A Marketing Project on FabIndia

12 December,2008School of Business Management NMIMS

Anurag Kalita (331) Kopal Doshi (313) Shristi Dalmia (308) Amit Baweja (306) Ashit Shetty (355) MBA (CP) DIVISION: D

A study submitted to Dr. Rajan Saxsena in partial fulfillment of the requirements of the Customer Acquisition and Retention Course.

Declaration

We hereby declare that out report titled “Fabindia” is an original work. The list of references used has been detailed at the end of this report, and the rest of the document contains our thoughts, learnings and recommendations. We also declare that we have not consciously attempted to plagiarize from any existing literature.

Anurag Kalita (331)

Kopal Doshi (313)

Shristi Dalmia (308)

Amit Baweja (306)

Ashit Shetty (355)

MBA (CP)

DIVISION: D

Table of Contents

1: Introduction..................................................................................................................................................... 1

2: Industry Overview ........................................................................................................................................... 2

3: Target Customer .............................................................................................................................................. 2

4: Marketing Mix................................................................................................................................................. 3

5: Competition Analysis...................................................................................................................................... 4

6: Customer Connect Initiatives .......................................................................................................................... 5

7: SWOT Analysis ................................................................................................................................................. 6

8: Future Plans..................................................................................................................................................... 7

9: Recommendations........................................................................................................................................... 8

10: Appendix........................................................................................................................................................ 9

11: References................................................................................................................................................... 21

Customer Acquisition and Retention 1

1: Introduction

“Fabindia was founded with the strong belief that there was a need for a vehicle to market the vast

and diverse craft traditions of India and thereby help fulfil the need to provide and sustain rural

employment.”

“Our endeavour is to provide customers with hand crafted products which help support and

encourage good craftsmanship.”

In 1958, John Bissell left New York, to work as a consultant for the Ford Foundation. Highly

impressed with the Indian handloom textiles, he decided to exhibit this craft to the outside world.

This led to the genesis of Fabindia in 1960, primarily as an export house, in order to provide

equitable employment to traditional artisans and to fuse the best aspects of East-West culture. In

1975, the first Fabindia retail outlet was opened in Greater Kailash, New Delhi. By the early eighties,

Fabindia had forayed into the production of garments made from hand-woven and hand block printed

fabrics.

Fabindia started dealing in a wide range of upholstery fabrics, durries, home linens, furniture, lights

and lamps, stationery, home accessories, pottery and cutlery. In 2004, their food products range and

in 2006, Fabindia Sana, their authentic body care products range was launched. Recently, they have

also ventured into the jewellery segment. However, the major chunk of Fabindia’s product range is

textile-based.


The company has continued to focus mainly on the artisans and sources its products from over

15,000 craftsperson across India. With a strong foundation, as stated above, the company has been

successful in increasing their presence all over India. They have also opened some international

stores in Italy, UAE, Qatar and China.

2: Industry Overview

The apparel industry is one of India's largest foreign exchange earners, accounting for nearly 16% of

the country's total exports. The 1996 Indian textile exports approximately amounted to Rs. 35,000

crores of which apparel occupied over Rs. 14,000 crores.1 The Traditional clothes market is growing

at 11 per cent a year.2

An estimated 30,000 readymade garment manufacturing units and around three million people are

working in the Indian textile industry. Many leading fashion labels are being associated with Indian

products. However, till today, the industry is dominated by sub-contractors and consists mainly of

small units of 50 to 60 machines. India's supply base is medium quality, relatively high fashion, but

small volume business.

3: Target Customer

Fabindia started as a wholesale export company and is still active in the wholesale sector. The target

customers in each segment:

Retail: Fabindia initially focussed on providing an Indian experience to the foreign buyer. In the 80’s, it

realised there is an untapped market among the upper and higher middle class. With the economic

boom in the 90s, the focus has shifted to the upwardly mobile consumers in metros who like Indian

prints. They are now also focusing on tier 2 and tier3 cities. The target audience is college going

youth and young professionals and just married couples in the higher middle class category.

