Saransh Neerad|20DM189 | Page |1

Managerial Economics
Assignment

Industry
Stationery

Company

Faber - Castell

By
Saransh Neerad
20DM189
Saransh Neerad|20DM189 | Page |2

Introduction 1:

 Industry – Stationery

Talking about the stationery industry, the product variance is quite vivid. As we can see, products like
Pencils, pens, office accessories, notebooks, color, etc. has always been on top notch in terms of
demand regardless of the consumer segmentation.
Focus of expenditure on education in India has significantly increase the demand for stationery
materials due to several educational policies by the government and with this, in recent years, India is
showing an organized growth in the demand in the stationery sector. This growing demand is being
benefitted by the entry of large number of international stationery brands in India. Demand for these
materials are much higher in educational sector and it holds the major market with more than 58%
revenue share.

Given below is the graphical representation of the projected revenue.

Introduction 2:
Saransh Neerad|20DM189 | Page |3

 Company – Faber-Castell

From the foundation of A.W. Faber Company to becoming Faber-Castell, the company showcases a
very interesting story. Founded in 1761 by Kasper Faber at Stein near Nuremberg, Germany, started
with the production of slide rules. After Kasper Faber, the expansion was in the hands of his grandson
Lothar who took the company to international level with his ambitions.
In 1900, Lothar’s granddaughter being the only heiress to the company was married to the count of
Castell and after that the current name came into existence which included the “since 1761” and the
knights from Castell’s coat of arms.

With such a story of ages, Faber-Castell emerges to be one of the top leading pencil manufacturers
all around the world. And by now the company was setting an example of innovations in the industry
of pencil manufacturing and its designs. With the idea of changing the shape of the pencil into
hexagonal and triangle, changed the perspective and set a new milestone of comfortable writing
experience targeting mostly the premium consumers.

Faber-Castell introduced their products in India in the year 1998 and has mastered in the Indian
market by selling the premium quality of stationery materials and has reached every trading lines with
networks more than 500 distributer through its 9 branches contributing to the revenue hike by 6.8%
reaching Rs 180 crore in the financial year of 2018 crossing the previous year by 11 crores.

Apart from conquering the Indian stationery market, the company also plays a vital role by
contributing in corporate social responsibility (CSR) in India. Faber castell collaborated with simple
education foundation for their common program called ‘simple schools’. It is an initiative to change the
general structure of various government schools in India transforming it into a new schooling model
with change in the learning experiences and academic distinction, ultimately impacting on several
stakeholders of schooling structure.
Saransh Neerad|20DM189 | Page |4

Marketing Structure:

Faber-Castell being in the stationery industry, falls under the market structure of monopolistic
competition. In monopolistic competition, an industry consists variance of firms manufacturing and
selling similar kind of product but neither of them are perfect replacement of each other, also not
severely impacting any firm with any kind of decisional change made by other firm.
Another factor stating the monopolistic competition is the easy of any firm from entering and exiting
the business sector. Here, in this type of market structure, companies try to provide with much and
much of innovation in their products to stay in the race with their competitors as they have similar
products in their domain.
Talking about Faber-Castell and its competitors, each one of them produces
and sells similar products like pencils, pens, notebook etc. only with slight change in design and price.
Currently its major competitors are Kokuyo Camlin, Apsara, Natraj, Classmate and yet all are almost
equally market player in the stationery industry. Also, Faber-Castell focuses more on premium
stationary materials with reasonable prices.

Demand Factors of Faber-Castell:

 Pricing of products and competitors

Faber-castell is more of a premium stationery product which is clearly reflected the pricing. Since
pricing is one of the major factors of the market structure Faber-Castell belongs to, which is
monopolistic competition.
Therefore, price is one of the major factors in the demand of the company. We can have a light
overview with price comparison of Faber-Castell with its competitors in India.

Hindustan Pencils
- Natraj - Rs. 3.50/-
- Apsara - Rs. 5.00/-
Faber-Castell
- Rs. 5.00/-

With this we can see that Faber-Castell is a high-end brand.

Saransh Neerad|20DM189 | Page |5

 Demographic Factor

As per the pricing of the product, the visible focus of the company in on the semi-urban families who
are willing to pay and spend more on stationery materials even having products with lesser cost.
Young city dwelling parents preferring premium stationery materials for their kids, for their own at
offices, go for the product of this company which acts as a factor for demand.

