Indian Pen Industry Project
-
Upload
saunak-das -
Category
Documents
-
view
1.127 -
download
6
description
Transcript of Indian Pen Industry Project
CAPSTONE PROJECT: PEN INDUSTRY 2012
ITM BUSINESS SCHOOL
Study of Marketing Mix & Penetration, Consumer Buying Behavior,
Effectiveness of Exclusive Business Outlet in Indian Pen Industry:
Exploratory Research
Submitted by: Saunak Das(KHR2010PGDM20F004)
Faculty Guide: Dr. Ankush Sharma
Academic Year
2010-2012 (PGDM - MARKETING)
ITM Business School
25, 26, Institutional Area, Kharghar, Sector- 4,
Navi Mumbai -410210
1
CAPSTONE PROJECT: PEN INDUSTRY 2012
Declaration
I, Saunak Das, student of PGDM(2010-2012), hereby declare that the Capstone report on “Study
of Marketing Mix & Penetration, Consumer Buying Behavior, Effectiveness of Exclusive
Business Outlet in Indian Pen Industry: Exploratory Research” submitted to ITM business
school in partial fulfillment of PGDM course is the original work conducted by me.
The information and data given in the report is authentic to the best of my knowledge.
This Capstone report is not being submitted to any other University for award of any other
Degree, Diploma. I further certify that without any objection or condition, I grant the rights to
Institute for Technology & Management to publish any part of the project if they deem fit in
journals/Magazines and newspapers etc without my permission.
Place : Mumbai
Date : 10-02-2012 ----------------------------------------
Signature
Name : Saunak Das
Class : PGDM-Marketing 2
Roll No. : KHR2010PGDM20F004
2
CAPSTONE PROJECT: PEN INDUSTRY 2012
CERTIFICATE
This is to certify that the Project Work titled “Study of Marketing Mix & Penetration, Consumer
Buying Behavior, Effectiveness of Exclusive Business Outlet in Indian Pen Industry:
Exploratory Research” is a bonafide work carried out by Saunak Das, a student of PGDM
program 2010 – 2012 of the Institute for Technology & Management, Kharghar, Navi Mumbai
under my guidance and direction.
Signature of Guide:
Name:
Designation:
Address:
Date:
Place:
3
CAPSTONE PROJECT: PEN INDUSTRY 2012
Acknowledgment
Written words have an unfortunate tendency to convert genuine gratitude into stilted formality.
However, I feel this is the best way to express my appreciation for everyone concerned.
Working in the project, has been an incredible experience for me. For this very wonderful
experience I would like to thank a lot of people without whose co-operation and support working
on this summer project report would not have been so pleasurable and interesting.
I would like to take this opportunity to express my deep gratitude to Dr. Ankush Sharma, for
providing me an excellent opportunity to understand the intricacies of Maketing Mix,
Penetration, Consumer Buying Pattern and effectiveness of Exclusive Business Outlet in Pen
Industry.
I would also like to thank Mr. Bharani Patri Vyas, Ms. Tejpreet Kaur & Mr. Prithviraj
Pradhan for their helpful suggestions and always motivating me to perform better. Without their
encouraging support, valuable suggestions and timely inputs, this project would never have been
possible and I would have been deprived of a vast treasure of knowledge.
Also I would like to thank my family and friends who have been a constant support all
throughout this project.
These acknowledgements are one way where I can thank the people who have been instrumental
in the making of this project. Without their help and guidelines it would be very difficult task for
me to try and plan this project and actually make it.
4
CAPSTONE PROJECT: PEN INDUSTRY 2012
CONTENTSDeclaration …………………………………………………………………….. 03
Certificate …………………………………………………………………….. 02
Acknowledgement …………………………………………………………………….. 04
Executive summary …………………………………………………………………….. 07
Introduction to Stationery …………………………………………………………………….. 09
Literature Review …………………………………………………………………….. 16
Indian Pen Industry …………………………………………………………………….. 20
Pen Industry Pyramid …………………………………………………………………….. 25
Marketing Mix …………………………………………………………………….. 28
Product …………………………………………………………………….. 29
Pricing …………………………………………………………………….. 50
Place …………………………………………………………………….. 56
Promotion …………………………………………………………………….. 64
Seasonality & Future Scenario …………………………………………………………………….. 71
Market Penetration …………………………………………………………………….. 72
Linc …………………………………………………………………….. 73
Consumer Buying Behaviour …………………………………………………………………….. 75
Research Objective …………………………………………………………………….. 75
Research Methodology …………………………………………………………………….. 76
Questionnaire Analysis …………………………………………………………………….. 77
Retailer Side …………………………………………………………………….. 77
Customer Side …………………………………………………………………….. 84
Conclusion …………………………………………………………………….. 99
Retailer Speaks …………………………………………………………………….. 99
5
CAPSTONE PROJECT: PEN INDUSTRY 2012
Customer Speaks …………………………………………………………………….. 100
Recommendations …………………………………………………………………….. 102
Limitations Of the study …………………………………………………………………….. 104
Future Scope Of the Study …………………………………………………………………….. 105
Exclusive Business Outlet (EBO) …………………………………………………………………….. 106
EBO Feasibility Plan …………………………………………………………………….. 109
Present Scenario …………………………………………………………………….. 115
The Way Ahead …………………………………………………………………….. 117
Bibliography …………………………………………………………………….. 118
Annexures …………………………………………………………………….. 119
6
CAPSTONE PROJECT: PEN INDUSTRY 2012
EXECUTIVE SUMMARY
ABSTRACT
My topic for the study is on Stationery Industry. Stationery Industry consists of
School Stationery, Office Stationery, Writing instrument & Computer Stationery. It is a vast field
where a specific content needs to be studied. Therefore, I have chosen Pen Industry (Writing
Instrument) specifically to study its Background Detail, Market Potential, Distribution Channel,
Profit Margin, Consumer Behavior & many more.
Pen is a product, which is used by each and every person. There are various brands of pen in the
market of different types Price, Color, design, Grip etc. The pen market is full of competition
where the consumer possesses vast variety of choice to select his brand which depends on his
Buying Behavior. It is very difficult to describe Consumer Buying Behavior about pen. Though,
I will try to find how the consumer purchases a particular brand & the effectiveness of having an
exclusive business outlet of a pen brand.
The technique of data collection is through questionnaire as it is less complex and
easy. Research Method will be primary as well as secondary. Primary research includes data
collected from retailers, consumers & distributors. Secondary research includes data collected
from web, magazines & company profiles. Graphical method, Percentage & Average Method
will be used as tools /techniques of analysis.
Research Methodology will be exploratory in nature in order to know the factors hidden behind
consumer preference & perception on pen of various brands. The study would be conducted in a
span of 2 weeks from retailers & customers within South Kolkata region & Navi Mumbai region.
The study will be of immense help to the Company Marketing Managers of pen industry to
Design an Effective Marketing Mix for its target Customers.
7
CAPSTONE PROJECT: PEN INDUSTRY 2012
OBJECTIVES OF THE STUDY
To study Marketing Mix Of Pen Industry
Segmentation, Targeting, Positioning & Differentiation of Various brands
Examine the existing organizational arrangement for the distribution of products
To know the market share of various pen producing companies
To analyze the margin of profits in various pens
To determine comparative consumer perception of consumer for pens between Rs.5-Rs20
To determine consumer preferences in respect of pen brands
To know the various reasons for which customers purchase pen
To understand the buying behavior of the consumers
To analyze the effect of display on customer purchasing
To understand relatives influence on customers in the purchasing process
To determine the main reason for 'Preferred' Brand
To understand the preference of brand from retailers point of view
To study the impact of advertisement on consumers in different Age Group, Income
Group & by profession
To help the Company Marketing Managers to Design an Effective Marketing Mix for its
target Customers
Effectiveness of Exclusive Business Outlet in the awareness & improvement of sales
performance
8
CAPSTONE PROJECT: PEN INDUSTRY 2012
STATIONERY INDUSTRY IN INDIA: Overview
Introduction
The term Stationery comprises of all the articles from pin to pen and from papers to files
and folders. Products comprised under it are paper products, computer stationery, school
stationery, office stationery etc. The Indian stationery industry is worth Rs 11,200 crore,
comprising of a wide variety of products and categories.
School stationery: It consists of a wide range of stationery products used by teachers and
students in the schools. It includes popular stationery products like notebooks, erasers, pencils,
rulers, sharpeners, writing boards, exam boards, graph book, pencil boxes, geometry boxes,
notebooks covers, glue sticks, maps, children paper clips and binders, pencil grippers, calculators
and many more.
Office stationery: Products include correction products, book/ magazine racks, business
organizers, card holders, cash boxes, clip boards, dampers, desk calendars, desk organizers,
document holders, glues, glue sticks, letter openers, message pads, stick ups, plastic paper clips,
paper trays, paper weights, pen holders, trays, stands, pen holders, cases, pocket planners,
punches, rubber bands, scales, rulers, scissors, stamp pad inks, stamp pads, staple removers,
staple pins, staplers, tapes and dispensers, telephone diaries, etc.
Writing instruments: It includes ball pens, correction fluids, pens, tapes, synthetic, PVC
Erasers, fountain pens, gel pens, highlighters, inks, markers, 0.5 and 2 mm pencils, micro tip
pens, pen refills, pen sets, pencil leads, roller pens, sharpeners, marking pens.
Computer stationery: It comprises of printer toners, computer CDs, floppy disks, computer
paper, printer ink, printer cartridges, CD covers, etc.
The Indian stationery market is influenced by macroeconomic development, national
income and lasts but not the least the ever-growing Indian population. The government policies
and the tax structures influence the general economy of the country which in turn affects the
9
CAPSTONE PROJECT: PEN INDUSTRY 2012
purchasing power of the consumer thus affecting the sales. The Indian Stationery Industry is
highly unorganized; the organized sector players in the stationery industry are estimated to be
less than the unorganized sector players. Also the unorganized stationery players are expanded
throughout the industry and controls major market share.
The Indian buyer is price sensitive and would like to have the best possible product
which suits its need and pocket. The manufacturer of unorganized sector without proper billing
practices dump goods at cheap prices to the buyers at a very low rate while the manufacturer and
suppliers from the organized sector have to bear the burden of taxation laid down by the
government which creates the major gap between the pricing structures of the two sectors.
The Indian Stationery Market is said to be growing 10 to 15% annually. The
manufacturers have started building new product strategies, which helps in reducing their overall
cost without compromising on quality thus producing a good quality product at competitive
price. They have learnt that innovation, flexibility, performance and versatility are the key area
of focus in the design and development of any product. Also the manufacturers are now into
researching and developing into their products and consumer's attitude thus finding out solutions
to provide customers the best products at cost effective prices.
Also the buyer is now becoming price conscious and is ready to spend more if a reliable
product is offered to him. Even in kids stationery today it is very necessary to make your product
creative and user friendly. The Indian buyers purchasing capacity has also started increasing with
the increase in the overall economic growth of the country. The taste of the people has also
improved with the improving technology and their attention has now been drawn towards
branded products available in the market. Branding plays a major role in the market today these
goods have greater marketability than the non - branded goods.
10
CAPSTONE PROJECT: PEN INDUSTRY 2012
STATIONERY INDUSTRY BREAK UP
62%32%
6%
Stationery Market in India 2011INR 11,200 crore
Paper & Notebooks
Writing Instruments
Others
Source: DNA (September 15, 2011)
11
CAPSTONE PROJECT: PEN INDUSTRY 2012
Competition from China
India is constantly challenged by the growing competition, especially from neighboring
countries such as China, Indonesia and many other countries that supply higher quality products,
as compared to India.
Chinese manufacturers are the most competitive among all the other world market
players as they have an advantage of
Mass production capacity
Aggressive favorable government export policy
Simplified low taxation
Well developed infrastructure
As part of the Indian government's liberalization program, the restrictions on imports are
removed and now imports become more easy and simplified. Secondly with development and
acceptance of Internet technology, sourcing the desired supplier in any part of the world has
became a very convenient task. Thus imports of Chinese stationery products are a major threat to
our stationery industry.
Malpractice of under invoicing is carried very frequently by importers thus giving them
clear advantage to the extent of nearly around 15 % to 20% than the cost of the Indian organized
manufacturers. These evasions of taxes by such importers lead to the incapability of organized
manufacturer to compete with the MRP of importers even though good innovative products are
supplied by them.
12
CAPSTONE PROJECT: PEN INDUSTRY 2012
GLOBAL STATIONERY MARKET COUNTRY/REGION WISE
ROW10%INDIA
6%CHINA8%
JAPAN15%LATIN AMERICA
8%
NORTH AMERICA26%
EUROPE27%
Geographical Stationery Market Revenue Break Up 2011
Source: BIC Estimate & Published Research 2011
13
CAPSTONE PROJECT: PEN INDUSTRY 2012
Threats to the industry
Lack of awareness - Due to lack of desire and unawareness about the products, the
consumer is used to buying whatever is available at the local stationery shops.
Competent local players - Indian local players hold the major share in the
stationery market, which is a challenge for Indian organized players.
Price variations - Local players, without any proper billing, sell products at cheap
prices, whereas, organized players have to go through proper billing and taxation, which
creates a gap between the prices of the two sectors.
Low cost products - The stationery products are low cost products and the
advertising spending is very low in this industry; it is difficult to attract the customers to
buy a particular product.
Branding Revolution
The Indian market is slowly developing into a brand conscious market. Branded goods
are expected to have premium quality as well as a value for money. They have started promoting
their brands with the help of powerful and popular Medias like advertising, electronic, internet
etc. Also active participation in national and international trade fairs have helped them in
creating awareness for their products and thus increase their growth in the market, also
incentives and other promotional strategies have benefited the Indian manufacturer in building
image for their brand. Thus it is apparent that the Indian stationery Industry slowly and gradually
with the right kind of input, approach and with government support can not only survive from its
competition but put its first step into achieving total growth and development.