Institutional Buyers: It has a dedicated team to handle institution buyers like heritage hotels, resorts and corporate houses.

They target organisation which want to portray Indian roots and eco-friendly culture. 1 Ministry of Textiles report, http://apparel.indiamart.com/industry/apparel/

2“ Womenswear brand W plans expansion”: Sravanthi Challapalli, Business Line Feb. 9 2008


4: Marketing Mix

Fabindia’s Marketing Mix can be defined under the following parameters:

4.1: TARGET MARKET

Price: Fabindia’s Product range enables it to provide a wide range of products in a wide

price range. The products range from garments for men and women to upholstery, furniture

etc. Obviously these products have different price ranges. But Fabindia has tried to make sure

that the customer cost remains affordable and gives ‘value for money’. To this end, it has

expanded its range of garments starting from Rs. 200 to more Rs.2000 in order to provide

something for all its customers.

Promotion: Fabindia has traditionally relied only on word-of-mouth as a marketing tool.

It believes that the product speaks for itself and this strategy has up till now worked very

well. Thus, Communication for Fabindia is completely customer driven. It believes that the

only problem in this strategy is that customers do not know the location of the stores, but

once that is overcome, no other strategy is needed. In order to do this, it has started using

tools such as Mobile Marketing and giving Advertorials in newspapers to increase awareness

about its store locations. Also, Fabindia uses a lot of in-store posters to create consumer

awareness about the products and where they come from, i.e. the rural suppliers etc.

PRICE-List Price -Discount

PROMOTION-Word of Mouth

PRODUCT-Nine different Product Offerings

PLACE-99 Outlets across India

CUSTOMER COST-Affordable and quality products

COMMUNICATION- Rely on Customer Recommedation

CUSTOMER VALUE- Products are hand made & traditional

CONVENIENCE-Outlets at major, upmarket locations


4.2 Product : Fabindia’s products are its differentiating factor and it has made sure over the

years that the quality and the style of the products is maintained. It has a large product range

which includes -Garments for men and women, Accessories, Home Linen and Furnishings,

Home Products, Floor Coverings, Body Care Products and more recently, Organic Food

Products and ethnic Jewellery. All the products have at least one factor which is handmade and

thus, supports artisans. This is a very strong customer value leveraged by Fabindia, which is that

of traditional, ethnic products which support poor artisans and provide livelihood to a large

number of people.

4.3 Place : Fabindia has stores in more than 95 locations across India. The stores include the

premium, regular and concept stores. It is trying to increase coverage in order to make sure that

the products are available at the largest number of places possible. It also differentiates its stores

according to the products stored. For eg. In Mumbai the Khar Store is only a Furniture and

Upholstery while the nearby Pali Hill stores Garments, organic products, Body products and

Jewellery. This also ensures convenience for the customers since the products are either

available in the same store or in nearby stores.

5: Competition AnalysisCompetition Faced by Fabindia is from both the organised and unorganised retail sector. (Appendix

10.1) The unorganised sector has the local tailors who provide customised garments to the

customers at reasonable prices and the local NGOs selling wares. However, the scale of operations

does not pose a major threat to Fabindia.

A far greater threat is posed by the organised sector especially Government owned Khadi Gram

Udyog outlets and Cottage Industries Emporiums across the country. The product mix offered by

both is similar to Fabindia. Also, they have the backing of the governments. However, the quality of

products and service provided by Fabindia is perceived to be higher than that of the government run

outlets.


The organised retail sector also includes outlets by corporate houses like Lifestyle and Westside

which cater to the same demographic profile. However, the products served are more contemporary

in nature and does not aim at the same target audience. Stores like Anokhi have the same target

audience, but do not have the reach of Fabindia.

6: Customer Connect Initiatives“A delighted Customer is our Best Brand Ambassador”

Fabindia does not follow any customer acquisition strategy. It mainly focuses on customer retention.

