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Crafts International 1 Marketing Plan

1.0 Executive Summary

Crafts International is startup export organization, the products in which Crafts is dealing
are Handicrafts. Crafts is developing its network of supplies of handicrafts from the
different parts of the country .In conjunction with the local handicrafts manufacturers
Crafts is dealing in the Textile handicrafts, Clay, Metal and Jewellery, Hand knitted
carpets ,Stone Crafts, Glass, Ceramic and Onyx, Camel and Snake skin products, Pottery,
Costume dolls, Shell and bone products and woodwork. In contrary to that we are
developing a market plan for our organization to export our products to Germany. The
research is done on the German handicrafts markets in this regard centre for business
development for developing countries market survey played a vital role in developing the
strategies. The market of handicrafts is on boom and Pakistan share is very less existent
in German markets. To fill that gap we are concentrating on the premier hand made
handicrafts, to compete with the local competitors in Germany along with the big players
in the market like China. The Competition is fierce due to bulk of cheap machine made
goods by the competitors; the focus of crafts would be on pure craftsmanship and value
addition to the consumers. We will sell initially through the local distribution network
which includes, wholesalers, importers, under the contract terms. We have to develop the
relationship with the retailers in order to penetrate the market.

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Crafts International 2 Marketing Plan

2.0 Introduction

Crafts International is the newly born Export organization which deals in the Textile
handicrafts, Clay, Metal and Jewellery, Hand knitted carpets ,Stone Crafts, Glass,
Ceramic and Onyx, Camel and Snake skin products, Pottery, Costume dolls, Shell and
bone products and woodwork. The purpose of building such an export organization is due
to the fact that the handicrafts market has been largely ignored by the Pakistani exporters.
Our target market is the Germany, The products under the Crafts international Signature
would be totally customized to serve the German likings and standards. This would
provide Crafts International with an extra ordinary opportunity for market growth as
handicrafts and decorative industry is on boom in Germany. The company has developed
its market plan which is as under.

3.0 Situation Analysis

The need of exporting handicrafts in German market arises by observing the worldwide
trend of handicrafts markets and the share of Pakistani handicrafts in the world markets.
As per a report from Federal Bureau of Statistics, handicrafts exports dropped 78
percent in the first half of the 2006.Pakistani handicrafts are losing share in global
markets. Export of handicrafts between July and December 2005-2006 stood at Rs334
million, which has been reduced to Rs74 million in first half of 2006-2007. World
markets are flooded with artificial machine-made handicrafts instead of handmade ones.
Far East markets have been conquered by cheap Chinese goods, while Italy is dominating
the European markets owing to lesser prices. The Export of Pakistani handicrafts is less
to European markets. (www.fibretofashion.com, Pakistani Handicraft export, Anonymous
January 22, 2007)
The Asian manufacturing industry is highly diversified, comprising of several
establishments engaged in manufacturing of pottery, ceramics, clay pieces, paintings,
sculptures, metal craft, antique furniture, antique jewelry, gems and stones, textiles, paper
craft, toys, leather based products. These industries provide additional employment and
raise the level of living for both rural and urban populations. The global handicrafts
industry accounts for a market share of 100 billion. This industry plays a dominant role in
the economic development of the rural mass of every country and earns substantial
foreign exchange (Crafts Central, Craft Industry Overview of Global Handicraft
Industry)
According to Eurostat Statistics, The European Union gifts and decorative articles
market was worth about $ 35 billion. During 2000-2004, the market experienced an
average percentage growth of 5.0 %. In 2004, Germany was the largest market,
accounting for 24.6% of the total EU markets, followed by France (17.2%), the United
Kingdom (15.4%), Italy (13.0%), Spain (7.8%), the Netherlands (4.3%), and Belgium
(2.5%). In the field of home decorations, there is a growing demand for products with a
personal and emotional touch. Consumers are willing to pay a higher price for unusual
and special products. EU consumers value the style, quality of construction and
functionality of the product. (CBI, Europe markets survey, 2007).

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Crafts International 3 Marketing Plan

The main source of wooden gifts and handicrafts is China which is responsible for 35
percent of the total imports. The difference with other exporters is huge. The imports
from China are almost 6 times as large as the runners-up. Not only are imports from
China are large, they are also rapidly growing at 15 percent since 2000, whereas imports
from Italy, Poland, Indonesia and Belgium all showed a decrease since 2000. Other
growing sources are India (+15%), Netherlands (+7%) and Thailand (+4%). (EU
MARKET BRIEF 2007, Compiled for CBI by, tuyu Bv, the Netherlands, 2007)
There is a great potential for Pakistani handicrafts as they are almost less existent in the
European markets, Crafts international took it as an opportunity and is looking for foreign
export marketing to Germany. The reason to export our products in Germany is due to
fact and reports that Germany is the largest consumer of handicrafts and gifts.

