PGP Project Presentation

Marketing Plan
for
FABINDIA, Ahmedabad

Presented By:

NIKITA SANGHVI
 FLOW OF PRESENTATION

Introduction
Current Marketing Situation
Threats and Opportunities Analysis
Objectives and Issues
Marketing Strategy
Action Program
Recommendations

Batch 2009-2911 Stevens Business School Marketing Plan

 INTRODUCTION

FABRIC OF INDIA

• India's largest private platform for products that are made from traditional
techniques, skills and hand-based processes
• Initially commenced as a village based industry in 1960 by John Bissell
• Links over 40,000 craft based rural producers to modern urban markets
• Promotes inclusive capitalism, through its unique COC (community owned
companies) model

Batch 2009-2911 Stevens Business School Marketing Plan

 INTRODUCTION

Fabindia Products

TEXTILE BASED NON- TEXTILE BASED

•ready-to-wear garments
•accessories for men, women, •Home Products
Authentic
Organic Food
Personal
Products
(October
care(July
products
2000)
2004)
teenagers and children; (March furniture,
cereals,
2006)
•bed, bath, table and kitchen linen; soaps, lighting,
grains,
•floor coverings, upholstery fabric and shampoos,
stationery,
pulses, tableware,
curtains. hair oils,
cane baskets
spices,
•Cotton, silk, wool, grass, linen and pure sugar,
selection
oils, of handcrafted
jute are the basic fibres used utilitytea,
moisturizers,
items
bodycoffee,
scrubs,
face packs,
honey,
hair conditioners
fruit preserves
specialherbs
skin care products

Batch 2009-2911 Stevens Business School Marketing Plan

 INTRODUCTION

Awards for Fab India

• Awarded “Best Retail Brand, 2004” by The Economic Times of India.
• Got “Designer Promoting Indian Craft or Technique award” as Hall of Fame
reward.
Annual Report (2008-09)
• Annual turnover of the company is in the range of Rs 500 crore
• Profit ranges between Rs 35- 40 crore.
• Registered a CAGR of about 58% in the period 2006-2008

Batch 2009-2911 Stevens Business School Marketing Plan

 INTRODUCTION

Fabindia Store locations

• 108 stores in 40 major cities of India.
• 6 stores in international places including UAE, Dubai,
Bahrain, Italy and Rome.
• Online Shopping & Exports to 34 countries

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 Fab India: timeline

Early
1960 1990’s 1999 2001 2004 2006 2010
80’s

Vision:200 stores and a turnover of

Rs.1000 crore by 2011
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 CURRENT MARKETING SITUATION

 A delighted Customer is our Best Brand Ambassador” Customer Profile

 USP : quality of the fabric and the cultivated image of ‘Indianness’ 15%

 Does not follow any customer acquisition strategy: focuses on

customer retention

 Key element: word of mouth publicity ( Zero advertising except print

ads during promotions ), advertorials, mobile marketing, in-store
posters 85%

 Mystery Shopper Program: to check the customer satisfaction level

•Motivating factor for the customer: quality and consistency of product and the service

•Over 83% of Fabindia’ s customers go back satisfied, with 58% being highly satisfied with the
brand and its offerings
SOURCE: Interview of Mr. William Bissel, MD, Fabindia published in The Economic Times, Jun 2009

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 CURRENT MARKETING SITUATION

FabIndia Store Format

•Metros
•Posh locality •Tier II cities
•All product lines •Specific products
retailing

•It has designed the stores’ decor and ambience keeping this in mind
•The layout usually keeps clothes section at the back of the store and the entrance area is
utilized for home products.
•The exclusive jewellery counter is also kept in the fronts.

