ACE INSTITUTE OF MANAGEMENT

Entrepreneurship
Assignment 3

Submitted to:​ Prof. Sohan Khatri ​Submitted by: ​Nisha Shrestha

EMBA Spring 2018

Executive Summary

Summary of situation analysis

Shopping bags (for daily use) were all imported in Nepal (esp. from India and
Bangkok). It was only in the early 1980’s the shopping bags started being produced
in Nepal. There was only a couple of producers of the bags in the early days. But
by 2000, there were several registered as well as unregistered producers of the
shopping bags. Since the same period there was huge demand for the shopping
bags especially because of its competitive prices compared with convenience. In
absence of barriers to new entrants, there were lots of producers that produce the
bags. As a result, the profit margin in the bags was very less compared to what it
used to be in the 1990’s. Any new product developed was easily copied, thereby
depleting the product price and profit margin in the product. Therefore, the
industry is now in a stagnant phase.

Summary of marketing objectives

Shopping bags are widely in demand in every corner of Nepal and also in border
area of Nepal. Hence the marketing strategy for the supply bags is to penetrate
wide and deep in the market. It is expected to reach out to as many places
reachable in Nepal and also penetrate in the border area of Nepal and India.

Summary of marketing strategies

Marketing strategy in line with the objective set above will be to penetrate in the
wide and deep in Nepal and Nepal and Border. This is expected to achieve by
producing bulk quantity of quality bags by developing the Nepali brand and
marketing bags with theme of nationality.
A. SITUATION ANALYSIS

The industry
Shopping bags are used by every household for various purposes like in purchase
of daily groceries. It is very much a need for every household for various reasons.
There are several types of shopping bags available in the market from ones totally
made up of plastic, polythene plastic coated cotton shopping bags.

History of Industry:
Initially, all these shopping bags (for daily use) were imported in Nepal (esp. from
India and Bangkok) in the absence of a prominent producer in Nepal. Therefore,
there is no doubt that a significant amount of money used to go out of the country
for shopping bags.Then, in the early 1980’s the shopping bags started being
produced in Nepal from bringing the raw materials required from India. However,
there were only a couple of producers of the bags in those days. Also, the variety
and quality of the bags were too not of good standard. But by the time we reached
2000, there were several registered as well as unregistered producers of the
shopping bags. Then, a significant improvement in the quality of the shopping bags
was seen. Also, shopping bags started being produced in various varieties and
sizes.

With the increase in population (esp. Kathmandu), there is a good demand for
shopping bags. Like Kathmandu, the demand for products has started increasing in
major cities of Nepal like Pokhara, Biratnagar and Narayanghat. It has been seen
that these shopping bags have a good market size in the urban part of the country.
Also, the fancy nature of the product attracted people. The design and looks keep
on evolving such that people tend to change the product very often. These factors
have ensured a good market for the shopping bags

Due to high demand in cities, the industries are established in the city areas. Also,
the materials required for production are easily available in the cities as a result
even the companies from outside are seen to be moving in Kathmandu.
B.The company Brief History:

National Polyworks started its operations in 1982 as a small shop in Bangemuda,

Kathmandu Dealing with clothing and accessories like shirts, pants, jackets and
slippers. It had seen significant growth in the initial days. But after the footpath
shops started in Kathmandu, the sales started dropping. To mitigate such problems,
in the year 1985 it entered the production business by producing rain coats as their
first product. The product was an instant hit as the raincoats brought from India
and China used to get stuck in the road due to landslides and floods. The company
was able to sell raincoats at a premium price due to the environmental situation.

Years down the line the National Polyworks had produced several items like
jackets, coat covers, photo albums, hangers, handkerchiefs and scarves and many
more. Most of the items that it produced turned out to be a hit in the market. Its
ability to adapt to the new demands of market had provided the firm a competitive
advantage over the others. The firm knows and understands the product life of
every product and thus is able to change its strategy accordingly. However, due to
extensive imports of similar products from China, the company has seen significant
down fall in the past few years. The similar and substitution products of the firm
are available at a cheaper price in the market due to imports from China.

