Marketing Management Project Report

 

LOGO

1. Executive Summary  Cuts & Fits, a start-up company, is a boutique style retailer of maternity clothing. Cuts & Fits will offer its customers a wide range of upscale products to choose from. By offering a nice selection of upper-end merchandise with benchmarked customer service, Cuts & Fits will quickly gain market share.

The Market Cuts & Fits has identified two distinct market segments to target. The first segment is the actual males, those that are buying the products for themselves or for their t heir spouses. This segment is growing at an impressive 9% annual rate and contains 400,000 potential customers. The second groups are friends and other people buying gifts. This market segment has a 8% annual growth rate with 600,000 potential customers.

The Concept Imagine this. You walk into a new retail space and it is an upscale boutique, as if you were on Fifth Avenue. But wait, the clothes are not for upscale models, but for expecting Males & Female. While this may seem a bit unusual, it is truly needed. Fashion conscious women have been looking for an upscale boutique where they can get good looking, chic clothing. While there is one other store in Lahore. That sells clothes at a similar price point; the store itself does not communicate the feeling of an exclusive boutique. Cuts & Fits will thrive by offering upscale products to upscale clients.  

Management  Mr. Irtaza Nasir Bhatti –President, Chief Executive Officer , As the C.E.O Mr. Bhatti will report to the Board of Directors and/or be assisted by a Board of Advisors. He will have overall responsibility for all aspects of the company, including operations, marketing, marketing, strategy, financing, company culture, human resources, compliance regulations, sales, and public relations.

 

Mr. Abdul Rehman Butt –Vice President of Finance, As the CFO, he will be responsible for day-to-day operations, including development of guidelines, distribution of resources authority consistent with planning, continuous review, and evaluation of performance, as well company overview of commitments against available financial resources and established schedules. Mr. Sahir Malik –Vice President of Marketing As Marketing As the VP of Marketing, this individual will be responsible for developing and implementing marketing programs to drive sales and raise community awareness.

Cuts & Fits will achieve strong sales for years two and three while earning moderate net profit for those years. 

1.1 Objectives    To create a maternity clothes and accessory boutique for both Male & Female   Quickly gain market share by addressing the upper-end price point of maternity.   To become profitable within two years.

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1.2 Mission Cuts & Fits mission is to become the premier maternity boutique for the upscale expectant Male & Female. This will be accomplished by offering the newest fashions and the highest level of customer attention.

1.3 Vision Statement Our Vision is to be a progressive business with strong brand equity, enhancing value for all the stakeholders through excellence in performance and good governess.

1.4 Keys to Success   Offer the finest maternity clothing for Male & Female.   Pamper the customers.   Develop a strict financial control regime for the business.

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2. Market Summary: The recent economic slowdown combined with the tragic events of September 11, 2001, reduced consumer confidence, which led to declining sales in the apparel industr industry y as a whole. The impact of the economic slowdown is felt differently by various sub-sectors of the fashion industry, with some being more greatly affected than others, such as the men's wear industry, in which the demand is more elastic than in the women's wear industry. In general, the apparel market is positive due to the immensity and strength of the industry. However, manufacturers w who ho want to enter the market will have to be extraprudent and prepared to make greater investments in promotions and resources to do

 

observation visits, conduct preliminary market tests, and increase their visibility by taking part in trade shows and other activities. activities. Industry specialists strong strongly ly advise using specialized brokers to increase one's chances of success.

2.1 Segmentation  Geographical of Target Market inTarget Lahore:Market: SegmentationArea & Identification Area of

Lahore 100,00,000 Women 55,00,000 Women 55%

3 % Target Women 165000

Men 45%

Potentially Interested 10%

Potentially Interested

Target 40,000 Women

3% Men

10%

2.1.1 Geographic  For the availability of our product we have strong distribution channels that make our product available in Lahore. But we want to increase our business in Punjab and then Pakistan. Punjab is divided into 5 zones includes modern retails of Lahore, Faisalabad, Islamabad, Multan and Gujranwala-Gujarat. Gujranwala-Gujarat. Then we target other provinces of Pakistan. Here are some specific areas of Lahore, which we want to target;

Identification of Target Area:  Defence: H block, Lahore   Y block, Lahore  

 

Stores: Hyper star, Lahore   Metro, Lahore   Mall of Lahore   Shopping Malls  

Gulburg: Liberty market, Lahore   M.M Alam road, Lahore    Xinema Mall, Lahore    Pace shopping mall, Lahore   

Others Areas:  Annar Kali, Lahore   Panorama Center Mall road Lahore      

Cream block market, Allama iqbal Town G 1 market Joher Town, Lahore

2.1.2 Demographics             

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Age: People of all ages but young girls and boys will mostly our customer. Gender: Male and Female. Family size: No limit of members. It may be single or all family members. Family life cycle: young or old, married or single. Income: Rs. 40,000 and above Occupation: students, working people and house wives

  Social Class: Upper class, Upper middle class and middle class

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2.1.3 Psychographics        

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Lifestyle: Achievers, Well settled and Ambitious people. Personality: Fashion conscious persons may be male or female. Value: Attitude:

In the case of Cuts and fits or any other appersal the final consumer is the person, who is earner of his family because he or she is the one who manage the financial expenses and has knowledge about quality and price of the product.

 

2.2 Behavioral Factors Creating a feel among consumers that “higher the rate, better the quality.”Cuts and fits is not only the product for customer. But it is the brand that targeting the peoples through believes and values. We define our brand according to the consumer needs. Therefore, our tag line is “The cuts that’s fit you.” Targeting quality driven customer who are ready to pay a premium price. Customers believe the product to be expensive, e xpensive, but consider it to be of superior quality and thus are willing to pay more.