14
CAPSTONE PROJECT: PEN INDUSTRY 2012
Introspection Time
Indian businessmen involved in the business of stationary items needs to work on proper
research and development of the sector. Design, Colors, Quality, Themes, Reaching the right
partners and to find out new markets for their products should be on their agenda. There is a need
to focus on providing assistance to businessmen for buying good machinery, necessary
infrastructure should be provided, to enhance export activities, workshops, conferences and
training programs should be conducted at state and national level. Logistics is also a key concern
that goods should reach on time which helps in maintaining a relationship with various
customers across the globe.
15
CAPSTONE PROJECT: PEN INDUSTRY 2012
LITERATURE REVIEW
As perceived by Mr. Manoj Lodaya, CEO, Corporate Stationery, says “the Stationery
industry has a flourishing future in its coming years and over a period is estimated to grow at 10
to 15% p.a. The demand for stationery goods will increase if good quality products are offered
and new marketing strategies are followed. Also the government has come out with education
enhancement schemes which in turn will give a growth to this sector.”
Mr. Sagar Tejura, Importer and Official Distributor, for Maped in India, has said “the
consumers are ready to spend if a quality and innovative product are offered to them. The
consumer is the king today and he today enjoys the choice of buying with so many
manufacturers and suppliers running the market. Also the government's focus on increasing
education everywhere in the country has proved to enhance the growth of stationery market. This
has helped the consumer in getting matured day by day and today he can easily distinguish and
choose the best product, which suits his purpose among the vast choice given to him. Also
government's liberal policies on taxation and other aspects have proved to be a stepping stone to
the growth of the stationery industry.”
“The Indian stationery industry has witnessed phenomenal growth over the past couple of
years. Growing beyond its set boundaries of writing instruments, stationery today, includes a
huge gamut of products across varied ranges. Further pushing the industry on a growth trajectory
is the influx of big and renowned players. Even the high-end luxury brands, which were earlier
limited to the recesses of select showrooms, have made their way into larger retail outlets, thus
finding more takers.”
Mr Sivaraman Balakrishnan, Deputy Manager Marketing, Crossword Bookstore says, “I
think, the present day consumer is educated, has a knack for experimentation, has the capacity to
spend and above all, wants value for money. Given the scenario, the penetration of more and
more luxury brands and consumers opting for them is no big surprise. As for local formats, well
they have their own share of market and will continue to exist.”
16
CAPSTONE PROJECT: PEN INDUSTRY 2012
According to Mr N.V.Sivakumar, leader retail practice, PricewaterhouseCoopers,
“Consumers want an increased variety of choice in stationery products ranging from private
label/branded, domestic/international, etc. As companies expand their footprint, it is essential
that they provide their workforce with the right tools to make their jobs easier — pens that last,
highlighters that do not dry up, file folders that are durable, etc. It is important to ensure that
products are of good quality and priced competitively.”
According to Mr Saket Bhatnagar, Principal Consultant, Technopak, “The Indian retail
industry is evolving. Three international office supplies giants – Office Depot, Staples and Office
1 Super Store have entered the Indian market. Office 1 Supermarket already has stores
operational, while the other two will open up soon. Looking at the factors for growth in this
industry, there are high levels of corporate activity in the country like more and more offices
being opened up and offices are the largest users of stationery products. Secondly, brand
consciousness has increased substantially among the consumers. People want brand promise and
are ready to pay extra for it.”
Vimal Rathod, managing director, Flair Pen & Plastic Industries, says the industry has grown 15-
20% annually in the last decade or so and will continue to grow at that clip in the foreseeable
future, too.
Deepak Jalan, MD of Kolkata-based Linc Pen & Plastics, believes there is going to be no
alternative to plastic as the prime raw material in the coming years.
What’s going to be new, however, is consolidation. “It has not yet happened but it will start
soon,” says Jalan. His company, also a listed player, reported revenues and net profit of `225
crore and `8 crore, respectively last fiscal.
For all that, however, Jalan believes that despite the downturn, greater growth is likely to come
from exports than from the domestic market.
Hitesh Jain, director of Shiv Shakti Plastic Industries, the maker of Montex pens and nibs, says
the market for the fountain pen is gradually shrinking. “But in India, schools make ink pens
mandatory for students for a few years,” he points out. Moreover, says Shah, children today have
17
CAPSTONE PROJECT: PEN INDUSTRY 2012
more pens than their parents did. “Most couples have just one or two kids compared with four or
five or even earlier, so parents spend all their resources on their kids.”
Mr. Ronnie Netto (Director of Today's Writing Product Ltd (TWPL) said –
"We noticed this trend about two years ago and it has picked up since then. Last fiscal, our
revenue from this segment was over Rs 10 crore of our total turnover of Rs 80crore. And this
fiscal ,we expect it to almost touch the Rs20-crore mark .We have set up an exclusive division to
handle such orders, as they require personalized service. We estimate this market segment to
grow to Rs 500 crore in the coming years, now; Indian manufacturers are beginning to reach out
to the overseas market. After UK's Pound land tied up with TWPL to have Today's brand of pens
in its chain of stores, we expect to export pens worth $1 million to UK in the current fiscal,"
“Increasing penetration in FMCG retail stores boost the phenomenal growth of writing
instruments with Ballpoint Pen takes a leading share in India’s pen market.”
Comment from ACNielsen (world's leading marketing information provider)
“Pen market previously suffered from lack of organized information on the market size or market
shares of various players, since most players are not listed companies and distribution was
mostly limited to stationery stores,”
Anmol Sherpa (Associate Director Client Services, ACNielsen)
18
CAPSTONE PROJECT: PEN INDUSTRY 2012
Literature Review On Target location
Mr. Vikram Mane, CEO, Cartoleria Retailing Pvt. Ltd says, “Location is still very
important - it is still sourced from the nearest place to your home, especially in the case of
students’ stationery. Mothers have a say in buying till say ten years of age of the student, but
their stationery requirement is the highest till that age due to loss or damage. For this age group
super stores located in their locality selling stationery could be the best suited. For office
stationery, you need to go to their doorstep and sell.”
Commenting on the importance of selecting the ideal location, Mr. Balakrishnan says,
“Appropriate location is decided keeping in mind the target group and the range of products on
offer. In case of Crossword Bookstores, malls and high streets are the perfect bid.”
Adding to this point Mr. Srivastava says, “The ideal location for a stationery store will be
firstly preferred on high streets surrounded by commercial complexes and secondly within
office/college complex and lastly in malls.”
19
CAPSTONE PROJECT: PEN INDUSTRY 2012
PEN INDUSTRY IN INDIA
Pen manufacturers, much like newspapers, are betting on the growing literate population in the
country to write their growth story. With a literacy rate of 66% out of 128 crore and still
counting, India has a large way to go and has a sizeable market nonetheless.
“22 crore children who are in school today is a number that assures pen manufacturers of healthy
business despite the growing spread of new-age devices such as computers and mobile phones”,
says Amrut P Shah, chairman & managing director of paper stationery firm Sundaram Multi Pap.
Sundaram, a listed company, is among the biggest in its space.
The Indian pen industry, which includes ball pens, fountain pens, gel pens and markers, among
others, is worth Rs2,800 crore. Exports are a sizeable and growing segment, accounting for about
40% of this, or around Rs1,120 crore.
“About 80% of the market is organized and the top ten companies contribute 70% to the
industry’s revenues,” notes Rathod, who is also the chairman of the Bombay Fountain Pen
Manufacturers and Traders Association, an all-India body with over 600 members.
Reynolds, Cello, Linc, Luxor, ITC, Todays, ADD Pens, Montex and Flair are among the leading
pen manufacturers.
“Ball and gel pens are responsible for 80% of the market,” Rathod says. Fountain pens are fast
losing their sheen thanks to the easy usability of ball and gel pens.
A mass market ball pen is priced at Rs3-10 and a gel pen at Rs 5-10. Typically, a pen maker
makes a profit of about 20-25 paise on a Rs5 pen whose manufacturing cost would be Rs2.
The sector has seen many changes in the last six decades with wooden and ebonite pens giving
way to metal and, later, plastic. Moreover, mechanization is now the norm in the industry where
hand-moulding was once the norm.
20
CAPSTONE PROJECT: PEN INDUSTRY 2012
India exports pens to more than 120 countries and, some believe, faces stiff competition from
China where the pen industry is tipped to be twice as big.
79%
15%6%
TOTAL INDIAN WRITING INDUSTRYINR 3,500 crore
Pen
Pencils
Others
Source: DNA (September 15, 2011)
Most Indian companies cater to the "Value for Money"(i.e. High Volume Low Value Strategy)
while International Players cater to Premiums segment operating through exclusive Distributors.
Globally writing Instruments Industry is estimated at Rs 50000 Crores (p.a). China controls
approximately 10% of the global markets while the Indian share had so far been Mini scale. But
given the superior quality perception that "Made In India" pens have over the Chinese, the
buying preference of major retailers has been shifting to Indian Products and Brands.
21
CAPSTONE PROJECT: PEN INDUSTRY 2012
80%
20%
INDIAN PEN MARKET 2011
Organized
Unorganized
68%
28%
4%
MARKET BREAK UP 2011
Ball Pen
Gel Pen
Fountain Pen
SOURCE: ACNielsen Retail Audit Report, April 2011
22
CAPSTONE PROJECT: PEN INDUSTRY 2012
The following Information regarding the Writing Instruments Industry Has been obtained from
the Public Sources like: The Mint, Business Line, The Economic Times, The Financial Express,
some Companies Catalog are Used along with Internet Web Support.
CHANGING CONSUMER BEHAVIOUR
The Purchase of a single Pen used to be a considered decision until not too long ago. Today,
most consumers buy multiple pens in a single Purchase. Because the consumer would go out
specifically to buy a pen earlier, today most buy along with a number of other things as a part of
their monthly provisions. Earlier there was one pen to write, now interestingly even as
communication is getting increasing psychological, there is different pen, ink, size for different
moods, needs and situations.
Gone are the days where pen were just considered as merely an item of writing, But now it a
Quasi Fashion Statement something that’s aligns with our Personality, still the Pen purchase
decision is considered As Low Involvement Decision.
GLOBAL WRITING INSTRUMENT INDUSTRY
Globally, Writing Instrument Industry is rising at a healthy rate despite growing computerization.
The global Writing Instrument Industry is estimated at Rs 50000 Crores.(p.a) where USA
Markets grew by 5% last year (2010-11) and is expected to grow by the same Proportionate at
this time too. China controls approximately 10% of the global market, due to its manufacturing
Process. India is becoming most preferred manufacturing destination after China. Indian
Products Quality is among best in the world, compared to china Mass Market Products. Indian
Market is growing healthily at 15 to 20% and is expected to grow with same Rate for upcoming
2 to 3 years (acc to CAGR)., where the organized sector now controls 75%+ market share as
compared to 54% up to 2004.
23
CAPSTONE PROJECT: PEN INDUSTRY 2012
MARKET AND MARKET INFORMATION (IN DETAIL)
The worldwide Market's Size for Writing Industry is Rs 50000 Crores (p.a) USA market
alone is $2.2 Billion Dollars (App 10000 Crores Rs).
Chinas exports of Pens are over Rs 5000 Crores (p.a).
India's Pens Exports are merely Rs 400 Crores (p.a).
The Annual Turnover of the Industry in India is now estimated at Rs 3500 Crores (p.a)
and is expected to Increase annual growth rate by 15-20% (p.a).
India is Viewed as Quality Supplier, where as China as Cheaper and Lower Quality
Products.
Germany, Japan, Taiwan & Korea were hubs for the Writing Instrument Industry, but due
to cast factor manufactured have started shifting to China and India.
Previously Switzerland was the manufacturing centre for Ball point Tips, but now India is
emerging as a major Tip Manufacturer satisfying not only Domestic demand but Global
demand also.
REGULATORY REQUIREMNTS
In India as per current law, the manufacturing of writing instruments is reserved or falls under
the category of SSI (Small Scale Industry Sector). Thus there is ceiling on Investment in Plant
and Machinery Manufacturing Process (Max limit of Rs 50 Crores), excluding Mould Making as
it is Highly Capital Intensive part of Manufacturing. As a result critical pen component like
refills are manufactured in house, while all non critical components are outsourced.
24
CAPSTONE PROJECT: PEN INDUSTRY 2012
INDIAN PEN INDUSTRY PYRAMID
Source: Linc Pen & Plastics Ltd.
Outlook as per LLPL(Linc Pen & Plastics Ltd.)
The global stationery product market is expected to touch USD 155.4 bn by 2015 aided by
technological advancement, increasing literacy rates and rising population. The Indian stationery
market is expected to grow at a CAGR of 20% over the next three years. Moreover, the thrust on
education by the Government will further accelerate the demand for writing instruments.
25
Premium(Above Rs.400)Market Players: Parker , Mont Blanc, Cross,
Lamy, Sheaffer, among others
High Value(Rs.20 - Rs.400)Market Players: Uni-ball, Pilot,Parker, etc.
Mass Market(Below Rs.20)Market Players: Cello, Linc, Reynolds etc.
CAPSTONE PROJECT: PEN INDUSTRY 2012
Change in Buying Pattern
2007-08 2010-11
SOURCE: SKP Research
CATERGORY WISE PEN USAGE
60%25%
15%
Consumer Market In Indian Pen Industry
Students
Commercial
Multilevel
SOURCE: Linc Pen & Plastics Ltd.
