kitayama, 1991).

Bhat and Reddy (1998) also reported that brands have practical and emblematic
importance for consumers. The emblematic importance, which is attached to brands, is often
broadcasted via the use and consumption of brands (Gottdeiner, 1985; McCracken, 1986).
Consequently, there seems to be a noteworthy relationship between brand images, consistent
with the emblematic importance of brands, and consumers’ self images (Zinkham and Hong,
1991). Individuals are more likely to buy brands whose personalities intimately match their
own self images (Schiffman and Kanuk, 2000). Similarly, consumers express themselves by
selecting brands whose personalities are recognized to be consistent with their own
personalities (Aaker, 1999; Kassarjian, 1971; Sirgy, 1982).

In many circumstances, consumers’ self image influences his/her purchase decisions


(Zinkham and Hong, 1991) In other words, consumers use products to illustrate, maintain,
and reinforce their self concepts to themselves (Sirgy, 1982; Wallendorf and Arnould, 1988;
Zinkham and Hong, 1991). Therefore, “purchase and consumption are good vehicles for self-
expression” (Jamal and Goode, 2001, p. 483).

Previous research indicated that self image/self expression affect consumers’ product
preferences and their purchase intentions (Ericksen, 1996; Mehta, 1999). For example,

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Ericksen (1996) found a significant relationship between self image and intention to buy an
American automobile (Ford Escort). Based on this finding, it might be inferred that
“individuals prefer brands that have images compatible with their perceptions of self” (Jamal
and Goode, 2001, p. 483; Belk, et. al., 1982; Ericksen, 1996; Solomon, 1983; Zinkham and
Hong, 1991). Moreover, this self image consistency strengthen positive attitude toward
products and brands (Ericksen, 1996; Sirgy, 1982, 1985, 1991; Sirgy, et. al., 1997).
Specifically, “the more similar a consumer’s self-image is to the brand’s image, the more
favorable their evaluations of that brand should be” (Graeff, 1996, p. 5).

Brand Personality

Contrary to product-related attributes, which refer to be performance-oriented for


customers, brand personality seems to be representative/self-expressive oriented (Keller,
1993). Brand personality refers to “the set of human characteristics associated with a brand”
(Aaker, 1997, p. 347). Moreover, researchers found that brand personality facilitates a
consumer to articulate his/her self (Belk, 1988), an ideal self (Malhotra, 1988), or exact
aspects of the self (Kleine, Kleine, and Kerman, 1993) via the use of a brand. Additionally,
this concept was the essential determinant of consumer preference and usage (Biel, 1993).

Brand personality can be shaped and influenced by any direct/indirect contact that the
consumer has with the brand (Plummer, 1985). The direct influences included the brand’s
user imagery, which is defined as “the set of human characteristics associated with the typical
user of a brand” (Aaker, 1997, p. 348); the firm’s workers and/or boss; and the brand’s
endorsers. On the other hand, the indirect influences contained product-related features,
product category relationships, brand name, mark or emblem, and other marketing mix
elements (Batra, Lehmann, and Singh, 1993).

Moreover, according to Levy (1959, p. 12), brand personality consisted of


demographic characteristics such as gender (“Usually it is hard to evade thinking of
inanimate things as male or female”), age (“Just as most, people usually recognize whether
something is addressed to them as a man or a woman, so are they sensitive to symbols of
age”), and class (“The possession of mink is hardly a matter of winter warmth alone”). Some
examples are provided as follows. First, in the tobacco industry, “Virginia Slims tends to be
thought of feminine, whereas Marlboro tends to perceived as masculine” (Aaker, 1997, p.
348). Second, in the pc business, “Apple is considered to be young, and IBM is considered to

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be older” (Aaker, 1997, p. 348). Third, based on the various pricing policies in relation to
different department stores, “Saks Fifth Avenue is perceived as upper class, whereas K-mart
is perceived as blue collar” (Aaker, 1997, p. 348).

Customer Perceived Value

Value has been recognized as “the fundamental basis for all marketing activity”
(Halbrook, 1994, p. 22). Value has also been stated as “a cognitive-based construct which
captures any benefit-sacrifice discrepancy in much the same way disconfirmation does for
variations between expectations and perceived performance” (Patterson and Spreng, 1997, p.
421). Therefore, it is the outcome of a cognitive assessment procedure. Moreover, it is an
affective evaluative reaction (Oliver, 1996).

