PEARL ACADEMY OF FASHION
Integrated Project
Brand Extension of Koutons Retail India Ltd.
Shavy Arora
11/28/2011
AUTHORIZATION LETTER
This report is submitted as partial fulfilment of the requirement of PG
Fashion Marketing, Pearl Academy of Fashion, Naraina. The report on
the title “Integrated Project“ is an original work and has not been
submitted to any other institution or university for the award of any
degree or diploma.
Place: Delhi-Naraina
Date: April 20, 2010
SHAVY ARORA
2
LETTER OF TRANSMITTAL
Dear Sir,
I am submitting the report, due NOVEMBER 28, 2011, that you
requested. The report is entitled Integrated Project. The purpose of
the report is to inform you of the current scenario of Koutons brand
and its market, problems and need gap and a business plan Koutons
for entering into Fashion accessories market. The content of this
report concentrates on the holistic study of the apparel and
accessories market in perspective of models such as Porter’s 5 Force
Model, SWOT analysis etc., thus gain a multidimensional insight of
the fashion industry.
I hope that this report will merit your approval.
Yours truly,
Pearl Academy of Fashion Student
Shavy Arora
3
ACKNOWLEDGEMENT
I would like to take this opportunity to express my gratitude and
respect to all those who helped me through the duration of this
project report. The pearl academy in particular has been the source
of inspiration for me. I acknowledge the effort of those who have
contributed significantly to my project.
I would also want to thank my friends Pallavi Laroiya and Astha
Tewary who helped me during my project. I also thank the staff of
Koutons stores in Delhi for providing me whatever information they
could under the laws of their company.
I feel privileged to offer my sincere thanks and deep sense of
gratitude to my faculty for providing their support, help and
encouragement in implementing this project report. Their skilful
teaching, precious suggestions and motivation added to the success
of this project. I thereby take this opportunity to express my
gratitude to my teachers; Mr. Rahul Jain, Mrs. Priyanka Aggarwal,
Mrs. Anjuna Dhir, Mrs. Meha Jaiswal, Mr. Rajesh Kochhar and Mr.
Ramesh Tahiliani for their valuable suggestions and support in
helping this project take shape.
4
EXECUTIVE SUMMARY
The Indian retail market size is estimated at US$ 427 bn. Koutons
Retail India comes under India’s top 50 apparel companies. It had a
Market capitalization Rs. 3000 crores in 2008 and of Rs.70.73 crores
in 2011. It generated 2.0% of aggregate sector revenue of the country
in 2010 which was Rs.59, 336 crores.
Koutons has had a profitable past. Unlike in FY 2010-11, when its
stock prices declined, huge debts mounted and the sales have started
drying up. Also, the popularity of other discount outlets of
established brands and the quality issues of Koutons have paved the
way for the downside for the brand.
To do away with all the losses and negative image, Koutons may
enter into a new market targeting a new set of customers. The
fashion accessories market is an untapped segment with not many
players in it. The market has a growth rate of 28-30% per annum. It
could be a great opportunity for Koutons and give a new direction to
the company.
The main idea is to launch a new brand DIVA, under Koutons that
deals with women’s fashion accessories. DIVA would be a sub brand
under Koutons. It shall have its individual stores in tier II and tier III
cities mainly. The brand would continue to focus on the middle
income group of people. Unlike, the rest of its brands, this new brand
will not follow any year long discounting strategy.
As per the projected financial plan, the company requires to make an
initial investment of Rs. 4,83,94,080 to open 18 exclusive stores of
DIVA around the country. Out of this amount, 20% will be taken on
loan. The sales for the 1st year are estimated to be Rs. 12,31,20,000
leading to a net loss Rs. 87,18,153. This loss will be covered up in the
2nd year by generating sales of Rs. 59,28,00,000 with additional 34
stores around the country. The net profit estimated for 2nd year is Rs.
9,07,88,442.
5
TABLE OF CONTENTS
S.NO.
1
1.1
1.2
1.3
1.4
1.5
1.6
1.7
2
2.1
2.2
2.3
2.4
2.5
2.6
3
3.1
3.2
3.3
3.4
3.5
4
4.1
4.2
4.3
TOPIC
CHAPTER 1
INTRODUCTION
Description of project
About the brand
Problems with Koutons
Idea generation
Objectives
Limitations
Data collection and analysis tools
CHAPTER 2
PROJECT OVERVIEW AND STRATEGY
Summary sheet
Strategy
Project Scoping Form
Work Breakdown Structure
Network Charts
5Q's
CHAPTER 3
ENVIRONMENT ANALYSIS
Market Analysis
PEST Analysis
Porter's 5 forces
SWOT Analysis
Competitor Analysis
CHAPTER 4
MARKETING PLAN
Koutons - Brand Portfolio
Koutons - Promotions
Ad Analysis
PAGE NO.
10
10
11
12
13
14
15
16
17
19
21
22
23
24
26
30
32
36
40
41
42
6
4.4
4.5
4.6
4.7
4.8
4.9
4.1
4.11
4.12
4.13
4.14
4.15
4.16
4.17
4.18
5
5.1
5.2
5.3
5.4
6
6.1
6.2
6.3
6.4
6.5
6.6
6.7
Brand Audit
DIVA
Brand Elements
DIVA’s Customer Segmentation
Consumer DILO
Consumer Behaviour
Perceptual Mapping
Product Mix and Pricing
Design Styles
Strategy
Promotions
Media Plan
Promotional Plan
Promtion Exemplars
Press Release
CHAPTER 5
OPERATIONS AND MANAGEMENT PLAN
Distribution Network of DIVA
Organisational structure
DIVA’s presence in India
City Wise Matrix
CHAPTER 6
FINANCIAL PLAN
Resource List
Expenses for the 3 years
Initial investments for 3 years
Initial investments under different scenarios
(1st yr)
Projected Income Statement for 3 years
Projected Income Statement under different
scenarios (1st yr)
Financials - graphs
44
46
46
47
48
49
51
51
52
53
54
54
55
57
59
60
61
62
64
65
66
67
68
69
70
71
7
1
8
9
CHAPTER 7
REFLECTION
CHAPTER 8
ANNEXURES
CHAPTER 9
REFERENCES
73
74
84
8
Chapter – 1, INTRODUCTION
Description of the project:
I am a student of Fashion Marketing at Pearl Academy of Fashion. As
per the curriculum of our course, an end-term project is to be done a
fashion or lifestyle related brand. I, as a marketing consultant, have
to provide marketing consultancy to a brand that may not be
performing well. It might require some changes in its business model,
brand positioning, brand extension, reconstruction, diversification or
expansion. The chosen brand for this project is the apparel brand
Koutons. The project involves brand extension plan for Koutons by
entering into a new market of Fashion Accessories for girls.
The brand:
The retail market in India is anticipated to grow to 427 billion USD by
the year 2011. Koutons Retail India Ltd. is number 29 out of 85 listed
other apparels & accessories companies in India with a market
capitalization of Rs.64.2 crores. With more than 1400 outlets across
India, it has a wide range of apparel designs suited for all segments
including corporate, formal and casual dressings.
The company was founded by Mr. DPS Kohli. Mr. Kohli and his family
owned a television manufacturing business which was destroyed
during a riot. Mr. Kohli had to suffer huge financial losses from that
even and had to work as an insurance surveyor for long. Later he
ventured into the retail textile business. Koutons grew really fast. The
company became India's largest retail apparel chain in a span of 10
years. In 2009, the company had around 1400 Exclusive Brand
Outlets [EBO] making it the largest apparel chain. [1]
9
Problems with Koutons:
Koutons has had a profitable past. Unlike in FY 2010-11, when it was
hit by a sharp spurt in the pledging of promoter shares, a decline in
the company’s stock prices, facing mounting debt and bad press
regarding the financial position. The sales have started drying up and
the cost and inventory started building up. Also, the popularity of
other discount outlets of established brands and the quality issues of
Koutons have paved the way for the downside for the brand. It lacks
the glamour of brand-building and this will eventually kill the
brand. The company has also opened up too many stores too soon,
and is not closing the non-profitable ones early enough. [2] The failure
is as much a failure of marketing innovation, as it is of the brand.
Koutons has not changed anything about its strategy in the last
decade, and so now, people walk into a Koutons knowing that they
are going to get a deep discounted price. They have never seen a
section of fine clothing being sold at premium prices, and hence the
weariness. Also, there are several other brands like Cantabil who
have rented places in the same malls and are following the same
strategy. Over the 20 years the brand has build up an image of poor
product quality; or rather that is how customers would perceive it.
Even to lower middle class, the products do not qualify in terms of
quality, design, fabric. There has been an increase in cost due to
heavy excise duty that the brand has to pay from 2011 onwards. Prior
to the latest Union Budget for 2011-12, apparels like readymade
garments and made-ups were under an optional excise duty regime.
In the Union Budget for 2011-12, the optional excise duty levy was
changed into a mandatory levy. This will hit Koutons adversely as it
will reduce its profit margins to a great extent. [3]
Idea generation:
10
The main idea is to launch a new brand under Koutons that deals
with women’s fashion accessories. This brand would be a sub brand
under Koutons. It shall have its individual stores in tier II and tier III
cities mainly, also having some of them in tier I as well. The brand
would continue to focus on the middle income group of people.
Unlike, the rest of its brands, this new brand will not follow any year
long discounting strategy. But rather have low prices for its products.
The fashion accessories market is an untapped segment with not
many players in it. The market has a growth rate of 28-30% per
annum. It could be a great opportunity for Koutons and give a new
direction to the company.
Scope:
The research done for the project is mainly in Delhi NCR region. It is
on the basis of primary and secondary research done in the last four
months. The primary research includes surveys at Koutons stores and
its competitors and various accessories stores around Delhi. It was
done through in-depth interviews, informal interviews and
questionnaire surveys with loyal customers of Koutons. Another
questionnaire was filled by girls of age group 18 t0 26 years who
belong to middle income group. Various tools have been used to
analyse the environment. These include tools such as PEST analysis;
Porter’s five forces, SWOT analysis and competitor analysis have
been done to study the marketing environment in depth and form
strategies accordingly. Brand audit has also been done to study the
customers’ perception about the brand Koutons.
Objectives:
11
 The main objective is to achieve higher sales and earn profits.
For achieving this, the brand needs create its identity and an
image in the minds of its customers.
 It also needs to position itself strongly in comparison with the
existing players in the market.
 It needs to face the challenges coming in the market with the
limited resources available.
 It needs to ensure quick inventory turnover avoiding the risk of
obsolesces in its stock.
 It also needs to maintain systematic records of all resources and
protect materials from losses and damages.
 The brand should focus on minimising the cost and optimising its
resources.
 It should also ensure an effective and efficient supply chain.
 It must provide to its customers, what it promises in terms of
design quality and price.
12
Limitation:
 The project undertaken is majorly a reflection of the class room
knowledge and might lack practicality when the application is
concerned.
 The secondary data relies on internet also containing personal
views and opinions of people which may be biased towards the
company or totally against it.
 Tastes and preferences of customers keep changing with the
change in time. Thus, judgement can’t be made on their future
likings and actions.
 A lot of secondary information is also procured from the
customers of the brand who may or may not be honest while
giving their opinions
 Our knowledge is restricted to a certain level and may not be up
to the standards of an actual marketing consultant of a brand. It
may even seem outdated at the time of its application.
 Market Research is a very broad concept, so it may not be
possible to collect all the relevant information within a given
time constraint.
13
Data collection and analysis tool:
Secondary research:
The initial research shall begin from the secondary sources such as
books, journals, magazines, reports, publications, internet, articles,
etc. Secondary research is on the basis of data that is already
available in general. It may be collected and analysed by someone
else for some other purpose.
For this particular project, various websites on internet shall be
referred which may include the company’s website, competitors
website, related articles on internet. Books such as ‘The Marketing
Whitebook’ shall be referred to get reliable statistical figures. Also,
articles and journals of other brands and their different strategies
shall be studied.
Primary research:
After the general information and statistics is available from the
secondary sources, primary research takes place. The data may be
collected individually in form of questionnaires, interviews, group
interviews, etc, from a selected reliable set of respondents. It is
entirely a personal approach for a specific purpose.
To get the most reliable information, brand audit shall be done in the
form of questionnaire surveys from the most loyal customers of the
brand. Various customers using that brand shall be personally
contacted. Also, personal meetings with some of the company’s
executives or officials may provide with useful knowledge.
14
Chapter – 2, PROJECT OVERVIEW AND STRATEGY
Summary Sheet:
Name of Company
Location
Product Description
USP
Name of Competitors
Number of EBO
Number of MBO
Number of Employees
Average Product Cost
Average Price
Average Retail Margin
Sales
COGS
PAT
Growth in Sales
Growth in PAT
Initial Investment
Fixed Asset Details
Machinery
Land & Building
Other Assets
Furniture
DIVA BY Koutons
18 cities in India
Fashion accessories
Fashionable products at reasonable prices
Big Bazaar & Reliance trends
Year 1
18
0
100
Rs. 100
Rs. 200
50%
12,31,20,000
6,15,60,000
-87,18,153
Year 2
34
0
236
Year 3
26
0
340
4,83,94,080
Rs. 300
50%
59,28,00,000
29,64,00,000
9,07,88,442
381.48%