26
Pre
mium andSemi-
Pre
mium Segment
Price: Rs 10 & Above
Revenue
Contribution:
12%
Mass
Segment
Price: Below Rs 10Revenue Contribution: 88%
Pre
mium andSemi-
Pre
mium Segment
Price: Rs 10 & Above
Revenue
Contribution:
27%
Mass
Segment
Price: Below Rs 10Revenue Contribution: 73%
CAPSTONE PROJECT: PEN INDUSTRY 2012
GROWTH OF PEN INDUSTRY
Till late 18th century - feathers
Early 19th century - metallic nib
1870’s - fountain pens (Waterman)
1925-1940 - growth of fountain pens
After 1945 – first ball point pen
1985-1990 – Japanese gel technology
21st century – stylish pens, roller balls, etc.
MARKET PLAYERS IN PEN INDUSTRY
ADD Gel Pens LUXOR MONTEX CELLO CLASSMATE LINC REYNOLDS LEXI SCHEFIELDS NATARAJ
MARKETING MIX OF THE PEN INDUSTRY27
CAPSTONE PROJECT: PEN INDUSTRY 2012
“Marketing mix is a set of marketing tools that the firm uses to achieve its marketing
objectives in the target market.”
“Marketing mix is the blending of 4 inputs or sub-mixes, which form the core of
marketing system. They are:
Product
Price
Promotion &
Place.
PRODUCT (INCLUDING STDP ANALYSIS)
28
CAPSTONE PROJECT: PEN INDUSTRY 2012
A Product is anything that can be offered to a market to satisfy a want or need. A product mean
the bundle, which satisfy human needs.
1. Ball Pen
2. Gel Pen
3. Refills
4. Fountain Pen
ADD PENS
Mission: Quality First……Cost Second
Product Range
Gel Pens- Gypsy, ADD 1st Rank
Ball Roller- Ballet, Impress
Exclusive- Maestro, Highness
Gel Roller- Alpha, Diamond Roller
Differentiation
ADD 1 st Rank : “experience”
ADD Cat : “style & performance”
ADD Achiever : “executive look but without executive prices”
Gypsy : “unique body color, vibrant looks, unconventional styling”
Corporate Customers
29
CAPSTONE PROJECT: PEN INDUSTRY 2012
Air Sahara
Binani Cement Ltd.
Brittania Industries Ltd.
Dabur Pharma Ltd.
Lotte India Corporation Ltd.
Segmentation, Targeting & Positioning
For Students: Ball & Gel Pens
For Executives: Roller Ball & Executive Series
For Office Needs: OHP Pens
Competitive Advantage
Benchmark for quality
Works across Diverse Climates
Present in more than 30 countries
Exported to Japan( pioneers of Gel technology)
Positioning: Quality First……Cost Second
LUXOR
Mission
“Establish Luxor Writing Instruments (P) Ltd. as the clear leader of the Indian Writing
Instruments market, both in value and image through sustained and profitable growth of it
franchises”
"We want the Parker brand in the pocket of every youth”
Product Range
LUXOR: Junior
30
CAPSTONE PROJECT: PEN INDUSTRY 2012
PILOT:
PARKER: BETA, VECTOR, JOTTER, REFLEX
WATERMAN: Serenite, Edson, Man 100
Segmentation
Upper sections of the society, including senior executives, businessmen
Young executives ,school and college going students
Corporate market
Targeting
Parker's target group is the top 15 million families in India”
Primarily targeted at the upper middle class consumers, senior level executives and
bureaucrats
Targeted its Vector brand at young executives and its Beta brand for the school and
college going students
Corporate market
Corporate Customers
Samsung
Aventis
Star
31
CAPSTONE PROJECT: PEN INDUSTRY 2012
NIIT
American express
Usha
Titan
Wipro
Birla plus
Dabur
Nivea
India Today
Mc Dowels
Separate brand for B2B customers
Specialize in selling a company by marking high quality writing instruments with
company logo, name or message to ensure the message is seen and noticed everyday
Positioning
The Parker name itself certifies standard in quality and reliability
Shifted Parker's positioning from a serious, daddy's pen to a youthful and vibrant
brand
Multiple price and product options to address the entire section of the consumers
USP
The arrow design on the pen caps which is its signature style
The Parker name has set a standard in quality and reliability. The strength and
heritage of these powerful brands
World Class brand
LEXI
MISSION & VISSION
32
CAPSTONE PROJECT: PEN INDUSTRY 2012
“We aim to be a leader in our business of writing instruments- by heightened sensitivity to
consumer needs and aspirations, setting new standards in quality products and capitalizing on
new business opportunities in our Industry”
Products
Plastic pens ( Ball pens, Gel pens):
Lexi sharp, Lexi QT, Lexi IQ Lexi 5
Lexi G, Lexi G7
Metal pens: LP 001, LP 002, LP 003….., LP 006
Corporate Customers
Pfizer ltd
Ranbaxy ltd
Times of India
Hindustan lever ltd
Tata Infotech ltd
Proctor & Gamble
Differentiation
Cater to specific needs
Consistency in supply
Segmentation & Targeting
Plastic pensà Students
Metal pensà Office Executives
Customised pensà Corporates
33
CAPSTONE PROJECT: PEN INDUSTRY 2012
Positioning
“QUALITY FOR A GOOD PRICE” or “Affordability and ease of writing”
USP
Nickel silver tips for smooth, free writing
Original innovative designs
Ergonomically designed products for stress free comfort writing
Instaflow ink technology for smudge free writing
Leak proof fitting
Linc Pens & Plastics Limited
34
CAPSTONE PROJECT: PEN INDUSTRY 2012
Linc is one of India’s leading manufacturers and exporters of ball pens, gel pens and all
other Stationery Suppliers. It’s a leading Exporter, manufacturer of Ball Pen and other
writing instruments in India
Head Office : Kolkata
Around 3 decades into business
Awards : ISO 9001:2000, Emerging India
Plants approved by some of the world's leading retail chain of stores like M/s. Walmart
Stores Inc, Tesco International, W.H. Smith etc.
Vision
To establish LINC as a global brand, known for its values, assertiveness and the acumen to
adapt to the ever-changing environment
Mission
To deliver innovative, user friendly and better-quality products at best value to the customers,
keeping in mind the prosperity of the company and its stakeholders
Products
Gel Pens: Ocean Gel, Linc excutive
Ball Pens: Linc Smart Gel, Glaycer
Linc Pens believe that writing instruments form an integral part of education and being
responsible corporate citizens, they make humble contribution to the society where literacy
seems to be a major issue. This prompted Linc to go for the corporate slogan of Encouraging
Literacy, a very apt platform for a company dealing in Writing Instrument. Linc has also put
forward a commitment of contributing 1% of its profits for promoting literacy drives.
Linc pen is India's Prime Manufacturer and Exporter of Ball Pens, Roller Ball Pens and
Gel Pens too. To endorse the commitment, Linc has already taken up some programmes with
leading educational institutions and is closely related to these programmes by financial support
and writing instrument.
35
CAPSTONE PROJECT: PEN INDUSTRY 2012
Segmentation, Targeting & Positioning
Export: Stickball Pens, Retractable Ball Pens, Designer pens, Gel Pens, Rubber grip ball point
pen, Ball Pens
Students: Gel Pens, Ball Pens
Office: White board markers, permanent markers, Highlighters
Rs 5 segment: 60 % Market Share
Highest selling category is the Rs-5 ball pens, which accounts for more than 60% of the
revenue
Exports contributed nearly 22.2% to the total sales in 2010-11, up from 18.5 % in 2008-
09.
Successfully launched and will be launching number of products in higher price segments
Positioning: Useful for all spheres of life
Differentiator
In the current "commoditized" approach of the industry for this category, building long-term
brand value
36
CAPSTONE PROJECT: PEN INDUSTRY 2012
USP
The USP of the company has been quality product at reasonable price i.e. value for money
through economically priced products with great price-to-performance ratio
REYNOLDS
Mission
High quality writing instruments, with R&D latest technology
Products
Ball pens: 045 fine carbure, 040 bold, fusion, office rite
Gel pens: Racer gel, Racer gel II, Racer gel active.
Lead pencils, Click pencils
Artoons: Fun Box, sketch pen, Safari, Jumbo combo
Markers: Permanent correction, OHP, whiteboard Highlighter
Ink pens
37
CAPSTONE PROJECT: PEN INDUSTRY 2012
Competitive Advantage
Latest R&D facilities and technology
Excellent distribution network
Good quality and Brand image
G.M. Pens International Pvt. Ltd. is the exclusive licensee of Reynolds, France, in India and the
SAARC countries Headquartered in Chennai .G.M. Pens has pioneered the writing instruments
revolution in the Indian market. Commencing operations in 1986, G.M. Pens introduced to India,
international quality writing instruments, and marketed them under the brand name Reynolds.
38
CAPSTONE PROJECT: PEN INDUSTRY 2012
G.M. Pens offers the widest range of writing instruments and accessories in the Indian market. A
variety of writing instruments including ball pens, gel pens, fountain pens, mechanical pencils,
markers, are marketed under the brand name Reynolds. A continuous focus on consistent quality
and a constant endeavor to provide quality products at affordable prices have ensured that
Reynolds has been the numero uno in the Indian writing instruments market. A substantial
investment has also been made in establishing the Reynolds brand name through the mass media,
especially through television and press ads, in an effort to convert the category from a
commodity to a brand dominated one.
Positioning: The pen the world prefers……
CELLO
1982: Started as tiny factory for making plastic households under Mr. G. D. Rathod
1986: New factory for Cello Thermoware is set up in Goregaon, Mumbai; Another factory at
Daman as demand rises. Exports products to other countries
39
CAPSTONE PROJECT: PEN INDUSTRY 2012
1994: Uses state–of-the-art moulds from Italy. Becomes household name for quality
1995: Enters plastic molded ball point pen market. Cello Clear pens with Swiss tips and German
ink sweep market. It has created revolution in writing instruments industry.
Vision
Vision of “uncompromising quality and total consumer satisfaction”
Products
Ball Pens : Includes brands like Advantic, Maxriter, Finegrip, Gripper, Techno Tip,
Maxima, Pin point, Benz, Benz Roller, Executive, Tri Fit, High Power Ball, Speed,
Power Ball pen.
Gel Pens : Includes brands like Pointec, Tech Gel, Free Flo Roller, Flo Gel, Freeflo
Gel, Cello Genius, Cello Gold / Silver, I Zone Gel.
Retractable : Includes brands like Click Grip, Powermax, Sapphire, Voyager
Markers : Including brands like Evermark, Maxx 500, Pocket 300, CD Marker.
Pencils: Including brands like Smarty pencils, Smarty with Grip.
Gift Products: Benz / Benz Roller, Cello Gold / Silver, Cello Magica, Triffit
Differentiation
40
CAPSTONE PROJECT: PEN INDUSTRY 2012
Inox Tip: Fibre tip technology that helps is smooth writing
LPHV: Low Pressure High Volume technology that helps to reduce pressure on paper
Elasto Grip: Elastic rubber grip to provide have perfect grip on the pen
Lubriflow: Used in Ball Pens for free and appropriate flow of ink
Lubrigel: Used in Gel Pens for free and appropriate flow of gel ink
Feather flow: Used to reduce the weight of pens for faster writing
STP Analysis
Segmentation:
School & College going students (Ball Pens, Gel Pens & Glitter pens)
Corporate Offices (Markers, Ball Pens, Retractable)
Target market:
Primary target market – Students (India), Corporate executive customers outside (Far
East, Mid East, Gulf)
Positioning:
“The Joy of Writing”
SCHEFIELDS41
CAPSTONE PROJECT: PEN INDUSTRY 2012
Schefield’s various products in this range are:
BALLPOINTPENS:
Polo/Stickball
Rubber ball
Transparent Stick Pens
Frosty
Prism
EasyBall
Easy Grip
Elan
Golf
Direct Fill Pens
Retractable Ball Point Pens:
Elite
Icon-Metal Version
Retro
GelPens:
Gel1000
Speed Gel
Gel500
Glitter Gel 1000S
Gel 2
Mission: “The Write Choice, The World Over”
42
CAPSTONE PROJECT: PEN INDUSTRY 2012
Incorporated in 1994, Schefields Exports is today one India's leading manufacturers and
exporters of gel pens and ballpoint pens. Schefields has grown from a modest turnover of USD
250,000 in 1994 to USD 3 Million in 2002. This growth has been possible through an almost
fanatical focus on quality and customer service, which has won us customers around
the world in the global writing instruments market. Their products have been widely accepted
because of the excellence in quality and our current exports cover a number of countries around
the globe, with our major markets being in the USA, UK and Africa. Our specialty lies in OEM
manufacturing for the world’s top brands.
Schefields manufacture a complete range of pens for the mass market, from the
economical direct fill throw away ball point pens to the top of the line smooth flowing gel pens.
43
CAPSTONE PROJECT: PEN INDUSTRY 2012
Their products are carefully designed to suit requirements of customers, from value added
features such as rubberized comfort grips for Western customers to economical designs for the
African market. Products are also custom designed for markets where specific modifications are
needed to adhere to laws such as the need for ventilated caps and absence of back
plugs in the United Kingdom. They also provide services for development of custom packing
and printing for their products depending on the
needs of the customer. Their manufacturing processes are instilled with a quality focus to ensure
that the end product is perfect in all aspects.
Each pen undergoes rigorous quality control and is inspected at various stages in the
manufacturing process, from inspection of the components to writing tests and individual
inspection of the final product, to ensure that we deliver a quality product. Many of their gel pens
use tips imported
from Switzerland and inks imported from Germany / Japan to give you smooth flowing and
trouble free writing. All the products are certified to conform to the major European norms for
product safety and performance.