Customer perceived value in commerce marketplace was defined as “the trade-off


between the multiple benefits and sacrifices of a supplier’s offering, as perceived by key
decision-makers in the customer’s organization, and taking into consideration the available
alternative suppliers’ offerings in a specific use situation” (Eggert and Ulaga, 2002, p. 110).
That is, there existed three elements in this definition: “(1) the multiple components of value,
(2) the subjectivity of value perceptions and (3) the importance of competition” (Eggert and
Ulaga, 2002, p. 109).

First of all, the multiple benefits refer to a mixture of product/service attributes and/or
technological support available related to a specific use condition (Monroe, 1990). The
multiple sacrifices were occasionally illustrated in monetary forms (Anderson, et al., 1993).
Secondly, customers’ perceived value is subjective, not objective (Kortge and Okonkwo,
1993). In other words, different customers might have a variety of perceived values for
consuming the same product/service. Thirdly, customers’ perceived value is associated with
competition on the market. Competitors generate sustainable competitive advantage by
means of bringing a better trade-off between utilities and sacrifice in a merchandise/service.

Alternatively, customer perceived value was consisted of a “take” factor- the benefits
a purchaser obtained from the vendor’s contribution- and a “give” factor- the buyer’s costs
(financial and/or non-monetary) of receiving the offering (Dodds, 1991; Zeithmal, 1988).
Even much of the precedent studies have emphasized product quality as the primary “take”
factor and price as the “give” factor (Grewal et al., 1998; Lichtenstein, Netemeyer, and
Burton, 1990; Zeithmal, 1988). But, “service is also a logical driver of perceived value”

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(Parasuraman and Grewal, 2000, p. 169). For the reason that outstanding before/after sale
services provided by the seller really increase the benefits obtained (the take factor) and also
“decrease the buyer’s non-monetary costs, such as time, effort, and mental stress” (the give
factor) (Parasuraman and Grewal, 2000, p. 169). Consequently, customer perceived value
was composed of “service quality, product quality, and price” (Parasuraman and Grewal,
2000, p. 169).

1. Service quality
Perceived service quality was defined as the discrepancy between “expected quality
and experienced quality” (Gronroos, 2000, p. 67). Expected quality refers to the expectations
of the customer; experienced quality is “the outcome of a series of internal decisions and
activities” (Gronroos, 2000, p. 101). In other words, customers’ subjectivity has a significant
influence on perceived service.

Based on a concrete background of empirical and conceptual research, Gronroos


(2000, p. 81) provided a list of The Seven Criteria of Good Perceived Service Quality:
“professionalism and skills” (i.e., service providers have required knowledge to offer skills in
order to solve customers’ problems in a professional way), “attitudes and behavior” (i.e.,
service providers are considerate of/friendly to customers), “accessibility and flexibility” (i.e.,
service providers are easy and adaptive for customers to reach), “reliability and
trustworthiness” (i.e., service providers are dependable and honorable), “service recovery”
(i.e., service providers are willing to correct mistakes as soon as they can), “serviscape” (i.e.,
customers feel comfortable in the environment related to the service process), “reputation and
credibility” (i.e., service providers can be trusted by customers).

2. Product quality
Generally speaking, people buy products to satisfy needs and wants. That is,
consumers would like to obtain a mixture of utilities when they procure items for
consumption, and different customers seem to acquire a variety of benefits from the same
kind of goods. In order to supply the benefits for consumers, marketers need to successfully
incorporate the components that constitute a product. These components include “product
features (quality, design, branding, and packaging) and customer service (purchase services
and usage services)” (Bearden, Ingram, and LaForge, 2001, p. 185). Product quality refers to
“how well a product does what it is supposed to do as defined by the customer” (Bearden,
Ingram, and LaForge, 2001, p. 186).

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3. Price
The price of a product/service can be analyzed associated with customers’ quality
expectations and/or their past experiences. If the price is judged too expensive, consumers
might not purchase. A low price policy causes poor positioning and neglected opportunities.
However, price appears to be a standard for quality in some circumstances. “A higher price
level equals a better quality in the minds of customers, especially when the service is highly
intangible” (Gronroos, 2000, p. 80).

Conduct a Review of the Branding Literature relating to brand image


Brand Image

Introduction

The concept of brand image has been very significant to consumer behaviour from post
1950’s. As Aaker and Keller confirmed in Hsieh’s study that, “brand image has been
considered a vital part of a firm’s marketing program, not only because it serves as a
foundation for tactical marketing mix issues but also because it plays an integral role in
building long term brand-equity” (1990).