 Social/Peer Factors

We can see it as a reference group which influences the buying ends of products in the market,
directly or indirectly. If few kids in a group are using the Faber-Castell product then there are chances
that other members of the group will also buy the same stationery to match with their peer resulting in
the demand factor.

 Brand Factor

The brand image of the product infers the status of the buyer or a user. To keep the brand feeling
high, people tends to go after the brand of the product. And since, Faber-Castell in one if the high-end
brands, people are eager to maintain that status quo.

 Psychological factor

The perception of people sometimes differs a lot with different variable around them. Be it delivering
quality of Faber-Castell, several reasons for motivation of buying premium product, or may be not-so-
good experience from previous purchased product plays a massive role in demand factor of the
Faber-Castell stationery materials.

 Government policies

Several social programs run by the government to improve, change the schooling model in rural
areas by distributing premium stationery materials to make the students feel good about what they
are using at a subsidized rate or free also pushes the demand of the product.

Supply Factors of Faber-Castell

Saransh Neerad|20DM189 | Page |6

 Technological enhancement

Change in technology in the productions line affects the supply. If the industry is using more and
more automated machines in their production, there will be a push in supply of the goods hence
becomes a factor.

 Resource availability

The paint used on the Faber-Castell pencils are harmless as they use water-based paint for finish
which does not contain any kind of petroleum-based components. Also, the wood used for the
production of pencils are woods from sustainable managed forests. Therefore, required resources for
Faber-Castell pencil production also affects the supply.

 Transportation

Transportation leaves a severe impact on supply of good from one place to another. The better the
transportation, easier and more frequent the supply will be and vice versa. Thus, being of the factors
that influences supply.

 Monopolies

The monopolists may deliberately increase or decrease the supply as it suits them. Thus, exercise of
monopolistic power brings about a change in supply. And being in a monopolistic marketing structure,
there are always chances of influence over supply due to the mention factor.

 Government duties

Faber-castell relies extensively on import in India from countries like Germany, England, etc. Even
there is a slight change in the government policies in import duties, the change if reflected on the
supply of the goods into the market.

Challenges
Saransh Neerad|20DM189 | Page |7

 Projected decline in revenue growth probably due to online academic shift. To get a better clarity, given
below is the graphical representation of revenue growth as per years.

 Since this is monopolistic market structure, all they can do to improve their product is to vary the
prices or innovate in the design/user experience of their product. So, coming up with innovative
ideas every time proves to be a challenge for the company.

 Distribution of their stationery materials into the market so that I get to reach people to people.
This was the challenge that they were facing because they made people aware about their high-
end products but was facing difficulties in locating how and from where to purchase the product.

 Positioning themselves in the eyes of the customer with having competitors like Classmates and
Hindustan Pencils introducing ‘Apsara’ and other high-end stationery products.

 Being a premium brand in the stationary industry, Faber-Castell sometimes faces difficulties in
selling their products among the lower urban dwelling middle class family.

References
Saransh Neerad|20DM189 | Page |8

https://en.wikipedia.org/wiki/Faber-Castell

https://milonimehta15.wordpress.com/2013/08/10/market-structure-and-competition-analysis/

https://qweetly.com/essay/faber-castell-assignment-essay-16339#:~:text=The%20product%20that%20we%20have,and%20sellers
%20in%20the%20market.

https://milonimehta15.wordpress.com/2013/08/02/consumer-behavior-and-buying-decision/#:~:text=cultural%20values%2C%20sub
%2Dcultures%20and,is%20a%20high%2Dend%20brand.&text=Reference%20groups%3B%20groups%20that%20directly,the
%20behavior%20of%20the%20customer.

https://www.statista.com/outlook/260/119/hobby-stationery/india (For graphical representation)

https://www.economicsdiscussion.net/supply/7-factors-which-affect-the-changes-of-supply/1645

https://www.zauba.com/import-faber+castell-hs-code.html

https://www.faber-castell.eu/corporate/faber-castell-experience/faber-castell-production

https://economictimes.indiatimes.com/distribution-one-of-the-major-challenges-for-brand-says-von-faber-
castell/articleshow/11094159.cms?from=mdr