The Entrepreneurial Story

Development and History

When the company started its production, it was used to produce various types of
bags. Along with cotton bags, the company also produced plastic bags. But due to
government’s strict policies against plastic bags the plastic bag was dropped from
the product line. Now, the company’s sole focus is in production of cotton bags.
The company produces various types of bags. It differs in size, shape and design.
However, the materials used are the same in production of all the bags. The raw
materials include:
❖ Cotton sheets , Marshal tape , Camerla piping , Runner ,Zipper , Thread

All these raw materials are imported from China. The look and feel of all the bags
are pretty much the same. The bags are only distinctly differentiated by its size,
otherwise they look very much alike. As far as the size of the bags are concerned, it
comes in three different sizes. They are:
❖ Small , Medium , Large

The major differentiating factor is size. In the context of design, there are only
slight changes in the design of the bags. To some extent the design patterns vary
from one bag to another bags, but it is of less significance. The buyers consider the
utility of the bags rather than the design. Shopping bags are fashionable and
seasonable items. The taste of customers keep on changing. Thus, the shopping
bags have a shorter life span. The company needs to evolve in its production
activity very often. As a result, there is no strict pattern in sales. At times the
demand increases rapidly and at times there is over stocking of product due to
lesser demand. The only confirmed type of pattern is seen during the rainy season
and festive seasons.
During the rainy season, the demand goes down significantly, while in the festive
seasons like Dashain, Tihar, Father’s Day and Mother’s day there is high demand
for shopping bags. There used to be a time when the company used to produce
around 8000 units of bags every month. But at the current situation, the company is
able to produce only 3000 pieces of bags per month, which actually is in a
decreasing trend. The company had to downsize its production due to lesser
demand in the market. But in the recent time, there has been an abrupt increase in
the demand and the company is not being able to fulfill it due to downsizing. There
is no clear demand pattern of the products in the market, causing lots of confusion
on the producers end.
Currently, the firm is involved only in the production of shopping bags. It has a
sole focus on production shopping bags of various shapes, sizes and designs. The
company started shopping bag production in the year 1992. But, due to more focus
on other product lines like photo albums scarves, etc., shopping bag production
was halted for about 5 years between 2000- 2005.
After 2005, shopping bags have been the premium product for the company and at
the current situation it is the only product the company focuses on. When it comes
to shopping bags, the company is one of the trusted production houses for shopping
bags in the market because of the quality of shopping bags it produces. Product
quality and durability are the major USPs of the company. Thus, years down the
line, it has managed to establish itself as a reputed shopping bag producer in the
market.

C. The Business / Venture Story

The shopping bags are perceptible and exclusive in nature as they keep on evolving
and are targeted for a fixed age group and gender. Mostly, household women
between the ages of 25-50 are targeted. Also, we need to keep note that the taste of
the customers keep on changing. Thus, there are slight changes every now and
then.Based upon the consumer perception, the following factors should be kept in
consideration in shopping bags:
Pricing: ​The product is price sensitive. Thus, lower the price higher is the demand
for the product
Product performance: The performance of bag is determined by its durability.
The durable products have a good impression among the customers.
References The shopping bags have higher chances of selling if it has performed
well and is recommended by the customers. This is significant as the majority of
the customers are household women.

Product Research and Development:

i.Technological breakthroughs
 ● Little machines, big results​: Efficient machines should be used which will
be small in size but delivering high output. This will also help to reduce the
over dependence on the human force.
● Improvements planned: Every process should be timely reviewed for
possible improvements. Improvements must be swiftly implemented to
ensure better productivity. Technical or service problems:
● Experts on call: Expert people will be available on call when required. This
is to make sure that the process is not stopped in the middle

ii. Sales History:

Basically, in Kathmandu itself more than 11, 000 units of such shopping bags are
demanded every month. Similarly, around 8,000 units of shoppings bags are sent
outside Kathmandu Valley per month. Outside valley, most of the products are
demanded from the urban side like Pokhara and Narayanghat. It is rarely seen
demanded from the rural part of Nepal. Among the products sent outside valley,
40% are for Pokhara and 25% for Narayanghat. The rest are sent to other cities of
Nepal. Among the different sizes of bags, the most demanded ones are the medium
sized ones. In the entire industry, more than 70% of the demands are for the
medium sized bags. While, others are demanded quite less. Only 15% of the total
sales include for the small sized bags and 10% for the larger ones. There are few
other sized bags as well which are not very popular and contribute to only 5% of
the sales in the entire industry.

iii. The Market

● Identification of market segment: ​The prime target for shoppings are

women between the age group of 25-50 who are involved in household
activities. Besides that, the firm had tried to introduce products for the
younger generations too, with the folding style bag. But it did not last long.
The younger generation did not seem to be so much into shopping for
household activities.
 ● Characteristics of market The shopping bags are supplied to many
geographical locations of Nepal both rural as well as urban. However, the
cities with dense population have high demand for the products. Also
shopping bags are more in demand in the area of people with behavioral
pattern who do not carry their own shopping bags while going for shopping
and who likes to go shopping without any plan. Some of the cities where
sales are high are: Kathmandu Valley, Pokhara, Butwal and Narayanghat.
Before the earthquake, there was a high demand for the products in the
market. But after the earthquake, there was a significant drop in the demand
for the shopping bags as people’s concern was more into ensuring their basic
needs. However, at the current situation there is a good prospect for the
products in the market
● Typical buying patterns:​The product is targeted to housewives, or the
member of family that do groceries for the household. The shopping bags
are popular in the market for its quality and durability. There is an increase
in demand during festive seasons like Dashin, Tihar, Father’s Day, Mother’s
Day and other local festivals of the Newari Community (in case of
Kathmandu).
Distributors As far as the distributors are concerned, there are 4 distributors
associated with the company right now and few more are interested too.
Typically, the finished products are dispatched to the distributors once a
week. However, during peak seasons, the bags are also dispatched thrice a
week.