4.0 Market Summary

Crafts International possess a research on handicrafts and decorative market in Germany


by Centre for the promotion of imports from developing countries which is also
known as CBI , In the changing world scenario, craft products exported to various
countries form a part of lifestyle products in international market. The impact is due to
the changing consumer taste and trends. In view of this it is a high time that the Pakistani
handicraft industry should go into the details of changing designs, patterns, product
development, requisite change in production facilities for a variety of materials,
production techniques, related expertise to achieve a leadership position in the fast
growing competitiveness with other countries.
The rural craft persons of Pakistan who are the backbone of Pakistani Handicraft Industry
has God gifted with inherent skill, technique, traditional craftsmanship but that is quite
sufficient for primary platform. However, in changing world market these craft persons
need an institutional support, at their places.
With over 82 million inhabitants, Germany is the largest market for giftware and
handicrafts items in Europe. A member of and situated within the European Union,
Germany is supplied with giftware and handicrafts from Germany as well as the
surrounding European countries such as France, Italy, Switzerland and the United
Kingdom and from other parts of the world like Russia, Latin America, Africa and
Asia.(Crafts central, Handicrafts markets in Germany)
The size of the total German giftware and handicrafts market varies according to the
definition of giftware and handicrafts. With its present size around $ 18 billion it
corresponds to a broad definition of giftware and handicrafts that includes the following
items as home furnishings, art metal ware, table accessories, Christmas decoration, wood
ware and furniture, imitation jewelers, artificial flowers/plants, scents/cosmetics, sweets,
toys/computer games, books, discs/videos, watches/jewellery, certain apparel/textile
items and others.
Handicrafts are classified into two categories:
1. Articles of everyday use
2. Decorative items

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Crafts International 4 Marketing Plan

The craftsmen use different media to express their originality. The diversity of the
handicrafts is expressed on textiles, metals – precious and semi-precious, wood, precious
and semi-precious stones, ceramics and glass.
Target Markets
1-House hold formation (New Home Builders)
2-Occasional (Christmas, Birthday, Marriages, Thanks giving)
3-Professional Men (Men in age range of 25 -50)
4-Professioanl Women (Women in age range of 35 and 50)
5-Baby Boomers (People with age 55 and above)

4.1 Market Demographics


The profile for typical crafts international customers consists of the following geographic,
demographic and behavior factors.
4.1.1 Geographic
Germany has the second largest population in Europe and is seventh largest in the area.
The territory of Germany covers 137,847 sq miles (Wikipedia, Germany).
The target market would be the population of 40 million inhabitants in the six big cities
of Germany
Cologne / Rhine Ruhr Area 11 million
Berlin 6 million
Munich 6 million
Frankfurt Rhine Main Area 5 million
Stuttgart Metropolitan Region 4 million
Hamburg Metropolitan Region 4 million
Leipzig-Halle-Dresden (Saxon Triangle) 4 million
Source :( wikipedia, Demography pf Germany)

4.1.2 Demographic Trends

Age structure of the Germany is monitored by the "Statistisches Bundesamt" (Federal


Statistical Office of Germany). The population of Germany is approximately 82,468,000,
making it the 14th most populous country in the world. Germany's population is
characterized by zero or declining growth with an aging population and smaller cohort of
youths.

• 0-14 years: 14.7%

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Crafts International 5 Marketing Plan

• 15-64 years: 67.3%


• 65 years and above 18.0%
Population growth rate: -0.033% (2007)
Birth rate: 9.8 births/1,000 population (2007)
Death rate: 10.52 deaths/1,000 population (2007)
Germany with the approximately 20 million older people It is forecast that this ageing
effect will continue in the near future. . (Wikipedia, Demography of Germany)
The ageing society in the Germany also brings interesting developments for exporters
from developing countries like Pakistan. These elderly people form an interesting
segment, not only because of their growing number, but also for their considerable
spending power. Also, because they have an increasing amount of free time, their
spending on house, hobbies and vacations are increasing. Value for money remains an
important factor for competing in this segment.
New household formation, which is an important engine for growth in the gifts &
decorative articles market, is not expected to rise substantially in the near future. The
number of households in the Germany is increasing by 0.8 % annually. Through
developments like ‘dilution’, family households are getting smaller because of the simple
fact that people are having fewer children as 2.9 - 3.0 people per household. It is forecast
that the number of households will increase more strongly than the growth of the
population size in the Germany.(Eurostat, German Demographics,2006)
The increasing household formation will increase the target markets. According to Euro
monitor, the number of marriages is an important sales driver in the gifts and decorative
articles market, as gifts and decorative articles make up a substantial share of the
wedding gifts given. According to Eurostat, the German marriage rate dropped from an
average of 6.3 marriages per 1000 inhabitants in 1980 to 5.1 marriages in 2002. Many
people today choose to delay their marriage until they are somewhat older. This
development has some implications for the gifts and decorative articles market, newly-
weds today tend to have well-equipped homes, making wedding This segment of
population will play a major part in our product