MONTEX
44
CAPSTONE PROJECT: PEN INDUSTRY 2012
The goal to see the world proudly writing with the perfect writing instrument led to the formation
of Montex Group in the seventies, headed by Mr. Raman Jain .Starting off as the world’s largest
manufacturer of nibs, the company carved its niche in offering a host of quality writing
instruments.
Montex became the only Indian company to have everything – from manufacturing
accessories to assembling under one roof. Under the camaraderie of Mr. Raman Jain, Montex
today is a force to reckon, with a product profile as versatile and innovative. Montex has been
the first in India to introduce Transparent Ball Pens, Trendy Fountain Pens, Precision Tips, Gel
Ink Pens, Roller Ink Pens, Tank Pens, Rubber Grip Pens and Co-molded Pens. Montex is
recognized as a pioneer in the Indian pen industry with innovations to its credit.
In its endeavor to offer the best, the company has combined the advantages of its
infrastructure with the uniqueness of its raw material Supplying associates, who are world-
renowned names in their respective fields. The machineries used for production are some of the
biggest brands from Switzerland and Germany.
One up than all these is the thrust on regular updates in the field, and also consistent research and
development. The company has 3 state-of-the-art manufacturing units, located in the commercial
capital of India – Mumbai, along with other prominent locations. Montex is not only the most
popular brand in India, but also recognized world over. Its products reach out to over 35
countries in the world, covering almost all the continents.
Fountain pens, ball pens, gel pens and free ink system pens are the broad categories,
under which one could have several models ranging in colors, design and packaging. All
categories have a choice of blue, black, red and green ink colors. While price too plays an
important role in defining the range, of most importance is the distinctiveness of each product.
As per the current market trends, the company foresees a growth of 8-10% on annual basis in the
next 5 years, coupled with introduction of new models, upgraded technology, competitive
framework, planned distribution and promotions.
45
CAPSTONE PROJECT: PEN INDUSTRY 2012
CLASSMATE Pens
ITC forayed into the pen industry with the launch of Classmate pens across markets offering the
consumer stylish and attractive designs.
Classmate pens has been positioned to deliver unmatched comfort & neat writing experience.
Classmate pens are attractive in design and superior in quality. The pens offer ergonomical grip,
precision engineered tips & controlled ink flow mechanisms to keep the writing smudge free and
the writing experience a pleasure!
Exciting range of pens from Classmate include B Qwick, B Neat, B Fine, B Positive, Volt, UVO,
Radeon and Genghis under the Ball point pens and Gelofun, Octane, Crypton, Attila and Trojan
under the Gel pens.
TODAY’S WRITING PRODUCT LIMITED(TWPL)
Today’s Writing Products Limited (TWPL), Incorporated in April 29, 1992 as Creative Stationo
Products Ltd By promoter Rajesh.K.Drolia, a first Generation Entrepreneur is one of the leading
manufacturer of pen in India. Company has now changed it names from Creative Staiono to
Today’s writing Products Limited since October 1995.The company came up with it maided
public Issue at par in April 1996, which was oversubscribe two and half times. TWPL has been
awarded with " Certificate For Excellence' by the "Writing Instrument Manufacturer's
Organization Of India for the Year 2001-02, & 2002-03.
46
CAPSTONE PROJECT: PEN INDUSTRY 2012
Name of the Product Ball Pen/ Gel Pen. Point/Tip Of the
pen(mm)
Price Per Piece
MRP.
1. Today’s C5 Ball pen 0.5 5.00
2. Today’s Cameos Ball Pen 0.6 5.00
3. Today’s Floral Ball & Gel Pen 0.5 5.00
4. New Starry Ball Pen 0.6 6.00
5. Notty Boy Ball Pen 0.5 & 0.6 5.00
6. School Mate Ball Pen 0.5 5.00
7. Extra Mate Ball Pen 0.6 5.00
8. 24 Carat Export) Ball Pen 0.7 15.00
9. Colour Slim Ball & Gel 0.5 & 0.6 6.00
47
CAPSTONE PROJECT: PEN INDUSTRY 2012
10. Today’s Combo Ball pen 0.6 6.00
11. Extra Point Ball Pen 0.5 7.00
12. Today’s Gel @ 5 Gel pen 0.6 5.00
13. Ink Advisor Ball Pen & Gel 0.5 5.00
14. Today’s MIG 1 Ball Pen 0.5 & 0.6 7.00 &5.00
15. Pirate Ball Ball & Gel 0.5 10.00
16. Sonic Ball Ball Pen 0.5 & 0.6 10.00
17. Super Smooth Ball pen 0.5 12.00
18. Walker Ball Pen 0.5 10.00
19. Today’s 18 Carat Ball Pen 0.6 12.00
20. ZEE 200 Ball Pen 0.5 2.00
21. TRIK Ball Pen 0.5& 0.6 3.00
22. Pocket Pen Ball pen 0.5 3.00
23. Today’s Jockeys Ball Pen 0.5 2.50
48
CAPSTONE PROJECT: PEN INDUSTRY 2012
BRAND WONDER SERIES: This is the product range of Gel Pen which is very much popular among
the Consumers not only in India but abroad also. It has enormous range of Gel pen out of which some of
them are displayed under. It has Both Ball & gel Pen.
Name of the Product Ball Pen/ Gel Pen. Price Per Piece
MRP
1. Wonder Gel Jasmine Gel Pen 5.00
2. Wonder Gel School Series Gel Pen 5.00
3. Wonder Little Heart Gel Pen 5.00
4. Wonder Perfume Gel Gel Pen 5.00
5. Wonder Chroma Gel Pen 5.00
6. Wonder Apple Gel Gel Pen 5.00
7. Wonder Sparkle Gel Gel Pen 5.00
Product Features
The entire above mentioned product are some of the most premium and profitable
products of the company over the years due to its features and characteristics. Different Pen
had different features in it as a reason it was most popular in its segment Business Person,
Student or Service Person or others
Gel Pen @ 5 Today’s its features are as under:
1. Pocket Friendly Clip
2. Clear Crystal Body
3. High Technology Tip Permitting smooth Ink Flow
4. 1st Gel pen @ Rate of Rs 5 in India
49
CAPSTONE PROJECT: PEN INDUSTRY 2012
Ink Advisor
1. Smooth & Precise Writing
2. Ink Level Indicator
3. Easy Snap Cap.
Today’s walker
1. Smart Executive look.
2. Metallic Clip.
3. Inbuilt Grip for better Handling
4. Soft Grip Outer for long Writing
Sonic Ball
1. Soft Grip for Long Writing
2. Designer Tip
3. Air Flow Cap
4. Attractive Refill foiling
.
Carat 24 & 18
1. Innovative Design. & Executive Look
2. Smooth Precise Writing
3. Easy Snap Cap.
50
CAPSTONE PROJECT: PEN INDUSTRY 2012
PRICING DECISION
It is the exchange value of product or services always expressed in monetary terms. Price is
matter of Importance both for the buyer and seller. Price is important factor in purchase decision
to the seller price is the source of revenue and to buyer price is the sacrifice of purchasing power.
Price is powerful marketing tool. Thus it must be used correctly from the outset. Therefore, all
marketing planners must plan an accurate Pricing Decision.
Pricing Policy is generally decided by the Head office by MD & VP in consultation with
Director Sales & Marketing and depending upon market condition, demand, Raw material Price,
Competitors Price and Products and other factors.
Price of the Pen is Decided taking into Consideration the following Cost:
1. Raw Material Cost
2. Production/manufacturing Cost
3. Transportation Cost.
4. Packaging & Labeling
5. State Wise Price Is Decided
6. Variable & Other Cost is undertaken.
7. Other factors Considered
Consumer Demand For the Product.
Analyzing the Competitors Price & Product Range
The Company has specific Price range for the different products for different Zones.
PRICES FOLLOWED BY DIFFERENT BRANDS & THEIR PRODUCTS
Classmate Pens
Name of Ball Pen M.R.P
Ilet 7
Safari 5
B Qwick 5
51
CAPSTONE PROJECT: PEN INDUSTRY 2012
B Neat 5
B Fine 6
Radeon 10
Volt 10
B Positive 8
UVO 10
Name of Gel pen
GeloFun 5
Octane 10
Attila 15
Trojan 25
Margin Structure For Retailer
Nameof Ball Pen M.R.P % Margin of Retailer
Ilet 7 25%+ Scheme
Safari 5 Do
B Qwick 5 Do
B Neat 5 Do
B Fine 6 Do
Radeon 10 Do
Volt 10 Do
B Positive 8 Do
UVO 10 Do
Name of Gel pen
Gelo Fun 5 25%+ Scheme
Octane 10 Do
Attila 15 Do
52
CAPSTONE PROJECT: PEN INDUSTRY 2012
Trojan 25 Do
Cello Pen
Name of Ball Pen M.R.P
Butter Flow 10
Pin Point 10
Max writer 10
Griper 7
Name of Gel Pen
Pointack Gel 15
Classic Gel 10
Gel Stick 5
Igon 10
Margin Structure For Retailer
Name of Ball Pen M.R.P % Margin of Retailer
Butter Flow 10 30 %(approx)
Pin Point 10 Do
Max writer 10 Do
Griper 7 Do
Name of Gel Pen
Pointack Gel 15 30 %(approx)
Classic Gel 10 Do
Gel Stick 5 Do
Igon 10 Do
53
CAPSTONE PROJECT: PEN INDUSTRY 2012
Reynolds Pen
Name of Ball Pen M.R.P
045 6
Jetter 15 to 35
Name of Gel Pen
Racer 10
Mera Gel 5
Trimax 35
Margin Structure For Retailer
Name of Ball Pen M.R.P % Margin of Retailer
045 6 35%(approx)
Jetter 15 to 35 25%
Name of Gel Pen
Racer 10 25%
Mera Gel 5 30%
Trimax 35 25%
Linc Pen
Name of Ball Pen M.R.P
Linc Smart Gel 5
Glaycer 7
54
CAPSTONE PROJECT: PEN INDUSTRY 2012
Name of Gel Pen
Ocean Gel 5
Linc excutive 10
Margin Structure For Retailer
PLACE / DISTRIBUTION OF THE COMPANY
DISTRIBUTION CHANNEL
55
Name of Ball Pen M.R.P % Margin of Retailer
Linc Smart Gel 5 30%(approx)
Glaycer 7 35%
Name of Gel Pen
Ocean Gel 5 25%
Linc excutive 10 30%
MANUFACTURING FACILITIES
MOTHER DEPO
WHOLESSELERS
RETAILERS
CONSUMERS
DISTRIBUTORS STATE WISE
SUPER STOCKIEST
CAPSTONE PROJECT: PEN INDUSTRY 2012
Distribution is an important function of any organization. Making the product available at right
place and at right time with less cost is the key objective of any distribution management personnel.
DISTRIBUTION SYSTEM OF A TYPICAL FMCG PEN INDUSTRY FIRM
A country's economic prosperity depends not only on the volume of production, but also on the
systematic, efficient and equitable distribution of all that has been produced in the country. Thus,
equal distribution of the production is also very important from the point of view of economic
prosperity.
56
CAPSTONE PROJECT: PEN INDUSTRY 2012
The National Marketing in India is very vast with it covers a large canvas of more than 1100
million people, about 6,38,691 Villages, 561 Towns, around 593 Districts and 28 States, 7 Union
Territories, with a varied geography of deserts, plains, hills, mountains, plantations etc. having a
multiplicity of languages and varied business practices too.
So scientifically, the system of equitable distribution of commodities would rather be impossible
for any enterprise. It would be very difficult for the enterprise to cater to the needs of their very
varied clientele. And due to all the above situations, the enterprises are likely to restrict their
operations and confirm it to limited geographic territories unless there are excellent and cheap
facilities for transportation facilities are feasible and adequate, than a wide range of
intermediaries especially retail institutions like fair price shop, super bazaars, departmental
stores, etc. can be brought into the picture to reach the final products into the customers hands.
Due to all this only the distribution system is becoming more and more importance. Now the
essentiality of the physical distribution system cannot be ignored.
Thus, this distribution system needs special attention under economic planning. In knowledge
acquired by us under the present distributive mechanism, the composition of the system, its
structure and the way the various links in the system are related is at present are inadequate. Due
to these particular reasons, it is difficult to visualize clearly the various administrative problems
that are involved in the physical distribution system present in India.
DISTRIBUTION MANAGEMENT OF DIFFERENT FIRMS
LINC PEN
57
CAPSTONE PROJECT: PEN INDUSTRY 2012
It has 51 super stockiest and over 1200 distributors spread all over India.
The company has 2,282 distributors countrywide and 20 retail outlets called Office Linc
& ‘Just Linc’ .
‘Office Linc' has roped in channel partners like Airtel, DHL, Blue Dart, Microsoft, Music
World, Book Cellar, Anderson Printing, Presto, Aqua Java, SKP Moneywise and Talk,
who will stock their products and provide after-sales services as well.
As on today, total 18 stores of both format are already operational and the company
intends to have pan India presence in future.
58
Super Stockiest
Distributor Wholesaler
Retailer
End-consumer
Mother Depot
CAPSTONE PROJECT: PEN INDUSTRY 2012
CELLO
Every day millions of Cello pens hit the highways and make a dash to reach every little corner of
India. No wonder you will find Cello at over 731,000 outlets all over the length and breadth of
India. Cello network of 42 super-stockiest, 4200 distributors and an efficient field force of 900
spread across length and breadth of country. Cello employs some of the most advanced supply
chain management techniques to meet the size and the spread of demand and has a fully
computerized central order booking system intelligently integrated with production, units for
efficient production distribution and inventory management. Factory warehouses, C&F godowns,
distributions depots, dealer points and transportation crew make one the largest distribution
superstructures n the FMCG industry in India.
