Market Estimation & Entry Strategy for “Color Crew”, by ITC


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Market Estimation & Entry Strategy for “Color Crew”, by ITC

  1. 1. Industry AnalysisMarket Size EstimationPrimary Research andFindingsCompetition offeringsSub Category AnalysisMarket Entry Strategy
  2. 2. Industry Analysis Indian Stationery market is 10,000 Crore market in 2011. Of this 900 Crore is accounted for artand colors. The market is expected to grow at 15% annual rate in the time to come and waiting to explode. Industry is dynamic and innovative to capture consumer preference. Products are reaching ClassC towns. Unorganized segment grab a larger share close to 45%. There is more market spread happening for the stationery segment, in the last few years resultingin higher consumption. Each market player targets B and C Class cities/ towns so as to expand the market size. Shift in focus from inexpensive to quality products. High propensity to spend on art and hobbies.Source:
  3. 3. Industry Analysis35%31%24%7%2%1% Sub-Segment MarketshareColorPencilsCrayonsCompetitorRevenueinStationery(Crore)Net Profit(Crore)Camlin 358.32 8.59FaberCastell210.74 4.16Navneet 244.07 5.13Plastic Crayons, Water Colors and OilPastelsadd to approximately 21% of ColorsMarket
  4. 4. Market Size EstimationTotal childrenIndia (0-14yrs)Abovepoverty line Literacy rateChildrenreceivingeducation Private school% of childrenreceiving privateeducation Target market359564220 25169495471.7% for <14yrs age 180465282 75,000 27% 67957637Target Market Reach % ReachConversionRatioTotal ConvertedChildrenBusiness per child(INR)Total Business(INR Crores)67957637 33% 22426020.21 8% 1794081.62 40 7.17For the next one year, if Color Crew try on making a modest 8% of Children marketto buy art products, it may end with a revenue of INR 7.2 crores approx. This is 3.8%of market share.Using GuesstimationApproachCONSUMER PROFILE17.9 mn School Goers in Urban India. 51.7 % Boys and 48.3 %GirlsArt and Color Market 900CrPlastic Crayon, Pastel andWater Color share21%Value of Color Crew Sub-segment market189CrCamlin Sales 358.32CrArts Sub Stationery % in CamlinSales -14%50.16 CrCamlin Market Share 25 %Value of Color Crew Sub-segmentmarket200.64Cr
  5. 5. Factors affecting consumer buying behavior in artstationeryFactor analysis10 attributes were consideredwhich influenced consumerbuying behavior.Combination of variables gaveus 3 factors namelyLifestyle/Status, Consumerdelightness, ConsumerExperienceConsumer brand preferences based over attributes ( Quantitativeanalysis)Attribute Based Perceptual MappingThe attributes for dimensions considered are Easeof Use, Brand Value, Variety of Choice andAdvertisements.The attributes are incorporated into the map asvectors. This results is a joint space mapcontaining perceived positions of brands andattributes.Color Crew – Perceived to be Ok on Ease of Useand needs to work on variety of choice and ads.Camlin – Perceived to be best in all attributesFaber Castell – Perceived to be Ok on ease ofuse and premium in brand value.Primary Research andFindings I
  6. 6. Retailers Preference in Art stationery ( Quantitative analysis ofdistribution)From Analysis of Variances, its found that Retailerdistinctly prefer Camlin over Faber Castell due toprice/premium and ease of availability and consumerreach.Color Crew and Camlin don’t vary distinctly inretailer preference for art stationery because of wellestablished distributor network of ITC in stationerymarket.RETAILER PREFERENCE– CAMLIN,COLORCREWConsumer Preference in Art stationery ( Quantitative analysis ofcompetition)From Analysis of Variances, its foundthat Consumer distinctly prefer Camlinover other 2 brands. Camlin touchesmore consumers.Color Crew and Faber Castell don’t varydistinctly in consumer preference for artstationery much. Both are perceived asgood.CONSUMER PREFERENCE -CAMLINPrimary Research andFindings II
