SAINT MARY'S UNIVERSITY COLLEGE OF GRADUATE STUDIES DEPARTMENT OF BUSINESS ADMINISTRATION MARKETING MANAGEMENT (MBA 541) MARKETING PLAN INDIVIDUAL ASSIGNMENTS PREPARED BY:NAME: DERBE YIMER ID NO: SGS/0064/2014A SECTION: C INSTRUCTOR: YIBELETAL NIGUSE (AST. PROF) FEBRUARY, 2022 Table of Contents 1. Executive Summary ……………………………………………….……….….…………..... 1 2. Situational Analysis…………………………………….…………………….….….…..……1 2.1. The Market Summary………………………………………………….……….…….……...2 2.1.1. Macro-environment ………………………………………………………….…………... 2 2.1.2. Macro-Demographics……………………………………………………….…………......2 2.1.3.Market Needs..................................................................................................................…..3 2.1.4. Market trends and Growth…………………………………………….……….……….....3 2.2. Competition analysis………………………….………….…………….…….….………......3 2.3. SWOT Analysis …………………………………………………………...……………..…6 2.3.1.Strength………………………………………………….…….….………….……………6 2.3.2.Weakness……………………………………………….……….……….….….………….6 2.3.3.Opportunities…………………………………………….…………….….……………….7 2.3.4.Threats……..…………………………………………….……………….….…………….7 2.4. Keys to Success……………………………………………………….…….………………7 2.5. Critical Issues……………………………………………………….……………………….8 2.6. Channels…………………………………………………………………….……………….8 3. Marketing Strategies…………………………………………………………………………8 3.1.Mission Statement……………………………………………………….…….…………….9 3.2. Marketing Objectives…………………………………………………….…....……….……9 3.2.1.Short term marketing objectives …………………….………………………...…………. 9 3.2.2.Long term marketing objectives ……………………….……………….………….…...….9 3.3. Financial objectives………………………………......……………………….....……….....10 3.4. Target Market……………….……………………………………………………….…..….10 3.5. Marketing Strategiesto be used – the 4 p’s and competitive position……………….….…. 10 3.5.1. Product Strategies…………………………………………………………………….…...10 3.5.2. Pricing Strategies……………………………………………………………………….....12 3.5.3. Place Strategies …………………………………………………………………….….....13 3.5.4 .Promotion Strategies……………...........….........................……....…………………..….13 4.Financial, Budgets and Forecasts ……………………......…………….……….......................13 4.1. Break –even Analysis……………...……………………………………………………..…13 4.2. Sales Forecast…………...……………………………………………………………..……14 4.2.1. Monthly Sales Forecast…………………………………………………………….……..14 4.3. Expense Forecast………..…………………………………………………………….……15 4.4. Linking sales and expenses to strategy..........................................................................…....18 4.5. Contribution Margin……………………………………………………………….…….....18 5. Control…………………………………………………………………….……………….…19 5.1. Implementation Milestones (specific point’s measure)………………………..….………...19 5.2. Marketing Organization………………………………………………………………….…20 5.3. Contingency Planning ……………..………………………………………………….……20 6. Conclusion ………………………………….………………..……………………………….21 7. Reference ………………………………………………………………..................................22 Page | i List of Figures and Tables Figure 1. Target markets………………………………………………….………………….…. 2 Figure 2. Women’s and men’s Product…………………………..……………….…………… 11 Figure 3. Women’s Products and Prices…………………………………..…………………… 12 Figure 4. Men’s Products and Prices……………………………………………………………12 Figure 5. Budget Requirement for sales forecast monthly………….…….…………..….……. 14 Figure6. Budget Requirement for sales forecast annually ………….………….………..……. 15 Figure7. Budget Requirement for raw materials per monthly…………………………………. 15 Figure8. Budget Requirement for raw materials per annually…………….….……….………. 16 Figure9. Budget Requirement for employees salary per annually ……….….…….….………. 16 Figure 10. Budget Requirement promotion through TV, radio, magazines and social media as per annually…………………………………………………………………………………………..16 Figure 11. Budget Requirement for shop rent and utility expense per annually………………..17 Figure 12. Budget Requirement for stationery items and refreshment expense as per annually ……….………………………………………………………………………………….…….... 17 Figure 13. Budget Requirement Summary ………….…………………..…………….….……. 17 Figure 14. Profit and loss statement……………………………………………………….….... 