4.1.3 Behavior Factors

Following behavior factors play important role in our target market

Linguistic factor

The linguistic factor seems obvious. The communication partners can have problems with
English, the agreed language of transatlantic business. At first we may think of the
German partner as the one who makes mistakes, fails to understand quickly enough, and
misses a few things. This point of view is simply conventional and unfair. Successful
transatlantic communication is not so much the German side rising up to the level of the
American side, but both sides finding common ground, a working modus of
communication in the Zone. (Eurostat, German Demographics,2006)

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Crafts International 6 Marketing Plan

Cultural factor

The cultural factor refers to a cultural conditioning which most people are not aware of.
Many people only become aware of a different cultural conditioning when they travel
abroad and are confronted with different patterns of behavior and ways of seeing things.
Thus the significance of cultural behaviors is "hidden." We often only become aware of
this hidden significance when someone fails to do as expected, such as not saying
goodbye, or not shaking hands. For this reason, experts on culture, such as the
anthropologist Edward T. Hall, refer to culture as “hidden" or "silent language."
(Eurostat, German Demographics,2006)

Individualism

Consumers are more likely to create comfortable and up-to-date interiors, which reflect
their individual style and requirements. These developments also influence the demand
for gifts and decorative articles, particularly in the (home) decorative sector. Consumers
appreciate one-of-a-kind items, which personalize their homes. Products that have a
personal and emotional link to the consumer, which appeal to multiple senses, including
sight, sound and scent, are in demand as consumers seek to make their homes more
comfortable and comforting. People are seeking decorative articles which contribute to a
positive impact on the mood and emotional atmosphere in their home. Next to ‘improving
the quality of life’, the following reasons are important for buyers of gifts and decorative
articles: pleasure, beautify the home, education, relaxation, and entertainments. (Eurostat,
German Demographics, 2006)

4.2 Market Needs

Crafts International in view of the wide range of products that could be considered as
giftware and handicrafts, it is difficult to name standards. Compliance with EU standards
and regulations is strongly suggested. There are, however, only few product groups in
the giftware and handicrafts field that has to follow standards. It is essential that CE-
labeling be observed where required. The CE-mark (including conformity statement and
technical documentation).While the quality regulations for candles are obligatory
assuring a certain level of quality, the toy regulation and the electronic standards have to
be observed because of safety considerations: To ensure these we are seeking forward to
the following benefits that are important for our customers.
Quality Craftsmanship
The customers work hard for their money and they mostly don’t enjoy spending on gifts,
handicrafts or any decorative unless it gives them inner satisfaction and belief of quality.
Well thought out designs
The objective is to provide customers with well built unique designs and crafts that may
touch their sense of beauty every time they choose our product; Affordability is the key

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Crafts International 7 Marketing Plan

factor, so crafts international will try to maintain the both objectives simultaneously to
provide best utilization of customer’s disposable income.
4.3 Marketing Trends
The substantial supply of giftware and handicrafts has transformed the German giftware
and handicrafts market into a fiercely price-competitive market place. Nevertheless,
innovative and new to market giftware and handicrafts items place still have good market
prospects. It is essential for the German giftware and handicrafts marketers to find new
products to stay competitive. Although German consumers may be willing to pay a high
price for exclusive items they are very price conscious and want value for money. Among
traditional gift items, candles, festive items, including Christmas decoration, exclusive
gift boxes and gift-wrap, ribbons, nostalgic calendars and all types of scented items have
best prospects. The German market shows a strong demand for low-priced candles. Thus
imports from Poland and China have increased substantially. The average growth for the
overall giftware and handicrafts is estimated at 1-2 percent over the years (CBI, German
Handicrafts Market, 2006)
“Seasonality” plays a major role in the buying patterns of gifts and decorative articles.
According to the German statistical Report by Statistisches Bundesamt (Federal
Statistical Office of Germany), approximately two thirds of decorative articles are sold in
the second half of the year. This has much to do with the fact that people spend more time
within their homes in this period. Christmas and New Year are also important sales
drivers. In springtime, the garden is more important, especially in the Northern European
countries including Germany. The peak periods for the sales of gifts generally revolve
around special occasions, such as Christmas and New Year, Valentine’s Day, Easter,
Mother’s Day and Father’s Day. (CBI, German Handicrafts Market, 2006)
German consumers are generally not very familiar with the different brands of gifts and
decorative articles, as can be derived from the high market share for private label
products. Most consumers do not believe that famous brands automatically mean better
quality. Brand awareness, however, differs per product group. In the Ceramic ware, and
Glassware sectors, brand awareness is generally higher than in the other segments,
mainly due to the marketing efforts of the manufacturers in these sectors. In the higher
end of the market, brand awareness is generally higher. Examples of brand names
(mainly operating in the higher segments) are Ginori, Waterford-Wedgwood, and Arc.
Advertising is another marketing trend .The trade press and trade fairs are important
means for gifts and decorative articles manufacturers to promote their products. This
indicates that most manufacturers target their advertising efforts towards specialist buyers
and push their products into the distribution chain. The retailers selling gifts and
decorative articles to the consumer use the media, catalogues, and Internet and consumer
fairs to promote their products. (CBI, German Handicrafts Market, 2006)

The market trends show continuous growth in the directions of handicrafts market in
Germany
.