Definition

Earlier definitions of brand image are presented in broad terms by Dobni (1990) who put
forward the following writers understanding of brand image. Newman stated it as “everything
the people associate with the brand” (1957). Reynolds (1965) confirms that an image was
centred on drawing a few key beliefs from a vast variety of sources, thus creating your own
impression based on the brand. Herzog’s concurs that brand image was “the sum of the total
impressions.” (1973). Indeed, such definitions all concur together; echoed by the words of
Levy who stated that “a brand image is a constellation of pictures and ideas in people’s minds
that sum up their knowledge of the brand and their main attitudes towards it” (1978). A more
recent insight into brand image was added by Woodside who “defined image as the degree of
positive or negative affect associated with psychological object” (Reid, 2001).

From these definitions a clear trend is appearing with regard to the perception of brand image
with key figures around the mid-nineteen hundreds, supporting a collective view that an

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individual takes in a collaboration of ideas that the company puts forward as a representation
of themselves. This allows them to draw a clear conclusion of a company from a few certain
points which strike a cord with the individuals.

Theory behind brand image

According to Tyler (1957), there are three approaches to brand image: Subjective, Objective
and Literal.

The first type, is a subjective image, this is when a potential customer hears or sees the brand
name/logo and feel obliged to purchase the product or service, despite a lack of
understanding as to why this is the case. The case simply relates to how the brand is
perceived as significant to an individual’s self-consciousness.

The second type of brand image is the objective form which is the attempt to generate an
emotional need for the product, leaving you with the feeling that you need to purchase the
product so as to satisfy this need.

The third is literal image, i.e. a logo which represents a company. This implies that upon
seeing this picture/logo, the name of the company does not need to be uttered as the picture
tells the consumer the whole story e.g. Nike with the tick or McDonalds with the golden
arches. Evidently, the approach used to obtain and sustain a brand image will vary upon
several factors as reflected by the analysis presented by Tyler.

Oxenfeldt and Swann’s idea was that the brand image should allow the company to establish
its position within its market segment, protecting it from competition, thus allowing them to
build upon this with market share growth (Park et al, 1986).

Moreover Park et al (1986) put forward in Bhat’s article that the importance of establishing a
brand image relevant to its market segment in which it is based, is significant so as to
ascertain a strong brand position, help create a barrier to entry for potential competitors: thus
raise the brands performance in the market.

Further, Meenaghan stated that “at the product/brand level the components of identity are in
effect the elements of the marketing mix, which combine to form the image of the brand in
the mind of the consumer” (1995). From this, it is clear that to gain a strong brand image, one
needs to exploit all areas of the marketing mix to achieve what Oxenfeldt and Swann stressed

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and that brand image is the key component in establishing market dominance. Also,
Krishman (1996) in Faircloth’s assessment with the aid of the Landor survey discovered that
there is a strong correlation between brand equity and brand image. The stronger the brand
equity, the stronger the brand image and vice versa.

Reid’s (2001) understanding of brand image concerns the product of interaction involving the
consumer’s specific experience with a certain brand, helped by advertising which reveals
how the brand is to be understood and used, predominantly for brands that contend at parity.
Another contemporary understanding of brand image was put forward by Hsieh (2002), who
felt that building a brand image based on the identified benefit-based image dimensions
consisted of a set of benefit brand associations. This helped consumers understand with
clarity what a brand can do for them-symbolically, economically, sensorial or as a utility.
White and Hsieh (2002) seem to recognise the key importance that advertising plays in
promoting the elements of a brand image thus differentiating the brand from rival brands,
giving them a competitive advantage.

To summarise, it is plain to see that these academics are in complete agreement that one of
the key attributes of a company, if not the key attribute, is the brand image. It is evident that
there is a clear link between brand image and market share, as depicted by Krishman’s
research. In addition, establishing a strong brand image is indeed a powerful way of
developing market power, which consequently helps to create a tight control over its position
within the market. Due to barriers to entry, a rounded marketing plan focussing on all aspects
of the marketing mix; this also helps to retain a consistent consumer interest.

Brand image: practical example

In this section we will relate how brand image is encompassed in modern organisations and
how they use this as a comparative advantage over there rivals to ensure that they keep there
competitive edge.