18 Page | ii 1. Executive Summary The Leather industry has been around from many years as leather is one of the most attractive and interesting fashion and furnished material around the world. It is a business that has continued to climb high despite its challenges. A leather manufacturing business usually purchases finished leathers from different supplies to make products according to the customers demand. A Lucy leather handmade bag is looking to grow its business, expand its customer base and make customers more aware of the brand itself. In order to produce and sell the expected amount of products, more skilled man powers will be recruited. In addition to this to help the recruit more talented, an arts advocacy center and apparent ship program will be created in Addis Ababa. To increase the value of Lucy leather handmade business and make the skilled artisans more relatable to customers, the artisans’ stories will be attached to different websites. Lucy will open 5 to 10 small boutiques in different sub cities of Addis Ababa as well as big boutiques in each of regional state cities. So, customers can interact with the products and purchase them. Each items are unique, completely hand mad bags. 2. Situational Analysis Lucy leather handmade bags all started a year ago in Ethiopia, Addis Ababa by A young woman, by the name of Mahelit Simur, with a passion for design, was walking by a leather products store and the displayed products took her attention. She walked into the store and took an up-close look on the bags. She was happy and excited, because the room was filled with a smell of fine pure leather and the bag she picked was so smooth. She was unhappy, because it was poorly designed and finished. The fact that Ethiopia has largest livestock population in Africa, with a cattle population of more than 65 million, and sheep, goat and camels population of 40 million and 51 million respectively as well as the availability of high quality leather in Ethiopia, the lack of originality in designs and poor finishing touches topped with her passion for design, drove Mahelit to start designing bags. This paved the way for the birth of Lucy leather handmade Bag. Page | 1 2.1. Market summary 2.1.1. Macro – environments To satisfy the societies need and keep their cultural values, Lucy leather bag Company will produce variety of briefcase as well as clutch bag. To go in line with the economic conditions of the market, Lucy leather handmade Bag Company will ready its product for various customers with appropriate price. As Lucy leather handmade Bag Company settles at Addis Ababa, it will be easy for it to get raw materials and distribute its products to the rest of the country. 2.1.2. Market Demographics Lucy leathers Bag Company has many target markets:Men’s & Women’s Gender Age 24 to 44 Family Cycle Young, Adults, Single, Married with children, Married without children, others Occupation Business Men’s and women, Office workers, Professionals, Students, Housewife Income Ranging Birr 5,000 to 15,000 Figure 1. Target markets In terms of gender, marketers segmented it by men’s and women’s since our products fall under accessories and designed for them. In terms of age is between 24 to 44, marketers segmented it by which mostly career women are earning money is the well-paid segment having the good income levels. In terms of family cycle, marketers segmented it by young, single, married with children and without children which includes almost all possible purchasers. In terms of occupation, marketers segmented it by business women, office workers, professionals, students and housewives and allowing only those who are financially stable or supported to purchase the product. Page | 2 Lastly, in terms of income, marketers segmented it from birr 5,000-15,000 which shows that the product can be purchased in relatively competitive prices. 2.1.3. Market Needs The needs of the leather handmade bag is increasing day-by-day in tune with the growth of industrialization, economic standards of people, tourism and fashion consciousness. The important customers of such products are medium and high-income group people belonging to service, business and executive classes. So Lucy leather handmadebags is one of the most attractivequality product and interesting fashion with faire price to serve customersneed. 2.1.4. Market trends and Growth The leather sector is one of the leading manufacturing sectors for Ethiopia. The industry bases itself on the country’s livestock resources. Ethiopia possesses one of the world’s largest livestock population with 65 million cattle, 29.1 million sheep, and 29.3 million goats is eighth, twelfth and eighth place from the world respectively with the share of 2.75 percent from the world total (FAO, 2019b). About 8 million of cattle hide 12 million of sheep skin and 8 million of goat skin is available annually. The livestock sub-sector contributes about 12% of national GDP, over 45% of the agricultural GDP and 16% of total exports. 