Fabindia creates its market through its existing customers which is quite evident from the fact that

about 85% of its customers are repeat customers. The Unique Selling Proposition of Fabindia is the

quality of the fabric and the traditional style, which is always in vogue. They have designed the

stores’ decor and ambiance keeping this in mind. They constantly try to improve upon the quality of

the products in order to retain their customers. (Appendix 10.3)

The company concentrates on customer feedback by maintaining a visitors’ register to record

customer views. The store managers prepare a report, which is periodically reviewed by the Product

Selection Committee at Fabindia in order to know about the buying pattern among consumers.

Recently, CRM software has been implemented in some of the stores which will help in maintaining

a centralized database. This will help Fabindia in retaining customers by building lasting

relationships and improving loyalty. The implementation, however, is still in its nascent stage, but is

soon expected to be spread across all the stores in the country.

Fabindia also has the Mystery Shopper Program in order to gauge the customer satisfaction level.

Mystery shoppers posing as normal customers perform specific tasks such as purchasing a product,

asking questions, registering complaints or behaving in a certain way and then provide detailed

reports or feedback on their experiences to the management. It serves as an effective tool to improve

the customer experience.


7: SWOT Analysis

ST

RE

NG

TH

S

Differentiable products

Brand recognition and loyalty

Diverse product mix

Partnering with suppliers

In-house manufacturing

Price Trends Setter

Different categories of stores

Customer Loyalty

No specific promotions

strategy

Limited channels of business

Sourcing strategy skewed

towards suppliers

Inconsistent quality of

products

Inconsistent service in stores

WE

AK

NE

SS

ES

TH

RE

AT

S

Substitute producing

competitors

Not in touch with Fashion

Trends

In store merchandising &

navigation

Promoting e-business channel

Organic foods market

Customer acquisition

strategies

OP

PO

RT

UN

ITIE

S

7.1: StrengthsThe product mix available at Fabindia can be easily differentiated by the customer. The uniqueness

of the fabric or styling has created a new category as identified by the customer as ethnic wear. This

leads to a very high brand recognition and connects with the customer value. It has an enviable

presence in diverse product lines as garments, furniture, furnishing and upholstery, body care,

organic foods and the very recently introduced jewellery line. Due to its variety of stores, it can reach

to different categories of customers.


7.2: WeaknessThis absence of promotions strategy is believed to be resulting in sales below its potential levels. The

sourcing strategy followed for accepting raw materials is heavily supplier centric. In the past there

have been incidences when due to delay in sending supplies for winter garments manufacture,

inventory was carried over to the next year and suppliers were not made to share the damage. It

operates through its own stores and that too fed by a centralized hub model of supply chain

management.

7.3: OpportunitiesMerchandising within stores is still in a rudimentary stage. The shopper navigation can be greatly

enhanced by focusing on the store layout and appropriate merchandising techniques which succinctly

create individual product areas. There is great opportunity to grow along with the fast growing

organic foods department. Out of the total customer base for Fabindia, a high percentage comprises

repeat customers. This leads to an inference that Fabindia can focus on customer acquisition

strategies.

7.4: ThreatsAlready many firms have tried to recreate the model of Fabindia. Hence, .Fabindia needs to innovate

and diversify into different product categories. It should be nimble and responsive to changing tastes

of its customers. Also as it is suppliers are mostly artisans and manufacturing is labour driven,

controlling costs can be a challenge. Also it needs to ensure that the customer service provided and

the quality of products is consistent.

8: Future PlansThe future plans of Fabindia include leveraging the Organic Products section, since it is still in a

nascent stage in India. It plans to expand nationally, as well as internationally. It is also trying to

reduce the number of defects in the products to a minimal which include bleeding of colours,

shrinkage etc.


9: RecommendationsSince the number of stores has more than doubled in the last four years, it needs to consolidate its

position and make sure that the supply chain problems are overcome. Also, as the survey and the

interview have pointed out, the visual merchandising of the stores needs to be improved

dramatically. In order to increase awareness about the location of the stores, it needs to market itself

more aggressively. It also needs to develop the online store and increase awareness about it.


10: Appendix

10.1: Competitors of Fabindia

STRENGTHS WEAKNESSES

UNORGANIZED SECTOR

Tailoring Outlets 1. Reaching out to customer

with larger dispersion.