Manchester United

In the Brand Strategy journal, the players’ were seen to be key to any clubs brand image. The
actions of players’ and the perception by supporters is hence key to brand image. For
example, ex-Man Utd David Beckham opened the Manchester Commonwealth Games
wearing an Adidas sweatshirt. These images were then broadcast across the globe and this

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was much more powerful then his endorsement through advertising. (Brand Strategy briefing:
Saving face of sponsorship).

These sort of images enable organisation’s such as Man Utd to develop into icons which
according to Douglas B. Holt is one step further than brand image, as ‘they succeed because
they forge a deep connection with the culture. In essence, they compete for culture share.’
This can clearly be applied to industries, like, the football industries, as many fans have a
strong link between them and their club i.e. it is part of their culture.

Analysis of Manchester United’s Brand

Introduction

Manchester United has excelled in the modern game of Football and its activities away from
the pitch. It has existed for over a century now and has grown during this period from a small
club into a global phenomenon. The strategy of Manchester United in building and
sustaining its brand image has been achieved by focusing on the premier football team, which
sits at the centre of the business. Indeed, it is crucial that all areas of the marketing mix are
exploited to help establish strong market dominance and a sustainable brand image, hence
this marketing principle will be central to the analysis of Manchester United’s brand image.

Manchester United’s brand image will be critically assessed, paying particular attention to the
way in which they have utilised various marketing communications to sustain their image.
Moreover, by presenting a timeline of Manchester United’s marketing practices will allow to
discriminate as to whether they have been successful or not.

Marketing Mix

Promotion:

Manchester United has established a range of global, commercial partnerships with certain
blue chip firms such as Vodafone and Nike. Indeed this has helped put Manchester United on
the global scene. Nike has launched their new Cool Motion double layer kit, promoted by
many of the players such as Scholes and Ferdinand, wearing Nike Boots, which have helped
connect the famous market leader with this Premier Football team. Further, legends such as
Cantona have helped create this maverick image for Manchester United, but also having such

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a combination of powerful sponsors has brought the team a reputable image. (ManUtd.com,
2004a).

The extent of success related to brand image will now be explored.

Nike

Worldwide sports giant Nike have become the shirt sponsors of Man United since 2002. The
deal is unique in terms of its value (£300 million), length (13 years) and structure. The
‘literal’ image of the Nike “tick” presented to customers on the Man United replica shirts has
helped boost shirt sales over the last four years. The relationship between the two
companies’, centres on combining the core activity of Football and the strength of United’s
global fan base with Nike’s expertise in sports product and integrated marketing campaigns.

Chairman Sir Roy Gardener feels that ‘this partnership with Nike will undoubtedly increase
the brand equity of Manchester United and thus enhance the brand image of the club
globally.’(ManUtd.com, 2004b). By associating itself with companies who are perceived as
leaders in their respective markets has allowed an increase in brand awareness as well as a
boost in brand equity. As referred by Krishman (1996) who cited the strong correlation
between brand equity and brand image.

Nike however have been criticised for a lack of human rights in many of its factories in South
East Asia. In particular, Oxfam in March 2000 alleged that Nike had not conformed to a code
of conduct in their subcontracted Par Garment factory in Thailand. Although Nike denies
accusations, ignoring cases and not realising the crisis of poverty and underpaid children; the
result has been a bad outlook for Nike. Consequently, such negativity has damaged the
relationship with Manchester United and their relationship with their customers. Moreover, in
October 2000, Paul Kenyon reported in the BBC that two girls were found in a factory in
Cambodia under the legal working age of 15. Despite recent attempts in October 2003 to
organise unionisation in Sri Lanka, Nike are still under the spotlight which could tarnish the
prosperity of their influential brand image with Manchester United.

Media

Indeed, the annual report (Man Utd Annual PLC Report, 2003) included that “the business of
Manchester United is built on three strong foundations of football, fans, and media. Football
is the core activity; the fans are the greatest asset and the media the most effective means of

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bringing the two together.” This comment is an indication of the paramount importance the
media has played in building and sustaining the Manchester United brand. In 2003, the
media contributed 37% towards total revenue (Man United Annual Report, 2003). However,
if Manchester United’s partnerships with the likes of Nike are in controversy, this can
determinately affect the image Manchester United want to sustain.