2.2. Competition analysis A. Ker Ezhi Ethiopia Leather manufacturing What is their value? Ker Ezhi Ethiopia Leather Manufacturing was established at Addis Ababa since 2017. It is owned by ZelalemMerawi. Page | 3 Deliver top quality leather products, high quality, unique designed women and men bags and accessories. Approach: How do they create value? The company currently resides in Addis Ababa, kazanchis in front of ECA around Elili Hotel (out let). The company has out lets in different hotels in Addis Ababa like Bole around Edna mall in front of monarch hotel gulf Aziz buliding ground floor, Kazanchisinfront of #ECA #UN gate 2and Bishoftu (deberezeyit) kuriftu water park villa. Great products for customers and their home, participate in various trade fairs, bazars and fashion shows. Price and Product: what categories do they fall in? 2,655 birr men bags 1,003 birr women bag Merchandize mix: Women 67% Men 25% Accessories 8% Strength : Wide varieties of design products. Completely handmade Diverse price range based on sub level Weakness: Limited verities of color Why they are competitor? Similar design styles in both men and women leather hand bags, Use of finest materials Completely handmade B. Sheba LeatherPlc Page | 4 What is their value? Sheba leather Plc. has started its operation in 1993 in Ethiopia, at Addis Ababa. Men’s hand leather bags, madeofpreciousleathers, crafted and sewn by hand, assign of luxury, not heavily branded; exclusive. Approach: - How do they create value? Boutique at theAfrica avenue, Bole Road in front of Shoa Shopping, Bole road, near Bole Printing next to NejatComputerAddis Ababa, Ethiopia, Addis Ababa.Each item is unique, completely with the finest leather. Define their product as the life style for the owners. Price and product: what categories do they fall in? 2,540 birr men bag 959 birr women bag Merchandized mix: Women 65% Men 25% Accessories 10% Strength: Graceful, classy, wide range of product categories. Weakness: Limited verities of designs, colors and products. The products are not completely handmade. Why they are competitors? Similar design and styles especially the men’s business hand bags. Luxury without heavy branding Page | 5 2.3. SWOT Analysis As we are living in globalization world, identifying the strength ,weakness, opportunities and treats related to business computation is crucial for accompany. So, the SWOT analysis is discussed briefly as follows. 2.3.1. Strength Many businesses sell their products at the cheapest price to have the largest margins- no matter how bad the quality of the materials are-and make the largest possible profit. Lucy leather handmade bags Company on the other hand, works day and night to satisfy the needs of the target market demography. The products that the company sells are also handmade, high-quality leather, high quality finishing leather bags that will last for long time and give customer’s good value for their money. Excellent trained staffs that are highly trained in producing handmade leather bags. The company will produce leather hand bags that can satisfy nations and nationalities of Ethiopia as well as those who can appreciate different cultural values. Motivated work force. 2.3.2. Weakness The biggest weakness is that the company is still very new, so there is a lot to do so as to grow the customer base. It will take a lot of work to gain acceptance from customers for Lucy leather handmade bags products and to tell customers about the quality of the product. Most customers are buying Lucy leather handmade bags from store rather than searching from webs and purchase it.So, there is a gap in promoting the product thorough modern technologies like TV, radio and so on. And this becomes a disadvantage for the company not to be known globally. Besides this the production of limited quantity is another weakens of the company. As the company is new, limited marketing budget may challenge the company. Less publicity when compared with competitors. Page | 6 2.3.3. Opportunities The opportunities seen by the company to enter the industry are the facts that men and women are fond of bags and another is people seek for innovative products so the company comes up with unique product. The increasing number of colleges and universities in different areas of the country is one of the good opportunities of the company, because most customers of Lucy leather handmade bags are those who graduate either from college or universities. The increasing of the tourism sector is another opportunity for the company to sell its product for tourist who is coming from abroad. As it is veryknown, the leather handmade bags which is produced by Lucy Company, are initially designed to reflect the culture of nations and nationalities of Ethiopia. The growing market in leather handmade hand bags. The presence of cheap man power in the country. Enhancing government policy on leather industry. The Advancement and need of using technology with in the society. 