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 COMPETITION
•Garments Based
(Shoppers Stop,
Pantaloons, Westside,
Reliance Trends,
Globus) •Local tailors who
provide customised
•Government garments to the
Handloom Initiatives customers at
(Khadi Gramodyog, Unorganized
Organized Sector
sector reasonable prices
Cottage Industries
Emporium, State •Local NGOs selling
Government wares,
departments)
•Regional -Law Garden
•Designer Boutiques Market for buying
handicraft and Gujarati
Ethnic wear retailers outfits
like Khadder, W and
Good Things, and
Stand alone stores like
Shristi, Biba, Anokhi
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 STRENGTHS
• Quintessential Indianness in fabric through the years
– Popular for authenticity of hand-woven fabric
• Sourcing system from rural India
– Strong supplier relationship
– Provision of capital loans (in agreement with banks)
– Leniency on order fulfilment & no-return policy
– 100% use of supplier’s capacity
• Sustainable employment opportunities to rural skilled poor
• Employees are given autonomy and hence inducing accountability
• Focus on customer retention instead of generation
– Large chunk of buyers are repeat purchasers
– Product quality improvement done keeping this in mind
• Word-of-mouth strong enough not to require any advertising
 WEAKNESSES
• Delays in delivery from artisans
– Opportunity losses due to irregularity
– Difficult to predict quantity and time of thaan coming from weaver
– Also arises as different stores are encouraged to order different stock

• Insignificant spend on marketing communications

– Losing out on attracting new customers instead of depending only on repeat purchase

• Not enough personnel to push Fabindia to greater growth

– Unavailability of people experienced in retail sector
– Unavailability of people believing in the same mission
– More formal processes would face resistance from existing employees

• Untimely delivery of products

– Transport, storage and shelf-life issues of organic foods
 OPPORTUNITIES
• Latent potential of organic foods market
– Leveraging changing consumer tastes & perceptions
– Awareness generation of merit in these foods

• Utilize multi-brand retail outlets and construction groups

– Display of Fabindia products in MBOs and department stores
• Leverages footfalls of the store, increasing likelihood of sales
– Use of Fabindia home furnishings in modular flats of buildings
• If consumer buys this flat or any other, and is impressed, will use Fabindia
furnishings

• Leveraging Web 2.0 tools and techniques

– Tying up with matrimonial sites for designer fancy wedding wear
– Interactive website for designing as per individual requirements
• Customization level is high
• Lead time between fixing of occasion date and event can be used for delivery
 THREATS
• Unorganized local operators
– Handloom retail shops/chains in regional pockets
– Souvenir shops providing indigenous products at lower prices
• Entry of organized brands and companies into retail
– High expected growth & entry of business houses in large ways
– Competitors access funds from conglomerate partners or markets
• Tilt of Indian consumers towards foreign brands
– Foreign brands alter lifestyle choices of the target market
– “Imported” or designer home furnishings have greater ‘flaunt value’ vis-a-vis Fabindia
• Development of government co-operatives
– Boost in future to KVIC and state handloom units
– Improvement in their ambience and shopping experience
• Rising prices of real estate could hamper growth
– Opening new stand-alone stores will be tough
 MARKET SURVEY

Objective: To explore:
• The affective responses Fabindia’s consumers
• Cognitive responses of Fabindia’s consumers
• Purchasing behavior of the consumers for products of apparel category

Sampling Design
• Sampling Unit : Customers of Fabindia
• Sampling techniques : Convenience Sampling
• Sample size : Customers -30

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16 Stevens Business School Batch 2009-2911
• Only 30% shopped online
• Out of 30%, only half of them had purchased online from
Online Spending Behavior
Fabindia
• According to experts this trend is set to change with
increasing internet penetration and e-retailing
• 90% - Word of mouth Contact of Information
• 10% - Print Media
• 70% of respondents were above 30 years of age Demographics
• 60% - Males, 40% - Females
MARKET SURVEY
17 Stevens Business School Batch 2009-2911
• 53% - Satisfied
• 33% - Appreciation
Affective Responses
• 14% - Good
• 30% - Natural
• 33% - Authentic Fabindia For You
• 20% - Comfortable
• 17% - Traditional
MARKET SURVEY
 MARKET SURVEY

Which of the following do you think was the instrumental in your choosing to buy
the garments? Rank them on the scale of 1 to 5 with 1 being the most important.

