Marketing Plan - Arong

Executive Summary Aarong is a fair trade organization, which is dedicated to make positive changes in the lives of “disadvantaged artisans” and “underprivileged rural women”. It does so by reviving and promoting their skills and craft. It is the first social enterprise of BRAC and was established in 1978 by Sir Fazle Hasan Abed, the founder of BRAC. Their designs of the products have brought consumer attention back to the products and styles that are native to Bangladesh. The designs focus on the varied types and textures of crafts and patterns that have been passed along from generation to generation among weavers and artisans in craft hubs around the country. It aims to position Bangladesh’s handicraft on a worldwide platform. We tried out to cover all the business operation process of Aarong such as situation analysis- Target market, sales and costs, industry analysis, competitors, macro environment forces, growth analysis. In SWOT analysis we have analyzed the whole scenario of Aarong. In marketing strategy we have identified different positioning, market offerings, branding and communication strategy of Aarong. Next comes the financial part where we have covered all the pricing strategy of Aarong which they apply before making a new product and then comes the implementation control part which starts from performance management and ends with contingency plan where we have mentioned all the future barriers of Aarong and how they encounter the situation.

Marketing Plan - Aarong

Situation Analysis Target Markets Aarong targets the middle class and upper class population, as can be understood from the prices they allocate. Bangladeshis living abroad look to Aarong for products that connect them to their heritage. The need, therefore, is of “connection to heritage”. Products like men’s, women’s clothing, j ewellery, etc. and particularly Nokishi Katha products like bags, wall hangings, mats, etc. fulfill the wants of the customers. The prices aim to satisfy the c ustomer by delivering unique and the highest level of quality products and also injecting tradition and heritage in everyday life. Aarong currently has 12 branches in overall; 7 of them spread throughout the Dhaka city, 2 in Chittagong, 1 each in Khulna and Sylhet, and a single international outlet in London. Currently people visit the stores to buy the different products and this is where the company and customers communicate with each other.

Sales and Costs The financial information of Aarong is confidential and it is released as an attached part of the entire BRAC organization. The only access to such information was that of 2006, which stated sales of Taka 14,839.02 million and costs of Taka 8916.52 million.

Industry Analysis An analysis between Aarong, Sadakalo, and Kaycraft is shown below. It uses the 4P concept and a part of the 4C concept, along with the consideration of experience in the market.

Product

Price

Aarong Best quality Uniqueness Well varied Expensive

Promotion

Wide advertising using billboards

Place Experience

12 branches Most experienced (since 1978)

Consumer wants and needs

Fulfils need traditional Bangladeshi products

Convenience to buy Communication

Limited to visiting stores only Limited to visiting stores only

for

BRAC University- MKT 501 – 501 – Marketing Marketing Management

SadaKalo Good quality Less variation

Kaycraft Good quality Less variation

Relatively reasonable than Aarong Relatively less than Aarong: also uses billboards 10 branches Much less than Aarong (since 2002)

Relatively reasonable than Aarong Relatively less than Aarong: also uses billboards 12 branches Less that Aarong but more than Sadakalo (since 1993) Fulfils need for traditional Bangladeshi products but with less variation than Aarong

Fulfils need for traditional Bangladeshi products but limited only to black and white colors Limited to visiting stores only Limited to visiting stores only

Limited to visiting stores only Limited to visiting stores only

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Competitors Currently Aarong has 5 major competitors: Sada Kalo; Kaycraft; Anjons; Rong; Handibazar, all of them being established brands.

Macroenvironment Forces This report will focus on the cultural, ecological, technological, and political/legal macroenvironment forces along with Aarong’s competitors. competitors.

Growth Analysis They are going to expand their business in America and Europe so by the end of 2012 their target branches will be more than 20.

SWOT Analysis

Strength The company’s reputation is its primary strength, as the brand name Aarong automatically creates projections in the minds of the general people. The main drivers of the brand equity are the logo, which symbolizes a peacock and thereby a sense of beauty, and the name itself. Customers seeing the logo automatically visualize traditional Bangladeshi handicraft products. Aarong currently has 68% of the total t otal market share for handicrafts. It establishes customer satisfaction with new and innovative along with quality products. Their innovation is hence yet another strength. Their service quality is also referred high as it has integrated providing quality service as one of its responsibilities. Aarong promotes its products through vast advertising, particularly through the billboards. These are quite well spread throughout the city especially on the busy roads, so they are quite hard to miss out.