59Super Stockiest
Mother Depot
CAPSTONE PROJECT: PEN INDUSTRY 2012
GLOBAL PRESENCE OF CELLO
Operates in over 62 countries including US, Gulf States, The Far East, Africa, Baltic nations,
Scandinavian countries and Commonwealth of independent states of former USSR.
Opportunities of Cello
• 80% of sales in India
• Rejection rate of 0.1%
• Reader’s digest – Most trusted brand in Asia (2007)
Classmate
The company will be doubling its distribution network in upcoming two years. Currently it has
900 distributors who make the products available in over 70,000 outlets in India.
60
Distributor Wholesaler
Retailer
End-consumer
Finished Good Warehouse
CAPSTONE PROJECT: PEN INDUSTRY 2012
LUXOR
Distribution Channel Management of LUXOR is same as that of CELLO.
• Initially launched in – Delhi, Mumbai, Kolkata and Chennai. As the demand grew, they
were made available in other urban areas
• Sales distribution network of 850 Super distributors/Distributors and 1,00,000 retail
outlets in more than 650 cities
• Low priced versions available in small stationary shops
Reynolds
The company' products are available in 3,00,000 retail outlets across India covered through
a network of 2500 redistribution stockiest and 30 main stockiest. This is facilitated by a sales and
marketing team of over 300 professionals.
61
Mother Depot
Retailer WholesalerStockiest
End-consumer
CAPSTONE PROJECT: PEN INDUSTRY 2012
REYNOLDS EXCLUSIVE RETAIL OUTLET: WRITESITE
• Franchisee owned retail outlet
• First of its kind in the industry
62
Mother Depot
Super Stockiest
Distributor Wholesaler
Retailer
End-consumer
CAPSTONE PROJECT: PEN INDUSTRY 2012
• Presently 38 outlets in 16 cities : Ahmedabad, Allahabad, Chennai, Delhi, Ernakulam,
Gurgaon, Hyderabad, Indore, Jaipur, Kanpur, Lucknow, Mumbai, Noida, Raipur,
Varanasi & Kolkata
• Targets to set up 35-40 sites in malls
WriteSite, a novel concept in retailing, is an exclusive showroom for writing instruments.
It showcases a range of global products from Sanford and Reynolds, in a smart yet easy
ambience. Consumers can get to touch, feel and choose from a wide range of products in a
relaxed and trendy atmosphere. They have products for all ages, ranging from five rupees to five
thousand rupees.
PROMOTION STRATEGIES AND DECISION
Promotion plays a distinct role in marketing. It is a combined effort of salesman,
advertisement and marketing channels. Promotion Mix consists of the Following.
63
CAPSTONE PROJECT: PEN INDUSTRY 2012
Advertising
Sales Promotion
Personnel selling
Publicity/Public Relation.
ADVERTISEMENT: It is any paid form of non personal presentation and promotion of Ideas,
goods or services by an identified sponsor. Advertisement can be in the form of TV Ad's,
Newspaper & Magazines, Banner & Hoardings, Print Media, and Or Internet. Advertisement
mainly uses TV Ad's to promote their sales. Company made effective slogan during the World
Cup (JEETNA HAI for TODAY’S) for the Indian Team. It has also used certain cricketers for its
Adz's for promoting Sales. Some of the Newspaper in which AD's of Company appear is as
under:
The Economic Times
The Times OF India
The Indian Express
SALES PROMOTION: Sales Promotion is also one of the elements of promotion mix. It is
done to promote the sales of the product. Company uses different Schemes for the Super
Distributors, Distributors, and Retailers & Wholesalers. Target Selling is the criteria for the
Super Distributor if they achieve that target specified they are awarded with commission (Not
Disclosed). For Wholesalers & Distributors different Scheme like Scratch Card, Lucky Draw,
Discount on Bulk Purchase, different Gifts, Commission etc are used to promote sales.
CORPORATE SALES PROMOTION: Promotional or Corporate Sales are now a day’s plays
a big role in marketing because the concept of getting anything extra along with the product is
becoming popular among the consumers. Company’s Promotional department has seized this
64
CAPSTONE PROJECT: PEN INDUSTRY 2012
opportunity and is selling large chunk of its production to corporate customers which in turn is
used by them as sales Promotion tool.
LUXOR
• Advertising in the print and television media
• In 2001, Luxor roped Amitabh Bacchan due to his popularity among all groups
• Huge success with high recall value among TV viewers
• Display on special racks so that people could notice the complete range of pens
LEXI
65
CAPSTONE PROJECT: PEN INDUSTRY 2012
LINC PENS
66
CAPSTONE PROJECT: PEN INDUSTRY 2012
Shah Rukh Khan is the brand Ambassador
Appointed Rediffusion DYR, the fourth largest ad agency for brand building and has
allotted more than Rs 7 crore for ad campaign.
Punch line – “Zindagi Ke liye”
Participation in fairs / exhibitions to increase awareness.
Separate team to focus on modern retail.
Events with IPL teams Rajasthan Royals & Kolkata Knight Rider
Linc Pens Advertisement Through event:-
Linc Delears Meet with the Kolkata Knightriders & Rajasthan Royals
67
CAPSTONE PROJECT: PEN INDUSTRY 2012
Meet with Shahrukh Khan on 31st August 2010 at Kolkata
To Teachers with Love:
Christmas celebration with underprivileged children:
68
CAPSTONE PROJECT: PEN INDUSTRY 2012
REYNOLDS
• Print ads with agency JWT and other agencies
• TV ads with brand ambassador
• Student scholarship programs in schools
• Vending machines at schools and nearby places
• Sachin was signed the brand ambassador on May 15th 2006
• Sachin endorses in ads RacerGel,045
Reynolds Pens Advertisement:
69
CAPSTONE PROJECT: PEN INDUSTRY 2012
CELLO
• By Radio Advertisements : In Radio Mirchi, Big FM, 91 FM
• By TV Advertisements : 8 commercial TV ad’s
• Internet Ads
Cello Pens Advertisement Through T.V and others:
70
CAPSTONE PROJECT: PEN INDUSTRY 2012
Seasonality trend in the SKU
Major of the sales of Reynolds pens in Nov, Dec, March, Jun, July (approx 50% sales of total sales)
Major of the sales of Cello pen in Feb, March, Jun, July (approx 40% sales of total sales)
Major of sales of Linc pen in Nov, Dec, Feb, March, July, Sept (approx 70% of the total sales)
Conclusion
We can say that major sales come from the month of Nov, Dec, Feb, March, Jun, July.
FUTURE SCENARIO
• Outsourcing - A striking feature of the writing instruments segment, which is now
becoming the order of the day is outsourcing. For instance Linc, outsources to the extent of 30-
40 per cent of its requirements. Consequently, a great deal of attention has to be devoted to
vendor development, as quality is of paramount importance in the pen segment.
• Consolidation - Mergers and acquisitions would come into play in this business in a
big way as competition would have become quite fierce.
• Small-scale industry classification - The Writing Instruments Manufacturers,
Organization, reserved for the small-scale industry (SSI), has appealed to the Government to
increase the SSI limit for the writing instruments sector from Rs 3 crore to Rs 5 crore. If this
does happen, it would lead to more investments being infused in plant and machinery and pave
the way for further consolidation of the industry.
• Custom and Excise Duties – Considering the competition in the industry and race
towards free trade world, customs duties may reduce in future. This will make it difficult for the
players to survive if excise duties are not reduced accordingly.
MARKETING PENETRATION71
CAPSTONE PROJECT: PEN INDUSTRY 2012
It is measure of the extent of a product's sales volume relative to the total sales volume of all
competing products, expressed as a percentage.
Cello33%
Reynolds16%Linc
11%Add Gel
8%
LUXOR4%
MONTEX2%
LEXI1%
Classmate2%
Rotomac1%
Today's2%
Unorganized20%
MARKET SHARE OF DIFFERENT PLAYERS: 2011
Source: Linc Pen & Plastics Limited, Kolkata Office
VISIT TO LINC PEN & PLASTICS LIMITED
72
CAPSTONE PROJECT: PEN INDUSTRY 2012
Incorporated in 1994 by Mr. S. M. Jalan, Linc Pen & Plastics Limited (LPPL) is India’s leading
manufacturer, marketer and exporter of writing instruments and stationery products. The
company is headquartered in Kolkata with manufacturing facilities in Falta SEZ and Serakole
(West Bengal).
DISTRIBUTION NETWORK
LPPL provides its products directly to consumers through its 11 direct outlets. It has a vibrant all-India distribution network of 48 exclusive channel partners, 3050 distributors and 213 sales representatives.
LPPL is looking to increase its presence in Western and Southern India where its market share is currently low. The company is looking to expand in states like Rajasthan, Madhya Pradesh, Maharasthra and Tamil Nadu.
Strong footprint in export market
LPPL has presence in over 30 countries and has registered its brand in 46 countries. The company has emerged as the largest selling brand in Myanmar, Yemen, Bangladesh and Sri Lanka.
The company’s exports has grown 6.36% from Rs 52.18 crores in 2009-10 to Rs 55.50 crore in 2010-11 despite concerns like geo-political unrest in Middle East and sudden imposition of excise duties on writing instruments in March 2011 (owing to time
73
LINC
CHANNEL PARTNERS
DISTRIBUTORS
WHOLESELLERS/RETAILERS
CAPSTONE PROJECT: PEN INDUSTRY 2012
consuming documentation). With Middle East problems subsiding, LPPL’s exports are expected to increase.
Increase in exports will be a positive development for LPPL as price realization is better in certain markets abroad leading to higher margins in export sales as compared to domestic sales.
Strong brand image
LPPL has successfully leveraged its strong brand image to reach to a wide consumer base in India. The company has invested Rs 22.70 crores in branding and advertising in the last three years. The wide scale branding exercise undertaken by the company will further enhance the topline of the company going forward.
The company has earmarked Rs 10 crore as advertisement budget with endorsers such as Shah Rukh Khan for Linc and Katrina Kaif for Uniball. This will further augment LPPL’s brand image and increase its mass appeal.
LPPL had inked sponsorship deals with three teams for Indian Premier League (IPL) 2011 – Kolkata Knight Riders, Deccan Chargers and Kings XI Punjab and was the Associate Sponsorer of Rajasthan Royals. The association with IPL has enhanced the brand image of LPPL through prominent visibility of the company’s logo in the electronic and print media for over a month.
Catering to all sections of the society
As pricing plays a very important part in India’s writing instruments industry, LPPL has products that cater to all sections of the society.
The company is focusing on premium and allied products (pens priced above Rs 10). This is positive for LPPL as competition in this segment is relatively lower as compared to the mass segment. LPPL is expected to launch 7 new products by Q2FY12 of which 4 will be in Rs. 10 and above segment. This will further augment the margins of the company going forward.
Alliances
LPPL enjoys an exclusive marketing tie-up with Mitsubishi Pencil Company Ltd, Japan for Uni-ball brand priced between Rs 30-225.
The company is also associated with C. Joseph Lamy, Germany for marketing its premium Lamy brand in India with prices starting from Rs 550.
CONSUMER BUYING BEHAVIOUR
RESEARCH OBJECTIVE
74
CAPSTONE PROJECT: PEN INDUSTRY 2012
"Identifying Consumer Buying Behavior regarding Pens"
The main objective behind the project is to identify consumer buying Behavior regarding the
Pen, which will ultimately help the company management to study the analysis and understand
the behavior that will enable the companies' marketer's to effectively sell the product.
SUB OBJECTIVES
1. To get a better understanding of pen Market.
2. To determine comparative consumer perception of consumer for pens between Rs.5-Rs20
3. To determine consumer preferences in respect of pen brands
4. To know the various reasons for which customers purchase pen
5. To understand the buying behavior of the consumers
6. To analyze the effect of display on customer purchasing
7. To understand relatives influence on customers in the purchasing process
8. To determine the main reason for 'Preferred' Brand
9. To understand the preference of brand from retailers point of view
10. To study the impact advertisement on consumers in different Age Group, Income Group
& by profession
11. To help the Company Marketing Managers to Design an Effective Marketing Mix for it
target Customers
RESEARCH METHODOLOGY
METHODS OF DATA COLLECTION
75
CAPSTONE PROJECT: PEN INDUSTRY 2012
The data has collected in two ways.
Primary Data: Primary research includes data collected from retailers, consumers & distributors.
Secondary data: Secondary data was collected from the magazines, websites and other such sources.
TOOLS AND TECHNIQUES OF DATA COLLECTION:
Questionnaire method: Primary data is collected by surveying the respondent personally. I have used both the Close & Open Ended Question where the researcher is free to answer in their own words too.
RESEARCH DESIGN
1) Purpose of study: Descriptive Study
In the current scenario, there are large numbers of stationary players present in India. At one point, the preferred brand in India for the stationary requirements used to be Reynolds and Luxor. The competition have kept on increasing as companies realized that to increase market share in India, they need to launch new and innovative products. Thus there is a need to know the changes in Consumer Behavior related to the different stationary players.
2) Degree of research question crystallization: Exploratory study
3) Method Of Data Collection : Personal Interview & Questionnaire Method
4) Method of Research: Applied Research
5) Type Of Research: Quantitative
6) Sampling Area: South Kolkata/ Navi Mumbai
7) Sampled Population : Retailers, Business Person, Service Person, Student, Housewife's etc
8) Sample Size : 100 Consumers
9) Sampling Technique : Convenience Sampling
10) Data Analysis: Using simple percentage method based on it table and graphs formulated
makes the data analysis
QUESTIONNAIRE ANALYSIS
Questionnaire for Retailers
76
CAPSTONE PROJECT: PEN INDUSTRY 2012
Q1-Who are the frequent buyers of pens in the price range between Rs5-Rs.20?