2.3 Market Needs We are proud to have a differentiation edge over our competitors through our effective segmentation.  Accessible: Our product cuts and fits are available to for our customer. Through using print and electronic media we provide all awareness’ of our product our customer feel no difficulty in assigning the product during purchase. The customers who have been focused are potential &real customer of our product. : We are going to have a strong add campaigns for attracting segment effectively  Actionable and efficiently. So, that we can capture the market share as soon as possible.

2.4 Market Trends The trend is directed towards consumer preferences for appraisal. However, there was a research that influences consumer preferences for appraisal goods. Current consumers’ attitudes regarding the brand image, consumer preferences for global a s well as domestic brands, and its country-of-origin country-of-origin.. Appraisal industry has seen considerable change in its customers’ purchasing patterns. Consumers are depending on their psychological satisfaction. They are also searching for more convenience in retail shopping. As a result, they are willing to pay more for products that are quick and easy to use and have huge stock in the local market of Pakistan. Faced with a highly competitive market and an ever decreasing direct marketing channel, branding has become very important for producers to gain a competitive advantage in the market place. Brand image provides consumers with a familiarity that increases convenience in shopping. Therefore, we focus on our brand image.

2.5 Market Growth We shall not consider training as a burden, but as a sustainable investment for growth. Need is for promoting culture of learning in this ever changing and ever improving technological era, for improvement at all levels. We can survive and compete in the international market, amid challenges, through an efficient work force and integrated systems. Trained work force is critical for improving productivity and efficiency in the garment industry, for survival and growth in the competitive international market. market.

 

2.6 SWOT Analysis The SWOT analysis on the Pakistan’s textile industry is given here for the interest of readers. In this way we would identify the weaknesses in the textile industry and find the alternative solutions and remedies so as to make the textile industry competitive and efficient against our biggest challengers, India and China and against the emerging markets such as Bangladesh and Vietnam

2.6.1 Strength  1. Raw material base 

Pakistan has high self sufficiency in raw material and is the fourth largest producer of cotton. Abundant use of cotton resources has made the Textile industry of Pakistan move towards the area of industrialization. 2. Labor

Cheap labor has always always been the backbone of the economy of Pakistan. Pakistan. Cheap and ample supply of labor strengthens the industrial and agriculture sector of the country. Around 39% of the labor force works in the textile sector. As Karl Marx said, that we have to use the “army of labor” present in the country for productive means. Thus cheap and abundant labor means low cost of production. 3. Rich heritage 

Due to cultural diversity and rich heritage, designers come up with new different and attractive designs which are appreciated worldwide. Our culture comprises of Sindhi, Punjabi, Balochi and Pushtoo values. Also we are also influenced by the Indian culture through the media exposure, which of course gives the Pakistani designers an inspiration and taste of Karnataka, Rajhastani styles, etc. This varied culture and fusion among these two neighbours gives inspiration to the designers to give their best in terms of styles, creativity and fashion. 4. Domestic market  

He recent shift of the population from the agraria agrarian n society to the urban areas, increased income levels and growth of the population raised the domestic demand. This means more factories more manufacturing units, more supply and more labor.

 

2.6.2 Weaknesses  1. Research & Development (R&D) 

Developed countries are using the technology of biotechnology and genetic engineering e ngineering to increase the quality and quantity of their cotton production. They are able to grow colored cotton, organic cotton and several different varieties cotton to added value to the textile chain. In Pakistan, there is very some research done on small scale by private companies to invent modified cotton fibers. Practically no efforts are being made by the APTMA in the R&D of the textile industry to enhance the quality of its products, upgrade the technology used, and encourage effective methods of production in order to compete internationally. Instead the industry suffers lack of latest means of production and falling cotton crop output every year. Due to low quality of cotton crop, profitability decreases and the farmer switch to the other crop such as sugar cane, maize and thus the cotton production decreases. 2. More dependence on cotton 

As the textile sector is heavily dependent on cotton production, low cultivation of cotton will deteriorate the textile industry. On the other hand, Pakistan lacks expertise in the development, production and marketing of synthetic products and fabrics required for items like swimwear, skiwear and industrial apparel. So far Pakistan has been unable to diversify in the export of textiles and is heavily dependent on single fibre, that is cotton and its blends. This dependence on single crop econom economy y is restricting the diversification diversification of exports from Pakistan. 3. Labor productivity 

Despite of the abundant supply of the labor, productivity of the labor is very low. According to a study by Federal Adviser on textiles, the regional competitors of Pakistan take take 75 minutes to complete and produce one piece of cloth whereas we take 133 minutes for the same work. We also waste 30% in finishing and 12% in washing.” European buyers recommended that we should cut our costs up to 45% in sewing by getting more efficient. Labor productivity can be improved by giving the labor appropriat appropriate e training with the advancement of technology so as to make them more efficient and with lower wastage of resources. In China an average 70 hours of training are given to labor to enhance their expertise. 4. Poor infrastructure 

The important resources and infrastructure, such as adequate of supply of water, continuous supply of electricity and gas, efficient logistics and transportation, tax structure, raw material supply are all basic requirements for the development of an industrial base. However, on the other hand, the industry is faced with rising charges of the energy sector,

 

which increases the cost of production, making it difficult to compete with the other regional rivals. 5. Poor quality standards 

