HOME TEXTILES

HOME TEXTILES: AN INDIA MARKETING PERSPECTIVE

Per se, home textiles are a low involvement product category in the marketing sense.
Unlike other premium textile products it does not enjoy the hype or a halo of mighty
brands around it.

The market for home textiles is vast, but in absence of an organised marketing format
at a national level, it is very difficult to envisage the market size and potential. The
major portion of this market is serviced by the unorganized sector scattered
throughout the country. Bombay Dyeing is the only known national brand having been
around for more than a century. The entire marketing system for home textiles still
functions on the conventional textile system – the wholesale channel, the product
offering being predominantly a commodity being retailed through numerous mixed
retail stores across markets.

Espirit, Spaces, Spread and Portico’s foray into modern organised retail is perhaps the
first effort at brand building in this product category. Given the lack of organised
retailing or aggressive brand building in home textiles, the markets hold vast
unexploited potential for a new entrant within the limitations that hold good for such
an endeavour. For a new entrant, the ideal entry in the market would be positioning
the product as a premium brand as at this level it will attract very little competition
and placing the product at the top will render the existing leader to competitive
pressures.

BRAND BUILDING:
The process of brand building will have the following salient features:

• It will take place over time and will be continuous.

• It will take place in stages beginning at conception.

• The greatest development of the brand will take place in the phase when it
actually enters the market.

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 • Whatever inputs are planned during the positioning and development phase,
the actual test of the brand is post launch – in the market. The values and
relationships of a brand are more determined in the market by actual users
than by any predetermined planning.

The two main factors that will influence the brand building process are “time and
communication”.

If the brands hang around long enough and ensure usage, values and relationships will
start building.

Communication / advertising is the most conscious method to build a brand – build its
values and forge its relationship.

Managing the brand building process will not be a one time effort and has to be a well
planned activity bearing the following key actions in mind;

• Regular brand health checks to monitor brand strengths and values.

• Regular competitive review: competition tends to reposition brands and there is

a need to monitor activities. At times this could mean a change in path instead
of going through the planned route.

PRODUCT CONCEPT

It follows from the marketing objective that the product offering has to distinguish
itself from others to escape the commodity trap. Competitive distinction has to be
sought via product features, visually or measurably identifiable attributes that promise
results or values different from those of competitors.

It is important to note that the usual presumption about so called undifferentiated

commodities is that they are price sensitive. A fractionally lower price gets the
business. This is seldom true in the actual world of markets; nothing is exempt from
other considerations even when price competition rages.

Depending upon the stage of the brand in its life cycle, the product personality may
vary from being offered as a “generic product” which sells only if the customers’ basic

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expectations are met to “the augmented product (brand)” where the prevailing
condition will be of a mature market or of relatively experienced or sophisticated
customers.

It will be a matter of staying aware of exactly what is going on in the market, of how
people use their products, of how and where they buy, of who makes buying decisions
and how these get modified. It is a matter of looking continuously for gaps in market
coverage that the company can fill, of looking continuously at new ways of influencing
buyers to choose one’s products instead of a competitor’s.

In the way the marketing process is managed resides the opportunity for the company
to escape the commodity trap.

MARKETING AND SALES

Broadly speaking the major business operation will consist of the two following vital
functions; Sales and Marketing.

The sales function will be responsible for ensuring optimum servicing of the
distribution channel while the marketing function will be concerned with
understanding the consumer and developing strategies to best meet consumer needs.

In today’s chaotic market place developing a brand will be a daunting task. Long
established brands battle for customers against makers of clones with uncertain
pedigrees. At the same time, consumers have more information about products and
more products to choose from than ever before. Given the proliferation of choices, it is
no wonder consumers view brand names with growing indifference. For the producer,
establishing a new brand is a Herculean task. The noise level of the media is
deafening and it takes longer to break through and develop markets.