(Opt for 1 or more than 1)
(a) Students (b) Servicemen (c) Businessmen (d) Other Professionals
60%25%
10%5%
Frequent Buyers
StudentsServicemenBusinessmenOther Professonals
Findings:
Students are the most frequent buyers (60%) followed by service men (25%).
Q2-Maximun sales under the price range between Rs5-Rs.20 are for which brand of pens?
(Rank in order of sales)
(a) Luxor (b) Reynolds (c) Cello (d) Linc (e) Others (please specify)………
77
CAPSTONE PROJECT: PEN INDUSTRY 2012
5%
16%
26%45%
8%
MAX SALES Rs 5 - 20
LUXORREYNOLDSLINCCELLOOTHERS
Findings:
Between the range of Rs.5 – Rs.20, Cello accounts for 45% of the sales followed by Linc &
Reynolds.
Chief products of sales of
Cello: Cello Gripper, Butterflow, Pin Point, Finegrip, Maxwriter
Linc: Ocean Gel, Glaycer, Smart Gel
Reynolds: Racer Gel, Racer Gel II, 045 fine carbure, 040 bold, fusion
Q3-Maximum schemes are being offered by which brand of pens?
(a) Cello (b) Luxor (c) Classmate (d) Linc (e) Reynolds
78
CAPSTONE PROJECT: PEN INDUSTRY 2012
36%
26%
10%
8%
20%
Schemes
CelloLincReynoldsLuxorOthers
Findings:
Cello provides the best schemes according to the retailers, followed by Linc as compared to
others.
The schemes varies from free refill to free pen or free gift with bulk buying.
Q4-When people buy pens what among the following options do they prefer? (Rank as per
the priority)
(a) Price (b) Quality (c) Refillable (d) Schemes (e) Looks of the pen
79
CAPSTONE PROJECT: PEN INDUSTRY 2012
29%
27%14%
11%
19%
Preferences
Price
Quality
Refillable
Schemes
Looks
Findings:
According to retailer, the important buying characteristics of customers are as follows as per the
decreasing order:
Price (29%)
Quality(27%)
Looks(19%)
Scheme(14%)
Refillable(11%)
Q5-Sales of pens between the ranges of Rs5-Rs.20 is high during which period of time?
(a) High during exams (b) Stable throughout the year
(c) When new schemes are introduced.
80
CAPSTONE PROJECT: PEN INDUSTRY 2012
19%
68%
13%
Higher Sales Period
ExamsStable throughoutNew schemes are present
Findings:
68% retailers believe that sales are constant and stable throughout
19% feels that sales are more during exams
13% feels sales are more when schemes are available
Q6-Your best business deal is with which company of pens?
(a) Reynolds (b) Cello (c) Luxor (d) Linc (e) Others……………..
81
CAPSTONE PROJECT: PEN INDUSTRY 2012
15%
34%
14%
22%
15%
Best Deal
ReynoldsCelloLuxorLincOthers
Findings:
Cello tops the list with a consistent 30% profit margin for all its products
Linc being second, provides a profit margin which varies from 25% to 35% depending
upon the price
Reynolds being third, provides a profit margin between 25% to 30%
Q7- Do you think that Brand endorsement by celebrities is really helpful in boosting sales
of pens?
(a)Yes (b) No
82
CAPSTONE PROJECT: PEN INDUSTRY 2012
20%
80%
Brand Endorsement
YESNO
Findings:
80% retailers feels that brand endorsement through celebrities does not boost the sales of pen.
QUESTIONNAIRE FOR CUSTOMERS
Q1- How frequently you purchase a pen?
(a) Once in a week (b) Once in 15 days (c) Once in a month (d) Borrow
83
CAPSTONE PROJECT: PEN INDUSTRY 2012
12%
20%
54%
14%
Purchase Frequency
Once in a week Once in 15 days
Once in a month Borrow
Occupation Wise Classification (in %)
Purchase Frequency
Once in a week Once in 15 days Once in a month
Borrow
Business Person 12 20 68 0
Service Person 15 36 49 0
Student 14 12 40 34
Findings
54% of the respondents said that they buy a pen once in a month which means that they make
use of it fully for one full month.
14% people agreed to borrow it from someone and use. This means that either they may or may
not return it back. It depends upon the person who borrows it.
Conclusion:
Students (34%) mostly borrow pen from others, while service person buy pen mostly within 15
days or in a month.
Q2- Which pen strikes first in your mind when the range is between Rs.5 - Rs.20 (check
only one):
(a) Luxor (b) Reynolds (c) Cello (d) Linc (e) Any other……………….
84
CAPSTONE PROJECT: PEN INDUSTRY 2012
8%23%
45%
12%
13%
Favourite Pen
LUXORREYNOLDSCELLOLINCOthers
Occupation Wise Classification (in %)
Brand Luxor Reynolds Cello’s Linc Others
Business Person
6 21 36 15 22
Service Person 18 28 42 10 2
Student 8 18 58 14 2
Findings:
From the above pie-chart, it has been analyzed that majority of the consumers (i.e.) 45% of them prefer Cello as a brand to be used, which is followed by Reynolds (22%) & Linc (12%).Others include Lexi, Add pens etc.
Conclusion:Occupation Classification clearly signifies that cello is not only preferred by majority of the consumers and is preferred highly by all the consumers in different demographic segments.
Q3- Rank the brands of pens according to your preference from 1-5?
Cello, Reynolds, Luxor, Linc, Add Pens
85
CAPSTONE PROJECT: PEN INDUSTRY 2012
Rank 1 Rank 2 Rank 3 Rank 4 Rank 50
5
10
15
20
25
30
35
40
45
Luxor
Reynolds
Cello
Linc
Add Pens
Findings:
RANK 1: Cello
RANK 2: Reynolds
RANK 3: Luxor
RANK 4: Linc
RANK 5: Add Pens
From the above chart it is clear that that they recognize Cello as the leader among all the companies. At 2nd position is Reynolds & at 3rd position is Luxor followed by Linc & Add Pens.
Q4- Which type of pen do you currently use?
(a) Ball Pen (b) Gel Pen (c) Ink Pen (d) Roller ball Pen
86
CAPSTONE PROJECT: PEN INDUSTRY 2012
66%
21%
2% 12%
Pen being currently used
Ball Pen
Gel Pen
Ink Pen
Roller ball Pen
Occupation Wise Classification (in %)
Types Ball Pen Gel Pen Ink Pen Roller ball Pen
Business Person 83 17 0 0
Service Person 56 24 0 20
Student 55 19 8 18
Findings:From the above pie-chart, it is visualized that majority of the consumer prefer and use Ball Pen. Almost 65% of the respondent says that they use Ball Pen. And the next best usage is of Gel Pen by 21%, followed by Ink & Roller ball Pen which are least preferred by the consumers in the modern or present market condition.
Conclusion:It is identified that only two categories are preferred by the consumers that accounts to nearly 80 % of responses. Consumer less prefer Ink & Gel Pen. Thus, Company should more concentrate in Ball & Gel Pen segments rather than Pilot or roller or Ink Pens.
Q5- Which Colour of Pen do you normally use? (Check only one)
(a) Blue (b) Red (c) Black (d) Multiple colors
87
CAPSTONE PROJECT: PEN INDUSTRY 2012
75%
6%
15%
4%
Color Of Pen
Blue Red Black
Multiple Color
Occupation Wise Classification (in %)
Color BLUE RED BLACK MULTIPLE COLOR
Business Person 88 0 12 4
Service Person 58 24 14 4
Student 65 0 16 9
Findings:
Blue is the most preferred Color for consumers and majority of the consumers uses blue Color as in colleges, schools, institutions, corporate and at many other place. Blue is commonly accepted Color for writing, whereas Red & Black are mainly used by the Professors or Doctors or Lawyers.
Q6- Which Ball Pen Point do you normally use?
(a) 0.5 (b) 0.45 (c) 0.6 (d) 0.8
88
CAPSTONE PROJECT: PEN INDUSTRY 2012
62%8%
12%
18%
Ball Pen Fineness
0.5
0.45
0.600000000000001
0.8
Occupation Wise Classification (in %)
POINT OF PEN 0.5 0.45 0.6 0.8
Business Person 52 0 14 34
Service Person 60 10 10 20
Student 72 12 10 6
Findings
Point ranging 0.5 & 0.8 are more demanded and used in the market by almost 80% of the respondents. 0.45 & 0.6 are least preferred.
0.45 results into very thin writing where as 0.8 results into bold writings according to consumers.
Q7- What motivates you to buy a pen? (Ranking from 1 to 5)
89
CAPSTONE PROJECT: PEN INDUSTRY 2012
(a) Price (b) Quality (c) Refillable (d) Availability (e) Looks of the pen
Rank 1 Rank 2 Rank 3 Rank 4 Rank 50
10
20
30
40
50
60
70
80
PriceQualityRefillableAvailabilityLooks
FINDINGS for motivational features in a pen
Rank 1: Quality
Rank 2: Price
Rank 3: Refillable
Rank 4: Availability
Rank 5: Looks
Q8- Which Characteristics of Pen Influences your Buying Decision?
90
CAPSTONE PROJECT: PEN INDUSTRY 2012
(a) Point (b) Grip (c) Long Life (d) Ink (e) Performance
24%
15%
11%12%
38%
Key Characteristics Of Pen
POINTGRIPLONG LIFEINKPERFORMANCE
PURPOSE: The Purpose of asking this question is to know the features/characteristic of pen that influences the buying decision of majority of the consumers in different segments (i.e.) Business Person, Service Person & Student.
Occupation Wise Classification (in %)
Characteristics Of Pen
Point Grip Long Life Ink Performance
Business Person 24 12 10 12 42
Service Person 22 21 5 4 46
Student 29 16 10 11 34
Findings: From the above chart it has been analyzed that the most influencing characteristic is Performance by 38%, which is followed by the Point with 24%. Grip accounts for 15%. Long Life and Ink are least influencing features of the pen impacting consumer buying decision.
Service men look for Performance & Grip, and Students prefer the point.
Long life is being given the least preference by all.
Q9- Do you use separate pens for signing and writing purpose?
(a) Yes (b) No
91
CAPSTONE PROJECT: PEN INDUSTRY 2012
YES; 22.6
NO; 79.2
If Yes then which pen do you use for signing purpose and for writing purpose?
For signing purpose …………………………………
For writing purpose ………………………………….
Signing Purpose
Gel Pen, Parker, Uniball usually
Writing Purpose
Cello Techno Tip, Cello Gripper, Reynolds 045
Q10- Are you conscious of status while purchasing a pen?
(a) Yes (b) No
92
CAPSTONE PROJECT: PEN INDUSTRY 2012
30%
70%
STATUS CONSCIOUSNESS
YESNO
Occupation Wise Classification (in %)
STATUS CONSCIOUSNESS YES NO
Business Person 26 74
Service Person 42 58
Student 15 85
FINDINGS
70 % people do not buy the pen as their status symbol
42% of service person came to status conscious while buying pen
Only 15 % students came to be status conscious
Q11- From where did you get influence about the pen you use?
(a) Advertisement (b) Colleagues (c) Friends (d) Retailers
93
CAPSTONE PROJECT: PEN INDUSTRY 2012
43%
7%
28%
21%
Key Influencer
Advertisement
Colleagues
Friends
Retailers
Findings:
From the above pie-chart, it can be concluded that Advertisements (TV Ads, Print Ads, and Internet) are the most influencing Ad impacting the buying decision of different consumer segments having almost 43% of the responses. The next most influencing medium is friends followed by Retailers & Colleagues.It can be seen that even retailers influence the customer base of 21%.
Q12- Which Advertising Media Influence You the Most?
(a) TV ads (b) Banners & Hoardings (c) Newspapers & Magazines (d) Internet
94
CAPSTONE PROJECT: PEN INDUSTRY 2012
45%
19%
27%
9%
Most Effective Advertisment
TV adsBanners & HoardingsNewspapers & MagazinesInternet
Purpose
The purpose is to know the most effective media affecting consumer buying decision. It also aims of finding the media which is most preferred and can be used as for the promotion scheme.
Findings
From the chart it can be concluded that TV Ads are the most influencing Ad impacting the buying decision of different consumer segments having almost 45% of the responses. The next most influencing media is Newspaper impacting the buying decision. Internet is the least influencing among all media.
Q13- What is the price range in which you generally used to buy a pen?
(a) Below Rs 10 (b) Between Rs 10-Rs 20 (c) More than Rs 20 (d) Price is not an issue
95
CAPSTONE PROJECT: PEN INDUSTRY 2012
21%
55%
6%
18%
Price Range
Below Rs 10
Rs 10 - 20
More than Rs 20
Price No Issue
Occupation Wise Classification (in %)
PRICE RANGE Rs. 5 - 10 Rs. 10 – 20 > Rs. 20 Price no issue
Business Person 19 62 5 14
Service Person 0 71 7 32
Student 42 38 8 12
Findings: It can be analyzed from the above graph that out of the total responses, consumer
mostly favors and prefer their pen in the price range of Rs 10 – 20. The next most proffered price
range is Rs 5 -10. The high price range ranging from more than Rs 20 & above that is least prefer
by the consumers.
Interpretation: Business Person are ready to Pay up to Rs 6 -10 for their prefer type and brand
of pen, whereas service person do use pen in the same range but in students category they are not
willing to spend more and are using Pen mainly in the Price range of Rs 5 – 10.
Some of the service person did not have any price issues over buying of pen.
Q14- Do you refill your pen regularly?
(a) Yes (b) No
If No, Why?