With the exception of big and leading units who comply with global quality standards in textiles, most of the medium and small sized units can not ensure the reliable and consistent quality standards. Some of these textile units import second hand machinery from China, India, Korea, and Taiwan with no checks and balances on the quality of the machinery parts and tools. Preference is only given to the cheap and workable machinery with no concern of the quality of the machine, therefore, resulting in poor quality of the end product. The industry can generate more profit by adding more value to the product, as value can be measured in terms of quality, increased per unit price, etc. Pakistan’s textile indus try should focus on latest material handling techniques and should train workers. The inability to timely modernize the equipment, machinery and labor has led to the decline of Pakistani textile competitiveness. 6. Unstable political situation 

Political unrest, strikes and terrorism have critically affected the economy of Pakistan. Frequent changing of the government has adversely maligned the policies of the textile sector. According to the World Trade Review “Pakistan has failed to take necessary steps needed to meet post Multi-Fiber Agreement (MFA) challenges for its textile industry owing to lack of political will by the successive governments.”  In 1978 World Bank surveyed the Pakistan textile industry and reported many deficiencies in this sector. It also gave certain measures to resolve these issues, but unfortunately all these problems still persist and the industry is still unable to keep its pace with the international market. market. Successive governments lacked the will to rreform eform human resources and adapt the marketing techniques that resulted present scenario in this industry. 7. System orientation and supply chain 

Nowadays, customers are very systematic in their work and they expect the same professionalism from their vendors. Unfortunately, we lack this capability and are not competent to struggle in the international business, thus losing many opportunities. On the other hand supply chain management is rarely implemented. We are disorganized, disconnected and distorted. Time management is very much important aspect in the business and buyers expect on time delivery to match the retail launch of the Spring/ Summer or Autumn/Winter seasonal collections on time . Delayed delivery of export orders result increase in cost due to fines by the buyers and at times losing business altogether due to the breach the order contract.

 

2.6.3 Opportunities  1. Pakistan Textile City 

Pakistan Textile City in Port Qasim, Karachi with an area of 1250 acres, will be completed in 2011 as a private public sector joint venture. The main purpose of the textile city is to provide the textile industry with the world class infrastructure to meet the global competitiveness and challenges and as to provide value added textile industrial zone. Its main features include one way window operation, constant supplies of gas and water, and uninterrupted power supply. 2. Marketing 

Targeting the unexplored export markets with the help of aggressive sales and marketing will pave the way for the textile growth. It’s all about hunting your opportunities with the handful of colorful lollipops. If we make investment in our sales force and train them in the fine art of marketing textile products, we can capture an much bigger market share from other smaller competitors. 3. Collaboration with foreign companies 

By making partners with the foreign companies, we will be able to learn a lot from them in terms system orientation, supply chain and it would be feasible to import latest technology. We can also reduce our costs, comply with the international standards, standards, add value to our products, easiness in marketing our products in different d ifferent foreign regions, improved labor and thus catching up with our regional competitors. 4. Re-engineering of production system  

Information technology has a crucial role in manufacturing sector. Acquiring state of the art machinery is though very much expensive, but a very fruitful and necessary measure to stay competitive in the long run. It is the level of trust, the exporter builds with its customers by giving them flawless flawless products, made on state of the art machinery. Once this trust is developed, there is no other way than any unforeseen exception, that you may lose a customer to another competitor. Therefore, its highly recommended to produce with great efficiency, minimizing the wastage of the raw material, energy resources and thus reducing the cost of production. 5. Producing high value products  It’s better to export yarn than raw cotton. Similarly it’s better to export finished fabric than to export grey fabric (raw fabric). Furthermore it’s very much feasible to export readymade garments than to only fabrics. What makes the latter better is the value added and subsequent increase in per unit price.

 

Therefore, the textile industry should focus on the finished products so as to create more value in their products and reap larger margin of profits. The industry should also diversify into other areas such as technical textiles and nonwovens in order decrease its dependence on conventional and commodity textiles, which is highly sensitive to per unit price and volume for the profit margin. 6. Image building of Pakistan to attract FDI 

Security measures should be taken to facilitate the buyers and investors to visit Pakistan for investments. Secure business environment must be needed to attract golden sparrows to facilitate business dealings and building positive image of Pakistan that they can rely upon. 7. Reducing the cost of business. 

China and India are much cheaper in labor, raw material and utilities as compared with Pakistan. Rising inflation inflation also increase the cost of production. We have to control these unnecessary costs if we have to survive in the middle of the two giants of the textile se sector ctor in the world.

2.6.4 Threats  1. New competitors 

Pakistan is facing new competitors in textile sector such as Bangladesh, Vietnam and Turkey. Though we cannot avoid competition but we can always stay ahead of them by reforming our strategies and educating our entrepreneurs so as to move one step forward in every aspect. 2. Phasing out of quota system 

As the quota system is most ruled of out bymarket WTO, there a threat by the Chinese and Indian manufacturers to gain the share.isWe have high costs, low labor productivity and inefficient production processes. 3. Fashion life cycle 

Fashion changes day by day these days. Media has so much penetrated in our daily lives that we easily adapt ourselves as it wants us to. This has resulted in shortening the fashion lifecycle thus increasing the fashion risk. Now the buyer does not want to wait long for his consignment because he is insecure that by the time it will reach to him he will lost its demand due to change in fashion. Therefore, they prefer to buy from neighboring countries even at higher cost to get their products instantly rather than to wait weeks or months for their consignments to reach them.