-1141.37%
15,87,31,753
Rs. 400
50%
1,06,70,40,000
53,35,20,000
14,40,69,822
80.00%
58.69%
29,09,60,000
6,00,000
N.a (Rented)
1,56,00,000
93,00,000
2,55,00,000
10,00,000
N.a (Rented)
18,36,000
1,53,00,000
1,81,36,000
8,00,000
N.a (Rented)
14,04,000
1,17,00,000
1,39,04,000
15
Strategies:
Pricing Penetration Strategy
• The product prices will be at par with its competitors in
the 1st year but gradually increase with coming years.
Psychological Pricing Strategy
• The prices of the products of DIVA end with the odd no.
9. example: Rs. 299.
Product Centric Strategy
• The selling strategy adopted by Diva will be focusing on
its product's quality and giving value for money to the
customer.
Intensive Distribution Strategy
• In the 1st year, 18 stores of DIVA will be opened in
North and South Zone of India. It will further expand in
other zones y opening more stores in2nd and 3rd year.
Push Strategy
• Diva will use various sales promtion tools such as
seasonal sales, gift vouchers and student discount
during specific periods to promtoe its sales.
Pull Strategy
• Diva will have an official website to provide information
about its products and promotions. It will also advertise
through newspapers and Radio to increase its
awareness among people.
16
PROJECT SCOPING FORM
Project Name:
Brand extension for Koutons Retail India
Project
Manager/T
eam
Members:
Shavy
Arora
Problem/Opportunity:
 Financial losses to the company further due to implication of
heavy excise duty.
 Failure of marketing innovation
 Opportunity to tap a new market segment
Project Goal:
To develop extension strategies for Koutons Retail India
Objectives [SMART]:
 To study history and literature of the brand [since inception]
 To conduct market survey for suggesting extension strategies and
promotional plans to the company
 To study the buying habits of the customers [existing and potential]
 To develop a profitable venture plan for the new market
17
Success Criteria [Outcomes]:
 Managed to meet company officials and loyal consumers of the
brand
 Develop the most profitable strategies for the extended brand
Assumptions: Financial assumptions –
 SPF [Rs. 3000 – industry average]
 Scenarios [SPF- pessimistic - 30% of Rs.3000, most likely - 50%,
optimistic - 75 %]
 COGS [50% of sales]
 Working Capital Investment [20% of Sales]
 Loan [20% of total funds required]
 Interest on loan [12% of loan]
 Preliminary expenses for 2nd & 3 rd year 5% of sales
 Preliminary expenses written off [1/5 of preliminary expenses]
 Income tax [33.99%]
 Advertising cost for 1st and 2nd yr [10% of sales]
 Advertising cost for 3rd yr [7% of sales]
 Logistics [3% of sales]
 Sales promotion for 2nd and 3rd yr [1% of sales]
 Depreciation[40% on comp., 18%on interiors, 13.91% on
electronics p.a.
Obstacles:
 Lack of honesty in the respondents surveyed through
questionnaires
 Company officials are not very open about sharing the company
information
 Lack of time due to social events
18
Work Breakdown Structure
Activity
Description of Activities
A
Assess Concept
B
Begin Industrial Analysis
C
Environmental Analysis
D
Marketing Plan
E
Development Plan
F
Operational & Management Plan
G
Build Strategies
H
Forecast Cost & Revenues
I
Create Financial Plan
J
Determining Funding Needs
K
Formulate Suggestions & Recommendations
L
Compilation & Submission of Project Report
19
WORK BREAKDOWN STRUCTURE
Activity
A
B
C
D
E
F
G
H
I
J
K
L
Description
Assess Concept
Begin Industrial
Analysis
Environmental
Analysis
Marketing Plan
Development Plan
Operational &
Management Plan
Build Strategies
Forecast Cost &
Revenues
Create Financial
Plan
Determining
Funding Needs
Formulate
Suggestions &
Recommendation
s
Compilation &
Submission of
Project Report
Time
variance = {[tpto]/6}2
Tp
6
To Tm 4Tm
10 7
28
Te
7.33
6
10
7
28
7.33
0.44
6
10
15
10
15
20
7
12
17
28
48
68
7.33
12.17
17.17
0.44
0.69
0.69
9
12
10
40
10.17
0.25
10
15
12
48
12.17
0.69
10
15
12
48
12.17
0.69
9
12
10
40
10.17
0.25
6
10
7
28
7.33
0.44
0.44
7.33
6
15
10
7
28
20 17 68 17.17
15 12
127.8
108 9
5
3
Standard Deviation = √∑[variance]2 = 2.49
Z= Due date-Expected date/Std dev. = 2.8
0.44
0.69
6.19
Z is the probability of project completion by a target date. Since it is
positive, there are 50% chances that the project will complete on time.
20
Network charts:
Calculation for CPM:
1st Path:
1
2
3
5
7
9
10
11
9
10
11
7 + 7 + 17 + 12 + 7 + 7 + 17 = 74
 2nd Path:
1
2
3
5
7
7 + 7 + 17 + 10 + 10 + 7 + 17 = 75 [Longest path]
Therefore, the project will be completed in maximum 75 days or 11
weeks approximately and it gives of a buffer time of 7 weeks.
21
5 Q’s:
1. What important customer problem/need can you solve?
This project is providing affordable fashion accessories for women in
an organized format. There lies a need gap for fashion accessories
market in the organized sector of India.
2. How are you going to do it?
It will be done by opening exclusive accessories stores in various Tier
2 and Tier 3 cities around the country. The brand will be a sub brand
of Koutons Retail India Ltd.
3. Who are the customers willing to buy from you?
Females in the age group 18 to 25 years and having Rs. 5,000-15,000
monthly disposable income are the target group for this brand.
4. Why can only you provide the solution?
Koutons already sells apparel for men, women and children and
accessories for men. Since the new brand will be endorsed by
Koutons, it will generate trust and confidence in the minds of its
existing customers.
5. How can you defend against others?
There are very competitors in the organized sector of fashion
accessories in India. Thus, by providing quality products at affordable
prices to the customers, it can compete against its competitors.
22
Chapter – 3, ENVIRONMENT ANALYSIS
Market analysis:
Indian Apparel market:
 Indian Retail Market size [total] 2010: US$ 427 bn/annum
 Domestic apparel market size – Rs. 1,48,500 crore
 Discount brands industry - Rs 2,000 crore
 Organized sector expected to increase at 8-9% by 2012 [4]
Kouton’s Market Share:
Koutons Retail India is India's 30th largest apparels company. It had a
Market capitalization Rs. 3000 crores in 2008 and of Rs.70.73 crores
in 2011.
Koutons Retail India vs. Other Apparels & Accessories sector:
Revenue of Rs1, 206.7 crores [US$255.8 million] 2.0% of aggregate
sector revenue of Rs.59, 336 crores; down from 2.9% in the previous
year.] [5]
It made a net Profit of Rs. 80.3 crores [US$17 million] 5.2% of
aggregate sector net profit of Rs1, 549.8 crores; down from 13.7% in
the previous year.]
EBIT of Rs.208.7 crores [US$44.2 million] 6.9% of aggregate sector
EBIT of Rs.3, 006 crores; down from 11.1% in the previous year.] [6]
23
Fashion Accessories Market:
The Global accessories market is estimated at USD 16.3 billion. Major
raw materials for fashion accessories are derived from Australia,
Africa, Russia and Canada. The manufacturing of fashion jewellery
largely takes place in China, India, Italy and Turkey. The largest retail
markets of fashion accessories are USA, Europe, Far East, Middle East
and Asia.
In India, Fashion accessories market size is nearly Rs. 10,000 crores.
The value of exports of fashion jewellery and accessories is Rs. 886
crores. The growth rate at which this market is growing in India is 2830 percent per annum. [7]
Indian Retail Sector is at its inflexion point awaiting multifold growth.
The Retail Industry’s Size is presently Rs 1, 44,253 crore out of which
the organized sector contributes to a mere 4 percent of the market
size. Organized Share of retail sector is expected to increase to 8-9
percent in 2010-11 from 4 percent in 2007. [8]
24
PEST Analysis
Political Factors:
1. Implication of Excise duty on apparels: Prior to the latest Union
Budget for 2011-12, apparels like readymade garments and
made-ups were under an optional excise duty regime.
Manufacturers of readymade apparels could opt not to pay
excise duty and thereby not claim the Cenvat credit on the
inputs used for manufacturing these apparels. In the Union
Budget for 2011-12, the optional excise duty levy was changed
into a mandatory levy at a unified rate of 10% for branded
garments with abatement of 55%. Within the branded garments
space, apparel discount brands like Koutons would be the most
affected due to the imposition of mandatory excise duty and has
the potential to distort their cost structure. The MRPs of
discount brands are disproportionately higher than the final
sales prices. In addition, discounts are offered throughout the
year. Therefore, the implication of excise duty as a percentage
of actual realisations is much higher for discounted brands than
non-discounted brands. As per ICRA estimates, effective excise
duty would work out to 10%-45% for brands offering discounts
between 50%-90%. [9]
2. Cheap Labour cost in India: Hourly compensation costs in India
are among the lowest when compared with the 36 countries in
the BLS [Bureau of Labour Statistics] hourly compensation
series. In 2005, India’s average hourly compensation cost for all
employees in manufacturing [$0.91] was approximately 3.1
percent of the level seen in the United States [$29.74] when
measured in U.S dollars. [10]
25
Social Factors:
1. Value for Money: Consumers are becoming more and more
aware about value for money. It’s the price that is the most
important factor that comes into consideration while buying
something. Shopping experience, ease of making payments,
celebrity endorsements, online portals etc. are all secondary to
price.
2. Fashion awareness: The awareness of global trends is growing
along with the need to look fashionable. Newspapers,
magazines, radios and television are spreading fashion
awareness in different forms. The youth is also getting attracted
from the Bollywood and wants to look stylish and up-to-date.
3. Major population: 70 % of our population is under 35 years of
age. Urban population mostly comes from relatively smaller
cities. Also, the middle class is growing and forming the major
part of the population.
4. Growth of organised retail sector: With the entry of a large no.
of domestic and international players the Indian retail sector is
growing at a speedy rate.
5. Accessories retailers: The largest retail markets of fashion
accessories are USA, Europe, Far East, Middle East and Asia
Major raw materials for fashion accessories are derived from
Australia, Africa, Russia and Canada. The manufacturing largely
takes place in China, India, Italy and Turkey. [11]
26
Economic factors:
1. Increase in cost: Due to a shortage in the supply of raw materials
for fashion accessories, there is a steep hike in the prices which
has led to a great competition among the countries where
polishing for fashion accessories takes place.
2. Rising disposable income: the disposable income of people is
rising, also leading to improved lifestyles, increasing international
exposure and increasing awareness among the customers. India
has a large middle class as well as youth population, which has
contributed greatly to the retail phenomenon. The middle class is
considered to be a major potential customer group. The youth
are perceived as trend setters and decision makers. [12]
3. Financial crisis: Koutons is now facing the worst period of its
existence. It is facing mounting debt and bad press regarding the
financial position and the stock prices are moving southward. [13]
27
Technological Factors
1. New software and technology: Advances in technology such as
artificial diamonds, artificial rubies and sapphires, precision
cutting and other refinements have made jewellery more
affordable. The technological advances lowered the barriers of
entry into jewellery business and this has allowed a stiffer
competition to prevail. It has also made owning jewellery more
democratic as more people can now afford to buy jewellery.
Software such as CAD [computer-aided design] help to lower
their production costs.
2. Precious stones and alloys: With the use of laser in welding,
formulation of new metal alloys and the invention of precious
metal clay have become possible. There are still many
applications of technology in jewellery that are being tested and
these will change the jewellery industry forever.
3. Prototype designs: The ability to see prototype designs without
actually making them has made computers vital to the jewellery
industry. Before computers were invented, a designer had to
build a real sample to see how it turns out. This was otherwise,
costly in terms of time, labour and materials wasted on a design
that might be bad.
4. Innovation: With all such technological advancements,
innovations can be seen in the fashion industry. It makes the
manufacturers more experimental and initiate risk-taking to
come up with different ideas.[14]
28
Porter’s five forces:
Porter's Five Forces is a framework for industry analysis and business
strategy development formed by Michael Porter. It has derived five
forces that determine the competitive intensity and therefore
attractiveness of a market. Three of Porter's five forces refer to
competition from external sources. The remainders are internal
threats.
 The threat of the entry of new competitors:
Accessories market is a profitable market since it has high
growth rate and profitable returns which will attract new players
in this market. This may result in many new entrants, which
eventually will decrease profitability for the firms and reduce its
market share.
 The threat of substitute products or services:
Unorganised retail is a huge market for fashion accessories. Also
many brands under the organized sectors such as Shoppers
Stop, Pantaloons, etc can also pose a threat to the new brand.
 The bargaining power of customers:
Income level of consumers is rising which enables large number
of buyers. Consumers are also becoming more prices sensitive.
They have the availability of more choice. Therefore, they may
not be ready to pay the quoted price.
 The bargaining power of suppliers:
Suppliers of raw materials, components, labour, and services
such as expertise to the firm can be a source of power over the
firm, when there are few substitutes. Suppliers may refuse to
29
work with the firm, or charge excessively high prices for unique
resources.
 Competitive rivalry:
There is a limited number of competing firms in the organised
retail sector of accessories. But there also exist some of the well
established brands which may pose a threat to this new brand of
accessories.
30
SWOT Analysis
Strengths:

Value for money: the main USP of Koutons is the fact that it
provides value for money to its customers. Its deep discounting
strategy fulfills the value proposition that it promises to its
customers.

Target group: Koutons mainly targets the middle and lower
middle income group of people, which constitutes the largest
proportion of population. With rising disposable incomes, the
middle class in India is growing and forming the major part of
the population.

Brand for all: Koutons offers products for all age groups and
genders. It has various sub brands under it. Koutons and Charlie
Outlaw offer formal and casual apparels for men of the age
group of 16-45 years. Les Femme offers formal and casual wear
for women within the age group of 16-35years of age. Koutons
Junior offers clothing for children in the age group of 2-15years.

Franchisee arrangement: 98% of Koutons stores are run under
the agreement of franchisees. This reduces the liability of
handling individual stores. Also, low capital is required for
expansion. It also reduces the risk of rising rentals for the
company.

Economies of scale: Koutons enjoys the cost advantages due its
expanded product category. [14]
31
Weakness:

Risk of obsolescence: Koutons has high inventory period due to
which its products take a long while to move out of the stores.
This increases the risk of its products becoming obsolete.

Poor quality of products: Since Koutons has positioned itself as
a deep discounted brand; its product quality is very poor. Most
of the people also perceive it as a poor quality brand which
hampers the brand image.

Rising cost: There is an increase in cost due to heavy excise duty
that the brand has to pay from 2011 onwards. This will hit
Koutons adversely as it will reduce its profit margins to a great
extent. Also, there are a lot of fluctuations in the prices,
availability and quality of raw materials which causes delays and
thus, increases cost. [15]

Dependency: 98% of Koutons stores are run by franchisee. Also,
it partially outsources its production, manufacturing and
transportation. There for there is dependency on third parties

Low brand loyalty: Koutons is not able to deliver good quality
and designs in its clothing to its customers. Also, there are too
many players coming up with the same strategy because of
which customers are shifting from the brand and Koutons is
losing down on its loyal customers. [16]
32
Opportunity:

Increased Demand: People are becoming more fashion savvy
nowadays. The middle class is rapidly growing and being more
aware about the market around them. Also, the purchasing
power of the people is increasing and there is a rise in per capita
income of people, resulting in an increase in demand for fashion
products.

Market potential: Fashion accessories market in India is largely
dominated by unbranded players; therefore there is a huge
market potential for branded players in this segment. Also the
growth rate of accessories market in India is 28-30% per annum.

Potential in tier II and III cities: With the spread of information
and technology, the standard of living of people is being
upgraded. They are becoming more aware about brands. There
is high growth potential in the tier II and tier III cities. [17]
33
Threats:

Government regulations: In the Union Budget for 2011-12, the
optional excise duty levy was changed into a mandatory levy at a
unified rate of 10% for branded garments. Within the branded
garments space, apparel discount brands would be the most
affected due to the imposition of mandatory excise duty and has
the potential to distort their cost structure.