Respondents(in %)

3% 3% 3%
7% 33% Quality of Fabrics
Range of Garments Available
Price of the Garments
The Fabindia brand
17% Traditional work
Natural Fabric ( eg. Cotton, Linen)
Location of the Store
Service provided by staff
Display of the Garments at Store
Store Ambience
17% 17%

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 MARKET SURVEY

Rate your experience at Fabindia in terms of your satisfaction level for the
following: (Highly Satisfactory, Satisfactory, Average, Unsatisfactory, Highly
Unsatisfactory)

Respondents(in %)

10% 7% 17%
Range of Garments Available
10% Price of the Garments
Quality of Fabrics
17% Location of the Store
Designs/Colors of Garments
Service provided by Staff
Store Ambience
13% Display of the Garments at Store
13% 13%

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 SUMMARY OF MARKET SURVEY

PRIORITY FACTORS SATISFACTION

Quality of Fabrics Range of Garments Available

Range of Garments Available Price of the Garments
Price of the Garments Quality of Fabrics
The Fabindia brand Location of the Store
Traditional work Designs/Colors of Garments
Natural Fabric ( eg. Cotton, Linen) Service provided by Staff
Location of the Store Store Ambience
Service provided by staff Display of the Garments at Store
Display of the Garments at Store
Store Ambience
Batch 2009-2911 Stevens Business School Marketing Plan
 OBJECTIVES

• Capitalize the potential to expand the Target Segment from 25+

years to 18+years
• Fabindia does not advertise, depends on word of mouth. This
essence will be taken away with the help of social media campaign
and broadcasting and print media tools
• Take advantage of the perfect overlap of Fabindia target segment
Profile and the internet user profile, 18-35 years
• Create fully fledged retail market online
• First mover advantage in their segment 
• Connect with the customer to customize
• Focus on discovering the methods to improve the quality and life of
the fabric
• Unravel the issues related to supply chain management

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 STRATEGY
• Expand average basket size of target segment which coincides
with internet
• Promotion optimization
• Endorsement: Shabana Azmi , Ranbir Kapoor & Deepika
Padukone
• Convenient country specific format
• Online space- for more visibility
• Online marketplace – integrated into operations
• Aspiration value - though long term membership benefits
• Increase preference n brand recall in foreign countries n NRIs
• Lock in % of wallet as Indians increasingly shop online

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 TACTICS
• Launch online activities with the Summer collection
• Online Trial Room: mix n match clothes and design a new look on
a 3D simulated trialroom w/ a model as per physical
specification
• High search ranking: Google Adwords
• Exhibition + workshops on ground
• Diwali – make ur own gift bag for your family/friend – buy them
a new look and get it home delivered !
• CSR weekend promotion: showcase craftsmen and tie up with
Breakthrough

Batch 2009-2911 Stevens Business School Marketing Plan

 FABINDIA: 2011

Early
80’s

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 FINANCIAL COMPARISONS

• Financial aspects of Fabindia have been compared with Pantaloons

• Though not a direct competitor, it represents the Indian Retail Industry

very well

• Financials for its direct competitors such as Anokhi, Khadi Gram Udhyog
etc. were not available, restricting comparison

• This assessment contrasts the performance of Fabindia with respect to the

biggest retailer of India

• Hence, we get a sense of the feasible options available with Fabindia to

raise funds
 INTEREST COVERAGE RATIO

18
16 16.54
14
12
10.75
10 Fabindia
9.27
8 8.41 Pantaloons
6 5.51
4 4.15
3.27
2 2.08
0
Year 2005 Year 2006 Year 2007 Year 2008

The interest coverage ratio of Fabindia is far higher than that of Pantaloons. Hence,
raising funds through debt is not a big challenge.