96
CAPSTONE PROJECT: PEN INDUSTRY 2012
23%
77%
Refill
Yes
No
Reason for being No:
Pen Cost is Negligible than Refill
Replacement Results in Poor Performance
Refill is unavailable
Findings
From the above table, it has been analyzed that majority of the respondents (i.e.) 77% out of 100 do not refill their pens. The reasons for not refilling is that the Pen Cost is negligible as compared to a new refill so consumers prefer to buy a new pen rather than refill, and even the refill of second time does not give the original performance in writing, thus this two reason accounts for more than 60 consumers not refilling their pen. Sometimes, the refill is not available also.But some say that it’s better to go for New Pen rather than refill, some are using the Rs2 unbranded Pen which are use and throw.
Q15- Which Type of Schemes affect your buying Decision?
(a) Extra Refill (b) discount on bulk Purchase (c) Free Pen (d) Others……………
97
CAPSTONE PROJECT: PEN INDUSTRY 2012
17%
44%
28%
11%
SCHEMES
Extra RefillDiscount on bulkFree PenOthers
Purpose
The purpose of this question is to know whether the scheme provided by the retailer or the companies motivate the consumer to buy more or not. If no, then which are the other schemes that influence the consumer to buy it which can help the company to select the right promotion mix for selling the product?
Findings
It can be visualized from the above chart that different promotional activities undertaken by the companies are definitely impacting the buying decision of consumers. But among the promotional schemes, the most influencing promotional schemes that affects the decision is Discount on Purchase of Pens (In Bulk more than 1 or 2).
The next most influencing scheme is of free Pen given by the companies on purchase of 1 pen (1 per 1 free) impacts the decision.
For some 10% of the responses, they believe that no scheme impacts their buying decision as pen is low price product where consumer involvement is less.
RETAILER SPEAKS
Students are the most frequent buyers (60%) of pen, followed by service men (25%).
98
CAPSTONE PROJECT: PEN INDUSTRY 2012
Between the range of Rs.5 – Rs.20, Cello accounts for 45% of the sales followed by Linc &
Reynolds.
Cello provides the best schemes according to the retailers, followed by Linc as compared to
others. The scheme varies from free refill to free pen or free gift with bulk buying.
According to retailer, the important buying characteristics of customers are as follows as per
the decreasing order:
Price (29%)
Quality(27%)
Looks(19%)
Scheme(14%)
Refillable(11%)
68% retailers believe that sales are constant and stable throughout, 19% feels that sales are
more during exams, 13% feels sales are more when schemes are available
Cello tops the list with a consistent 30% profit margin for all its products; Linc being
second, provides a profit margin which varies from 25% to 35% depending upon the price;
Reynolds being third, provides a profit margin between 25% to 30%
80% retailers feels that brand endorsement through celebrities does not boost the sales of
pen.
CUSTOMER SPEAKS
99
CAPSTONE PROJECT: PEN INDUSTRY 2012
Cello Brand enjoys market leadership position and it is also prefer by the majority of the
consumer for writing among different brands OF Pen available in the market.
In different types of Pen, Ball pen is preferred by most of consumer’s and they have ranked
Ball-Pen as No 1 among different Types of pen
54% of the respondents said that they buy a pen once in a month
Blue Color is preferred by the consumer among different colors, whereas Red & Black are
mainly used by the Professors or Doctors or Lawyers.
RANK 1: Cello, RANK 2: Reynolds, RANK 3: Luxor, RANK 4: Linc, RANK 5: Add Pens
Point ranging 0.5 & 0.8 are more demanded and used in the market by almost 80% of the
respondents.
Motivational features in a pen are as follows: Rank 1: Quality, Rank 2: Price, Rank 3:
Refillable, Rank 4: Availability & Rank 5: Looks
The most influencing characteristic is Performance by 38%, which is followed by the Point
with 24%. Grip accounts for 15%. Long Life and Ink are least influencing features of the pen
impacting consumer buying decision
70 % people do not buy the pen as their status symbol
Most of the consumers Buying Decision is not only influenced by any specific single
characteristics but it is influenced by either the combination of more than one. Thus majority
buying decision is influenced by Performance of Pen in Total. Of course in different
consumer segments there are different characteristics impacting buying Decision.
Occupation Wise Classification
o For Business Person: The most influencing characteristic impacting buying decision
is Price.
o For Service Person: Price & Performance have impact influence on buying decision.
It signifies that Service Person purchase pen not only considering price but along with
it some different features such as Grip, LongLife, etc are also impacting the Decision.
But still, Price & Performance are dominating features for this Consumer Segments.
o For Students: - In this consumer segment, it cannot be predicted or analyzed that any
one characteristic is impacting their decision. But student wants everything in the
Pen: Affordable Price, Proper Grip, Long Life and even the performance of the pen.
100
CAPSTONE PROJECT: PEN INDUSTRY 2012
Thus student buying decision regarding pen is influenced equally by almost all
variables
In the Pen Market, the consumers are not loyal to a particular Brand. Majority of them do
not stick or purchase the same brand. Repeat Purchase is very less. The major reason for this
is Pen is Low Involvement Product, as well as low price but in huge product varieties and
price range. Consumers do not purchase the same brand mainly due to Influx of Newer and
Newer Products in the Market by different players and in different Price range ultimately
changing the consumer buying Decision
In the Present market condition where Pen is available even in the Price Range of Rs 1 – 3,
consumers do not go for refilling the Pen. They do not refill pen as they believe that new pen
cost is negligible as compared to purchasing a refill. E.g. Todays Wonder Gel & Linc Ocean
Gel is Rs 5 and refill of the same is of Rs 4. Even the refilling does not give the same writing
performance as of the original refill. So consumer refrains from refilling the Pen.
Tv Advertisement is having a significant impact on majority of the Consumer. Influence of
different Advertising Media is not differing by Profession. Thus almost all media is having
the impact on buying decision of different consumer Segments.
The most influencing promotional schemes that affects the decision is Discount on Purchase
of Pens (In Bulk more than 1 or 2). The next most influencing scheme is of free Pen given by
the companies on purchase of 1 pen (1 per 1 free) impacts the decision.
It can be analyzed that out of the total responses, consumer mostly favors and prefer their pen
in the price range of Rs 10 – 20. The next most proffered price range is Rs 5 -10. The high
price range ranging from more than Rs 20 & above that is least prefer by the consumers.
Recommendations
101
CAPSTONE PROJECT: PEN INDUSTRY 2012
Cello Company is regarded as No 1 market leader due to its product varieties mainly in
the Price range ranging from Rs 5 – 20. This is Low Price Segment where majority of
consumers prefer to buy their pen. And in the Point Size of 0.5 & 0.8, Cello has huge
product range. At the same price range, others have very less products which can satisfy
consumer need. So hereby I suggest that Companies should come up with the product in
Effective Price range Of Rs 5 – 20, with Point Size of 0.5 & 0.8, targeted to different
consumer segments.
Companies are spending huge sum of money on Advertisement, with Logo (Every Pen
Speaks) but like other Companies it is not targeting specific segments. From the survey, it
is clear that different variable/features influence buying decision of consumer in different
segments. Thus Companies should not have a common Positioning for all Target
Markets. The companies should try to focus on a target group by focusing on various
characteristics that affect their buying decision. For
E.g.: Business Personà Producing the Pen in the Price range of Rs 11 -20, that gives
good writing performance and on the basis of that positioning the product in the same
way emphasizing the two variables for Specifically Business Person. Other variables does
not impact their decision as the above mentioned
Eg: Service Person :- PRICE RANGE— Rs 11 -20
Characteristics to Emphasize – Complete Performance
For Student:- PRICE RANGE— Rs 1 -10
Characteristics to Emphasize – Price
Most of the retailers were unsatisfied with the pending schemes that has been providing
to them. They suggested that no schemes should be left pending.
Another aspect which they highlighted was that some companies did not work at all
towards the promotion. Neither did they provided banners or stands for that matter for
display on the shops due to which the attention and focus of the customers could not be
tapped. Most of them suggested that there should be introduction of new product lines
under this range with sufficient availability at the same time so that Luxor can get into the
rat race under the given price category.
102
CAPSTONE PROJECT: PEN INDUSTRY 2012
In this world of Competition, there is competition not only from organized players but
unorganized players also. I hereby suggest that firms with its own R & D facilities can
outperform this unorganized players by producing the Pen In the price range of Rs 1 -3
(i.e.) Use & Throw which are favorite among students now a Days. There is huge
Opportunity for the Company to have such type of pens and even take First Move
Advantage in this type of pen as still no organized player is producing Pen in Price Rs 1 –
3. Nataraj Glow is one of the organized player who has started the trend with use & throw
pen starting from Rs. 3
I also suggest the companies to increase the Product Varieties substantially in Ball Pen
Segment as it has about 65% of the total Market.
Thus if the Companies use all of the above mentioned features for specific target market and makes the product, fixes the Price and position it properly and effectively, then it can definitely outperform its competitors in different segments.
103
CAPSTONE PROJECT: PEN INDUSTRY 2012
LIMITATIONS OF THE STUDY
This study is to done by interviewing limited number of customers & retailers; therefore
it may not reflect the authentic information
The sample size is 50 customers & 50 retailers, thus it may not give true results
The information collected is restricted to the consumer of Kolkata & Navi Mumbai
region only, so we cannot generalize to other regions
Time duration was limited to few weeks. So a proper justification cannot be made
towards the project
Some of the respondents were non co-operative, as they were busy with their work.
104
CAPSTONE PROJECT: PEN INDUSTRY 2012
FUTURE SCOPE OF THE STUDY
The present study is on customer satisfaction towards pen provided by the various
brands; set of whole could extend the study.
The present study covers all product perception & buying behavior of the customers. If
the study is extended to all Company Marketing Managers to Design an Effective Marketing Mix
for it target Customers, it would be very useful. It would be better to know the behaviors and
expectations of all the customers.
Indian businessmen involved in the business of stationary items needs to work on proper
research and development of the sector. Design, Colors, Quality, Themes, Reaching the right
partners and to find out new markets for their products should be on their agenda. There is a need
to focus on providing assistance to businessmen for buying good machinery, necessary
infrastructure should be provided, to enhance export activities, workshops, conferences and
training programs should be conducted at state and national level. Logistics is also a key concern
that goods should reach on time which helps in maintaining a relationship with various
customers across the globe.
Further study can help to sought
To suggest a least cost distributive system without imparting the efficiency
of distribution
To recommend a fair margin to the trade after examining the present margin
and operation expense
105
CAPSTONE PROJECT: PEN INDUSTRY 2012
EXCLUSIVE BUSINESS OUTLET FOR PEN INDUSTRY
Exclusive distribution is when you only have one outlet/store in a given area for your product. The store can enjoy a higher margin and little competition and so may perhaps prominently place the product to encourage sales. This may help the product seem more desirable, make more money per sale, and minimize channel conflicts, but may reduce total profits.
Fast-moving consumer goods (FMCGs) are usually not distributed this way but it is reasonable to consider when manufacturing or distribution is constrained or to make the product seem more special in its early stages.
The advantage of having exclusive distribution with fmcg product is that we will have focus on our products. The disadvantage is that it will cost us more and may end up as a fixed cost which we cannot manage if the turnover goes down.
The exclusive or mono-brand retail concept is a vendor-centric model. Here, a retailer has deep commitments in terms of investments, sales targets and marketing. The benefits that a retailer can derive from exclusive retail are territory protection, better margins, manpower subsidy, demo subsidy, backend rebates, brand marketing rights, lead generation support and marketing support from the vendor.
In an exclusive store, uniformity in terms of store design, store interiors, store size, products, prices, promotions and events are strictly maintained. This method prevents competition, and gives all the retailers a fair chance to earn profits. Vendors also work more closely with exclusive retailers to conduct events and promotional schemes, and provide, along with the retailers, region- or city-specific advertisements.
More Attention
One benefit of exclusivity is that the manufacturer's or distributor's products receive much more attention. The retailer may highlight the exclusive product in their store newspapers or ads. Some retailers may even include coupons on the exclusive items, distributing them in coupon magazines or other print media. The manufacturer may also be permitted to set up store demos or videos in stores, showing customers how to use the new products.
106
CAPSTONE PROJECT: PEN INDUSTRY 2012
Greater Shelf Space
Manufacturers and distributors with exclusivity enjoy greater amounts of shelf space in stores. Most retail stores allocate a certain amount of space for product categories and competing brands. Manufacturers or distributors with retail exclusivity get to use 100 percent of the allotted space for their products. Some may even get the use of store end caps, which are located at both ends of the long shelving units or gondolas. Greater amounts of shelf space can mean fewer out-of-stock situations. Consumers may also feel the brand is special because it dominates a certain store aisle.
Greater Sales and Profits
Retail exclusivity or mono-branding, as it is sometimes called, can lead to greater sales. Retailers may devote all their in-store marketing efforts to that one brand. Their sales reps may also be well-versed on all the product features and benefits of the brand. Hence, the reps only have one product or brand to push in that particular product category. A product manufacturer or distributor may also enjoy higher profits from the greater sales volume.
Minimized Competitive Influence
Manufacturers and distributors can minimize their competitors' influence with multiple retail exclusivity arrangements. Competitors are forced to make do with available retail outlets. This minimizes competitors' distribution options, which can hamper their sales and profits. Consumers are inconvenienced because they may have trouble finding a competitive brand. Hence, they may be forced to purchase the available brand. A competitor has no influence or impact in stores where a manufacturer or distributor enjoys retail exclusivity.
Disadvantages
Unlike multi-brand outlets, exclusive retailers get very little footfall and lose out on every other customer. Over 80 percent of consumers today prefer to go to a store where they can see and test all the different brands and then make a decision. If a retailer has a multi-brand outlet he can keep the customer in the store by showing him different varieties of products. But if a retailer has an exclusive outlet and the customer wants to see and test the competitor’s products he can’t retain the customer.