2. Ensures convenience of

demanding service.

1. Very fragmented business

approach.

NGOs Promoting

Handicrafts

1. Strong community based

operations.

2. Complementary products

manufactured with other

firms.

1. Lack of retailing expertise

and inability to minimize

costs.

2. Products are mostly produced

for souvenirs or artifacts of

collector’s interest.

ORGANIZED SECTOR

RETAILING HOUSES :

Garments Based (Shoppers

Stop, Westside, Reliance

Trends, Globus)

1. National presence of outlets.

2. Retailing expertise and

competitive pricing.

3. Agility for quick product

development cycles.

1. Diversity of product is very

less.

2. Retailing brands and in-house

labels have a considerable

share of product mix. The

trends are designed as per

recent garments and

accessories trends.

Government Handloom

Initiatives

1. Strong legacy attached to

products.

1. Business is heavily

influenced by bureaucratic


(Khadi Gramodyog, Cottage

Industries Emporium, State

Government departments)

2. Subsidized manufacturing

and costs.

approach of employees.

2. No significant product

evolution.

Designer Boutiques 1. Scope of product

customization.

2. Highest level of customer

intimacy.

1. No uniformity in price across

products.

2. Limited models of SKUs

manufactured.

Organic Foods (Reliance,

Godrej Agrovet, ITC Foods,

Organic India)

1. Well established business

houses with high brand

equity.

2. Established and

technologically equipped

supply chains.

1. Profitability concerns as

organic market is still at

nascent state.

FABINDIA MODELLED GARMENT HOUSES

Anokhi 1. Differentiable products.

2. Established brand and

market.

1. Minimal product lines.

2. Handicrafts from western

regions

Bombay (Swadeshi) Stores 1. Servicing high value

customers.

1. Only located in Mumbai

2. Priced at a much higher

prices than average Fabindia

prices.


10.2: Questionnaire for Customer Survey NAME:

SEX:

AGE:

LOCATION:

EDUCATION BACKGROUND:

- High School- College- Graduation- Post Graduation

CURRENTLY WORKING AS:

QUESTIONS:

1: How much do you generally spend on Clothes per month?

- 0-500- 501-1000- 1000-2000- >2000

2: How much do you generally spend on Home Furniture and Furnishings per year?

- 0-5000- 5000-10000- 10000-15000- >15000

3: Have you heard about Fabindia

If yes, how did you find out about Fabindia?

- Internet- SMS- Print Ads- Word of Mouth- Gift certificates


- Others ____________________________

4: Have you visited any of the Fabindia outlets?

- Yes(Specify Frequency) -Once a week - 1-2 weeks - 3-4 weeks - > 1 month

- No

5: Were you able to find a Fabindia Outlet in your city?

- Yes ( Specify)- No

6: Rate your experience at Fabindia in terms of your satisfaction level for the following:

Highly Satisfactory

Satisfactory Average Unsatisfactory Highly Unsatisfactory

Service

Products

Range of products available

Location of the Store

Display of goods at the store

Quality of Products


Price

7: To whom would you recommend Fabindia ?

(Tick whichever is appropriate)

- Friends/ Relatives

- Business associates

- Teenagers/ College goers

- NRIs/ Tourists

- Elderly

8: Which of the following do you think was instrumental in your choosing to buy the products?Rank them on scale of 1 to 5 with 1 being the most important.

- Traditional work

- Support to poor artisans

- Quality of the product

- Price

- Range of products available

- Convenient Location of the store

- Service provided by the staff

- The ‘Fabindia’ Brand

9: Which of the following words would you associate with Fabindia?

- Traditional

- Indigenous

- Versatile


- Artistic

- Comfortable

10: Which of the following products of Fabindia were you aware of before you visited the

store?

- Garments (Men)

- Garments (Women)

- Accessories ( Duppattas, scarves etc.)

- Home Linen and Furnishings

- Home Products (Furniture, Tableware, Ceramics etc.)

- Organic Food Products

- Floor Coverings

- Body Care Products

- Jewellery

11: Which of these products would you buy from Fabindia?