Batch 2009-2911 Stevens Business School Marketing Plan

 INTEREST COST AS % OF SALES

2.5
2.25
2.14 2.08
2

1.5 1.49
Fabindia
1.14
1 1.09 0.96
Pantaloons
0.69
0.5

0
Year 2005 Year 2006 Year 2007 Year 2008

The interest cost as a percentage of sales for Fabindia is far lesser than that of
Pantaloons. Hence, raising funds through debt is again not a big challenge.

Batch 2009-2911 Stevens Business School Marketing Plan

 PROFIT MARGIN RATIO (IN %)

7
6.3
6 5.78 6.02
5.66
5
4
3.41 3.63 Fabindia
3.27
3 Pantaloons
2.71
2
1
0
Year 2005 Year 2006 Year 2007 Year 2008

The PAT as a percentage of sales of Fabindia is higher than that of Pantaloons.

Though retail industry works at low margins, Fabindia’s margins are quite high.
Hence, raising funds through debt is not a big challenge.
Batch 2009-2911 Stevens Business School Marketing Plan
 OPTIONS AVAILABLE

• DEBT FINANCING
– Pros
• The decision authority stay with them, hence can stick to their mission
• Healthy current ratio (around 2:1 throughout years)
• A very healthy interest coverage ratio (as high as 16 times) which is
quite higher compared to Pantaloons, Shoppers Stop etc. (1.5%-2.5%)
• A very healthy debt to equity ratio
• Interest cost as a percentage of Sales is very low (0.006%)
• Family owned
– Cons
• Debt acquired may not be huge
• Loose out on the expertise of other organisations which can be
brought in through JVs or investments
 OPTIONS AVAILABLE

• PRIVATE INVESTORS/ JVs

– Pros
• Huge investments can be brought in
• Professional expertise can be brought in

– Cons
• Decision authority gets diluted
• Emphasis may shift to profit maximisation and hence Fabindia’s
mission may get diluted
 CULTURAL EVENT
(ON GROUND ACTIVATION)

• The FabIndia Website gives information about the various fabric

crafts like Chikankari, Kalamkari, Batik etc. for the customers.

• We will bring this art on ground for them to experience it first hand
and also learn it.

• Every metro will have a 2 day workshop cum exhibition where these
artists will put up stalls about these crafts and exhibit the work along
with “Live Craft Workshop”, workshops (for more knowledge and
interest) for keen audience.

• It will be called “Know what you wear”

• This makes the customers more aware of the work put in for their
fabric and helps them with their association with brand FabIndia.

• It will also have a regional food festival at the same time to make it
an overall fun and enriching experience.
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 “WOMEN OF TODAY”

• As an extended activity, on weekends FabIndia will have “weekend promotions” with

special focus on “Women of Today”.
• Men can be encouraged to increasingly visit the stores with the women in their
lives with offers like “ bring your mom/sis/wife/ girlfriend to shop, and get x% off”

• FabIndia will tie up with various NGOs like Breakthrough, Jagori etc. for their cause of
empowering women.

•Viral video to be launched in association with Breakthrough ( along the lines of Mann
ke Manjeere)

Objective-
The passion group identifies with the theme ““Women of Today” and results in new
customer acquisition

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 RECOMMENDATIONS AT A GLANCE
• Heavy investments in back-end of value chain
– Supply chain development for efficiency and quality management
• Expansion aiding strong regional presence
– Outlets to counter regional competition
– Sourcing from local suppliers for outlet and other regions will be easier
• Growth through harnessing new customers
– Cannot depend on existing customers to counter competition
– Must create new customers in all segments
• Tie up with different types of graduate schools for talent
– Rural management graduates for managing supply chain and rural
initiatives
– Management graduates for helping growth in front-end and retail
arms
 THANK YOU

Batch 2009-2911 Stevens Business School Marketing Plan