2.3.4. Threats It is obvious that profit is essential so as to insure that the company will grow but rapid Expansion and mass production of leather handmade bags bother companies may hurt the Lucy leather hand bags company. Must compete against handmade and non-handmade leather hand bags. High standard of living. Internet connection problems. High rent space. Unconditional changes in government rules and regulations. 2.4. Keys to Success There are many benefits of using social media to market our small business. Each of our postings to social media sites will include a tractable link. We need to know how many people click on each post. Using online tools like link redirectors (i.e., bit.ly, tr.im and others); we can also see how many of readers and followers repost or forward such links. We will also include tractable Page | 7 links within our email marketing messages. Using online analytics tools; we will be able to see how many people click on various links in our media campaigns. 2.5. Critical Issues As we are starting our handmade leather products we may face several critical issues. To promoting our self to the market. To evaluate our performance against similar providers. To satisfy the customers need. 2.6. Channels It’s announce the brand name through electronic media like TV, radio, various websites and capture new customers so as to be more competitors in the market. To posted in Publication magazines, local news features and influencer posts every quarter 3. Marketing strategies As obviously stated, Lucy leather bags products are handmade and of high quality. For this costumers will be informed on the web site and other plat forms so people looking to make a purchase can compare Lucy leather handmade bags to other options and make decision. Through information should be available to the customers, so they will know where the leather comes from, why it is of higher quality than another business, how long it take the designer to hand make each hand bag and other relevant information. In this way, this market can find the information they need to see it is a good product. Lucy leather handmade Bags Company is focusing in producing leather hand bags that reflect the societal cultural values. So, in reaching those Ethiopians who are living inside the country different boutiques will be opened. Specifically those who are settled at Baherdar ,Awassa and other state cities of Ethiopia are promising to buy the product because of the young professional demographic, the income they earned, and there attitudes towards their culture. In addition to this, by contacting 5- 10 small boutiques that are found abroad, the company will try to get send its products. To capture boutiques, the companies will offer incentives to boutiques by Page | 8 givingthem a discount rate if they order or sell a certain number of hand bags. So boutique order 50 or more bags, they could receive 30percent off the purchase. 3.1. Mission As a strategic program Mahelit Addis Ababa, former Lucy leather handmade bags, entered into the market with missions that integrate designing, manufacturing and distributing unique, sassy, fashionably sustainable and top of the line finished leather products both for the local and international markets. Currently the company is mainly engaged in designing, manufacturing and distributing leather products of different types to both the local and International markets. Vision Mahelit Addis Ababa envisions becoming one of the leading high quality leather products manufacturers in the world by ethically and efficiently implementing a sustainable fashion concept as a business model. It also plans to expand and diversify its products, production unit and sales outlets. 3.2. Marketing objectives Lucy leather Bags Company has its own short term as well as long term objectives. To achieve these objectives the company is doing a lot of works. The short term and the long term objectives of the company are listed below. 3.2.1 Short term marketing objectives To make Lucy leather handbags to be identified as luxury brand thorough out the country as well as abroad. Announce the brand name through electronic media like TV, radio, various websites and capture new customers so as to be more competitors in the market. Create brand loyalty. To posted in Publication, that is in magazines, local news features and influencer posts every quarter 3.2.2. Long term marketing objectives Page | 9 Expand and diversify its products, production unit and sales out let. To be one of the leading qualities leather handmade bags products in the world by ethically and efficiently implementing various fashion design concepts. Open 2 to 4 small boutiques in various zone areas of Ethiopia by 2026. Open small boutiques in Canada ,Israel, south Africa, and German by 2029 .This will be accomplished through building relationships with boutique owners (Ethiopians who lived abroad). To be market leader in handmade leather hand bag manufacturing and distributing segment. Increase sales by 30% by 2026. Introducing new products in to the market based on the costumer need assessment result. 