Weaknesses It can be debatable but one of their weaknesses, which Aaro ng considers as a “neutral” factor, is the price of the products. Although the quality is considered good (and thereby the increased prices), this has certainly been one of the issues that customers speak out about. Of course another consideration is that of Aarong’s target markets and henceforth the prices may be justifiable. j ustifiable. A certain weakness is the distribution of the products, since only by visiting the stores can customers be aware of the newcomers. Aarong does have a website but that really does not do much about the particular products; it provides basic information about the company. Order catalogs or ecommerce features are missing, thereby the means of ordering from home is missing. Service of Aarong in overall maybe a positive factor but their sales force has room for improvement. Since they are a part of BRAC, there are ample training opportunities but somehow this does not improve the sales force. One reason may be BRAC’s policy of hiring a certain percentage of rural people; this can suggest that more improved or further training is required.


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Opportunities Aarong’s opportunities are expanding not only inside Bangladesh but also outside the country. They are currently operating there branches in Europe and they are going to cover America very soon. In this way Aarong is expanding their business globally. We can say that Aarong is adapting intensive growth under market development strategies like new product in the new market they are going to capture. From income distribution we can say that it won ’t create any affect into the population of t he people of Bangladesh, because our target people is middle and above so its neither fall in opportunity nor in threats. To talk about culture there are big opportunities where Aarong can enhance their heritage through products into the markets. Everything has changed so culture has become vital issue now days, people are trendier than before they want new tailored product so Aarong can come up with new products in occasion’s like- Pohela Boishak , Pohela Falgun, Victory Day, and Independence Day, to sell their products in those special occasions. On the basis of seasonal changing people is more concern about their choice so Aarong can make products on the basis of customer preferences. Aarong does not address any environmental issues because the products they are producing are all handicrafts so it doesn’t harmful for the society and it also shows “Go green” Slogan. So far we can assume they are contributing on corporate social responsibility so far so natural factor can also fall neither opportunity nor are threats. Technology factors are also not influencing any environmental issues so that also falls in neither opportunities nor threats since the whole industry is purely manual. The political and legal environments also have no effect because the handicrafts industry is less vulnerable to any law of the country.

Threats The biggest threat of Aarong is from their competitors because their pricing strategy is very competitive compared to Aarong. One competitor, Sadakalo, has come up with a great concept like all their products are mixture of white (sada) and black (kalo) with a very competitive price. Another competitor OG’s Panjabi shape is very different from others ; Khubsurti’s design of salwar kamiz, Rangs Sarees so these are all core and unique concepts of the competitors and also decreasing the market share of Aarong. So the threats t hreats against competitors are increasing day by day.


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Marketing Strategy Marketing strategy of Aarong Aarong is a BRAC social enterprise that supports rural artisans like potters, jewelers, jute workers, basket weavers, silk silk weavers. Their marketing strategy is differentiation. Aarong has continuously invented and reinvented products that are tasteful, unique and superior in quality. Aarong focuses on on innovations and that’s why consumers are willing to pay a little premium because their product offers creative excellence and uniqueness. Aarong’s strategy motivates their artisans to produce unique designs traditional products.

Mission statement “To promote traditional Bangladeshi products and designs that represents our rich craft and cultural heritage by employing sixty five thousand rural artisans and handicraft producers.”

Target Market Aarong usually targets upper-middle class to upper class urban customers. They have around one million loyal customers. customers. Most of the products are designed for trendy young generations. Housewives are also their important target group. Aarong has reached to the four divisions of Bangladesh such as Dhaka, Sylhet, Khulna. They have also one franchise i n London, UK. 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% youth

Men

Women

Children

Figure: Figure: Percentage of consumers of Aarong

Market Offerings of Aarong Aarong’s market offerings are shaped up for its target groups l ike men, women, children and youth. Their product line is around ninety to hundred. Aarong offers ethnic wear to beautiful crafts from an array of hand-woven textiles such as silk, c otton, handspun, endi to terracotta, bamboo, jute and much more.


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There are some value propositions categorized by target groups: Women Man Youth Jewellery products Home accessesaries Terracotta products

Traditional sarees like Jamdani, Muslin, shalwar kamiz, shawls, fabrics, shoes, bags Traditional Panjabi, Executive shirt, fotua, short kurta, T-shirt, shawls, sandals Taga- a brand of young generation Skirt, fotua, kurta. Taga Accessories include- trendy bags, belt, sandals Gold, silver, pearl and other jewellery available Table lamp, lamp, cutlery, cutlery, dinning ware, bowls & plates, photo frames, plant accessories Bowls and plates, Glass, Dinning ware

Aarong has fame for its elegant Jamdani collection. They arrange exhibition of Jamdani sarees named “Story of Pride”. Aarong believes that the display of Jamdani sarees, an artistic excellence, will make some contribution to the restoration of Jamdani t o its past glory.

Positioning of Aarong as a brand The unique positioning of Aarong as a “Bangladeshi Brand of pride” has always helped its consumers to identify them with the root of Bangladeshi cultural heritage. Now it has become the household brand of Bangladesh. 