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Crafts International 8 Marketing Plan

4.4 Market Access and Growth

EU member states and Asian countries, China in particular, are major suppliers of
giftware and handicrafts to the German market. Crafts International is making an
approach to the German market have to have comprehensive product literature and data
sheets professionally translated into German. Although English is widely understood, a
well-prepared translation gives an important marketing edge, particularly in the initial
presentation. Crafts International should preferably appoint an agent or distributor who
can maintain a stock sufficient to answer short-notice orders.
The Growth of Handicrafts is on boom with china as the major supplier to the Germany
handicrafts markets the market growth at $ 5,115.5 millions in 2004 and is estimated to
grow at this pace .The largest share of 26.4 % is held by Germany in the overall EU
markets (CBI, German Market statistics,2004)

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Crafts International 9 Marketing Plan

5.0 SWOT ANALYSIS


Strengths
6.0 Competition
1-Abundant and cheap
labor hence can compete
on price.
2-Low capital investment
and high ratio of value
addition.
3-Aesthetic and functional
qualities
4-Hand made and hence
has few competitors.
5-Variety of products
which are unique
6-Exporters willing to
Opportunities handle small orders. Threats
7-Increasing emphasis on
1-Rising appreciation for product development and 1-Decline in Pakistan share
handicrafts by consumers design up gradation in international handicrafts
in the developed countries markets due to:
2-Widespread novelty 2-Better quality products
seeking produced by competitors
3-Large discretionary from Europe, South Africa,
income at disposal of South Asia, etc.
consumer from developed 3-Better terms of trade by
countries competing countries
4-Growth in search made Consistent quality and
by retail chains in major increasing focus on R&D
importing countries for Weaknesses by competing countries
suitable products and 4-Better packaging and
reliable suppliers. 1-Inconsistent quality and Stricter international
5-Opportune for agencies Inadequate market study standards
to promote marketing and marketing strategy
activities 2-Lack of adequate
6-Use of e-commerce in infrastructure and
direct marketing communication facilities
3-Capacity to handle
limited orders
4-Untimely delivery
schedule
5-Unawareness of
international standards by
many players in the market

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Crafts International 10 Marketing Plan

German handicrafts market was of $ 5,115.5 millions in 2004 and is estimated to grow
at this pace .The largest share of 26.4 % is held by Germany in the overall EU markets
German giftware and handicrafts consumption is growing. Thus, there are expectations
for additional growth. In general the market shows good business opportunities if prices
and quality are competitive and delivery schedules are fulfilled. The competition we
could face from local and foreign competitors.

6.1 Local Competitor


A few well-established German manufacturers of giftware and handicrafts items are:

1. Koziol GmbH, Erbach 2. Krebs-Glas-Lauscha GmbH,


Ernstthal
3. Barti GmbH, Garching 4. Margarete Steiff GmbH, Giengen
5. Duni GmbH & Co. KG, Bramsche 6. WMF AG, Geislingen
7. Rastal, Hoehr-Grenzhausen 8. Rosenthal AG, Seib
9. Fartak, Lahr 10. W. Goebel Porzellanfabrik,
Roedental
11. GIES Kerzen, Glinde 12. Walther-Glas GmbH, Bad Driburg
13. Jet Papier GmbH, Bernau
Source (Germany Bead Stores, Listed by Store Name)

6.2 International Competitors


Fierce price competition in Germany is intensified by the increasing quantity of Chinese
and Asian made products on the market. For Pakistani organizational like Crafts
International this situation is exclusive to Pakistani handicrafts items or new-to-market
products. This means that firms offering exclusive and niche market giftware and
handicrafts could be proved successful. Germany is supplied by giftware and handicrafts
from nearly all of the European countries. German firms often import specific product
groups from a particular country. Major suppliers of pottery are, for example, Spain and
Portugal; fine exclusive stationery comes from Italy, France and Switzerland; candles
from Poland, China and Portugal; dried flowers from the Netherlands etc

7.0 Product Offering

Crafts International will offer following products in German markets. Handicrafts are
characterized as products depicting a cultural trait of a specific region or time and
produced by hand or foot having traditional or artistic features derived from the
geographical peculiarities of craftsman and generally on small or cottage industry and not
on mass production basis. There is following different kinds of handicrafts produced in
Pakistan which we will offer to the German Markets.