 

2.7 Products & service offerings Cuts & Fits is a new boutique that offers a wide range of fancy maternity clothes and accessories. The concept is to offer high-end products for Male & Female in one store. This level of convenience is not offered by anyone else. While there is one other store that offers upscale maternity clothing, no one offers products for both mother and child in the

same store. Our products highly effective withonhigh and days. But, convenience in pricing. Inare apparel market thedisinfectants competition are thequality peak these we over products according to our customers need. Our product will have a broad spectrum and will have a rapid growth market share. Some of Cuts & Fits product offerings include:   Maternity clothes.   Shoes.   Wallets.   Belts.   Clutch Bags.   Undergarments.   Wallets   Party dresses   To create a maternity clothes and accessory boutique for both Male & Female   Quickly gain market share by addressing the upper-end u pper-end price point of maternity. Our services are our customer’s satisfaction. Because we are launching garments outlets, therefore our brand and our valuable products are our service. Due to this it is compulsory to focusing o quality and customer satisfaction. satisfaction. Regarding the product and servicin servicing g we have clear motives and our goals. 

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2.8 Key success factors  Success in the Apparel industry depends in large part of knowledge of retail operations, and the suitability of your brand skills and personality to the business. The apparel business just like our cuts & fits requires that we must: Enjoy meeting people.   Be skilled in the art of maintaining customer customers. s.   Have a knack for choosing the clothes that people will actually buy,   Possess a huge dose of fashion sense.  

According to a report, the industry is very competitive, and studies show that 80 percent  of  of retail clothing businesses fail within the first five years. Most brands, particularly small businesses, perish because of poor of management, tough competition from department and discount stores and poor e valuation evaluation fashion trends.

 

Below are nine ways of our business can succeed in the clothing retail market: 1. Start small

One of the most common downfalls of retailers is that they tie up so much cash in inventory and overheads in the beginning. But we are short in cash; concentrate on getting select quality merchandise. As your business grows and our customers increase, we can then afford to increase your inventory. 2. Location

Selecting a location with significant sources of demand is the most important decision when deciding to open a garments brand outlet. Opening a brand store in Lahore, one cannot find a better place than mall of Lahore, panorama center, liberty market because there is high frequency of habitual shopping class is seen. 3. Quality Product and Service  

You are only successful when you over a high rated product. Similarly, you're only as good as your last customer interaction. Successful brands ensure their service offer quality and product after sometime by gathering data to the customer. We must do this technique, because then we make a trend in market. 4. Effective Capitalizat Capitalization ion 

The life cycle of a brand is naturally five years. In year one, the business busine ss is built. In years two and three, the business is fine tuned. In years four and five, earnings are maximized. Same the condition will happen with us. We have a crystal clear thinking about our plan or accomplishing our goals. Cuts and fits invest effective effect ive capitalization in its business process, so we can earn maximum profit. 5. Environment  

A successful brand outlet has an environment that matches the product it is serving and the customers it attracts. A retail chain store that focuses on selling high quality and prestigious apparels to families should have an environment in there outlets that are peaceful and exciting. It’s maters a lot in your sale.  

 

6. Staff and customer service 

Successful employ managers and employees who perform at a high level and work to accomplish the company goals. goals . We hire that employees which have a clear mind about our brand and they know about our customer needs. For this purpose, we need a strong and hardworking marketing team. Employee’s selection is also our success factor. Also we hire a strongest sales staff, which convince our customers for buying.

7. Go on heavy service

We are offering products for every age persons like young, kids, aged persons. So, it’s commonly seen that there is a rush of people in r etails brand store. It will be our success factor to handle a large number of people at a time. Because a statement is that “every “every customer is superior in business.” business.” 

8. Strong supplier network

Supplier affects a lot on a company reputation. Therefore, management of Cuts and fits will prefer to hire those suppliers, which know the market trends and they are initiatives in doing activities. So, we will have a high edge in the market. 9. Strong distribution network or channel Cuts & fits have a strong distribution in all over the city. It is our key success factor. Because distribution of the products on the time have a lot of affects your sales and promotion of your product. 10. Successful product positioning & promotion

Our successful product positioning will also become a key success factor for us. It helps us create a brand image in the customer mind. And then we will be able to accomplish our goals. In these days successful product promotion also give you a edge in the market. If you offer a high quality product then effective promotion takes you on the top of profit edge.

 

3. Marketing Strategy Cuts & Fits marketing strategy is based on the following: Product differentiation based upon "The Cuts that fits you"    Building a relationship-oriented business.   Fostering corporate social responsibility.   Focusing on the diversified "communities" as the company's target markets.  

Cuts & Fits brand and marketing message are not directly attached to any particular group of customers, but rather to a diversified community of consumers who believe in humanitarianism humanitarian ism and equal opportun opportunities ities and choices for everyone. The company does not simply offer products that clothe the body, but rather products that clothe the soul clothing that supports people, either directly or indirectly, through difficult situations. The company's primary marketing strategy is to establish itself as the "Apparel Company of the Future." With management's deep roots in humanitarianism coupled with a firm belief in harmony and honesty in business and advertising, Cuts & Fits will greatly increase the marketability of its apparel line.

3.1 Pricing Strategy Cuts & Fits pricing strategy remains competitive with all other high quality apparel companies, but offers much more in terms of meeting the company's mission and purpose for existing. As a general rule of thumb, 50% of each garment's garment's cost is consumed in actual manufacturing,, divided among labor and ma manufacturing materials. terials. The other 50% is allocated overhead and shipping expenses.* Average mark-up is 40% of cost. Currently, all of the company's products are on target in price, as compared to other similar branded apparel. Cuts & Fits with regularly monitor its its operating expenses, delivery costs, cost of sales, trade discounts offered, damage allowance, hazards, and other variables to ensure that the company's pricing strategy remains competitive with industry standards and expectations.