Two other disadvantages are the risk of losses if the vendor’s market share falls, and the lack of freedom to make your own decisions.
107
CAPSTONE PROJECT: PEN INDUSTRY 2012
STORE CONCEPT
Suggested Surface: 400 sq. ft.
Designed by the best architect department
Located at the top places of the objective city
To attract people to make them aware about the new products of the company
Every store has to keep the same style worldwide
RECOMMENDATIONS
Rent should not exceed more than 70% of the monthly average sales.
It is recommended to negotiate a monthly fixed rent representing a minimum sales
volume, and a variable over that amount.
Company can give advice, if the licensee is interested, in the lease negotiation.
Sales volume is directly affected by the location and exposition of the space to be rented.
To promote the brand idea, a single branded outlet can be a better option because with
this, the idea can be communicated effectively. The ambience is designed carefully to flourish
the brand image and give a holistic experience to the customer. The furniture, music, lighting,
and colors are chosen which helps to create the brand image. Since there is a considerable
control over the ambience of the single branded outlet, the target group can be attracted
effectively by providing an experience which is in line with the brand idea.
The objective of the single branded outlets is spotting the next trend, test-market
combinations that a retailer might otherwise hide at the bottom of the rack, pick-up consumer
feedback, and even making customers co-creators. These outlets are the ultimate in being
customer-centric. Beyond being points of interaction, they enable the companies to pick ideas,
track trends, test products and even reverse-engineer products based on feedback.
108
CAPSTONE PROJECT: PEN INDUSTRY 2012
EXCLUSIVE BUSINESS OUTLET PLAN OF PEN COMPANY X
Break Even Analysis will be there if there are some fixed costs.
Suppose, if we purchase the shop of 400 sq.ft. in Inorbit mall, Vashi, then it would cost around
40-45 Lakhs as per prevailing market rates.
So it’s better if we take it on rental basis. And if we take shop on rental basis, then per month
rental is assumed to be Rs.1, 00,000.
Manufacturing expenses for the financial year 2012-13(Company point of view)
Total cost of manufacturing per unit = Rs. 2
Add central sales tax @ 4% = (4+2)*.04
= 0.24
Local sales tax @ 15% = (4+2)* .15
= 0.9
TOTAL manufacturing cost per unit = 3.14(2+0.24+0.9)
No. of units = 2400
Total manufacturing cost = Rs. 7536
Sale of Pens (Initially: First Year)
Type1 Type 2 Type 3 Total
Units
SP per unit 10 15 20
No. of units 1,000 800 600 2,400
Total sales
10,000 12,000 12,000 36,000
109
CAPSTONE PROJECT: PEN INDUSTRY 2012
BREAK EVEN ANALYSIS
Supposing Distribution Cost as Rs.4
I) Rs. 10 pen
if shop is taken on rental basis at Rs. 1, 00,000
Fixed cost= Rs. 1, 00,000
Sales per unit = Rs. 10 per pen
Variable cost per unit = Rs. 7.14 (4+3.14)
Contribution per unit = Rs. 2.86
BEP = Fixed cost = 1,00,000 = 34,965 units
Contribution per unit 2.86
Hence, we can conclude that we will achieve our break even with 34,965 units approximately.
II) Rs. 15 pen
Fixed cost= Rs. 1,00,000
Sales per unit = Rs. 15 per pen
Variable cost per unit = Rs. 9.14 (4+2+3.14) (extra Rs. 2 for better quality in Rs. 15)
Contribution per unit = Rs. 5.86
BEP = Fixed cost = 1,00,000 = 17064 units
Contribution per unit 5.86
110
CAPSTONE PROJECT: PEN INDUSTRY 2012
Hence, we can conclude that we will achieve our break even with 17064 units approximately.
III) Rs. 20 pen
Fixed cost= Rs. 1,00,000
Sales per unit = Rs. 20 per pen
Variable cost per unit = Rs. 11.14 (4+4+3.14) (extra Rs. 4 for better quality in Rs. 20)
Contribution per unit = Rs. 8.86
BEP = Fixed cost = 1,00,000 = 11286 units
Contribution per unit 8.86
Hence, we can conclude that we will achieve our break even with 11286 units approximately.
111
CAPSTONE PROJECT: PEN INDUSTRY 2012
Cash account
Receipt
Amount(Rs.
) Paryment
Amount(Rs.
)
To capital a/c 10,00,000 by salaries a/c 20,000
To Sales a/c 36,000 by advertising expenses a/c 15,000
by insurance premium a/c 10,000
by rent a/c 1,00,000
by administrative expenses a/c 2,000
by miscellaneous expenses a/c 1,000
by shop interior a/c 100,000
by Electricity expenses a/c 15,000
by balance c/d 7,73,000
Total 10,36,000 Total 10,36,000
Assumptions:
Shopkeeper’s salary is assumed at Rs. 10,000 p.m. and there are 2 persons in the shop. So
at the end of year the salaries a/c has been debited with Rs. 2,40,000
Insurance premium paid Rs. 10,000
Total sales are Rs. 10, 36,000 as per schedule A.
Balanced remained in the cash book is at the end of year is Rs. 7,73,000
Profit can be calculated after deducting govt. taxes, assumed it is 30% so tax will be
112
CAPSTONE PROJECT: PEN INDUSTRY 2012
TAX CALCULATION:
Rs. 7,73,000* 30%= 2, 31,900
Final profit= Rs. 7, 73,000 - Rs. 2, 31,900
= Rs. 5, 41,100
113
CAPSTONE PROJECT: PEN INDUSTRY 2012
CAPITAL BUDGETING
Calculation of NPV
Year Cash inflows Discounting factor Present value of cash inflow
2012-13 5,41,100 0.909 491860
2013-14 6,00,000 0.826 495600
2014-15 8,00,000 0.751 6,00,800
Total 15,88,260
initial investment (10,00,000)
Net present value 5,88,260
Assumption: discounting rate has been taken as 10%
It is giving positive NPV, which means project is feasible.
114
CAPSTONE PROJECT: PEN INDUSTRY 2012
Present Scenario
Reynolds & Linc have started their EBO and are successful in making people aware of their
products. Their main concern is to make the people feel that the brand is prestigious to them.
People can understand the uniqueness of the products better as the retailer is more interested in
explaining his own brand.
RENOLDS: WRITESITE
LINC: JUST LINC & OFFICE LINC
REYNOLDS EXCLUSIVE RETAIL OUTLET: WRITESITE
• Franchisee owned retail outlet
• First of its kind in the industry
• Presently 38 outlets in 16 cities : Ahmedabad, Allahabad, Chennai, Delhi, Ernakulam,
Gurgaon, Hyderabad, Indore, Jaipur, Kanpur, Lucknow, Mumbai, Noida, Raipur,
Varanasi & Kolkata
• Targets to set up 35-40 sites in malls
115
CAPSTONE PROJECT: PEN INDUSTRY 2012
WriteSite, a novel concept in retailing, is an exclusive showroom for writing instruments.
It showcases a range of global products from Sanford and Reynolds, in a smart yet easy
ambience. Consumers can get to touch, feel and choose from a wide range of products in a
relaxed and trendy atmosphere. They have products for all ages, ranging from five rupees to five
thousand rupees.
LINC EXCLUSIVE STORES
20 retail outlets called Office Linc & ‘Just Linc’ .
‘Office Linc' has roped in channel partners like Airtel, DHL, Blue Dart, Microsoft, Music
World, Book Cellar, Anderson Printing, Presto, Aqua Java, SKP Moneywise and Talk,
who will stock their products and provide after-sales services as well.
As on today, total 18 stores of both formats are already operational and the company
intends to have pan India presence in future.
116
CAPSTONE PROJECT: PEN INDUSTRY 2012
THE WAY AHEAD
The production of pens in India has been steadily growing since the beginning of the twentieth
century. It is still expected to register a sharper rise in the next decade. The Industry is widely
dispersed comprising of large size units and small sized units. The pen industry is basically a
labor intensive having vast employment potential. Due to this there is a greater need for a well
knit distribution system to help the industry to grow and meet the needs of millions and millions
of Indians who are striving to achieve a higher standard of living.
117
CAPSTONE PROJECT: PEN INDUSTRY 2012
REFERENCES
1. http://www.acnielsen.co.in/site/index.shtml 2. http://www.outlookindia.com/ 3. http://economictimes.indiatimes.com/ 4. http://www.dessenceconsulting.com/ 5. http://marketing.wtwhmedia.com/ 6. http://www.gmarketing.com/ 7. http://www.dnaindia.com/ 8. www.skpmoneywise.com 9. www.wikipedia.com 10.http://www.economywatch.com/world-industries/stationery-
industry.html11.http://www.giftsnaccessories.com/gifts-stationery/539.htm 12.http://www.indianretailer.com/magazine/ 13.http://stationery.indiabizclub.com/ 14.http://marketingjournal.blogspot.in/ 15.http://lincpen.com/ 16.http://cellopens.com/ 17.http://www.reynolds-india.com/reynolds/ 18.http://www.luxorpen.com/ 19.http://pssmagazine.com/?p=1369
118
CAPSTONE PROJECT: PEN INDUSTRY 2012
ANNEXURES
Questionnaire for Retailers
Name: ……………………………………. Today's date: …………………………
Address:
………………………………………………………………………………………………………
……………………………………………………………………………………………
…………………………………………………………………………………………
City: …………………………………… State: ……………………………………..
Zip:
Telephone: ……………………………… Mobile: ……………………………..
Date of birth: ……………………………… Sex: _ Male _ Female
Q1-Who are the frequent buyers of pens in the price range between Rs5-Rs.20?
(Opt for 1 or more than 1)
(a) Students (b) Servicemen (c) Businessmen (d) Other Professionals
Q2-Maximun sales under the price range between Rs5-Rs.20 are for which brand of pens?
(Rank in order of sales)
(a) Luxor (b) Reynolds (c) Cello (d) Linc (e) Others (please specify)………
Q3-Maximum schemes are being offered by which brand of pens?
a) Cello b) Luxor c) Classmate d) Linc e) Reynolds
Q4-When people buy pens what among the following options do they prefer? (Rank as per
the priority)
(a) Price (b) Quality (c) Refillable (d) Schemes (e) Looks of the pen
119
CAPSTONE PROJECT: PEN INDUSTRY 2012
Q5-Sales of pens between the ranges of Rs5-Rs.20 is high during which period of time?
(a) High during exams (b) Stable throughout the year
(c) When new schemes are introduced.
Q6-Your best business deal is with which company of pens?
(a) Reynolds (b) Cello (c) Luxor (d) Linc (e) Others……………..
Q7- Do you think that Brand endorsement by celebrities is really helpful in boosting sales
of pens?
(a)Yes (b) No
Q8-Your valuable suggestion for Luxor to capture market share in lower
price range?
………………………………………………………………………………………………………
………………………………………………………………………………………………………
………………………………………………………………………………………………………
………………………………………………………………………………………………………
………………………………………………………………………………………………………
………………………………………………………………………………………………………
120
CAPSTONE PROJECT: PEN INDUSTRY 2012
THANK YOU
Questionnaire for Customers
Name:……………………………………. Today's date: ……………………...
Address……………………………………………………………………......................................
...........................................................................................................................................................
City:……………………………… State: ………………………………
Zip:
Telephone:……………………………... Mobile: ……………………………
Date of birth: ……………………………… Sex: ______Male _____Female
Occupation (Tick) : Student / Businessman/ Service
Please circle the preferred option:
Q1- How frequently you purchase a pen?
(a)Once a week (b) Once in 15 days (c) Once in a month (d) Borrow
Q2- Which pen strikes first in your mind when the range is between Rs.5 - Rs.20 (check
only one):
(a)Luxor (b) Reynolds (c) Cello (d) Linc (e) Any other……………….
Q3- Rank the brands of pens according to your preference from 1-5?
Cello, Reynolds, Luxor, Linc, Add Pens
Q4- Which type of pen do you currently use?
(a) Ball Pen (b) Gel Pen (c) Ink Pen (d) Roller ball Pen
Q5- Which Colour of Pen do you normally use? (Check only one)
(a) Blue (b) Red (c) Black (d) Multiple colors
Q6- Which Ball Pen Point do you normally use?
(a) 0.5 (b) 0.45 (c) 0.6 (d) 0.8
121
CAPSTONE PROJECT: PEN INDUSTRY 2012
Q7- What motivates you to buy a pen?
(a) Price (b) Quality (c) Refillable (d) Availability (e) Looks of the pen
Q8- Which Characteristics of Pen Influences your Buying Decision?
(a) Point (b) Grip (c) Long Life (d) Ink (e) Performance
Q9- Do you use separate pens for signing and writing purpose?
(a) Yes (b) No
If Yes then which pen do you use for signing purpose and for writing purpose?
For signing purpose …………………………………
For writing purpose ………………………………….
Q10- Are you conscious of status while purchasing a pen?
(a) Yes (b) No
Q11- From where did you get influenced about the pen you use?
(a) Advertisement (b) Colleagues (c) Friends (d) Retailers
Q12- Which Advertising Media Influence You the Most?
(a) TV ads (b) Banners & Hoardings (c) Newspapers & Magazines (d) Internet
Q13- What is the price range in which you generally used to buy a pen?
(a) Below Rs 10 (b) Between Rs 10-Rs 20 (c) More than Rs 20 (d) Price is not an issue
Q14- Do you refill your pen regularly?
(a) Yes (b) No
If No, Why?
Q15- Which Type of Schemes affect your buying Decision?
(a) Extra Refill (b) discount on bulk Purchase (c) Free Pen (d) Others……………
THANK YOU
122