3.3. Financial objectives Obtaining financing to expand manufacturing capabilities and increase distribution. Increase revenue by at least 20 percent each year. 3.4. Target marketing Lucy leathers handmade bag users consists of young people, since the young people demographic is so large, it is also very profitable. These active consumers represent a demographic group of well –educated and successful individuals; they are single or married and raising families. Regardless of their age (whether they fall at upper or lower end of the target range), they lead active lifestyles. They are somewhat status oriented but not overly so. Currently Lucy leathers handmade bag customers tend to live in Addis Ababa, Hawasa and Bahirdar. However, one future goal is to target consumers in Canada and people who are living in various zones of the country areas. 3.5. Marketing strategies to be used – the 4 p’s and competitive position. For an organization to be more profitable, the marketing strategies should be clearly identified and discussed. So the marketing strategies that Lucy leather handmade bag Company uses is discussed as follows 3.5.1 Product Strategies Page | 10 The product will consist of a luxury, traditional handmade, leather hand and shoulder bags line. This line will be available both for men and women.The bags will range from large brief case to women clutch,with everything in between available as well.This bags still be made with the best materials. Each piece will be more of completely handmadeand half of used electricity on the pieces at any time. The pieces will be constructed of leather covers and finished with brass hard ware; the piece will be designed to last a life time. Because of deep care, the company takes in its craftsmanship, there will be average 100 bags made and sold per month, making each bag an exclusive item. They will also be offered in different color options with reflecting the culture of the people. Color: - Light Brown, Dark Green, Red, Black Characteristics: - Durable, Simple, highly branded Specification: -Finest saddle leather, brass hard ware, handmade, made in Ethiopia Women’s line: -Small cross body, medium cross body, short handle satchel, clutch Men’s line: -Large briefcase, medium briefcase, portfolio Figure 2. Women and men product Women’s Products Men’s product Page | 11 3.5.2. PriceStrategies Figure 3. Women’s Products and Prices Women’s product Descriptio Small cross body bag Medium cross body bag n Shorthandle Clutch satchel Leather Hard ware (Brass) (Brass) price 600 birr 1,200 birr (Brass) (Brass) 750 birr 550birr Figure 4. Men’s Products and Prices Men’s Product Description Large briefcase Medium briefcase portfolio 2,600 birr 2,100 birr 1,650 birr Hard ware price Page | 12 3.5.3. Place Strategies Specialty boutiques and small stores will be a great place to position the Lucy leather handmade bags lines. But there will be e-commerce site for consumers who do prefer online shopping or who may not live near one of the location the line will be sold in. The e-commerce site will also have a good explanation of the company, accompanied with some educational Video so that customers who are not properly educated about the brand in a store will still have the opportunity to understand exactly the quality of piece they are purchasing. Generally: 1. Target location: Inside Ethiopia:-Addis Ababa in 3 shops: Bole inside Snap plaza 2nd floor Grje inside Bawa building 1st floor Sky light hotel out let And thorough out the countries regional States cities. Abroad: - Canada, South Africa and Israel 2. Distributional Channels: - Special stores, Department Stores, Boutiques and e-commerce 3.5.4. PromotionStrategies The promotion plan for the line of Lucy leather handmade hand bag will take place in various mechanisms. One of the company’s key strategies is through communication with key social media is huge source of information for readers and having this influential social Media aboutand promote the Lucy leather handmade hand bags product will do a lot for getting the Lucy name main streamed. This is the easiest way to remind people of Lucy leather handmade bags name and drive sales because of the technology driven society we live in. Generally by using local magazine, life style bloggers, local news channel Features, you tube and face book Lucy leather Bag Company will advert its products. 