3.2 Promotion Strategy Cuts & Fits brand is a competitive advantage in itself, as it is not directly attached to any particular group of customers and allows entry into different segments of the apparel industry. In addition, the company ha hass an established marketing strategy strategy that relies upon celebrities, market specific advertising, product promotion, and "giveaways" that have established Cuts & Fits presence in the apparel industry. Cuts & Fits will depend upon several promotion promotion strategies to reach new customers. These strategies include:

 

3.2.1 Advertising: Cuts & Fits will utilize industry-wide apparel magazines and newsletters as primary sources of advertising.

3.2.2 Magazines/Newsletters:  Industry magazines and newsletters are considered to be effective advertising media because they consistently reach the company's target markets. Because magazines and newsletters a are re tangible media, they help advert advertisers isers relate intangibles, such believa believability, bility,that quality, andhave prestige. prestige. typesprimary of media are non-intrusive, quiet, peras personal sonal vehicles usually a longThese life. life. Their audiences pass them along to secondary readers, so that their reach builds over long periods of time, making them a long-term investment.

3.2.3 Direct Mail:  Cuts & Fits will explore the benefits of incremental, coordinated, direct mail campaigns which ensure that the company's advertising is:          

Targetable Efficient Flexible Measurable Accountable

3.2.4 Media:  Cuts & Fits will initially develop a loca locall media campaign, including including radio and television, built around service service innovation. This campaign w will ill begin with a "Who We Are" statement and be supported by other advertisements that reinforce the company's marketing message to consumers of casual, active, and sports apparel.

1. Radio:  One of radio's greatest strengths is its abi ability lity to deliver a marketing message message to a selective audience. The media is portable, free, and very very accessible - at least one radio exists in most American homes. Cuts & Fits radio campaign campaignss include advertising with

WMCA 570 and WWDJ 970, which are two of the largest radio stations. 2. Television:  Nearly 31% of total TV households watch p prime-time rime-time television (ABC/NBC/CBS affiliates), affiliates), a share change of 38.8% since 1985-1986. People spend more time with TV than with any other medium, which due to its sight and sound uniqueness, creates awareness, interest, and desire. desire. Executed properly, Cuts & Fits TV campaign campaign will lend prestige and glamour to the company's marketing message. 3. Cable Television:  Cable television service is available to 95% of all television households in the Pakistan, and about two-thirds of all television households subscribe to it. Most of those systems offer at least 30 channels (57% ha have ve between 30-53 channels and 13% have 54 of more channels).

 

3.3 Financial Objectives of CUTS & FITS 3.3.1 Revenue Growth

Increasing revenue is the most basic and fundamental financial objective of Cuts & Fits. The growth in revenue of our ou r company comes from an emphasis on sales and marketing — earnings activities, and solely concerned increasing earnings before  revenue expenses. Our is Cuts & Fits companywith goals top-line are in terms of percentage increases rather than aiming for specific Rupees amounts. We are setting our objective of increasing revenue by 20 percent each year for the first five years of our company's operations. 3.3.2 Profit Margins 

Profit objectives are a bit more sophisticated than revenue growth goals. Any money left over from sales revenue after all expenses have been paid is considered profit. Our company is a startup company so we use our Profit or bottom-line earnings in number of ways that includes investing it back into the business for expansion and distributing it among employees in a profit-sharing arrangement. Profit goals are concerned first with revenue, then with costs. Keeping costs low by finding and building relationships with reliable suppliers, designing operations with an eye toward lean efficiency and taking advantage advantage of economies of scale, to name a few methods, can leave our Cuts and Fits Company with more money after paying all of our bills. 3.3.3 Sustainability

At certain times, companies or brands may be primarily concerned with basic economic survival. Retrenching is a marketing technique — based on a financial objective — that attempts to keep a brand alive and keep current revenue and profit levels le vels from falling any further during the “decline” stage of the product/brand life cycle. Companies may Cuts be concerned with financial sustainability during periods of economic turmoil, as well. and fits financial objectives for survival include collecting on all outstanding debts on time and in full, de-leveraging by paying off debt and keeping income levels consistent. 3.3.4 Return on Investment

Return on Investment is a financial ratio applied to capital expenditures. ROI can be applied to two basic scenarios. ROI is concerned with the return generated by investments in real property and productive equipment. Our Cuts & Fits will make it sure that the outlets, material, products and other equipment they buy generates sufficient revenue and profit to justify its purchase cost.

 

3.4 The Target market “The process of evaluating each market segment’s attractiveness and selecting two or more segments “As the outlets of cuts and fits are in posh area and prices are high, so cuts and fits is targeting upper class and upper middle class.

Target market depends upon size and growth rate of population, Company resources and structural attractiveness of market segment. Cuts and fits are not so much expensive but is unique. We are targeting household women, students and all aged men. The segmentation of our target market on the basis of income is Elite and upper middle class. The majority market of cuts and fits is household women as they t hey are more in to buying the wearing products because they are more curious about fashion. As we know that we are selling appraisal products so our main target market is girls of elite class, and upper middle class and especially those who are using different kinds of brands without keeping in mind that from what class of society they are. We conducted a survey using the most appropriate tool i.e. the questionnaires in which we asked customers if we launched cuts and fits in the market, would they like to buy that innovative product or not. For this purpose we used a sample size of 100 and response we got is shown bellow graphically.