- Garments (Men)

- Garments (Women)

- Accessories ( Duppattas, scarves etc.)

- Home Linen and Furnishings

- Home Products (Furniture, Tableware, Ceramics etc.)

- Organic Food Products

- Floor Coverings

- Body Care Products


- Jewellery

12: Have you bought any Products from the Fabindia Online Store? (Specify)

- Yes _______________________________________________________________

- No________________________________________________________________

13: What would you like to change in the outlet?

Interpretations:

17

8

17

25

33

Why Choose FabindiaRange of products available

Service provided by the staff

The ‘Fabindia’ Brand

5825

17

Quality of Products

Highly Satisfactory

Satisfactory

Unsatisfactory


25%

8.33%

16.67%

41.67%

8.33%

Customer Feedback - Areas of Improvement

Loyalty Program

Wider Range in Home Products

More International Stores

Better Display


10.3: Transcript of Interview with Zonal Manager FabindiaInterview with Ms. Shraddha Pandey, Zonal Manager Fabindia, [email protected]

Q: Can you give an idea how many customers walk into Fabindia stores without knowing what the store is all

about?

A: Very few. Almost all the customers are repeat customers.

Q: There is an issue of supply chain with organic products. The products are not always available. So how do

you deal with customers in that case?

A: We are the biggest seller of organic products in India. And as the market of organic products is at a very

nascent stage, people understand if there is non availability at some point of time.

Q: As you have said that most of the customers of Fabindia are loyal customers, so what does Fabindia do to

acquire new customers?

A: Virtually we do nothing. Fabindia creates its market through their existing customers only. We have 99

stores all over India. Recently we have opened a store in Bhopal also. Initially there was not much market but

over a period of time every store flourishes.

Q: Keeping this thing in mind, what kind of growth figures do you have in mind for Fabindia, because you

don’t advertise as such, so customers coming in might be less compared to the scenario where advertising is

also done?

A: Its growing at a fairly fast rate as evident from the number of stores which are opening every year. And I

don’t think advertising will affect much of our customer base because almost 85% of the customers are loyal

customers. Sometimes people are so much inclined towards uniqueness of Fabindia that they don’t believe in

telling others that they are wearing a Fabindia garment. Else word of mouth is the main factor of success of

Fabindia.

Q: Can you tell us something about the mystery shopper program in Fabindia?

A: In mystery shopper program, a person hired by management goes to every store and shops there and then

give a feedback according to the customer perspective. The store people never come to know or for that matter

suspect anyone whether he is a mystery shopper or not. There are almost 200 customers coming everyday to

Fabindia so anyways you can’t judge. As far as report is concerned, the feedback is given to every individual

shop and that is a very detailed feedback. It consists of minute details like signages outside, restrooms,

behavior of staff, etc. So it serves as a tool to provide better customer satisfaction.


Q: As the number of customers visiting Fabindia is pretty large, there must be some customer complaints also.

What are those and how do you handle them?

A: Main complaint is regarding the faulty product. Sometimes Fabindia product color fades off. But in the

maximum cases we replace the product. As far as organic products are concerned, there is a less scope of fault

because they all are kept on shelf after taking care of its expiry date etc..

Q: What is the competitive strategy of Fabindia?

A: I don’t think there is any threat to Fabindia when competition is concerned. The companies like Anokhi,

Khadi Bhandar, W, etc are not that big in supply and distribution network as Fabindia is, so I don’t think we

face a significant competition.

Q: Don’t you think that not having a competitive strategy is a loophole in a way. Suppose a big company

enters the market with a buzz, then it might eat upon some share of Fabindia?

A: I don’t think so. While looking at Fabindia, don’t look it just as a store. See the depth in the network. The

supplier who is providing sari to Fabindia is doing it from past 20 years. He looks upon us as the people who

have transformed his life. I have been to a village in Uttar Pradesh and trust me there are lot of villages which

are entirely made up of people supplying to Fabindia. We are very fair people, and clear in our mission and

vision, so there won’t be any problem arising in upcoming years also.

Q: You have 3 kinds of stores, how do you differentiate which place which store will suit the best?