D. Conclusion

Shopping bags are consumer products. The shopping bag doesn’t show a specific
trend of the demand. However, demand falls during the rainy season and an abrupt
hike seen during festival like Dashin and Tihar. With increasing awareness against
plastic bags, demand of shopping bag is expected to increase which is a huge
prospect for the business. Consumers behavior in regard to carrying their own
shopping bag to market is also changing. The shopping bags also have become a
style symbol and bringing on new trends and designs.

The shopping bags this company produces is the Consumer good targeted to
household member that conducts the household shopping. The shopping bags is a
durable product as it can be used multiple times. The product can be the
convenience, shopping, or specialty good depending upon the nature of consumer
that buys it. The shopping bag is the convenience item for those that use it for
carrying shopping items and use it multiple times. It can be the shopping items for
those people that do not remember to carry their shopping bags while going for
shopping goods and who prefer to conduct ad hoc shopping.
Packaging of the product is not of big concern as the company only needs to
protect bags from getting dirty while being handled at various channels of the
delivery till it reached the end customers. Hence plastic bags or jute rugs to protect
the shopping bag would be enough

E. Recommendations

I can see that it's actually the distributors that are causing the majority of the
problems for the company. The company is not able to price properly due to the
effect of the distributors. Similarly, the customers are less aware about the quality
of the products that National Polywork produces. Brand awareness is a difficult
process in an industry such as a shopping bag. Therefore we recommend the
following strategies to be implemented in company:

i) Zero Level Channel: ​If the company is to market their products well, they need
to setup an outlet of their own. The only way the company can make customers
aware about their product is by setting up their own outlet. This strategy will
mitigate problems problems for the ones associated with the distribution of
products in Kathmandu. Also, the purchase price of the product can be minimized
as the company will allocate a reasonable price for the final product.
ii) One Level Channel: ​As far as sending the shopping bags out of the valley, the
company needs to tie up with a reputed and trusted partner. The company should
ensure that there is not more than intermediary between the company and the final
customer outside the valley. The company should also make sure that the
distributor of shopping bags outside the valley dictates its terms while doing the
business.

iii. Channel alternatives: ​Among several channel alternatives like Exclusive

distribution, Selective Distribution or Intensive Distribution, the company will go
with Intensive Distribution strategy. Under this strategy the company will sell
through as many outlets as possible.

iv. Contract: ​The company will strictly prepare and follow contracts for
distribution of the procuts. By entering into an agreement, the company will always
have an upper hand and they can ensure that the market drives as per their
necessity and demand.

F. Lessons Learnt

Entrepreneurs need to think ahead of the business, it’s not just creating and
relaxing back. Entrepreneurs need to think for the next move and plan to improve
what they did previously. Mistake for entrepreneur is not a bad thing as long as you
learn from the mistake which has a proof from all successful entrepreneurs.
Entrepreneur should constantly question themselves and look ways for better and
pushing all boundaries. Believe in yourself and your idea, one day the success will
come to place but we should remember to update our product and services
according to the needs of the market. Entrepreneur must listen to others and
positively take the feedback for the betterment of self and their idea.
In many cases, people will complain they simply don’t have the necessary vision to
see where they are headed. But many of today’s most successful entrepreneurs
didn’t start with a vision; they started with a unique perspective on a product,
service or venture, which eventually prompted a vision based on their initial
efforts. We all have fears. Those who learn to master their fears and their reactions
to those fears tend to get further in life and business. One of the biggest surprises in
life was learning how those fears never actually disappear, but rather they get
suppressed deeper within, just enough to not obstruct the actions that would make a
person successful.

There are some Lessons learned While marketing:

● Intermediaries in the supply have a major role in determining the demand for
the product; so marketing activities focusing on them can be fruitful.
● Even the competitors use very less tools for marketing and are less aware
about the effects of marketing; use of an adequate means could help the
company further establish its position.
● Forming alliances and tying up with some reputed department stores and
groceries. could help boost sales as well as position some kind of image in
the customers mind