25% Niche Market Segmentation ( Middle Class & Others) Target Market (Elite Class & Upper Class) Middle

 

3.5 Specific Environmental Factors

SUPPIERS

THE ORGANIZATION

COMPITETORS

CUSTOMERS

The specific environment includes those external forces that have a direct impact on manager s’ decisions and actions, and are directly relevant to the achievement of the organizational goals. 3.5.1 Customers: Customers are very important for the organization because customers are the main source of organizations profit. Organization Organization exists to meet the need of customers. Customer obviously represents potential uncertainty to an organization. If customers become dissatisfied with the organization products it will really affect the organization. Customers are regarded as the king of the market. Success of every business depends upon the level of their customer’s satisfaction  3.5.2 Suppliers: Suppliers are very important for any organization. A supplier relationship is one way of ensuring competitive and quality products for an organization. They are the persons who supply raw material and required components to the company. They must be reliable and business must have multiple suppliers i.e. they should not depend upon only one supplier. 3,5,3 Competitors: Every organization has one or more competitors. Competitor’s analysis and monitoring is crucial if an organization is to maintain its position within the market. Every move of the competitors affects the business. Business has to adjust itself according to the strategies of the Competitors.

 

3.6 PEST Analysis

  ECONOMIC

TECHNOLOGICAL

THE ORGANIZATION

POLITICAL/LEGAL

SOCIALCULTURAL

3.6.1 Political Factors If we analyze the political situation of our country, we come to know that it is not in very good condition. Currently, these problems are main and most important problem which our country is facing.   The continuous change in power affects the policy making of the industry thus affecting our business in a negative way.   Government seems failing in solving the problem of shortage of most important resource required to operate any industry and business that is electricity.   The legislation is in hands of few people and they keep on changing it in ways that would benefit their sole interests.   Government does not take interest in new establishing industries.   Nowadays we are also facing an internal war situation in our Frontier Province which is also affecting us a lot and adding to already worsening political situation.   International pressure groups are also there which are indirectly ruling our country   For past many years like USA and others are used to interfere in our internal matters and they dictate our government according to their sole interests.   In short, the political condition of Pakistan is not good or unstable.

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3.6.2 Economical Factors Economic condition affects both capital availability cost and demand. Timing and relative success of particular strategies can be influences by economic conditions.   As we look at the economical trends of Pakistan there is a high inflation rate which decreases the purchasing power of customers so economical factors might affect on cuts

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and fits.   We can categories our economy into different segments, although the general economy of Pakistan is not in very good condition but still we can see development in some industries and sectors.   There are some industries which are not affected by the current economic situation and we are seeing growth in these industries. Although the cost of goods manufacturing has increased and profit margins have decreased.   Not only in Pakistan, but overall world economy e conomy is unstable.   Our Pakistani industry is in introduction and growth stage in the trade cycle and we can hope for good in future, provided the political situation and overall world economy also stabilizes.   Pakistan have got loan from IMF and World Bank on certain conditions. These conditions

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are also affecting our economy.

3.6.3 Social Factors

Social factors include the demographic and cultural aspects. These factors affect customer needs and the size of potential markets.   According to the current lifestyle people are getting busier in their work in some place husbands and wives both are the earners in case of this trend it create a demand of domestic help services so that people could get reliable services in their absence.   Consumer attitudes and opinions are favorable towards trustworthy services which would bring comfort and ease to them.   Now, people are more aware of quality of services and are ready to pay a slightly higher price for durable and reliable services.

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  Advertising and publicity has a major role in forming consumer attitudes and changing consumer buying behavior.

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3.6.4 Technological Factors The frequent change in technology is a challenge these days. Pakistan is still far behind rest of the world in technology development, innovations, and research and development.   Our product would be based on latest technology being used all over the world.   Our R&D activities will continuous in our factory.

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We have latest automated machines that would surely create big difference in the market.

 

3.7 Marketing Research Marketing research consists of all the activities that enable the organization to obtain information it needs to make decisions about its environment, marketing mix, and present or potential customers. Marketing research is the development, interpretation, and communication of decision oriented information to be used in all the phases of the marketing process. Coming to what processes cuts and fits uses to research the current status or even to determine the future prospects of brand is firstly the use of syndicated services because they are developed without a particular client in mind but are sold to anyone interested. The source is the marketing information system that employs these are basically internally coordinated activity that provide continuous, scheduled or on demand standard reports that help evaluate the products performance. It collects the data it requires by the data bases and data ware houses it keeps both of the customers it sells to as well as the retailers and how much sales at a specific time is the sales were. Therefore keeps a whole record of what is happening when. Moreover, cuts and fits also use the conventional method of obtaining primary data either from the people or from the shop keepers it sells its products to. Therefore, engages in an independent marketing project. Sometimes they even collect the data they need by distributing or providing free samples of different products in all major places around Pakistan. So, we can conclude that, we are uses the Simulated Test Marketing. An example of marketing research for our brand can be put forth. First, we defined the objective, the object was does it have to come up with a new and innovative product. It wanted to research that would to the launch of our brand bring new innovation in the product itself and do the people want innovation? Now, we had to conduct a situation analysis which dealt with concentrating on what people wanted and what new flavor can be brought forth different from the existing ones. The third step was conducting an informal investigation by going to the retailers and the shop keepers and the consumers themselves by just asking verbal questions. The next step was to conduct a formal investigation; in this case, we are giving samples of our products in all big places. Finally, we will be analyzed the data and launched our brand cuts and fits.

 

3.8 Positioning “Positioning is referring as Arranging for a product to occupy a clear, distinctive and desirable place relative to competing products in the minds of target consumer.”We arrange cuts and fits to occupy a clear, distinctive, and desirable place relative to competing products in the mind of target customers.