Threat from other players: There are a number of players from
the unorganized sector offering cheaper, poor quality imitations
to the customers. A lot of apparel brands are also trying to tap
this gap and venturing into fashion accessories market. Thus,
there is threat from the existing and upcoming players in the
market.
34
Competitor analysis:
Apart from Koutons, some of the major players in this market would
be Cantabil, TNG, TQS and The Loot. These brands also work on the
same business model of deep discounted strategies.
Also, brands like Pantaloons, Reliance trends, Big Bazaar, Provogue
and Spencer’s to name a few give a tough competition to Koutons
since they cater to a similar target group.
In terms of the accessories segment, major competition would come
from MBO’s like Big Bazaar, Reliance Trends, Shoppers Stop, Lifestyle,
Westside, Pantaloons. Also, the local retail shops would cater to the
same segment of customers.
At present, Cantabil could be considered as the strongest competitor
of Koutons in terms of its price, quality, locations, customer clientele
and USP. [19]
35
Cantabil:
CANTABIL RETAIL INDIA LIMITED was incorporated in 1989 as
Kapish Products Private Limited. It opened its 1st store in New
Delhi in 2000. The Company is involved in the business of
designing, manufacturing, branding and retailing of apparels under
the brand names of “CANTABIL” and “La FANSO”. Company
launched the second brand “La FANSO” on October 25, 2008 and
has 141 exclusive outlets [as on July 31, 2010]. The “La FANSO”
brand caters to men’s segment in lower to middle income group
and focuses on casual, ultra casual and formal wear. It also retails
various accessories like ties, belts, socks, caps and handkerchief
under our brands. It mainly offers men’s shirts and trousers in
formal, semi formal & casual wear range. The brand has 279
exclusive retail outlets across India. It also launched women’s wear
in 2006 offering formal shirts to cargos. It came up with children’s
collection as well for the age group of 2 to 14 years of age.
Cantabil’s summer collection 2011 has been styled by Rocky S. The
company is also listed on BSE and NSE. It operates its outlets under
two models either company owned & franchisee managed or
franchisee owned & operated. [20]
36
Competitors – Accessories
Big Bazaar:
Big Bazaar is a chain of hypermarket
in India. It is part of Future Group,
which also owns the Central
Hypermarket, and is owned through
a wholly owned subsidiary of
Pantaloon Retail India Limited that is
listed on Indian stock exchanges.
Currently, there are 210 stores across 80 cities and towns in India. Big
Bazaar offers a wide range of merchandise including fashion and
apparels, food products, general merchandise, furniture, electronics,
books, fast food and leisure and entertainment sections. [22]
Reliance trends:
A subsidiary of reliance Industries Limited,
With multiple in-house brands, various
shop-in-shop formats, product range for
the entire family, Reliance Trends is a onestop-shop for apparel and accessories ethnic and contemporary, formal and casual, Indian and western.
Trends also has a unique collection of technology clothes like fragrant
clothes for infant, stain-free trousers, shirts and trousers with in-built
moisture management and the likes. [23]
37
Factors
Big bazaar
Reliance Trends
Parent group
Future Group
Reliance Industries
Limited
Founded
2001
2007
Outlets
133
60
Tagline
‘Isse sasta aur accha
kahin nahi’
‘sirf dikhne me
mehenga’
Advertisements
TV commercials,
newspapers, hoardings
TVs,
newspapers,
hoardings
Social media
Facebook, online
shopping
Facebook 7 twitter
Promotions
Offers of the day, hot
deals
Gift coupons, online
discount coupons
Revenue
Rs. 210 crores
Rs. 330 crores
30% of total revenue
Net profit[2009- Rs. 495 crores [future
10]
group]
Loss- Rs. 211 lakhs
38
Chapter – 4, MARKETING PLAN
Koutons - Brand Portfolio
 Koutons [1998]:
o Age group of 22-45 years
o Formal and casual men’s wear
 Charlie outlaw [2006]:
o Age group of 14-25 years
o casual men’s wear brand
 Les femme [2008]:
o Age group of 16-34 yrs
o Formal and casual wear for
women
 Koutons junior [2008]:
o age group of 2-15yrs
o Trendy and playful apparels for
kids
 K2One [2009]:
o Footwear for men, women and
kids
o Leather accessories for men
39
Koutons – Promotions
The advertising agency for Koutons Retail India is IMM Advertising
PVT. LTD. IMM Advertising is a young, full service Advertising Agency
with a very strong grasp on the areas of Graphic Design & other
Advertising. It also provides advertising solutions to the brands like
Bentley, Charlie, TNG, Suncity, Crossriver Mall, Body Care, Cantabil,
Malhotra's, Clone Mannequins Inc., Appu Ghar, Nino Mantelli, TQS,
Rabael, Cairo, Divine City, TDI City, Advertising Service, Food Forum
India 2008, India Fashion Forum 2008, Images Multimedia, Zardozi,
West Wood and many more. [23]
Print ads of Koutons:
40
Visual analysis of an ad:
Visual elements:
Mood
Money Saver
Typeface
Serif font [logo]
Logo
Wings, Blue & white
Colour
Blue, purple, yellow
Shapes
Rectangular boxes, circles in the
background
Overall
Composition
Stresses mainly on the discounts which
is written bolder than the logo
41
Story components:
Character[s]
Discounting promotions
Plot
Saving money
Setting
An international model happy to use
Koutons
Symbols
A male model, brand logo, emphasis on
discounts
Sub‐text
THE WAY AHEAD…ALWAYS [serif]
Needs
under the budget, Pocket friendly,
helps saving money
42
KOUTONS
A brand audit was done on 17 customers, to know more about
Koutons. What people feel and like about the brand. Following are a
few similar answers given by the customers.
What
What else
comes to comes to
your mind your mind
Others
Self image
wearing it
Memories
Other
brands
High
discounts
Blue &
white logo
Stylish
Not wasting Bulk
money
shopping
Cantabil
Value for
money
Wings in
logo
Mass
usage
brand
Spending
wisely
Heavy
discounts
TNG
Affordable Newspaper
ads
Routine
brand
stylish
Praises
from
friends
Pantaloons
Good
quality
Hoardings
Fit for
Indian
mind set
satisfied
Great deals COBB
Cheap &
trendy
Reasonable
Up-todate
Trendy at
low price
Clothes
remain in
Good
quality
Variety &
colors
50%+40%
off
Love for
discounts
Comfortable Birthday
top
Budget
brand
Good
quality
Good use
of money
Big bazaar
TQS
43
Brand:
A brand is a name, term, sign, symbol, or design which is
intended to identify the goods or services of one seller or
group of sellers and to differentiate them from those of
competitors. The aim of branding is to convey brand
message vividly, create customer loyalty, persuade the
buyer for the product, and establish an emotional
connectivity with the customers. Branding forms customer perceptions about
the product. It should raise customer expectations about the product. The
primary aim of branding is to create differentiation.
Brand Prism:
Quotes by the consumers:
“I made a bulk purchase of 7 shirts during heavy sales and they all still have
good quality and fit.”
-Varun Aggarwal, 27
“I bought my birthday top from Les Femme & got lots of compliments from my
friends.”
– Shikha Gupta, 1
44
DIVA:
DIVA is a sub brand under Koutons. It
will have fashion accessories under it
being sold through exclusive outlets
around the country. In the 1st year, 18
exclusive stores are targeted to be opened mainly in tier 2 and tier 3
cities of north and west zone of India. Further 34 stores to be opened
in the tier 2 and tier3 cities of south and east zones of India. By the
end of 3rd year a total of 78 stores to be opened in differnt parts of
the country. Koutons stores are already present in all of these cities.
There are various reasons for introducing DIVA as a sub brand of
Koutons. Koutons has a negative image about its quality in the minds
of its non consumers. Therefore, it is important for a new brand to
not to fall under the same category as that of Koutons. As a sub
brand, DIVA will be able to attract new customers and have an
identity of its own. Also, it is being endorsed ‘by Koutons’ which will
help generate trust and confidence in the existing customers of
Koutons.
Brand Elements:
Name: The name, Diva, sounds very bold, chic, trendy, fun, attractive
and confident. It explains that it is a brand for girls.
Logo: The logo includes a female figure in the form of the alphabet ‘I’.
This symbolises that it is a girls’ brand.
Color: The colors used are pink, black and white. Pink is the girl’s
color. It adds the element of brightness and boldness in it.
45
DIVA’s Customer Segmentation:
Gender: Females
Age group: 18 to 26years
Geographic:
 Region- North and East India [1st year]
 City- Amritsar, Jalandhar, Ludhiana, Chandigarh, Rohtak, Gurgaon,
Noida, New Delhi, Shimla, Jammu, Jaipur, Agra, Lucknow, Kanpur,
Dehradun, Ahmedabad, Mumbai, Pune [18 cities]
34 cities in 2nd year and 26 cities in 3rd year.
Demographic:






Family size- 3-6 members
Income of parents [per month] – Rs. 25,000 – Rs. 80,000
Pocket money of students [per month] – Rs. 5,000-10,000
Occupation – college students, working girls
Education – graduates, post graduates
Social class – middle class
Psychographics:
She is smart, trendy and bold. She is experimental and wants to concur the
world. She is fun loving and wants to be independent. She desires to be the
perfect women as she grows. She is both culture-oriented and outdoororiented. She goes for holidays in India and spends wisely on necessities
Behavioural:





Occasions – window shopping, casual outings, shopping
User status – potential user, first time user
Usage rate – light, medium
Loyalty status – none, medium
Attitude toward product – enthusiastic
Source: Questionnaire survey
46
Consumer DILO:
47
Consumer Behaviour:
To understand the customers of fashion accessories market, a
questionnaire survey was conducted with the target group for Diva.
20 customers were interviewed. The following views and preferences
were obtained:
1. From where do you normally buy fashion accessories?
2
3
max
10
big bazaar
5
reliance trends
local markets
Majority of the girls buy fashion accessories from the unorganised
local markets. Some of them prefer buying from Max, Big Bazaar or
Reliance Trends.
2. How much do you normally spend on a single purchase at such
stores?
3
1
2
<150
6
151-300
301-500
8
501-1000
1001<
Mostly girls spend around Rs. 300-500 on their single purchase at
such stores.
48
3. Which of the products do you buy most frequently?
3
jewellery
2
bags & purses
10
hair accessories
4
scarves & wraps
1
belts
Most of the girls buy jewellery most frequently from such stores.
4. How frequently do you visit such stores?
1
more than once a month
2
1
once 2-3 months
4
12
semi annually
special occasions
sales period
Mostly, girls visit accessories stores more than once a month.
5. Which factor affects your purchasing decision the most?
1
price
4
8
quality
design
5
functionality
2
brand name
Price is the most important factor for girls to be considered while
purchasing an accessory.
49
Perceptual Mapping:
The parameters taken into consideration for perceptual mapping are
price and quality of products. Diva will be positioned above its
competitors such as Big Bazaar and Reliance Trends in terms of both
quality and price.
Product Mix and Pricing for DIVA
•
•
•
•
•
•
•
•
•
Jewellery - Rs. 49-499
Bags – Rs.199-1199
Belts – Rs. 89-799
Hair accessories - Rs. 49-399
Scarves - Rs.149-799
Sun glasses - Rs. 349-1499
Clutch bags – Rs.199-1499
Hats – Rs. 199-799
Gloves/stockings – Rs. 99-799
50
Design Styles:
Victorian
Contemporary
Retro
Bohemian
Ethnic
The products will be displayed as per these five themes inside the
stores for the convenience of the customers to make choices
easily.[25]
51
Strategy:
The product mix and pricing has been defined keeping in view the
product range of the competitors of DIVA such as Big Bazaar,
Reliance Trends and local markets. The strategy adopted for pricing is
competitive pricing psychological pricing. Even high end brands use
this strategy, i.e. prices should end with odd numbers; instead of Rs.
200, the price of a product will be Rs.199.
No year-long price discount or allowances will be given. It is because
it is not good for the brand’s image. Discounts will be given only at
the time of sale season and on special occasions. Various other
incentives will be offered to the customer at different periods.
Gift vouchers will be made available at all the stores of DIVA as well
as online. Customers can be gift vouchers of different amounts for
further gifting to someone. They can also buy these online from
DIVA’s official website which will be applicable on the purchases
made at any of the DIVA stores. This will be applicable for 3 months
during the launch period.
Student discounts of a particular amount on the purchase will be
given to students while purchasing from any of the DIVA stores
around the country. This will not be applicable on online shopping.
This sales promotional activity will start after the launch period for 5
months.
The quality of products and their prices have been set at a slightly
higher level than its competitors Big Bazaar and Reliance Trends so
that the customers get the best of products at affordable price.
52
Promotions:
DIVA will be performing different promotional activities through
various mediums of advertising. Since it is a new brand, it will invest
in various launch promotions. A detailed media plan is explained
below which explains the different mediums of advertising that will
be used for various objectives. It also mentions the time duration,
costs involved and other details of the activities to be performed.
DAGMAR - Defining Advertising Goals for Measured Advertising
Results
The main goal of advertising is to spread awareness about the brand
by using print media, audio media and public relations activities in
the first 4 months during the launch period of brand by investing
nearly Rs. 1.23 crores in 18 cities of North and West India.
Media Plan
Objective
Brand
Awareness
Teasers And
Informative
Month
Media
Vehicle(Ht)
March &
April'12
Print AdNewspaper
Hindustan
Times Htcity, Ht
Café,Mint
March &
April'12
Audio AdRadio
Jingles
94.3 Fm
Cities Details
 Page - Back
 Size9*8cm=72sqcm
 Avg
Cost=Rs.245/Sq
cm
18
 Insertions -2 Per
Month
 Duration - 2
Months
 Timings-Popular
Prime Time (
11a.M To 2p.M
&6p.M To
10p.M)
 Avg
Cost=Rs.550per
18
10sec
 Duration - 10
Seconds
Cost Per
City
Total Cost
70,560
12,70,080
4,84,00
0
87,12,000
53
 Repetition 20times Daily
For 2 Months
On Weekdays
Brand
Awareness
Persuasive
Persuasive
April,
May,
June,
July'12
Pr-Gift
Hampers
Barter
Deals In
Fashion
Shows
18
April,
May,
June'12
Sales
Promotions
- Gift
Vouchers
Gift
Vouchers
At Stores
And Online
18
April'12March'1
3
July,
Aug'12,
Jan,
Feb'13
Sales
PromotionOnline
Promotion
Sales
PromotionSeasonal
Discounts
AugDec'12
Sales
PromotionStudent
Discount
Diva's
Website
1
50
1
Website Of Diva
For Online
Shopping
18
Retail
Stores
18
Persuasive
March
Onwards
Sales
Promotion - Retail
Vm
Stores
18
Informative
MarchJuly'12
Brochures
March
Onwards
Public
Relation Website
Persuasive
Informative
Koutons
Stores
Internet
Offers Available
On Online
Shopping
Stock Clearance
Sales At The End
Of The Seasons
10% Student
Discount
Applicable For A
Limited Period
After Launch
Cost Of Jewellery
Mannequins,
Posters And
Signage
Brochures Of Diva
Available At
Approx.50
Koutons Stores In
Different Cities
Retail
Stores
Persuasive
 3 Colleges Per
City
 Gift Hampers
Worth Rs.1000
To Top 3
Winners Of
Each College
 2000 Gift
Vouchers At
Each Store
During Lauch
Period
 To Be Availed At
Stores Only
18,000
3,24,000
1,500
27,000
0
0
1,100
20,000
1,000
18,000
30,000
5,40,000
25,000
12,50,000
1,50,00
0
1,50,000
Total Cost = 1,23,11,080
54
Promotional Plan Year 2012-13
Promotions
Opening of
stores
Barter Deals
With Colleges
Gift Vouchers
Newspapers
Ads
Radio Jingles
Online
Promotions
Seasonal
Discounts
Student
Discounts
Mar’12 Apr May June July Aug Sept Oct Nov Dec Jan’13 Feb Mar
Website for DIVA:
55
Sales Promotions for DIVA:
Exemplars:
Gift Vouchers
Brochures
Student Discounts
Seasonal Sales
Launch promotions for DIVA:
Newspaper ad:
56
Radio Jingles:
College fashion shows:
57
Press Release:
Koutons Retail India Ltd.
KOUTONS ENTERS WOMEN ACCESSORIES MARKET
18 EBO’s to open by the end of 2012
28th November, 2011
Koutons expands its brand portfolio by launching DIVA, a
fashion accessories brand for women. The new brand will have 18 EBO’s in
the 1st year in mainly Tier 2 and tier 3 cities of India by the end of 2012.
Koutons had been catering to the apparel segment for men,
women and children. Now it sees the opportunity of entering into the
fashion accessories market. This sector is mainly in the unorganised format
in India and has very few players in the organised sector. Indian brands like
Big Bazaar, Reliance trends, Shoppers Stop, etc. are offering fashion
accessories like jewellery, purses, hats, belts, hair accessories, scarves,
clutch bags, etc. to the consumers.
In the 1st year, Koutons plans to open 18 stores in North and
West zone of India. 2nd year onwards it plans to penetrate in the entire
country by opening more stores. The brand DIVA will be a sub-brand of
Koutons and will sell its products only through Exclusive stores.
ENDS
For more information:
Shavy Arora (PR Manager)
Contact no.: 7897635590
Koutons Retail India
Gurgaon.
58
Chapter – 5, OPERATIONS AND MANAGEMENT PLAN
Distribution Network of DIVA:
4 level distribution network:
Outsourcing the product
Warehouse/ Distribution
Centre
Retail Stores
Consumer
DIVA will follow a 4-level distribution channel. It will outsource its
products from various agents and wholesalers of India. All the
outsourced products will be assembled at the distribution centre
from where it will be further sent to all the DIVA stores around the
country and finally to the end consumer.
59
Organisational structure:
Brand
Manager
Marketing
Dept
Purchase &
Sourcing Dept
Sales Dept
Marketing
Manager
18-store
Managers
VM Manager
2- Assisstant VM
Managers
2 - Head
Sourcing
Managers
2 Assisstant
Product
Coordinators
Quality
Controller
Assisstant Quality
Controller
Sales Manager
Assisstant Sales
Manager
Logistic
Manager
2 Regional
Logistic
Managers
Warehouse
Manager
2- Support Staff
VP Finance
2- Regional Fin. &
A/Cing Managers
HR Manager
2- Senior
Executive
Managers
IT Manager
2 Executive Staff
CEO
Supply Chain
Dept
Finance Dept
HR Dept
IT Dept
2- Sales
Executive
Support
Staff
The head office of Koutons Retail India Ltd. is at Udyog Vihar,
Gurgaon [India]. The departments have been categorised under
different heads such as Marketing, Purchase and Sourcing, Sales,
Supply chain, Finance, HR and IT. Each department has their manager
and the assistant managers under them. These will lead to a
decentralized organisational structure where employees can
maintain a greater level of control over their own departments.
People are more motivated by the increased ownership of