4. Financial, Budgets and Forecasts 4.1. Break –even Analysis Page | 13 The break-even analysis is used to determine when your business will be able to cover all of its expenses and begin to make a profit. It is calculated using a formula, which is the total annual sales minus costs of goods sold dividedtotal annual sales the difference amount divided by annual fixed costs of the business. From this formula we can determine the quantity of products that need to be sold in order to generate annual sales that equal total annual costs. The formula to calculate the breakeven production level is as follows: Breakeven Point per units =Fixed Costs/ (Sailing Price per units - Variable Costs per units) =722, 0000/ (1,652.50-795.77) =722, 0000/ (1,652.50-795.77) =722,000/856.73 =842.74 units We have averaged all of the prices on our leather handmade bags to calculated the average price per unit to be birr 1,652.50. Our fixed cost in year one, as noted in the expenses, is birr 722, 000. Using these numbers we were able to calculate that the quantity needed to be sold in order to break even is 842.74 units, which at a selling price of birr 1,652.50 is equal to birr 1,392,627.85 in sales. 4.2. Sales Forecast 4.2.1. Monthly Sales Forecast Lucy leather handmade bags to generate men’s birr 126,000 and women’s birr 39,250 in revenue per monthly. For our financial projections we are going to assume this to be a reasonable starting point for our income. However, we are expecting an increase in customers with time, and from this we are forecasting a steady increase in sales by 20% annually for our first three years. After the two year period we project our sales will stabilize, leaving us with an annual average revenue of men’s birr 2,177,280 and women’s birr 678,240. Figure 5:Budget Requirement for sales forecast monthly Qty per Types Product Types month Men's Unit price Monthly Total Sales(birr) Large briefcase 30.00 2,600.00 78,000.00 Medium briefcase 15.00 2,100.00 31,500.00 Portfolio 10.00 1,650.00 16,500.00 Page | 14 Total Men’s Women's 55.00 6,350.00 126,000.00 Small cross body bag 10.00 600.00 6,000.00 Medium cross body bag 20.00 1,200.00 24,000.00 Short handle satchels 5.00 750.00 3,750.00 Clutch 10.00 5,500.00 45.00 550.00 3,100.00 39,250.00 100.00 9,450.00 165,250.00 Total Women’s Grand total Figure 6:Budget Requirement for sales forecast annually Types Product Types Annually Total Sales(birr) Men's Years 1 936,000.00 Years 2 1,123,200.00 Years 3 1,347,840.00 Medium briefcase 378,000.00 453,600.00 544,320.00 portfolio 198,000.00 237,600.00 285,120.00 1,512,000.00 1,814,400.00 2,177,280.00 72,000.00 86,400.00 103,680.00 288,000.00 345,600.00 414,720.00 Short handle satchels 45,000.00 54,000.00 64,800.00 clutch 66,000.00 79,200.00 95,040.00 471,000.00 1,983,000.00 565,200.00 2,379,600.00 678,240.00 2,855,520.00 Large briefcase Total men’s Women's Small cross body bag Medium cross body bag Total women’s Grand total 4.3. Expense Forecast Figure 7:Budget Requirement for raw materials per monthly No 1 Description Upper leather (sq.) Quantity 300.00 Unit Cost 70.00 Amount(birr) 21,000.00 2 Lining fabric (m2) 200.00 50.00 10,000.00 3 4 Cardboard (m2) Lining paper (m2) 140.00 200.00 40.00 35.00 5,600.00 7,000.00 5 Locks (pcs) 250.00 30.00 7,500.00 6 Zippers(pcs) 200.00 50.00 10,000.00 7 Buckles & Brass(pcs) 200.00 50.00 10,000.00 8 Glue(gallon) 50.00 210.00 10,500.00 9 Thread (m2) 100.00 50.00 5,000.00 1,640.00 585.00 86,600.00 Total cost per month Page | 15 Figure 8:Budget Requirement for raw materials per annually No Description 1 Upper leather (sq.) Annually Total Raw Materials(birr) Years 1 Years 2 Years 3 252,000.00 252,000.00 252,000.00 2 Lining fabric (m2) 120,000.00 120,000.00 120,000.00 3 Cardboard (m2) 67,200.00 67,200.00 67,200.00 4 Lining paper (m2) 84,000.00 84,000.00 84,000.00 5 Locks (pcs) 90,000.00 90,000.00 90,000.00 6 Zippers(pcs) 120,000.00 120,000.00 120,000.00 7 Buckles & Brass(pcs) 120,000.00 120,000.00 120,000.00 8 Glue(gallon) 126,000.00 126,000.00 126,000.00 9 Thread (m2) 60,000.00 60,000.00 60,000.00 1,039,200.00 1,039,200.00 1,039,200.00 Total cost per annually Figure 9:Budget Requirement for employees salary per annually No Employees No of Monthly Employees Salary(birr) 1 Sales Manager 1 12,000.00 Annually Salary(birr) 144,000.00 2 Sales 3 12,000.00 144,000.00 3 Casher 3 9,000.00 108,000.00 4 Store man 1 2,500.00 30,000.00 5 Helper(Loading unloading) 3 4,500.00 54,000.00 11 40,000.00 480,000.00 Total salary expense Figure 10: Budget Requirement promotion through TV, radio, magazines and social media as per annually No Description Time No of shoot Unit Price Amount(birr) 1 Advertising Through ETV 15seconds 4 11,000.00 44,000.00 2 Advertising through Radio 3 Magazines & others social media Total advertising expense 15seconds 4 2,500.00 10,000.00 Inches 4 2,000.00 8,000.00 62,000.00 Page | 16 Figure 11:Budget Requirement for shop rent and utility expense per annually No 1 Description Shop rent-3shops Measurement Quantity Pcs 12 Total rent expense 2 Power Unit Price 15,000.00 Amount(birr) 180,000.00 180,000.00 60,000.00 Kw 12 5,000.00 3 Water Liter Total utility expense Grand total rent & utility expense 12 1,500.00 18,000.00 78,000.00 258,000.00 Figure 12:Budget Requirement for stationery items and refreshment expense as per annually No Description Quantity Unit price Amount(birr) 5 Pad 50 250.00 Stationery items as per annually 1 Notice Book 2 Brochure 1000 Pcs 6 6,000.00 4 Photocopy Paper 10 ream 300 3,000.00 5 Back up 4GB 2Pcs 3000 6,000.00 6 Pen 50 Pcs 12 600.00 8 Contingency 10% of the total 15,850.00 7,585.00 Total Total stationery expense 23,435.00 Refreshment for office employees and customers as per annually 1 Coffee, tea and water Cup, Pcs 18,000.00 Total refreshment expense Grand total stationery and budget refreshment expense Figure 13:Budget Requirements Summary No Description year 1 1,039,200.00 480,000.00 18,000.00 41,435.00 Budget required year 2 1,039,200.00 480,000.00 year 3 1,039,200.00 480,000.00 1 2 Raw Materials Salary and Wages 3 Shop Rent Expense 180,000.00 180,000.00 180,000.00 4 Total Utility Expense 78,000.00 78,000.00 78,000.00 5 Advertising and Promotion 62,000.00 62,000.00 62,000.00 6 Stationery Expense 23,435.00 23,435.00 23,435.00 Page | 17 7 Refreshment Expense Total budget require 18,000.00 18,000.00 18,000.00 1,880,635.00 1,880,635.00 1,880,635.00 4.4. Linking sales and expenses to strategy Figure 14. Profit and loss Statement Year 1 Year 2 Year 3 Sales 1,983,000.00 2,379,600.00 2,855,520.00 Direct cost of sales 1,039,200.00 1,039,200.00 1,039,200.00 0.00 0.00 0.00 1,039,200.00 1,039,200.00 1,039,200.00 943,800.00 1,340,400.00 1,816,320.00 48% 56% 64% Salary and wages 480,000.00 480,000.00 480,000.00 Shop rent Expense 180,000.00 180,000.00 180,000.00 advertising and Promotion 62,000.00 62,000.00 62,000.00 Utility Expense 78,000.00 78,000.00 78,000.00 Stationery Expense 23,435.00 23,435.00 23,435.00 Refreshment Expense 18,000.00 18,000.00 18,000.00 Total Operating Expense 841,435.00 841,435.00 841,435.00 Net Income/Loss 102,365.00 498,965.00 974,885.00 Net Income/Sales 5% 21% 34% Revenue: Other cost of sales-Discounts Total Cost of Sales Gross Margin Gross Margin % Expense: 4.5. Contribution Margin Contribution Margin units = Sailing price – Variable Costs =1,652.50 -795.77 =856.73 units Contribution Margin Ratio = Contribution Margin units /Sailing price =856.73units/1,652.80 =52% Page | 18 5. Control In order to confirm thatstrategiesare on their way to being met on time, Lucy Leathers will utilize several marketing controls. It is important to keep track of the progress for each strategy so that potential problems can be identified and fixed earlier on in the process. 5.1. Implementation Milestones (specific point’s measure) Throughout each year, Lucy Leathers will check up on the progress of each strategies. If astrategiesis not where it should be, the reason why should be communicated and ideas for solutions should be discussed. If, even with possible solutions, the strategies will not be met on time, a revised plan of action should be created to set a new deadline that incorporates a more realistic time frame based on past progress, including ideas to speed up the process if deemed necessary. The first strategiesof expanding product availability by getting products stocked 5- 10 small boutiques that are found abroad, the company will try to get send its products. Progress should include building relationships with business owners in the area, deciding what supplementary services or discounts should be offered to encourage retailers to stock the product and evaluate how big of an impact discounts for retailers will have on Lucy’s profits. Since the company is looking to get the products just in small businesses, it is important to make connections with those owners in the area and show them the value of the products and what value will be added to their small business if they stock Lucy leather. The company should set milestones, such as having the products in 2- 4 small boutiques each year until the strategiesis met. The second strategies Lucy leather handmade Bags Company is focusing in producing leather hand bags that reflect the societal cultural values. So, in reaching those Ethiopians who are living inside the country different boutiques will be opened. Specifically those who are settled at Baherdar ,Awassa and other state cities of Ethiopia are promising to buy the product because of the young professional demographic, the income they earned, and there attitudes towards their culture. In addition to this, by contacting 5- 10 small boutiques that are found abroad, the company will try to get send its products. Page | 19 5.2. Marketing Organization Throughout the year the intention will be to undertake regular evaluation of our service & marketing programs by comparing with our objectives, so as to ensure that we are in line with our intended objectives. In summary we intend to undertake the following: 1. Market segment: We intend to have the self-control to market segment focused. 