Product

Merchandise

In the early nineties, the extent of the United range was very narrow (consisting of goods
such as scarves, mugs and hats), but now the product line is inexhaustible, including
everything possible from wallpaper in children’s bedrooms to cuddly toys, soft drinks and
underwear.
As the popularity of the Internet has come to prominence, this has acted as a further
opportunity of extending the brand image around the globe, providing new found supporters
in East-Asia and America with the opportunity to purchase their goods. Manchester United
have proposed tactics to sell their brand image in countries where popularity is however
limited, such as America and the Far-East.

Place
Old Trafford Club Stadium

The club recognised at an early stage in the brand’s development, the potential earning power
of the club’s home ground, Old Trafford with 68,000 supporters walking through the gates on
any given match day. Currently shown in Manchester United financial data is that 36% of the
club’s revenue is generated from match days. (ManUtd.com, 2004c). Reid (2001) stressed
that the brand has to be experienced, therefore by providing a well equipped stadium, this
helps attract a greater influx of foreign visitors.

Price
The use of price can be viewed as the sole negative factor of Manchester United brand image.
Exploitation is evident in the form of the fans that pay outrageous prices for gate admissions
(£34) and replica shirts (£45) and via their business partners, the exploitation of children in
the sweatshops of Asia as exposed by the BBC’s current affairs flagship Panorama. While the
clubs players such as Ferdinand, Giggs and Keane are paid so handsomely to wear the

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products of leading sports manufacturers the workers in the sweatshops of Indonesia and
other Asian countries are earning 72 pence for 24 hours of work. (Skynews.com, 2002). The
enormous difference between what the goods cost to manufacture and their price is the reason
behind the clubs huge profits and enormous transfer kitty. It is clear that there is a large
disparity between with the wealth of Manchester United and the workers who make the
products so crucial to the global spread of the brand image.

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Chapter - 04

RESEARCH METHODOLOGY

INTRODUCTION

Research refers to a search for knowledge. It is a systematic method of collecting and


recording the facts in the form of numerical data relevant to the formulated problem and
arriving at certain conclusions over the problem based on collected data.

Thus formulation of the problem is the first and foremost step in the research process
followed by the collection, recording, tabulation and analysis and drawing the conclusions.
The problem formulation starts with defining the problem or number of problems in the
functional area. To detect the functional area and locate the exact problem is most important
part of any research as the whole research is based on the problem.

According to Clifford Woody research comprises defining and redefining problems,


formulating hypothesis or suggested solutions: collecting, organizing and evaluating data:
making deductions and reaching conclusions: and at last carefully testing the conclusions to
determine whether they fit the formulating hypothesis.

Research can be defined as “the manipulation of things, concepts or symbols for the
purpose of generalizing to extend, correct or verify knowledge, whether that knowledge aids
in construction of theory or in the practice of an art”

In short, the search for knowledge through objective and systematic method of finding
solution to a problem is research.

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DRAFTING QUESTIONNAIRE

The questionnaire is considered as the most important thing in a survey operation. Hence it
should be carefully constructed. Structured questionnaire consist of only fixed alternative
questions. Such type of questionnaire is inexpensive to analysis and easy to administer. All
questions are closed ended.

S. No. Particulars Description


1. Project Title A Study of Brand Preference towards Men
Wear Special Reference to Nimbahera
2. Sample Size 50
3. Sample Unit Shopkeeper, Service men, students,
transporter etc.
4. Area Covered Nimbahera
5. Sampling Procedure Random Sampling
6. Research Design Exploratory
7. Data Collection Method Survey
8. Research Instrument Questionnaire
9. Type of Questionnaire Structured
10. Type of Questions Close Ended, Open Ended Questions
11. Method of Survey Sample Survey
12. Type of Sampling Judgement Sampling
SAMPLING
It was divided into following parts:

Sampling universe
All the employees are the sampling universe for the research.

Sampling technique

Judgmental sampling

Sample was taken on judgmental basis. The advantage of sampling are that it is much less
costly, quicker and analysis will become easier. Sample size taken was 100 employees.

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DATA COLLECTION

The task of data collection begins after the research problem has been defined and
research design chalked out. While deciding the method of data collection to be used for
the study, the researcher should keep in mind two types of data viz. Primary and
secondary data.

Primary Data

The primary data are those, which are collected afresh and for the first time and
thus happen to be original in character. The primary data were collected through well-
designed and structured questionnaires based on the objectives.

Secondary Data:

The secondary data are those, which have already been collected by someone else
and passed through statistical process. The secondary data required of the research was
collected through various newspapers, and Internet etc.