This is something very important because as it creates an image about our brand in the minds of our patrons that how they perceive it. This positioning would be helpful in a sense as it would tell us that our patrons are willing to buy our product or not the more effectively we position our product the more will be demand for our product. In cuts and fits feedback will be taken from the customer in order to know the customer demands and then improvements will make in products. We are focusing on quality and pricing in order to create a distinct and clear position in the minds of our customers .cuts and fits will have a strong brand name and we will leading the market appraisal industry.

In Pakistan, the markets for producing brand appraisal on its own are very rare. Only a few names are in the market that produces their own products. But here cuts c uts and fits is differentiating from all in the way that we are providing quality and new styles other than traditional in a variety of styles and colors that makes your personality admirable. Our brand enables you to present yourself as a style setter in the limits of our society. Cuts and fits collection is specifically designed to suit a variety of occasions and cultures as well.

 

4. Financial Plans of CUTS & FITS The growth of Cuts & Fits will be moderate and the cash balance will always be positive. Being a retail environment we will not be selling on credit. We will accept cash, checks, and all major credit cards. Tele-Check Services will be used as the check guaranty system to help reduce the percentage of loss on bad checks. Marketing and advertising will remain at or below 5% of sales. We will continue to reinvest residual profits into company expansion, and personnel. Important Assumptions

Cuts & Fits Company does not sell on credit nor do we offer layaways at this time. We accept cash and checks, Visa and MasterCard. All sales paid via credit cards will be deposited in our business checking account within 48 hours. Key Financial Indicators 

The following chart shows the benchmark figures for Cuts and Fits Company:

 

4.1 Projected Profit& Loss  Projected profit and loss of Cuts & Fits Company is:

300000

200000

175000 150000 100000

Pro Forma Profit and Loss for Outlets of Cuts & Fits   Sales Direct Cost of Sales Other Production Expenses Total Cost of Sales Gross Margin Gross Margin % Expenses Payroll Sales and Marketing and Other Expenses Depreciation Telephone / Pagers/ Cell Utilities Payroll Taxes Other Total Operating Expenses Profit Before Interest and Taxes EBITDA Interest Expense Taxes Incurred Net Profit Net Profit/Sales

Year 1 284,200 142,100 0 142,100 142,100 0.00%

Year 2 369,460 184,730 0 184,730 184,730 50.00%

Year 3 480,290 240,145 0 240,145 240,145 50.00%

44,115 15,448 0 1,800 4,500 4,412 0 70,275 71,826 71,826 1,491 21,100

48,527 15,523 0 1,800 4,800 4,853 0 75,502 109,228 109,228 1,175 32,416

53,379 15,834 0 1,836 4,896 5,338 0 81,283 158,862 158,862 845 47,405

49,234 17.32%

75,637 20.47%

110,612 23.03%

 

4.2 Projected Cash Flow The following table explains projected cash flow.

200000 150000 120000 100000 80000 50000 0  

PROFORMA CASH FLOW FOR CUTS & FITS OUTLETS Pro Forma Cash Flow Cash Received Cash from Operations Cash Sales Subtotal Cash from Operations Additional Cash Received Sales Tax, VAT, HST/GST Received New Current Borrowing New Other Liabilities (interest-free) New Long-term Liabilities Sales of Other Current Assets Sales of Long-term Assets New Investment Received Subtotal Cash Received Expenditures Expenditures from Operations Cash Spending Bill Payments Subtotal Spent on Operations Additional Cash Spent Sales Tax, VAT, HST/GST Paid Out Principal Repayment of Current Borrowing

Year 1

Year 2

Year 3

284,200 284,200

369,460 369,460

480,290 480,290

0 0 0 0 0 0 0 Rs284,200 Year 1

0 0 0 0 0 0 0 Rs369,460 Year 2

0 0 0 0 0 0 0 Rs480,290 Year 3

44,115 174,454 218,569

48,527 244,577 293,103

53,379 315,576 368,955

0 0

0 0

0 0

 

Other Liabilities Principal Repayment Long-term Liabilities Principal Repayment Purchase Other Current Assets Purchase Long-term Assets Dividends Subtotal Cash Spent Net Cash Flow Cash Balance

$0 3,300 0 0 0 221,869 62,331 Rs62,715

0 3,300 0 0 0 296,403 73,057 Rs135,771

0 3,300 0 0 0 372,255 108,035 Rs243,806

4.3 Projected Balance Sheet   The following table explains the projected balance sheet of each outlet of Cuts & Fits.

Pro Forma Balance Sheet Assets Current Assets Cash Inventory Other Current Assets Total Current Assets Long-term Assets Long-term Assets Accumulated Depreciation Total Long-term Assets Total Assets Liabilities and Capital Current Liabilities Accounts Payable Current Borrowing Other Current Liabilities Subtotal Current Liabilities Long-term Liabilities Total Liabilities Paid-in Capital Retained Earnings Earnings Total Capital Total Liabilities and Capital Net Worth

Year 1

Year 2

Year 3

62,715 13,365 0 76,080

135,771 17,375 0 153,146

243,806 22,586 0 266,393

0 0

0 0

0 0

0 76,080 Year 1

0 153,146 Year 2

0 266,393 Year 3

15,762 0 2,000 17,762

20,491 0 2,000 22,491

26,426 0 2,000 28,426

13,400 31,162 5,100 (9,416) 49,234 44,918 76,080

10,100 32,591 5,100 39,818 75,637 120,555 153,146

6,800 35,226 5,100 115,455 110,612 231,167 266,393

44,918

120,555

231,167

 