  7. 7. Competition Offering in this subcategoriesCompetitor Product Category Product Attribute PositioningCamlin(The brand caters to about1,50,000 retail outlets acrossTier I,II and III cities in India )Plastic CrayonsArtica Plastic crayons(57mm, 97mm12,15,16,24 colors)Can sharpen the crayon and alsoerase the impressions Bastion product for kidsOil PastelsOil pastels(12, 15, 25, 50 colors)Ideal for painting or drawingquick sketches in color Positioned for hobby paintingWater ColorsWater Color tubes Non-toxic water colors Positioned for school kidsWater Color cakes(12, 15, 18, 24 colorsRectangular, Round)Coloring strength developedspecially for students Positioned for school kidsFaber Castell(The brand caters to about90,000 retail outlets acrossTier I & Tier II cities inIndia )Plastic CrayonsGroup Pack Long lasting, hard to break,short and thick, customizedPositioned for pre-schooland kindergartenJumbo Crayons(12, 24 colors)Extra long, strong and thick Positioned for beginnersErasable plastic Crayons(15,25 sets)Higher breaking strength,smooth, sharpenedPositioned for school kidsRegular Plastic Crayons(24, 48 colors)Regular size, color printed onpacksPositioned for little artistsand kidsWater ColorsStudio Quality WC(Product Bundling)High Density of pigments,Brilliant colorsPositioned for school kidsand hobbyistsCreative Studio WC(Product Bundling)Long lasting,Excellent BlendingPositioned for school kidsPremium segmentOil PastelsRegular Oil Pastels Superior Color mixing, nontoxicPositioned for school kidssafetyExtra thick Oil Pastels Extra thick,Free scratch toolPositioned for hobbypaintingGrip Oil Pastels Triangular shaped, Easy Gripand controlPositioned for hobbypaintingCamlin is value for money brand, while Faber Castell is a premium brandmore varieties and great consumer experience. The Gap we find here is taccess to varieties and differentiated products at an inexpensive price.
  8. 8. Brand Portfolio
  9. 9. Sub Category Analysis andPrioritizationClassmateNotebook,8.2, 7.503690 3 6 9GE MATRIXITC Arts and StationeryBusiness StrengthIndustryAttractivenessLowLow MediumMediumHighHighLowLowMediumHighLowLowMediumHighLowMediumHighPaper Kraft,6.4,7.15Color Crew,4.65, 5.55INDUSTRYATTRACTIVENESSOverall MarketSizeMarket GrowthRateProfitabilityTech DevelopmentMarket RivalryPricingGlobal OpportunityBUSINESS STRENGTHMarket ShareMarket Growth RateProfit Margin Relative toCompetitorsTech InnovationBrand ReputationSales and DistributionEffectivenessAd and PromotionalEffectivenessPricing Strategy andCustomer LoyaltyPrioritization of Sub categories( Quantitative analysis ofcompetition)Color crew should prioritize the product launch on theoffensive principle of marketing warfare which suggest ofattacking at the weakness of market leader.Quantitative analysis with primary research on oursample size provided that there consumer show morewillingness to purchase water colors and are leastdesirable to purchase oil pastels.Thus on the basis of research and strategy priority ordershould be1. Water colors (high acceptance by the consumer)2. Plastic crayons (affordable)3. Oil pastels (Ease of use is difficult, more brand loyal
  10. 10. Threat of new entrantsThe art stationary is a specialized sector, requires a lot of skilful application of marketing, talentmanagement and investment, barriers could be:Level of expertise required for successful operationAccess to resources & distribution networkExpected retaliation of existing firmsDifficult for a new entrant to undertake all above activities and beat the competitors in a shorttime. It is difficult for a new entrant to compete with the brand strength and reach of the existingmajor players like Camlin and Navneet, but it is possible to enter the market and achieve small-scale success. Highly unorganized, so easy to start business but succeeding is difficult.Power of SuppliersLarge numbers ofsuppliers in open market atcompetitive prices.Availability of eminentquality of materials andrich industry experiencesuppliers.Suppliers products areless differentiated.More suppliers comparedto buyers reduce theirbargaining power.Leverage on robustSupply Chain practices ofITC.Power of BuyersThe stationery productsmarket in India is growing at15% a year and increasedpurchasing capacity.Increasing affordability ofIndian masses through higherdisposable income has resulted inincreased demand.Stationeries are a highlyfragmented industry. They dependon variety to create purchasertraffic, and hence they needmore variety.Plenty of choices and qualitysensitiveThreat of SubstitutesPresence of many color varieties assubstitutes.Consumer Switching costs are low.Many other craft hobbies are becomingattractive.Less painting hobbies with advent ofIndustry RivalryQuality products, wide product range and strongdistribution network of competitors like Camlin andFaber Castell.No product differentiation and fragmented marketUnorganized players making cheap inferiorproductsPorters 5 forceModel