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Aarong has been awarded „Superbrand Award‟ a UK based independent authority of branding, in November 2010. This has made Aarong to be positioned itself as prestigious brand. Aarong is going to launch „E-commerce shopping‟ in 2013. Consumers can buy Aarong products from anywhere in the world. Aarong has been celebrating their 30 years of establishment. establishment. It was established in 1978. „My Aarong reward‟ a discount card, is offered by Aarong to its loyal customers. The cardholders can have exclusive crowd- free shopping hours and benefits.

Communication Strategy Aarong’s communication strategies are pretty skillful and effective which create longstanding customer base. Aarong’s tagline is “Aki britte banglar mukh” - states Bengali always try to keep focus on their traditional cultural heritage. Their major communication tools are

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Advertising: Aarong air TV commercial, print media advertising in newspaper, billboard, magazines. Their communication partner is „Ogilvy & mather‟. Aarong arranges fashion shows, exhibition of magnificent Jamdani named “Story of Pride” was a real success. “My Aarong reward” is a discount card, offered to its valued customers. They can earn point by purchasing Aarong product for getting further discount. Garage sale of Aarong is newly launched communication initiatives where the poor artisans can directly sell their product to consumers. Aarong celebrates Environment day, father’s day, friendship day. On World Environment Day 2011, it highlights it eco-friendly and biodegradable products like jute bags, showpieces of bamboo, cane, clay.


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Financial Projections A firm must set a price for the first time when it develops a new product, when it introduces its regular product into a new distribution channel or geographical area, and when it enters bids on new contract work. The firm must decide where to position its product on quality and price. The firm must consider many factors in setting its pricing policy. pol icy. Let’s look in some at a six step procedure. 1. 2. 3. 4. 5. 6.

Selecting the pricing objective Determining Demand Estimating costs Analyzing competitors costs, prices and offers Selecting a pricing method Selecting the final price.

From above the pricing method we will discuss the selecting a pricing method of Aarong here from the estimated data.

Selecting a pricing strategy The most elementary pricing method is to add a standard mark up to the product’s cost. Aarong has given us their pricing strategy method but they did not give us the actual data of their company to calculate pricing strategy. Suppose a manufacturing SME like Aarong has costs and sales expectations as shown in the following f ollowing page:


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Pricing strategy of 1 Particular product of Aarong:

Variable costs:

T.K

Direct materials

50

Direct labour Manufacturing Overhead

36 77

Total variable cost

163

Fixed costs

500,000.00

Expected unit sales

100,000.00

Unit cost is given below: Unit cost= Variable cost + fixed cost/unit sales = 163+500000/100000 168 TAKA IS THE UNIT COST If we can assume Aarong wants to earn a 20% markup on sales then the calculation would be Markup price = unit cost/1-desired return on sales 171 is the mark up price Aarong would charge 171 from a customer to make a profit of 3 tk per unit Break even Volume would be = fixed cost/(price-variable cost) 62500 is the break even volume Break even sales would be = fixed cost/ contribution margin percentage 12500000 is the break even sales revenue


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The Financial data we have collected from Aarong Sales and Profit of 2006 are given below:

Aarong’s Markets – Domestic 9 Out utle lets ts



31st Dec. 2006

– 5 in Dhaka

– 2 in Chittagong

– 1 in Sylhet

– 1 in Khulna

Area (Sft)

Sales (M Tk.)

Profit (Tk.)

% of Dom. Sales

Sales Growth %

No. of Employees

Gulshan

18,532

458.23

82.86

29.63

40.27

119

Dhanmondi

19,328

480.70

91.46

31.08

33.20

124

Mogbazar

19,500

173.19

19.15

11.20

43.73

102

Uttara

8,300

101.99

13.56

6.59

45.30

47

Rankin St.

4,464

52.22

6.59

3.38

42.65

35

Chittagong

5,463

140.12

26.37

9.06

30.74

40

Sylhet

8,000

116.67

20.15

7.54

45.72

54

Khulna

4,000

23.52

2.74

1.52

33.35

20

87,587

1,546.64

262.88

100

38.13

541

Total

Sales by Product Children's Wear 10.7%

Women's Wear 26.8%

Jewellery 7.8% Leather 6.6% Household : Textile 12.2%

Men's Wear 27.7%

Others 2.2%

Household : Nontextile 6.1%

‘Others’ includes Food and Herbal Products, Stationery, Toys and Furniture


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Financial Performance: Sales Million Tk. 1800

1702.34

1600 1400

Exports = 4% Of Total Sales

1229.82

1200 943.77

1000 807.67

800

668.65

600 400 200 0 2002

Growth >>

2003

20.73%

2004

16.91% Local

2005

30.31%

2006

38.21%

Export

Financial Performance: Profit Million Tk.