4.4 Business Ratios Business ratios for the years of this plan are shown below. Ratio Analysis

Sales Growth Percent of Total Assets Inventory Other Current Assets Total Current Assets Long-term Assets Total Assets Current Liabilities Long-term Liabilities Total Liabilities Net Worth Percent of Sales Sales Gross Margin Selling, General & Administrative Expenses Advertising Expenses Profit Before Interest and Taxes Main Ratios Current Quick Total Debt to Total Assets Pre-tax Return on Net Worth Pre-tax Return on Assets Additional Ratios Net Profit Margin Return on Equity Activity Ratios Inventory Turnover Accounts Payable Turnover Payment Days Total Asset Turnover Debt Ratios Debt to Net Worth Current Liab. to Liab. Liquidity Ratios Net Working Capital Interest Coverage Additional Ratios Assets to Sales Current Debt/Total Assets Acid Test Sales/Net Worth Dividend Payout

Year 1

Year 2

Year 3

Industry Profile

0.00%

30.00%

30.00%

0.20%

17.57% 0.00% 100.00% 0.00% 100.00% 23.35% 17.61% 40.96% 59.04%

11.35% 0.00% 100.00% 0.00% 100.00% 14.69% 6.60% 21.28% 78.72%

8.48% 0.00% 100.00% 0.00% 100.00% 10.67% 2.55% 13.22% 86.78%

49.00% 23.00% 81.40% 18.60% 100.00% 40.70% 15.20% 55.90% 44.10%

100.00% 50.00%

100.00% 50.00%

100.00% 50.00%

100.00% 38.30%

32.72% 0.00% 25.27%

29.62% 0.02% 29.56%

27.09% 0.02% 33.08%

22.10% 2.10% 0.70%

4.28 3.53 40.96% 156.58% 92.45% Year 1 17.32% 109.61%

6.81 6.04 21.28% 89.63% 70.56% Year 2 20.47% 62.74%

9.37 8.58 13.22% 68.36% 59.32% Year 3 23.03% 47.85%

2.22 0.62 55.90% 1.70% 3.80% n.a n.a

10.91 12.07 27 3.74

12.02 12.17 27 2.41

12.02 12.17 27 1.80

n.a n.a n.a n.a

0.69 0.57

0.27 0.69

0.15 0.81

n.a n.a

$58,318 48.16

$130,655 92.96

$237,967 188.00

n.a n.a

0.27 23% 3.53 6.33 0.00

0.41 15% 6.04 3.06 0.00

0.55 11% 8.58 2.08 0.00

n.a n.a n.a n.a n.a

 

4.5 Financial Analysis on CUTS & FITS Financial analysis (also referred to as financial statement analysis or accounting analysis or Analysis of finance) refers to an assessment of the viability, stability and profitability of a business, sub-business or project. Cuts & Fits Company has appointed professionals that make useful information taken from financial statements and other reports. These reports are usuallyOur presented to top management asbased one ofon their bases in making business decisions. major business decisions are these reports such as:   Continue or discontinue its main operation or part of its business;   Make or purchase certain materials in the manufactur manufacture e of its product;   Acquire or rent/lease certain machineries and equipment in the production of its goods;   Issue stocks or negotiate for a bank loan to increase its working capital;   Make decisions regarding investing or lending capital;   Other decisions that allow management to make an informed selection on various alternatives in the conduct of its business Goals

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For financial analysis financial analysts analysts often assess the following elements of a firm:   Profitability - its ability to earn income and sustain growth in both the short- and long-term. A company's degree of profitability is usually based on the income statement, which reports on the company's results of operations;

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  Solvency - its ability to pay its obligation to creditors and other third parties in the long-term;   Liquidity - its ability to maintain positive cash flow, while satisfying immediate obligations;   Stability - the firm's ability to remain in business in the long run, without having to sustain significant losses in the conduct of its business. Assessing a company's stability requires the use of both the income statement and the balance sheet, as well as other financial and non-financial indicators. etc.

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4.6 INCOME STATEMENT STATEMENT OF Cuts & Fits for the year ended

INCOME STATEMENT Cuts & FitsFor the year ended DECEMBER 31 Rs Debit

Rs Credit

Revenues GROSS REVENUES (including INTEREST income) -------Expenses: ADVERTISING 6,300 BANK & CREDIT CARD FEES 144 BOOKKEEPING 2,350 SUBCONTRACTORS 88,000 ENTERTAINMENT 5,550 INSURANCE 750 LEGAL & PROFESSIONAL SERVICES 1,575 LICENSES 632 PRINTING, POSTAGE & STATIONERY 320 RENT 13,000 MATERIALS 74,400 TELEPHONE 1,000 UTILITIES 1,491 GOODS 95,000 -------TOTAL EXPENSES (290,512) -------NET INCOME 209,488

500,000

The net income of cuts and fits shows a statement of comprehensive income. With the help of this and statement we can assess the degree ability to income is and sustain growth in both the shortlong-term. A company's of earn profitability usually based on the income statement, which reports on the company's results of operations. Income statement of cuts& fits clearly shows that the business is earning good income that also shows company’s sustainability in both short and long term. 

4. 7 Solvency  Cuts & Fits solvency is high with the help of balance sheet it is clearly shown that it mostly deals in cash and due to handsome profits the company c ompany is able to clear its debts on time and have ability to pay its obligation to creditors and third parties as well.

 

4.8 Liquidity Thorough balance sheet it is clearly shown that Company’s liquidity ability maintains positive cash flow and is also able to satisfy its immediate obligations. So with the help of above financial statements we clearly got a financial picture of Cuts & and sustainable as well. With the help of company’s Fits Company that income is highlystatement pr ofitablethe balance sheet and  company’s ability to remain in business in the long run, without having to sustain significant losses in the conduct of its business is clearly shown.