Importance of research work:

 The purpose of this study is to examine the impacts of demographic Factors and
footwear benefits sought on consumer purchasing outcomes in the urban market.
 Research results show that age, household size, education, occupation and income
significantly affect amount of money spent, pairs of footwear purchased and purchase
plans, but not average price paid. Gender and residence of respondent were not
significantly related to purchasing outcomes.
 The study identified two groups of shoppers seeking significantly different benefits
in purchasing footwear products: the functional shoppers and the alpha shoppers. As
compared to the functional shoppers, alpha shoppers purchased more pairs of
footwear, paid higher price for footwear and spent larger HRK1 amount on footwear.
The results are indicative for the segmentation strategy in the footwear market.
 The research also helps footwear manufacturers and retailers to better target their
consumer segments
RESEARCH OBJECTIVE

The research study tends to follow and achieve specific objectives.

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The objectives of this particular study are:-

• To know the personal views of “Nimbahera” people regarding choices among various
branded wear.
• To study which branded wear is mostly preferred by people as per their choices.
• Comparison between various branded wear..
• Find out factor influencing the people at the time of purchasing Branded cloth.
QUALITY, DURABILITY, VARIETY, PRICE.

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Data Analysis & Interpretation
1. Do you buy branded Pant & Shirts?

SR.NO. PARTICULARS NO. OF RESPONDENTS PERCENTAGE


1 Yes 48 96%
3 No 2 4%
5 Total 50 100%

INTERPRETATION:

The above table indicates that, 96% people wearing branded cloth & 4% people not
choose branded cloths.

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1. Classification of users based on Annual Income.
SR.NO. PARTICULARS NO. OF PERCENTAGE
RESPONDENTS
1 Less than Rs. 1Lac 15 30%
3 Rs. 1 – 3 Lac 35 70%
5 Total 50 100%

INTERPRETATION:

The above table indicates that, 30% people earn in a year 1 lacs rupee and 70% people
are earn 1 to 3 lacs per annum.

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2. Type of men’s clothing is likely to be purchased.

SR.NO. PARTICULARS NO. OF PERCENTAGE


RESPONDENTS
1 Shirt 14 28%
2 Pant 12 24%
3 T-Shirt 5 10%
4 Trouser 8 16%
5 Jeans 8 16%
6 Cargo Jeans 2 4%
7 Nero Jeans 1 2%
8 Total 50 100%

INTERPRETATION:

The above table indicates that, 24% people purchase Pant, 28% purchase shirt, 16%
purchase Jeans, 16% purchase Trouser, 4% Purchase Cargo Jeans & 2% purchase Nero Jenas.

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3. Brand you would prefer.

SR.NO. PARTICULARS NO. OF RESPONDENTS PERCENTAGE


1 KOUTONS 17 34%
2 PETER ENGLAND 12 24%
3 ALLEN COOPER 6 12%
4 CHARLY OUTLOW 7 14%
5 JOHN PLAYER 3 6%
6 PRIKNIT 2 4%
7 COTTON COUNTY 1 2%
8 MONTE CARLO 2 4%
9 Total 50 100%

INTERPRETATION:

The above table indicates that, 35% people prefer KOUTONS, 25% prefer PETER
ENGLAND, 13% prefer ALLEN COOPER, 15% prefer CHARLY OUTLOW, 6% prefer
JOHN PLAYERS.

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4. How long have you been using this brand?

SR.NO. PARTICULARS NO. OF RESPONDENTS PERCENTAGE


1 0 – 1 Yrs. 8 16%
2 1 – 2 Yrs. 11 22%
3 2 – 3 Yrs. 27 54%
4 3 – 4 Yrs. 3 6%
5 Above 4 Yrs 1 2%
6 Total 50 100%

INTERPRETATION:

The above table indicates that, 54% people use the brand 2-3 yrs., 22% use 1-2 yrs.,
16% use 0-1 yrs., 6% use 3-4 yrs., 2% use above 4 yrs.

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5. Price range, you shop in this brand.

SR.NO. PARTICULARS NO. OF RESPONDENTS PERCENTAGE


1 Below 1000 4 8%
2 1000-2000 18 36%
3 2000-3000 16 32%
4 3000 – 4000 8 16%
5 Above 4000 4 8%
6 Total 50 100%

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INTERPRETATION:

The above table indicates that, the different price rang which are purchased by
customer like below 1000 purchase 8%, 1000-2000 purchase 36%, 2000-3000 purchase 32%,
3000-4000 purchase 16% and above 4000 purchase 8% of the price.