responsibility.
60
DIVA’s presence in India:
1st Year
North Zone
Amritsar
Jalandhar
Ludhiana
Chandigarh
Rohtak
Gurgaon
Noida
New Delhi
Simla
Jammu
Agra
Lucknow
Kanpur
Dehradun
14
West Zone
Ajmer
Ahmedabad
Mumbai
Pune
South Zone
East Zone
4
0
0
Total Stores = 18
North
Amritsar
Bhatinda
Jalandhar
Patiala
Chandigarh
Ambala
Sirsa
Ghaziabad
New Delhi
Nainital
Manali
Bareily
Meerut
Roorkee
West
Jaipur
Kota
Bhopal
Indore
Surat
Nagpur
Nasik
14
7
2nd Year
South
Bangalore
Mysore
Chennai
Hyderabad
4
Total Stores [34+18] =52
East
Bhubneshwar
Raipur
Cuttack
Jamshedpur
Patna
Darjeeling
Kolkata
Siliguri
Imphal
9
61
3rd Year
North
West
South
East
Abohar
Udaipur
Mangalore
Bargarg
Batala
Vadodra
Cochin
Bilaspur
Pathankot
Gwalior
Calicut
Dhanbad
Vishakhapattnam
Ranchi
Panipat
Faridabad
Gaya
New Delhi
Durgapur
Aligarh
Agartala
Saharanpur
Gangtok
Varanasi
Shilong
Guwahati
9
3
4
10
Total Stores [26+52] = 78 Stores
DIVA, although being a sub brand of Koutons Retail India Ltd., will
operate as Exclusive brand outlets unlike its existing sub brands.
Majority stores are being opened in the markets of Tier 2 and Tier 3
cities of India targeting the people of middle income group. The focus
in the 1st year is on tier 2 & tier 3 cities of North zone and West zone
by opening 18 stores in total. By the 2nd year, stores will b opened in
some parts of south and east zone as well, adding 34 new stores in
2nd year and 26 stores in the 3rd year. By the end of 3rd year, a total
of 78 stores of Diva will be opened throughout the country.
62
City Wise Matrix:
Cities
Pop.[In
Lakhs]
Chandigarh 10.54
Ahmedabad 5.57
Lucknow
27.67
Dehradun 10.25
Jalandhar
Ajmer
9.03
4.85
Avg Household
Income
[rs/Household]
484775
317856
280393
200458
296651
159761
Total [in Rs.]
Average
Household
Consumption
Radio Ad Newspaper
Expenditure as a Rentals [In Rs./10
Ad[in
share of Income [in Rs.]
Sec]
Rs./sqcm] Colleges
45%
57,000 704000
42%
20900
58%
23560
47%
38000
77%
17860
53%
22040
INIFD,
108000 NIIFT, PU
64800
INIFD,
NID, GIFT
57600
AHFI, JMI,
IMS
264000
28800
INIFD,
SAFT, JD
352000
APJ, LPU,
108000
DAV
264000
INIFD, AIC,
57600
SGC
968000
440000
1,79,360 29,92,000 4,24,800
30,000
50,000
70,800
Some of the cities have been taken into consideration for
understanding the cities profile and expenses involved. [28] [29]
Prefernces
Population
In Terms Of Avg Hh Inc
Rentals
Radio Ads Cost
Newspaper Ads Cost
Most preferred
Lucknow
Chandigarh
Jalandhar
Dehradun
Dehradun
Least preferred
Ajmer
Ajmer
Chandigarh
Chandigarh
Chandigarh
63
Chapter – 7, FINANCIAL PLAN
Resource List:
Resource List [Head Office-Gurgaon]
Total value [in Rs.]
Laptops
2,64,000
Printer & Scanner
24,000
Cost Of Interiors Per Sqft
12,00,000
Erp Software [Enterprise Resource Programme] 3,00,000
Airconditioners [2ton]
1,50,000
Other Resources
0
Total
19,38,000
Resource List [For 1 Retail Store - Chandigarh]
Computers
22,000
Printer & Scanner
12,000
Cost Of Interiors Per Sqft [Avrg Rs. 1200-1500
Per Sq Ft]
4,50,000
Cctv With Dvr Recording System
20,000
Airconditioners [2ton]
25,000
Total
6,19,250
Total resource list for 18 stores
95,22,000
64
Expenses for the 3 years:
1st year
2nd year
3rd year
64,80,000
1,87,20,000
2,80,80,000
17,28,000
49,92,000
74,88,000
1,58,88,000
2,79,88,000
4,17,16,000
2,57,59,079
1,52,22,152
9,61,20,820
7,56,000
21,84,000
32,76,000
5,06,11,079
6,91,06,152
17,66,80,820
1,23,12,000
5,92,80,000
7,46,92,800
Logistics [2% to 5% of Sales]
36,93,600
1,77,84,000
3,20,11,200
Sales Promotion [1% to 3% of
Sales]
38,000
59,28,000
1,06,70,400
Expenses
Office and Administration
Overheads
Rentals [Rent per store*Area
*12*Number of Stores]
Electricity
Salary 532000+[44000*18]
Depreciation [40% on comp.,
18%on interiors, 13.91% on
electronics annually]
Other Office Overheads
[stationery, internet/phone]
Total
Selling and Distribution
Overheads
Advertising [7% to 12% of
Sales]
Total
1,60,43,600 8,29,92,000 11,73,74,400
65
Initial investments for 3 years:
Initial investment
Total initial investment
in fixed assets
Pre operative expenses
Working Capital
Investment [20% of
Sales]
Year 1
Year 2
Year3
1,14,60,000
18,13,600
2,42,00,000
1,23,10,080
2,96,40,000
5,33,52,000
2,46,24,000
11,85,60,000
21,34,08,000
loss to be recovered in
2nd year
Total
Sources of Funds
Loan [20%]
equity
87,18,153
4,83,94,080
15,87,31,753 29,09,60,000
Year1
Year2
Year3
96,78,816
3,17,46,351
5,81,92,000
1,49,45,184
12,69,85,402
23,27,68,000
66
Initial investments under different scenarios [1st yr]:
Initial Investment
Most Likely
Pessimistic
Optimistic
Total initial investment
in fixed assets
1,14,60,000
1,14,60,000
1,14,60,000
Pre operative expenses
1,23,10,080
1,23,10,080
1,23,10,080
Working Capital
Investment [20% of
Sales]
2,46,24,000
1,47,74,400
3,69,36,000
Total
4,83,94,080
3,85,44,480 6,07,06,080
Sources of Funds
Most likely
pessimistic optimistic
Loan [20%]
equity
96,78,816
77,08,896
1,21,41,216
3,87,15,264
3,08,35,584
4,85,64,864
67
Projected Income Statement for 3 years:
1st year
2nd year
3rd year
Sales
12,31,20,000
59,28,00,000
1,06,70,40,000
Less: Cost of Goods Sold
6,15,60,000
29,64,00,000
53,35,20,000
= Gross Profit
6,15,60,000
29,64,00,000
53,35,20,000
Less: Office and
Administration Overheads
5,06,11,079
6,91,06,152
17,66,80,820
Less: Selling and
Distribution Overheads
1,60,43,600
8,29,92,000
11,73,74,400
= Operating Profit /loss
-50,94,679
14,43,01,848
23,94,64,780
Less: Interest on loan[12%]
11,61,458
38,09,562
69,83,040
Less: Preliminary Expenses
[ Written Off]
24,62,016
29,54,880
1,42,27,200
-87,18,153
13,75,37,406
21,82,54,540
0
4,67,48,964
7,41,84,718
= Net profit/Loss
Less: Income Tax [33.99%]
EAT [Net profit/ loss
-87,18,153
9,07,88,442 14,40,69,822
68
Projected Income Statement under different scenarios [1st yr]:
Pessimistic
Most Likely
Optimistic
Sales
7,38,72,000
12,31,20,000
18,46,80,000
Less: Cost of Goods Sold
3,69,36,000
6,15,60,000
9,23,40,000
3,69,36,000
6,15,60,000
9,23,40,000
Less: Office and
Administration Overheads
5,06,11,079
5,06,11,079
5,06,11,079
Selling and Distribution
Overheads
1,60,43,600
1,60,43,600
1,60,43,600
=Operating Profit [loss]
-2,97,18,679
-50,94,679
2,56,85,321
Less: Interest on Loan[12%]
9,25,068
11,61,458
14,56,946
Less: Preliminary Expenses
[ Written Off]
24,62,016
24,62,016
24,62,016
-3,31,05,763
-87,18,153
2,17,66,359
0
0
0
-3,31,05,763
-87,18,153
2,17,66,359
= Gross Profit
=Net Loss
Less: Income Tax [33.99%]
EAT [Net loss]
69
Projected Gross Profit for 3 years:
Gross profit
600,000,000
500,000,000
400,000,000
300,000,000
200,000,000
100,000,000
0
year1
year 2
year 3
Projected Initial Investments for 3 years:
300,000,000
250,000,000
200,000,000
150,000,000
100,000,000
50,000,000
0
year 1
year 2
year3
70
Projected Sales and Net Profit/Loss for 3 years:
1,200,000,000
1,000,000,000
800,000,000
sales
600,000,000
net profit/loss
400,000,000
200,000,000
0
-200,000,000
year1
year 2
year 3
After doing all this research, analysis and implementation, it
shows that this project can take a practical shape. Thus, this
project is viable.
71
Reflection:
This project gave me a lot of confidence to work such marketing
projects in future. I learnt how to integrate various marketing
components like Branding, Promotions, Finance and Project
Management and work in a synchronised way. I also learnt and
implemented various concepts like work breakdown structure,
networking, 5 Q’s, PEST analysis, Porter’s % forces, SWOT analysis,
competitor analysis, brand audit, perceptual mapping, media and
promotional plan.
I also underwent an entire financial plan from investment required,
fixed assets, depreciations, expenses to income statements for 3
years and under different scenarios like pessimistic, optimistic and
most likely.
Overall, it had been very motivating doing this project. I hope I am
able to be successful in performing live projects of such kinds in the
fashion industry.
72
ANNEXURES
Index
($29.74 = 100)
Mean total hourly cost of manufacturing
employees(2005)
140
120
100
80
60
40
20
0
European
nations
US
Japan
East asia
excl. Japan
Brazil
Mexico
Phillipines
India
Sri Lanka
Source: ftp://ftp.bls.gov/pub/special.requests/ForeignLabor/ichccaesuppt01.txt
73
Source: The Marketing Whitebook 2011-12
74
Source: The Marketing Whitebook 2011-12
75
Demographic and economic indicators:
2007
Real GDP Growth [% growth]
10.0
Inflation [% growth]
6.4
Population Aged 65+: January 1st 53,626.7
['000]
Population Density [persons per 382.2
sq km]
GDP Measured at Purchasing 3,254,212.6
Power Parity [international $
million]
Consumer Expenditure [US$ 683,303.8
million]
Annual Gross Income [US$ 950,439.7
million]
Annual Disposable Income [US$ 942,928.2
million]
2008
6.2
8.3
55,132.7
2009
6.8
10.8
56,656.4
2010
10.1
12.1
58,215.2
2011
7.8
10.6
59,834.0
387.7
393.1
398.5
403.9
3,461,016.7 3,897,346.3 4,254,107.9 4,686,005.4
750,837.9
783,288.8
987,139.9
1,026,899.0
1,050,228.0 1,079,460.9 1,354,956.8 1,405,100.8
1,046,081.6 1,071,152.7 1,338,447.7 1,383,179.5
Source: http://www.euromonitor.com/india/country-factfile
76
Brand Audit Questionnaire [Koutons]:
I am a student of Pearl Academy of Fashion, majoring in Fashion Marketing. For my project I am
undertaking a primary research study on Koutons, and would appreciate your valuable
contribution. I assure you that the details you provide will be strictly confidential and will not be
circulated, in any form or manner. Thank you very much for taking time out.
Name:
Age:
Occupation:
Location:
Gender:
Personal monthly disposable income:





Up to Rs. 5,000
Rs. 5,001- 15,000
Rs. 15,001-30,000
Rs. 30,001-50,000
Rs.50,000-above
1.
When you hear the brand name “Koutons” what comes to your mind
immediately?
2.
What strikes your mind when you hear the following in connection with
Koutons:
 Logo: ______________________________________________
 Color: _____________________________________________
 Advertising: _________________________________________
 Quality: ____________________________________________
 Any other thing: _____________________________________
3.
When you see others wearing/buying from Koutons, how do you feel? What
thoughts come to your mind?
_______________________________________________________________
_____________________________________________________________
77
4.
5.
6.
7.
8.
9.
10.
When you shop from Koutons how does it make you feel about yourself?
What role does it play in your life?
______________________________________________________________
______________________________________________________________
Can you describe any memory that you associate with Koutons?
_______________________________________________________________
__________________________________________________________
Which others brands do you prefer apart from Koutons? [please tick the most
suitable choice]
 Cantabil
 TNG
 TQS
 Pantaloons
 Other [please specify] ________________________________
How do you compare Koutons with other brands?
_______________________________________________________________
____________________________________________________________
How much do you normally spend on a single purchase at Koutons?
 Rs.100-500
 Rs.501-1000
 Rs.1001-2000
 Rs.2001-above
Why do you buy at Koutons?
 For the clothes
 For the price
 For the customer service
 For the store location
What proportion of your wardrobe do you normally buy at Koutons?
 Some of them
 Half of them
 Most of them
 All of them
78
Newspaper and Magazine articles of Koutons:
79
Questionnaire for Accessories:
I am a student of Pearl Academy of Fashion, majoring in Fashion Marketing. I am doing a project
of introducing Women’s Fashion Accessories Brand under Koutons and would appreciate your
valuable contribution. I assure you that the details you provide will be strictly confidential and
will not be circulated, in any form or manner.
[P.S – accessories include jewellery, hair accessories, belts, bags, purses, scarves, hats, gloves, etc.]
Name:
Age:
Occupation:
Location:
Gender:
Personal monthly disposable income:





Up to Rs. 5,000
Rs. 5,001- 15,000
Rs. 15,001-30,000
Rs. 30,001-50,000
Rs.50,000-above








From where do you normally buy fashion accessories?
Big bazaar
Splash
Max
Reliance trends
Shoppers stop
Lifestyle
Local markets
Any other place [please specify]





How much do you normally spend on a single purchase at such stores?
Rs. 50-150
Rs. 150-300
Rs. 300-500
Rs 500-1,000
Rs. 1000 & above
1.
2.
80
3.






Which of these products do you buy most frequently?
Jewellery
Bags & purses
Hair accessories
Scarves & wraps
Belts
Any other thing [please specify]





How frequently do you visit such stores?
More than once a month
Once in 2-3 months
Once in 6 months or more
Only during Sales/Promotion periods
Only on special occasions
4.
5.





6.


7.






Rate the following factors which affect your purchase decision [rate on the
scale of 1 to 7 where 1=most important]
Price
Quality
Design
Functionality
Brand name
Would you appreciate if Koutons Launches an accessories brand for women?
Yes
No
Which medium of advertising attracts you the most?
Newspapers
Magazines
Radio
Hoardings
Television
Mails and SMS
81
Projected sales for 3 years:
1st year
SPF [3000 ind. Avg.] 50%
Total store size
Sales of 1 store [in Rs.]
Average selling price
[estimated]
1,500
380
5,70,000
200
2,850
2nd year
3rd year
2,500
3,000
380
380
9,50,000
11,40,000
300
400
3,167
2,850
Sales qty.[units]
Total monthly sales of all
stores
1,02,60,000
4,94,00,000
8,89,20,000
Total annual sales [in Rs.]
12,31,20,000
59,28,00,000
1,06,70,40,000
82
References:
1)
2)
3)
4)
5)
6)
7)
8)
9)
10)
11)
12)
http://www.koutonsparivar.com/
buysellsignals.com
http://www.futureinq.com/09/retail-revolution-in-india/
http://www.technopak.com/Perspective/vol4/Trends%20in%20I
ndia's%20Domestic%20Fashion%20market.pdf
http://indiafranchiseblog.blogspot.com/2011/01/fashionaccessories-companies-franchise.html
www.buysellsignals.com
http://smetimes.tradeindia.com/smetimes/news/topstories/2011/Jul/07/indian-fashion-jewellery-sector-all-set-togrow.html
http://www.moneycontrol.com/news
http://www.bls.gov/opub/mlr/2010/05/art1full.pdf
http://www.futureinq.com/09/retail-revolution-in-india/
http://www.futureinq.com/09/retail-revolution-in-india/
http://www.business-standard.com/india/news/three-directorskey-executives-quit-koutons/423647/
13) http://www.thejewellerydepot.com/the-technology-ofdesigning-jewellery.html
14) http://www.koutonsparivar.com/
15) http://www.koutonsparivar.com/
16) http://timesofindia.indiatimes.com/business/bizarticlelist/18980
55.cms
17) http://indiafranchiseblog.blogspot.com/2011/01/fashionaccessories-companies-franchise.html
18) http://economictimes.indiatimes.com/koutons-retail-indialtd/stocks/companyid-15470.cms
83
19) http://economictimes.indiatimes.com/koutons-retail-indialtd/stocks/companyid-15470.cms
20) http://www.cantabilinternational.com/
21) www.bigbazaar.futurebazaar.com/
22) www.reliance-tracker.in/tag/reliance-trends/
23) http://www.indiamart.com/imm-advertising/
24) http://www.fashionproducts.com/fashion-accessories/
25) http://www.hindustantimes.com/ratecard/Impact.aspx
26) http://www.ads2book.com/ads2book/ratecard/ht_ratecard.htm
27) http://www.releasemyad.com/tariff/newspaper-display-adstep1.php
28) http://www.myfmindia.com/myfm_advertise.php#
29) http://www.radioone.in/rate-card.aspx#
30) http://www.moneycontrol.com/mccode/news/article/article_pdf
.php?autono=568012&num=0
84