350 305.92

300 250 192.82

200 150 100.94

100

84.46 63.48

50 0

2002

Increase >> Net Profit Margin

2003

33.01%

9.49%

2004 19.55%

10.46%

2005 90.96%

10.70%


15.68%

2006 58.66%

17.97%

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Implementation Controls Performance Management Products and services that satisfies customers Aarong, an iconic Bangladeshi brand and the country’s l argest retail chain, offers customers over 100 fashion and lifestyle product lines, including designer clothing, household items and jewellery, all of which bear the promise of exceptional quality and value. The rich tradition of Bangladeshi craft and folk art returned to prominence through Aarong, which, for the last 32 years, has been creatively blending traditional and ethnic craft-skills with contemporary styles and trends. Aarong works with over 1,600 artisan groups, ensuring the livelihood of over 65,000 artisans and directly benefiting 320,000 people across Bangladesh.

Aarong’s discerning style and high-quality craftsmanship make every Aarong product unique and demand for them has been consistently rising due to Aarong’s focus on innovation, quality, valuebased pricing and superior in-store customer service. Products‟ quality compared to competitors A pioneer in the country’s craft industry, Aarong’s unique product designs have brought consumer attention back to crafts and materials indigenous to Bangladesh, as its designers blend the traditional with the contemporary in a way that continues to win consumer appeal. Its success revolutionized trends and virtually created the market that has now been taken up by countless other boutiques and brands. Aarong caters to this growing urban consumer-base through outlets in every major city in the country. Aarong products are not only the gift items of choice for every occasion for local and expatriate Bangladeshis but also the quintessential cultural mementos for these visitors.

Effort towards social responsibility The organization has identified three basic constraints for gainful employment of the low income and marginalized people in the rural areas: lack of working capital, marketing support and opportunity for skills development. In order to bridge these gaps, Aarong provides a wide range of services to its workers and suppliers:       

Spot payment on product delivery to encourage e ncourage efficiency and productivity Reach out to producers in remote areas a reas to ensure fair value for their efforts Marketing communication and information for artisans Advances against purchase orders where necessary Training & Education in skills development to raise product quality and marketability Product Design and Support in Product Development Quality Control to increase producer awareness of the importance of quality

Contingency Plans Future barriers Aarong identified the following threats or barriers that they may possibly encounter. 

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Hand-crafted products have to compete on price, design and adaptability with modern machine made products, which make difficulties for our traditional products to be competitive in international market. Artificial automated product produced by competing countries, as Chinese embroidery machine products compete with our hand stitch. Use of polyester, nylon, acrylic and other manmade elements in competing artificial products which reducing the product cost of artificial product


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Quality products produced by competing countries like India, Pakistan, China, South Africa, etc. Competing countries are enjoying better Trade Terms sometimes. Competing countries are offering better technological support and R&D facility in their countries.

Tackling the future barriers Aarong plans to tackle these barriers in i n the following ways. 

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Our Prime Minister Sheikh Hasina has told that, she will try to “Make Every Home a Industry”. By considering handicraft she can really elaborate it like, “Every home will be a handicraft industry”, because it is the only industry which can flourish at this tough time of gas and energy crisis. PM’s strong campaign for saving environment from climate change may promote the hand made goods like handicrafts globally. An integrated branding and promotion of Bangladeshi Handicrafts can be great tool of poverty alleviation also. Setting up of design development centre is urgently needed for producing new product and product diversification. Crafts men to be trained for better performance, innovation and technology to be provided for overall development of the sector in a design development institute.

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Quality raw materials to be ensured for product diversification.

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Develop fund for identifying new markets and new products.

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Continued and focused attention has to be given to handicrafts for up-gradation of skill, creation of better work environment and development of cluster for specific crafts with common service and improvement of infrastructures and market development. Arrangement of International Handicraft Fair to attract more buyers and thus reducing difficulties in entering to overseas market for our Traditional and Non-Traditional Handmade goods. Without a doubt, the global market for handicrafts and hand-made goods is expanding. When customers are faced with two products of similar price, quality and design, they will invariably select hand-made goods in changed world with environment consciousness. The cost of production of hand-made items is smaller in Bangladesh whilst it is possible to make competitively priced handicrafts in Bangladesh, it is important to understand that pricing is one of the key factors for.

Appendix The following documents have been attached with this report: 1. The questionnaire used for this report 2. A spreadsheet printout of the budgeting structure of Aarong 3. A spreadsheet printout of the pricing strategy of Aarong BRAC University- MKT 501 – 501 – Marketing Marketing Management

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Bibliography [1] [2] [3] [4] [5] [6] [7] [8]

http://aarong.com/ http://aarong.com/aboutus.php http://www.brac.net/content/social-enterprises-0 http://www.brac.net/content/stay-informed-brac-glance http://www.sadakalo.net/locations.php http://eid.kaykraft.com/outlets.html http://eid.kaykraft.com/about.html An internship report on Aarong, BRAC Business School (BBS), BRAC University


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Marketing Plan - Arong

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