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6. Brand Preference and Top of the Mind Awareness for cloth brand.

SR.NO. PARTICULARS NO. OF PERCENTAGE


RESPONDENTS
1 Extremely Satisfied 8 16%
2 Satisfied 33 66%
3 Neither Satisfied nor 5 10%
Dissatisfied
4 Dissatisfied 3 6%
5 Extremely Dissatisfied 1 2%
6 Total 50 100%

INTERPRETATION:

The above table indicates that, 66% people satisfied with brand,16% people extremely
satisfied, 10% people neither satisfied nor dissatisfied, 6% people dissatisfied & 2% people
extremely dissatisfied.

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7. Factors influencing brand preference.

SR.NO. PARTICULARS NO. OF RESPONDENTS PERCENTAGE


1 Advertisement 9 18%
2 Services 17 34%
3 Quality 21 42%
4 Good words of Mouths 3 6%
5 Total 50 100%

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INTERPRETATION:

The above table indicates that, 34% people influencing through services, 18% through
advertisement, 42% through quality & 6% people influencing through good words of mouths.

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8. You feel about the product quality.

SR.NO. PARTICULARS NO. OF RESPONDENTS PERCENTAGE


1 Very Good 29 58%
2 Very Poor 1 2%
3 Poor 2 4%
4 Can be improved 18 36%
5 Total 50 100%

INTERPRETATION:

The above table indicates that, 58% people feel that product is very good, 4% feel
poor, 2% feel very poor, 36% feel that can be improvement in product.

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9. How often do you change the brand preference?

SR.NO. PARTICULARS NO. OF RESPONDENTS PERCENTAGE


1 Very Often 0 0%
2 Occasionally 27 54%
3 Rarely 6 12%
4 Never 17 34%
5 Total 50 100%

INTERPRETATION:

The above table indicates that, 54% people change the brand occasionally, 34%
people never change, 12% people may rarely change the product.

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10. Importance of buying a name brand.

SR.NO. PARTICULARS NO. OF RESPONDENTS PERCENTAGE


1 Quality 13 26%
2 Attractive 7 14%
3 Reliable 12 24%
4 Advertisement 2 4%
5 Services 15 30%
6 Various Offers 1 2%
7 Total 50 100%

INTERPRETATION:

The above table indicates that, 26% people buying through product quality, 24%
through product reliable, 4% through company advertisement, 30% through services of
company & 2% through various offers.

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11. Consumer intention towards replacing their existing brand of Cloth.

SR.NO. PARTICULARS NO. OF RESPONDENTS PERCENTAGE


1 To replace 42 84%
2 Not to replace 8 16%
3 Total 50 100%

INTERPRETATION:

The above table indicates that, 84% people want to replace the current product line &
16% people not to replace.

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12. Which brand would be your First choice?

SR.NO. PARTICULARS NO. OF RESPONDENTS PERCENTAGE


1 KOUTONS 22 44%
2 PETER ENGLAND 9 18%
3 ALLEN COOPER 6 12%
4 CHARLY OUTLOW 4 8%
5 JOHN PLAYER 3 6%
6 PRIKNIT 2 4%

7 COTTON COUNTY 3 6%

8 MONTE CARLO 1 2%

9 Total 50 100%

INTERPRETATION:

The above table indicates that, 44% peoples prefer to Koutons, 18% to peter England,
4% priknit, 8% charly outlaw, 6% john player, 6% cotton county.

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13.You choose above brand.

SR.NO. PARTICULARS NO. OF RESPONDENTS PERCENTAGE


1 Cloth Feting 14 28%
2 Cloth Quality 28 56%
3 Good Stitching 8 16%
4 Washing Machine Washable 0 0%
9 Total 50 100%

INTERPRETATION:

The above table indicates that, 28% choose through cloth feting, 56% through cloth
quality, 16% through good stitching.

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14. I would recommend above brand to others.

SR.NO. PARTICULARS NO. OF RESPONDENTS PERCENTAGE


1 Strongly Agree 6 12%
2 Agree 15 30%
3 Neither Agree nor Disagree 28 56%
4 Disagree 1 2%
5 Strongly disagree 0 0%
6 Total 50 100%

INTERPRETATION:

The above table indicates that, 56% people neither agrees not disagree to recommend
to other, 30% agree with above statement, 12% strongly agree & 2% people disagree.