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Crafts International 11 Marketing Plan

• Textile based handicrafts

Hand printed textiles including block and screen printing, hand printing by pen, tie
and die are used in products ranging from bed-covers to sheets, dress material to
upholstery and tapestry. The famous embroidered articles of silk and cotton often
embellished with mirrors, shells, beads, and metallic pieces.

• Clay, Metal and Jewellery


Brass, copper, bronze, metal is used for a variety of wares and in a variety of finishes.
Scintillating ornaments are available in a wide range of patterns, styles and
compositions. Made from precious metals, base metals, precious and semi-precious
stones; these ornaments have traditional as well as modern styles.

• Woodwork
Wooden articles in Pakistan range from the orient ally carved to the absolutely
simple. One can find toys, furniture, decorative articles, etc. bearing the art and
individuality of the craftsman.

• Stone Craft
The intricately carved stoneware made of marble, alabaster or soapstone

• Glass ,Ceramic and Onyx


Glass, ceramic and onyx products are a fast upcoming segment in the handicrafts
from Pakistan

• Camel and Snake skin Products

• Pottery

• Hand knitted carpets

• Shell and bone products

• Costume dolls

Craft concentration Areas:

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Crafts International 12 Marketing Plan

A wide range of handicrafts are produced in all the four provinces of Pakistan and Azad
Kashmir, Punjab is richly famous for its traditional crafts ,with Sindh, Balochistan and
NWFP have unique traditions of handicrafts .

8.0 Critical Issues

As a startup export organization, Crafts international have some critical issues to face that
are as follows:-

8.1 Matching products and the product range

Matching products and the product range is critical because a German importer can select
a suitable business partner if he/she knows exactly what range we can offer. A precise
review of the product range, therefore, aims at identifying the most suitable candidates
out of the many potential customers. A product range consists of several product groups
(range width), each with several different products (range depth). One product can have
several variations.

8.2 Product design

In general, the gifts and decorative articles market is becoming more seasonal, taking its
lead from the fashion industry. According to Euro monitor, product innovation and
design are important growth drivers in the gifts and decorative articles market. The
different consumer groups all have their own requirements. Also, between countries there
can be profound differences, as Euro monitor puts it; success of a particular design in
one market is no guarantee of its success in another market. We should point out that taste
and design preferences are very personal.

8.3 Presentation of our products

A German importer for Crafts International products can only select us as a suitable
business partner if he/she knows exactly what range we can offer. It is therefore wise to
compose a list all the products we produce, together with their varieties. Furthermore,
state their color, size, the period in which we are able to supply them and the packaging
method. This enables potential customers to make an appraisal of our complete product
range. It is very important to keep the list up-to-date. The presentation of our products
and its range should be flexible, so that adjustments and changes can be made, if the need
arises.
8.4 Packing of our products

Besides a protective function, packaging is also very important when selling the product.
An attractive design can have a sales promoting affect. Today’s consumers want to know
what they are buying. Therefore, it is important, as a minimum, to mark the product
name, special materials used in the production, name or sign of the producer, country of
origin. The label on the article has to provide these data in a language comprehensible in
the target market.

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Crafts International 13 Marketing Plan

8.5 Building up a relation with a suitable trading partner

Among the many potential customers, we must identify those who match our own
company profile and product range and are therefore most suitable for building up a
relationship. Checking our potential trade partners’ financial status, credibility, and
reliability would be a good source for information about our (potential) trading partners.
In this regard we found Dunn & Bradstreet (http://www.dnb.com). It is the company
which has specialization in sourcing reliable, consistent and objective credit information
about potential trading partners.
At the end of the identification phase, it should be possible for us to select the
names and addresses of suitable trading partners. Generally, a concise but detailed
inquiry improves the chances of precise identification.

8.6 Drawing up an offer

There are two different kinds of offers which we can make to our potential trading
partners General and specific. The purpose of a general offer is to make the first contact
with potential trading partners with whom we are not yet personally acquainted. A
general offer consists of sending a short profile of our own company and a summary of
our products range.
A specific offer is legally binding for a certain period. We must therefore be capable of
fulfilling the terms of such an offer.
We should make up a specific offer only when we know the business partner personally
or after we have made the initial contact. A specific offer should consist of two parts: a
written offer and a product sample.

8.7 Quotations

It is best for us to quote prices on an FOB or CIF basis in US$, We know that the
exchange rate between the US$ and the €(Euro)varies, influencing the eventual prices at
the moment of transaction. Due to these fluctuating exchange rates, we would not
guarantee the product prices over an extended period of time, but we will quote prices
linked to a date and exchange rate. Regarding the final price of the product, transactions
we must always be subject to a final confirmation. This avoids problems with fluctuating
exchange rates.