It is normally expected that marketing function will make the product succeed once it
is in the market place. But what determines success in a crowded place is the time to
product acceptance and not time to market. A product that cannot win customers
quickly will not be able to compete well against a product that is well established.

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The sales function will focus on the following aspects of the business;

• A good rapport with retailers with systematic coverage.

• Developing a well knit distribution system.

• Ensuring no stock out situation.

• Organizing market exposure in line with market support.

• Maintaining and enhancing company goodwill.

The initial entry in the market has to be essentially through wholesalers with the
objective of spreading goods as far and wide at the lowest possible costs, adopting the
push strategy. As volumes start building, the brand building exercise has to
commence in a very basic form. Concurrently the company’s sales personnel have to
make inroads into the markets to strengthen the company’s goodwill will the trade.

After sales achieve substantial volumes, the brand building exercise has to be
intensified with emphasis on pull strategy. A market driven company can outdo the
competition on brand pull; the basic pull reasoning, lodging the brand in consumer
mind space is winning more than half the battle.

The brand consolidation phase will involve more of direct marketing, with wholesalers
being gradually replaced by the company’s own distribution system, giving closer
contact with the retail market which is a prerequisite for the ultimate aim of direct
retailing by the company.

One important point that has to be borne in mind that trade strategies bring in sales
so long as the returns are good. In a world where every brand is looking for a chink in
the other’s armour, the easiest to spot (and attack) is either the retail price or the deal
to the trade. Conversely the hardest to breach is the brands worth in consumer’s eyes.
In the long run building brand equity is clearly more reliable marketing strategy.

The reason boils down to the basics, the truth is that the retailer will never be bigger
than the brand. Whichever may be the markets, pull is likely to remain the ultimate
long term weapon in any marketing game.

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INDIAN RETAIL SCENARIO

The Indian economy is in a development mode. Parallel to this markets are witnessing
a retail revolution on an unprecedented scale. Modern organized retail in India has
come a long way from singly focused and partially multifaceted shops to sprawling
shopping centres, super markets, multi storied malls and entertainment complexes.
The economy is witnessing the emergence of a new class of consuming masses in the
middle income bracket with increasing disposable incomes. These consumers are
better off than their predecessor, have great awareness due to increased exposure to
the media.

Notwithstanding the income disparities between the United States and India, a
cursory comparison between the sales of a private Indian company – Rs.8000 crores in
2009 with a U S retail giant sales of Rs.3,602,000 crores, clearly indicates the retail
potential that can be exploited; given the size of the Indian market and the predicted
average economic growth rate of about 6%. Retail industry analysts estimate a growth
rate of 10 – 15 % per annum in the organized retail sector, the maximum action being
expected in the following three areas; apparel and clothing, food retailing and
entertainment.

RETAILING – A PREVIEW

The retail revolution coupled with the emerging consumer profile makes it imperative
to review business models in a more contemporary context.

Today’s consumers are more aware than before. They have more information about
products and more products to choose from than ever before. They have more ways
to shop, at giant malls, specialty shops and super stores, through mail order
catalogues and home shopping networks. They are bombarded with messages pitched
through a growing number of channels, broadcast and narrowcast television, radio, on
line computer networks, telephony services, niche magazines and other print media.

Given the proliferation of choices it is no wonder consumers view brand names with
growing indifference. Marketing’s traditional connections to customers are no longer
sufficient in today’s dynamic markets. Such a daunting and ever changing market

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scenario makes it necessary for a new entrant to have sustainable momentum if it has
to break through and establish itself in the market place. A new product or a new
brand has to win customers as quickly as possible which implies integrating marketing
with design and manufacturing. That is done by involving potential customers as early
as possible in the development process. To build customer loyalty, to build brands –
companies need to keep their customers engaged in a continuous dialogue.