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Finding & Conclusion

 KOUTONS has a good brand image in the existing market.

 Low sales as compared to market potential,.

 Peter England, Allen Cooper, Cotton County have maximum market share’s viz.

 Less advertisement of the product as compared to other company.

 Lack of self – enthusiasm Customer Satisfactions.

 Many facilities are available to customer.

 There is a need of a proper information, encouragement & motivation related to

customer.

 There is a complaint from the side of retailers is that dealers deal customer directly

and sell wears on lower price, due to this customer does not go to retailers and

purchase from dealers.

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Suggestion

 The product quality must be improved

 Company must reform its marketing strategies.

 Company may go for reposition its brand image.

 In research we found that all the costumer are accepting the repositioning of kouton to

family store

 All above company must increase its range of products

 All company should put effort in creating brand image by stopping the offer like buy

1 and get 4.

 All company must change its image from discounted good to superior goods.

 Company must makes strategies for rural market.

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Bibliography

Books Referred:

 Kothari C. R. (2005) ‘RESEARCH METHODOLOGY’ New Age International


Limited, Fifth Edition
 Kotler Philip & Keller Kevin. MARKETING MANAGEMENT: Pearson Prentice
Hall, New Delhi, 2006
 Parry, Mark E., STRATEGIC MARKETING MANAGEMENT: Means-End
Approach, New Delhi, McGraw-Hill, 2002
 Saxena Rajan, MARKETING MANAGEMENT: Tata Mcgraw, New Delhi, 2006
 Kotler Philip, KOTLER ON MARKETING: Free Press, New York

Websites:-

www.koutons.com

www.peterengland.com

www.scribd.com

www.allencooper.net

www.johnplayer.com

www.cottoncounty.com

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Annexure

1. Do you buy branded Pant & Shirts?


Yes [ ]
No [ ]
2. Classification of users based on Annual Income.
Less than Rs. 1Lac [ ]
Rs. 1 – 3 Lac [ ]
3. What type of men’s clothing is likely to be purchased?
Shirt [ ] Pant [ ] T-Shirt [ ]
Trouser [ ] Jeans [ ] Cargo Jeans [ ]
Nero Jeans [ ]
4. Which brand you would prefer?
KOUTONS [ ] PETER ENGLAND [ ]
ALLEN COOPER [ ] CHARLY OUTLOW [ ]
JOHN PLAYER [ ] PRIKNIT [ ]
COTTON COUNTY [ ] MONTE CARLO [ ]
5. How long have you been using this brand?
0–1 Yrs [ ] 1–2 Yrs [ ]
2–3 Yrs [ ] 3–4 Yrs [ ]
Above 4 Yrs [ ]
6. What is the price range, you shop in this brand?
Below 1000 [ ] 1000 – 2000 [ ]
2000 – 3000 [ ] 3000 – 4000 [ ]
Above 4000 [ ]
7. Brand Preference and Top of the Mind Awareness for cloth brand?
Extremely Satisfied [ ]
Satisfied [ ]
Neither Satisfied nor Dissatisfied [ ]
Dissatisfied [ ]
Extremely Dissatisfied [ ]

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8. Factors influencing brand preference?
Advertisement [ ] Services [ ]
Quality [ ] Good words of Mouths [ ]
9. What do you feel about the product quality?
Very Good [ ] Poor [ ]
Very Poor [ ] Can be improved [ ]
10. How often do you change the brand preference?
Very Often [ ] Occasionally [ ]
Rarely [ ] Never [ ]
11. What is Importance of buying a name brand?
Quality [ ] Attractive [ ]
Reliable [ ] Advertisement [ ]
Services [ ] Various Offers [ ]
12. Consumer intention towards replacing their existing brand of Cloth?
To replace [ ] Not to replace [ ]
13. Which brand would be your First choice?
KOUTONS [ ] PETER ENGLAND [ ]
ALLEN COOPER [ ] CHARLY OUTLOW [ ]
JOHN PLAYER [ ] PRIKNIT [ ]
COTTON COUNTY [ ] MONTE CARLO [ ]
14. Why you choose above brand?
Cloth Feting [ ]
Cloth Quality [ ]
Good Stitching [ ]
Washing Machine Washable [ ]
15. I would recommend above brand to others.
Strongly Agree [ ]
Agree [ ]
Neither Agree nor Disagree [ ]
Disagree [ ]
Strongly disagree [ ]

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