  11. 11. Market Entry StrategyIProduct Price (based on benchmarking basis)PlacePromotionOil PastelsPlastic CrayonsWater ColorCompany shoulddistribute the productto all existingdistributor andstationary shopswith ITC.It should focus onlyon Metro, Tier-1, Tier-2 cities.After 8-10monthscompany canfocus on Tier 3cities and thepremiumschool tie up.Creative(Paint) Board atSchool Premises (PremiumSchool): Color Crew should tieup with different school for theinitial campaign, where thecompany can put (sponsor)some weekly board, where kidscan paint and show theircreativeness.Promoting CSR through contributing/participatingin the development of society belongs todifferently abled children : Color Crew canencourage them in activities like paining or sketchfor betterment of their childhood.Launching ProgramProduct CamlinFaberCastellNavneetColorCrewShineColorCrewColorCrewWonderOil Pastels 60 66 55 INR55INR55INR 65PlasticCrayons40 45 35 INR40INR35INR 44Water Color 65 72 60 INR65INR60INR 70
  12. 12. AwarenessSetConsiderationSetChoice SetTotalSetInnovation inApproachThe company will also givespecial offers at the shopsand will distribute free gifts tokids (goodies and smallpainting books) which willhelp in brand retentionamong the customers. It willcreate the buzz word amongthe children and will lead toBuying Behavior ofConsumers1: Product Awareness : The consumer should beaware about the product() through different traditionalmedia and non-conventional approach ofadvertisement like OOH, social media2: Retention of the product on ConsumersMind: Localized/personalized message to becommunicated. It should influence the factor like“absence of de-satisfier”. It should appeal theirbehavior.3: Push Strategy : Final stage for Buying. Throughsellers or enforcement through heavy campaignthrough programs in school/painting classes andavailability, this product must be in the choice set ofthe consumer. Push strategy may be applied.Communication strategyMascot/Free goodiesMarket Entry StrategyII1. Traditional Media (Impactful advertisement on TV andnews paper).2. Tie up with some comic magazine and cartoonnetwork programs.3. Competition in Scholl at different locations. (Brandthe competition as a National level)4. Advertisement through billboards/ OOH near byschools.5. Advt. on movies (based on kids). (Ex: Camlin : TaareZameen Par movie)6. Having email or SMS text message regarding studyAdvertisement
  13. 13. Market Entry StrategyIII1: Tie up with Premium Schools: Company should tie up withpremium(Public/Private schools), where school provides all the necessary stationary tothe kids for their study. Where company can get advantage of bulk selling.3: Selling at Stationary Shop: To increase the availability of the product, companyshould focus on all types of stationary shop in the tier(1,2,3) city and specially shops nearschools.2: Use of prior ITC network: ITC have a strong distribution network, so for thisnew product company can take that advantage over competitor.4: Innovation In Approach: (Selling Online) Company can sell through itsonline portal or can also through different online selling platform like flipcart,letsbuy etcDistribution StrategyAfter Sales Survey should be carried out after 3-4 months ofproduct launchFinancialsPhase 1:Advertizing: Per Annum (INR)• Newspaper Advs : 6,00,000 P/A(Rs 320/Sq cm)•OUT of Home Media: 3,00,000 P/A•SMS/Email services: 2,00,000 P/A•Competition/Creativeboard 3,00,000 P/A•Social Media : 50,000 P/A•Miscellaneous: 1,00,000 PA•Movie tie up (Kids) 2,20000P/AConsidering the marketstandard and thecompetitiveness Pay backperiod can be targeted for 3-4years.Cash flow of the company willadd these new product in itsportfolio
  14. 14. BibliographyPrimary Data &Analysis : Annual reports of companiesThank You