8.8 Handling the contract

Differing customs, habits and traditions can cause problems in business relationships,
even after both partners have carried out sound preliminary investigations. To prevent
problems, we will make use of a contract. This written agreement is common practice in
most Western countries. Many partners would be satisfied with a simple letter of
agreement, some even with verbal arrangements (which are legally binding for the
parties). But the safest way is to write

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Crafts International 14 Marketing Plan

8.9 Contract terms:

• We would use following contract terms


• The delivery conditions according to Incoterms.
• When delivering for the first time, we will deliver the goods free of commission
and freight-paid.

8.10 Contract fulfillment

We will follow these contract fulfillment procedures:-


• We will procure the delivery documents in good time.
• If there is a supply agreement, we will comply strictly with all parts.
• If we cannot comply with any part of the agreement (e.g. due to delivery delays or
quality problems), we will inform the customer clearly and in good time.
• We will Co-operate on a partnership basis and seek a common solution if conflicts
arise.
• We will fulfill the contract in high priority, particularly when delivering for the
first time.
8.11 Terms of payment

The determination of payment conditions for a regular export transaction is part of the
package of negotiations between crafts International and its buyer. We would demand the
largest possible guarantee of financial coverage for the goods we supply according to the
sales contract.
We will use the irrevocable method for our first trading. Then further Letter of Credit
(L/C) and then, later on, we will trade on the basis of “documents against payment” (D/P)

8.12 Sales promotion

One of the major critical success factors for us would be to offer sales promotion. The
objective of sales promotion is to increase sales. Methods of sales promotion are i.e.
giving free samples, discounts, coupons, etc. Sales promotions develop and expand
customer relations, which obligate the selling company to take good care of existing
customers (continuity). This would includes expressions of thanks to business partners,
regular updates on the product range; supplying brochures of the product range may be
useful for promoting sales just like keeping business partners up-to-date on recent
product development

9.0 Marketing Strategies

The key to marketing strategies is focusing on the delivery of premier hand made articles
to the consumers .Crafts International is the organization which would serve the different
segments depending upon their category, like the German markets will be considered

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Crafts International 15 Marketing Plan

Niche for us as we will target the group of people who are actively involved in household
formation, newly wed couples who would also be the part of target market, as they are
more interested in decorating their homes, Thirdly we would be good option for
youngsters in our jewelry category , to fulfill their fashion needs , to serve all these
markets we need to develop a marketing strategy of positioning our products keeping in
minds our market objectives we have developed our marketing mix of price ,distribution
which is in the report.

9.1 Mission

Crafts International has a mission to provide a sense of belongingness to personal


aesthetics by providing the premier products of true craftsmanship .With a strict
adherence to this maxim, success will be ensured; Our products will exceed the
expectation of the customers.

“Premier Craftsmanship”

“We will change your view of beauty”

9.2 Target Markets

The target markets are divided into following types

1-House hold formation (New Home Builders)


2-Occasional (Christmas, Birthday, Marriages, Thanks giving)
3-Professional Men (Men in age range of 25 -50)
4-Professioanl Women (Women in age range of 35 and 50)
5-Baby Boomers (People with age 55 and above)

1-House hold formation (New Home Builders)

New household formation, which is an important engine for growth in the gifts &
decorative articles market, is not expected to rise substantially in the near future. The
number of households in the Germany is increasing by 0.8 % annually. Through
developments like ‘dilution’, family households are getting smaller because of the simple
fact that people are having fewer children as 2.9 - 3.0 people per household. It is forecast
that the number of households will increase more strongly than the growth of the
population size in the Germany.(Eurostat, German Demographics,2006)
The increasing household formation will increase the target markets. According to Euro
monitor, the number of marriages is an important sales driver in the gifts and decorative
articles market, as gifts and decorative articles make up a substantial share of the
wedding gifts given. According to Eurostat, the German marriage rate dropped from an

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Crafts International 16 Marketing Plan

average of 6.3 marriages per 1000 inhabitants in 1980 to 5.1 marriages in 2002. Many
people today choose to delay their marriage until they are somewhat older. This
development has some implications for the gifts and decorative articles market, newly-
weds today tend to have well-equipped homes, making wedding this segment of
population will play a major part in our product

2-Occasional (Christmas, Birthday, Marriages, Thanks giving)

Seasonality plays a major role in the buying patterns of gifts and decorative articles.
According to the Report by “Statistisches Bundesamt" (Federal Statistical Office of
Germany), approximately two third of the decorative articles is sold in the second half of
the year. This has much to do with the fact that people spend more time within their
homes in this period. Christmas and New Year are also important sales drivers. In
springtime, the garden is more important, especially in the Northern European countries
including Germany. The peak periods for the sales of gifts generally revolve around
special occasions, such as Christmas and New Year, Valentine’s Day, Easter, Mother’

3-Professional Men

Men between the ages of 25 and 50 who are professionals, They earn in excess annually,
They seek to enjoy their home and communicate a "successful" image and message to
their contemporaries. They buy big when they receive a promotion, a bonus, or an
inheritance. They will be part of our target market.