A: It depends upon mostly on the demographics of the place. Like if its Dehradun, we will open a concept

store. Sometimes a concept store is transformed in a full fledged store depending upon its sales. So it all

depends on where & at what scale we are opening a store.

Q: As majority of the revenues of Fabindia comes from garment business, what is the positioning of other

avenues like furniture in Fabindia marketing?

A: Furniture market of Fabindia is also doing very well. Actually the demand is high and we are not able to

cater to all of that. This is because of the reason that the furnishing is unique and it also comes under

handcrafted products. Quality checks are periodic and it helps us to provide quality products to the market

where the demand is high.

Q: What are the different marketing channels used by Fabindia?


A: We do mobile marketing, i.e., invertising and also advertorials, i.e., whenever a new store or a new range

of products is launched, we put a news in the newspaper, so that customer comes to know. We don’t believe in

conventional advertising. It’s the word of mouth that helps.

Q: Do you have any customer loyalty program?

A: No, we don’t have. Actually we think that in these programs, it’s the customer who ultimately pays for

that. We rather keep our prices fixed and work on a fair margin.

Q: The perception in the mind of a consumer is that Fabindia is for upper middle class and high class people.

So what does Fabindia doing to break the ice?

A: Yes, I think that is a barrier and we are working on this front. I guess the USP of Fabindia is the quality of

the fabric, and the style, which will never go out of fashion. So we are constantly improving upon the quality

of the products and that way retaining the new customers and moving out of that niche segment slowly. We

believe that a customer comes again and again to buy the products.

Q: How do you take care of customer feedback?

A: This aspect of marketing is dealt by the store manager of every store. We have a Product Selection

Committee which reviews the position of the store periodically on the basis of the report of the store manager.

As he is always present in the store, he knows what does a customer feels and likes. Moreover, we have a

customer comment register in which he can write something if he wants. More recently, a CRM software is

implemented on some of the stores which will help in keeping a centralized database. But that is just at its

nascent stage.

Q: Anything which you consider as the weakness of Fabindia?

A: Our fabric still shrinks sometimes. We are working on that though. You have to realize that the person who

is working on that is weaving under the bulb. So we are putting up a system where we can recheck the

material before reaching the end user.

Q: Where do you see Fabindia in the coming future?

A: When I joined Fabindia, we had 40 stores, & now the number is more than doubled. So we see Fabindia to

launch more products which are close to customers same way as we launched organic products, Sana, and

jewellery.


11: References and Bibliography

JOURNAL

1. Wharton School of the University of Pennsylvania, “The Poor as Stakeholders: Can 'Inclusive Capitalism' Thrive in India?”, Knowledge@Wharton, November, 2008.

2. Jain R., “Mobile Magic: Making wishes come true now”, Netcore Solutions, June, 2006.

3. Mohanty B. & Roy R., “Fabindia Overseas Private Limited*”, Xavier Institute of Management, Bhubaneswar, Vilakshan, XIMB Journal of Management ; March, 2008

4. Khaire, M. & Kothandaraman P., “Fabindia Overseas Pvt. Ltd.”,

ONLINE

1. The Economic Times: “Fabindia launches its first-ever jewellery line”

http://economictimes.indiatimes.com, 12 August 2008.

2. Wikipedia, The free encyclopaedia: “1worldspace satellite radio”

http://en.wikipedia.org/wiki/Fabindia, December 2008

3. Business Standard: “LUNCH WITH BS: Fabindia MD William Bissell”

http://www.business-standard.com/india, 14 November 2006

4. Fabindia, Company information and online shopping portal

http://www.Fabindia.com, 5 December 2008

5. Rediff.com: "The amazing success story of Fabindia"

http://www.rediff.com, 18 June, 2008.

6. Infochangeindia, “The Fabindia School: Harbinger of change in rural Rajasthan”

www.infochangeindia.org, 2 November, 2008.

BOOK

1. Saxena R., Marketing Management, SAGE Publications, New Delhi, First Edition

A Marketing Project on FabIndia

Documents

Transcript of A Marketing Project on FabIndia