Conclusively, direct retailing by the company will be a vital strategic move in the
brand building operation. Being in direct and constant touch with the consumers can
only be achieved by direct retailing. Traditional marketing companies view retail
operations as a goal culminating from their marketing efforts. Direct retailing in
today’s market scenario is perhaps the fastest and more dependable route for brand
building. The company’s exclusive retail outlets in due course achieve brand status in
themselves. This supported by other promotional efforts goes a long way in lodging
the brand in consumers mind. Human beings are creatures of habit and familiarity. In
an otherwise changing and turbulent world, strong brands give a feeling of comfort
and stability.

Further the Indian customer’s preference for personalized service and reassurance
ensures to a great extent that exclusive brand stores remain the preferred point for
occasion based shopping like weddings, festivals. As large stores are still few and far
placed, concentrated in select metro cities, exclusive brand outlets continue to be the
best option to fill the gaps. Exclusive retail stores offer more than just a retail shop, a
chain of exclusive retail outlets is required if one has to create a certain brand
imagery. At this juncture, financial viability comes in as a secondary objective.

The benefits of retailing will be felt only when an equitable scale is achieved. This will
depend on diverse factors such as store size, number of foot falls, number of bills,
average bill size and revenue earned per sq.feet. Besides resources, a variety of other
aspects such as qualified and trained man power will also be the need of the hour to
taste success.

Embarking on brand building via the direct retailing route implies setting up a retail
organisation. Building a retail organisation is a long term proposition that has to be
done the right way to make it work. A lot of thought and hard work has to go in before
execution of operations.

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Financial muscle is a prerequisite; one must have enough to support the organisation.
Business plan expenses must not be solely dependant on the realization from retail
sales. The organisation should be able to sustain itself and at the same time support
the stores during the lean periods in business.

The retail business format has to be easy to set up and run. It has to be manageable
for reasonably intelligent people equipped with a reasonable amount of training. It
should not be too technical or too dependant on the top management. One needs to
have the management bandwidth to build and run a retail organisation. One should be
able to manage the two most critical pillars of successful retailing; “support and
control”. One should be able to invest in the right kind of manpower to ensure that the
retail operations get the right support and that the system has the right control tools.

RURAL MARKETS

A key challenge in the near future will be the maturing of mass markets as the largest
source of sales volume.

For all the hype about the new Indian life style, we have got to realise that this is a
phenomenon limited to the upper crust of the society. The average Indian’s life style
has not changed much. What has changed, almost across the board, is attitude. Now
even the low income customer is more exacting and demanding of the product she
uses. She is also far from aspirational. This is an opportunity for companies to woo her
with products at prices she can afford.

Consumption in rural markets and low income groups will accelerate. As it does, and
businesses begin to exploit the vast market potential, the balance of advantage will
shift to rural markets over urban markets. Poverty levels will drop leading to
significant changes in life styles because of the influence of TV and other mass media
as well as the increased penetration of manufactured consumer goods. With
increasing rural trade, the rural infrastructure will improve, so will rural literacy,
education and the variety in available employment.

As a consequence of a developing rural economy, across sectors, the conversion from

commodities to brands will become significant. The value proposition will continue to
be a critical parameter for both products and services. This will pose a tough

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challenge to the manufacturers of branded products. Consumers, given their exposure
and heightened awareness, will expect global-quality products at Indian prices. Again,
the rural markets will be paramount as the customers there are now ready to shift
from commodities to brands – all they need is branded products at the right price.

The Indian market is vast and diverse. Its behaviour varies from mature,
sophisticated to highly rural and primitive. In such a scenario one cannot
arrive at a fool proof strategy that can be applied universally across
markets. In such a situation the ideal approach to the market would be a
combination of both – direct retailing and distribution through wholesalers.
For each potential market, its size, consumer profile and business prospects
shall determine the entry mode. In totality the marketing strategy has to
strike a balance between direct retailing and distribution through
wholesalers. Both the modes have their respective merits and demerits.
Given today’s complex market environment, entry into the market place,
market share consolidation and marketing success will be more assured by
adopting a multi-pronged approach to marketing.