4-Professional Women

The most dominant segment of the five is comprised of women in the age range of 35 to
50. They are married, have a good combined income, own at least one home, and are
socially active at and away from home. They have discretionary income and their home
and how it looks is a priority. The appearance of where they live communicates who they
are and what is important to them. They spend lot of money on house hold decorative
items .They will be the part of our target market.

5-Baby Boomers

This group, typically ranging in age from 50 to 65, is going through a positive and
planned life transition. They are changing homes (either building or moving) or
remodeling due to, retirement plans, general downsizing desires, or to just get closer to
the golf course. Their surprisingly high level of discretionary income is first spent on
travel, with decorating their home a close second. They will contribute to a good extent to
our target market.

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Crafts International 17 Marketing Plan

9.3 Positioning

Crafts international will position it as a premier Handicrafts Company, Who would create
an image of “Conceptualizing the Beauty”. Its innovative hand made crafts will really
serve the purpose of real sense of satisfaction among the customers.

10.0 Strategies

We will use following strategies in our marketing mix

10.1 Marketing Mix

Our Marketing mix consist of following categories

1-Price

The price of our products will be on the per unit basis, it will depend on the category of
the product, the type of work, the more precious craft work will be charged higher in
comparison to the other products.

2-Distribution

In Germany, the giftware and handicrafts are distributed through seven major channels.

1. Wholesalers
2. Importers/distributors
3. Commission agents/sales representatives
4. Department stores
5. Mail-order
6. Internet sales
7. Tele-shopping

We will use these seven channels of our product distribution

1-Wholesalers:

Besides offering wide range of goods to retailers for direct sales, this channel also
supplies large quantities of individual articles. They are very particular in maintaining
consistency in the kind of products and their quality. One of the distinguishing features
of wholesalers is to provide distribution and storage facilities. Specialized wholesalers
deal in sales to retailers as well as to final consumers. They maintain high quality
standards and but have a narrower and in-depth range of arts and crafts.

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Crafts International 18 Marketing Plan

2-Importers/distributors

Most giftware and handicrafts companies use importers/distributors to market and sell
their giftware and handicrafts lines. They buy and sell on their own account. Thus, the
companies take advantage of the distributor's expertise, his sales force and his existing
distribution channels. Distributors call on giftware and handicrafts retailers, purchasing
groups and supermarkets. The distributors' mark-up varies depending on the giftware and
handicrafts item, but at least 50 percent. While the mark-ups vary according to the
distributor; they usually also depend on the exclusivity of a product and on its
competitiveness in the overall giftware and handicrafts market
According to a report of CBI, Germany hosts more than 45,000 giftware and handicrafts
retailers. Several retailers import directly from all over the world and sell to the German
customer. Usually these are small companies looking for items new to the market and
handling small orders only.

3-Commission agents

Commission agents provide companies with direct access to the German market and
direct control. Independent commercial agents are normally working on a 15 percent
commission and operate on a regional basis. They concentrate on specialist retailers,
purchasing groups and department stores. Commission agent contracts are based on
stringent EU and German regulations. In order to facilitate market entry efforts by the
agents their initial commission is often a few percent higher than the "usual" commission.
These additional payments are to reimburse the agent for substantial advertising and any
special efforts facilitating the new product's market entry.

4-Department Stores

We are also interested in establishing business contacts with major department stores.
Department stores in particular, prefer to deal directly with manufacturers. Their buyers
are very specialized and only handle a limited range of products. At some occasions
department stores also buy through independent commercial agents. Quite often they
have their own buyers as well as a few agents that usually work with them and who know
their assortments. If a department store decides to import a particular giftware and
handicrafts item, it places bulk rather than small orders.

5-Mail Order

On an average, each German consumer buys products totaling to $300 each year from
mail-order houses. There are about 200 mail order companies in Germany. In Europe,
Germany is the largest mail order market, followed by Great Britain and France. The
total European market volume for mail order products is estimated at approximately 50
billion. Of the 20 major mail order companies in Europe, 12 have their headquarters

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Crafts International 19 Marketing Plan

located in Germany. Among them are the world's largest mail order companies: Otto
Versand in Hamburg and Quelle Schickedanz AG & Co. in Fuerth. (Crafts Central,
German Markets). They will be our prospect distributors.

6-Internet Sales

Germany has become the market leader among the EU countries with regard to sales over
the Internet. It is anticipated that by then German electronic sales, which are estimated to
reach a volume of $250 billion worldwide in 2007, become second in the worldwide
ranking after the United States and before Japan. A typical German Internet user and a
major German mail-order publication is between 20-39 years old, is highly educated and
earns more money than the average German consumer. This age group consists of about
4.5 million Germans. Seventy percent of these consumers are male. Already today, the
Internet is a major sales channel for German mail-order houses (Crafts Central, German
Markets).Internet sales will be a major part our distribution in future.