2. Market Survey: We will do market serve yearly basis to compare our Products with other competitors and to adjust our service in a better way. 3. Profit and loss follows up: We will do timely profit and loss follows up timely and we use the data to take corrective action. We use standard financial transaction system for better evaluation and to make self-audit. 5.3. Contingency Planning The following is a summary of the external challenges that are raised by respondents during the interview. The quality issue and its link to the export share in output Raw leather quality is one of the main issues in the leather industry, as it was constantly put forward by the several managers interviewed during data collection, poor quality hides, and skins is the major challenge of the Ethiopian Leather Industry. High qualityleather can be exported or used for exportable finished goods, while low-quality hides and skins serve the local market only. Seasonality in rawhides and skins supply One major specificity of the Ethiopian tanneries is that their raw hides and skins supply can be very irregular. During holidays periods raw hides and skins are available in large quantities Page | 20 which lowers their price and with a long period of shortage they can be used when prices skyrocket. This has two main consequences: The necessity for the tanneries to buy and possess large stocks of raw hides and skins (during holidays periods), and the emergence of competition between tanneries for the best quality of raw hides and skins at the lowest price (during shortage periods). The first one can be illustrated by the impact of holding costs on the tanneries’ profitability as well as by a significant share of the working capital in the fixed costs. Evidence for the second can be found when assessing the impact of the raw hides and skins price variation on the tanneries’ profitability. 6. Conclusion Overall, Lucy leather handmade Bags that have a main focus on marketing to grow its customer base and get the brand name and image better known. The business model is very unique compared to many companies that make similar products, giving the company a competitive edge over many other businesses. With Brandi going to start a year ago in Ethiopia, Addis Ababa, it will be easier to grow the business by working with the people personally, by developing good business practices from the operational side of things and by recruiting more artisans to make the products. With these goals, Lucy Leathers handmade bags will be able to grow its infrastructure so that it can make more products, get its products in small boutiques so customers can interact personally with them and expand its marketing communications. The company is in a growing industry, so with more emphasis on communicating the unique business model, ethical emphasis and high-quality products, Lucy leather handmade bags can create a successful business and loyal customer base. Page | 21 7. Reference CSA.2020a. Agricultural Sample Survey 2019/20 [2012 E.C.]. Volume II report on livestock and livestock characteristics (private peasant holdings). Central Statistical Agency (CSA): Addis Ababa, Ethiopia. Ethiopian Chamber of Commerce and Sectorial Associations (ECCSA), study’s Investment Potentials and Opportunities in the Leather and Leather Product sectors on December, 2019 Ethiopian Leather Development S.C Email, elia.aalf@gmail.com. Website: www.elia-aalf.org. Addis Ababa, Ethiopia FAO.2019b. Poultry Sector Ethiopia.FAOAnimal Production and Health Livestock Country Reviews. No. 11.Rome Kerezhi leather manufacturinginfo@ker-ezhiethiopia.com Website: www.kerezhiethiopia. com. Addis Ababa, Ethiopia. Sheba Leather Industry Plc.Website: https://www.shebaleather.com Addis Ababa, Ethiopia. World Bank,2017. International Development Association: Project Appraisal Document on a Proposed Credit in the Amount of SDR 121.1 Million (US$ 170 Million Equivalent) to the Federal Democratic Republic of Ethiopia for a Livestock and Fisheries Sector Development Project (Project Appraisal Document No. PAD2396). Washington DC. Page | 22