7-Teleshopping

QVC and HOT are the two tele-shopping channels in Germany. They operate all over
Germany and offer various types of giftware and handicrafts; jewellery, fashion, health,
beauty; household consumer goods; collectibles and home accessories. They are our
prospect distributors.

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Crafts International 20 Marketing Plan

11.0 Financials

Following are our sales forecast for five years. The figures are conservative and they will
steadily rise, as long as our target market increases the sales will increases gradually.

11.1 Sales Forecast

Sales forecast product wise


Sales in Dollars $ 2007 2008 2009 2010 2011
Textiles Handicrafts $ 6000 $ 7100 $ 8500 $ 9500 $ 11000
Clay,Metal and jewellary $ 8500 $ 9400 $ 10200 $ 11600 $ 13000
woodwork $ 12000 $15000 $16300 20000 $25000
stone craft $4000 $4200 $5500 $7000 $10000
glass, ceramic and onyx $ 3000 $3600 4500 $5000 $6000
camel and snake skin
products $ 4000 $5000 $6000 $7500 $8500
pottery $ 2500 $3000 $4000 $5500 $6500
hand knitted carpets $ 7800 $8200 $9000 $10000 $12300
costume dolls $ 3600 $4000 $5600 $6200 $8000
shell and bone products $ 2000 $2500 $3000 $4000 $5600
Total sales $ 53400 $62000 $72600 $86300 $105900

Direct Cost of sales 2007 $2008 $2009 2010 2011


Textiles Handicrafts $ 3800 $4300 $5000 $5200 $5400
Clay,Metal and jewellary $ 2500 $2800 $3200 $3600 $4400
woodwork $ 8500 $7500 $9000 $9800 $10230
stone craft $ 1010 $1250 $1620 $1800 $2500
glass, ceramic and onyx $ 1500 $2200 $2580 $3000 $3600
camel and snake skin
products $2300 $2600 $2752 $3200 $3800
pottery $1800 $1900 $2500 $3500 $4000
hand knitted carpets $3500 $4000 $5622 $7000 $8500
costume dolls $1100 $1500 $2200 $3200 $4500
shell and bone products $820 $1300 $1600 $2300 $2900
Total cost of sales $26830 $29350 $36074 $42600 $49830

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Crafts International 21 Marketing Plan

11.2 Gross Margin

The objective is to maintain the gross margin from 48-53%

Gross Margin 2007 2008 2009 2010 2011


Sales $53400 $62000 $72600 $86300 $105900
Direct cost of goods $26830 $29350 $36074 $42600 $49830
Other Cost $0 $0 $0 $0 $0
Total cost of goods sold $26830 $29350 $36074 $42600 $49830
gross margin $26570 $32650 $36526 $41000 $56070
gross margin % 49.7 52.6 50.3 47.5 52.9

11.3 Breakeven Analysis

Break even analysis is $2200 which will be required in monthly sales revenue to reach
the break even point.

Breakeven point = Where line cuts zero

Break even analysis


Monthly units break even 900
Monthly sales break even $2200

Per unit price $2.4

11.4 Marketing Expenses

The monthly expenses are estimated at average $350 which includes brochures, and
reading material relevant to the product.

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Crafts International 22 Marketing Plan

12.0 Controls

The purpose of Crafts international marketing plan is to serve the purpose of guide for the
organization. The following areas will be monitored to gauge the performances

 Revenue monthly and annually


 Expenses monthly and annually
 Customer satisfaction
 New product development

13.0 Contingency Planning

Difficulties and risk


 An entry of more cheap goods in the market by the established competitors
Worst case Risks Include
 Determining that the business cannot support itself on ongoing basis
 Having to liquidate equipments or intellectual capital to cover the liabilities.

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Crafts International 23 Marketing Plan

14.0 References

C
1-Centre for the promotion of imports from developing countries (www.cbi.nl)
2-CBI, Europe markets survey, 2007(www.cbi.nl/marketinfo)
3-MARKET BRIEF 2007, Compiled for CBI by, tuyu Bv, the Netherlands,
2007(www.cbi.nl/eugift.pdf)
4-CBI, German Handicrafts Market, 2006(www.cbi.nl/germanmkt)
5-Crafts central (www.craftscentral.com)
Crafts central, Handicrafts markets in German (www.craftscentral.com/worldwideinfo.html)
Crafts Central, Craft Industry Overview of Global Handicraft Industry
(www.craftscentral.com/worldwideinfo.html)
E
7-Eurostat, German Demographics, 2006(www.cbi.nl/eurostat)
F
8-www.fibretofashion.com, Pakistani Handicraft export, Anonymous January 22, 2007
G
9-Germany Bead Stores, Listed by Store Name (www.howtogermany.com)
W
.10-Wikipedia, Germany (www.wikipedia.org/germany)
11-Wikipedia, Demography of Germany (www.wikipedia.org/demography_of_germany)

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