Marketing challenges faced by FabIndia:

Location The market can handle large volumes of standardized homogenous textile products but
the production base is scattered, and the product less standardized. The firm has to achieve the
variety and volume of products needed in the marketplace without compromising on the unique
production process followed by each artisan. FabIndia tackles this challenge by sharing a color
palette with the artisans to retain variety and some amount of standardization.
Survival in a westernized marketplace The apparel market is highly influenced by western
apparel . Also, generally local shops and tailors are preferred when it comes to buying traditional
clothes. Fabindia has however created a unique space for itself by competing in a niche market by
creating brand value.

Marketing strategy used by Fabindia:

Building brand value and Positioning FabIndias brand identity is strongly linked with the
designs and origin of the producers and artisans. It builds its brand value in a very innovative
manner. First, it creates a brand identity of the unique style and art used by the producer. Then it
builds a brand for itself by means of its communication and outlets. Another dimension that it
explores is the socio-cultural environment by linking the artisans to values of equity and a
sustainable livelihood; and the urban consumers' aspirations and memories of an old-world charm
and responsibility towards the society and environment. In this way it is able to create brand value
across multiple spaces and thus differentiate itself in a market being consumed by westernization.
Fabindia has positioned itself as an exclusive cultural brand ambassador that promotes the
traditional handloom trade and sustainable living among artisans.
Customer Relationship FabIndia does not chose to target any specific demographic or age
profile. However it majorly competes in a very niche segment of the handicrafts marketplace. It
typically attracts urban customers who wish to support arts and craft and are environmentally
conscious. The products give the customer a feeling of uniqueness and this enables FabIndia to

build a loyal customer base, which doesn't mind paying a premium and is not price-sensitive. Often
it is found that loyal customers of FabIndia do not tell other people where they bought the product
from, as they want to experience a feeling of exclusivity that comes with using FabIndia products.
FabIndia follows the customer retention strategy rather than customer acquisition as it believes that
''A delighted customer is our best brand ambassador''. The company thus lays great importance on
satisfying its customers and maintains a customer feedback register which is reviewed by the
Product Selection Committee. It also has a Mystery Shopper program wherein mystery shoppers
pose as normal customers and report their experience to the management. Fabindia is also in the
initial stages of implementing a CRM system in a move towards using information technology to
better understand its customers.
Product Bundling and Launching strategy A unique practice that Fabindia follows is launching
complementary products together, which is made possible by its diverse portfolio. For instance, if a
new line of apparel is launched, then jewelry or accessories that go with it are also launched at the
same time, thus requiring no separate promotion of its own. This also ensures that the customers get
a complete shopping experience when they visit a store.

Marketing mix:
Product diversification FabIndia has indulged in product diversification over the years and today
has a rich product portfolio that includes Garments, Home Furnishings, Organic Foods and Body
Care products with a good depth of products under all these categories. The products speak for
themselves and Fabindia does not give packaging much of an importance. The packaging however
does at times include product information as to where the product is sourced from and the process
of manufacturing etc.
Pricing Fabindia has products in a wide price range from Rs. 200 to over Rs. 2000, thus attracting
customers from all income segments. It aims to integrate affordability with quality and value for
money. Even with products in a lower range, most of Fabindia mainly follows a premium pricing

strategy as its products are unique and the customers do not mind paying a premium to own them.
It does not hold any sales or offer discounts to clear out its stock, but it does offer EMI options on
high-end products like furniture collections. Fabindia follows the oldest pricing strategy in the
book, which is pricing with the number 9. All its prices end in '90', for instance, Rs. 1890, Rs. 890
etc., thus giving the illusion of a lower price to the customer.
Promotion Fabindia has traditionally never spent on promotional or marketing strategies. It only
relies on word-of-mouth and customer referrals for promotions and believes in letting the product
do the talking. The only thing it promotes is the location of its stores by using tools like Mobile
Marketing and advertising in newspapers about its store locations.
Place Fabindia has always been competent in its upstream activities, with its unique model of
sourcing and logistics. With the center of gravity and competitive advantage of most businesses
shifting downstream, Fabindia has started to pay attention to how it sells the product to the different
segments of customers and is deploying better customer service strategies like implementing CRM
etc.
It mainly sells its products via the following channels of business,
Retail stores: The retail stores are well-established all over India as well as abroad.
Wholesale exports: Realizing the potential of the wholesale market, Fabindia launches a special
collection twice a year for exporting to around 34 countries, which it displays in exhibitions and
handicrafts' fairs.
Institutional sales: It also provides customized interior designing solutions to high-end institutional
clients like heritage hotels and business houses.
In-store strategy Fabindia has stores in around a 100 locations all over India and abroad as well.
It sells through premium, concept, regular and online stores. The stores are differentiated according
to the product range displayed, some stores only stock apparels and others only home furnishings.
However often, stores that stock jewelry and apparels are either the same or close by, so that
shoppers find it convenient to purchase complementary items at the same time. Online stores help

them to tap the tier II and tier III city markets.

Fabindia creates what is called the look-touch-feel in-store experience by creating a comfortable
and calm atmosphere wherein shoppers can take their own sweet time to try out clothes. The store
decor and ambiance highlights the natural organic theme that runs through its products. So even
with a major chunk of sales coming from online stores, loyal customers still love the experience of
shopping in a Fabindia store. The stores have hoardings to increase awareness about the artisans
from whom the products are sourced. The stores also give great importance to shelf display and
ensure that products which compliment each other and are aesthetically appealing are next to each
other.

Limitations of the marketing strategies used:

Promotion The lack of a promotional strategy and over-dependence on word of mouth can be
responsible for less than the potential sales in the future, as their competitors might become more
powerful and promote aggressively to gain greater market share.
Changing shopping trends As people shift to online shopping in the future, the uniqueness of the
Fabindia stores would lose their value, taking away some of the exclusivity associated with its
stores. Fabindia might lose some of its competitive advantage due to this.
Sourcing The number of stores has increased a lot over the past few years and sourcing and backend operations need to be strengthened. Fabindia needs enhanced mean of predicting customer
demands, as a few times, their stock has had to be carried to the next season owing to lack of
demand for a particular type of product.

References:
1. Annapurna M., ''Transitioning Markets: Transcending Consumption'', Economic and
Political Weekly, Vol. 41, No. 31 (Aug. 5-11, 2006), pp. 3388-3393
2. B. Syamasundari and Seemanthini Niranjana, ''Valuing the Non-Market'', Economic and

Political Weekly, Vol. 41, No. 31 (Aug. 5-11, 2006), pp. 3394-3398
3. Savita Modak, ''Weaving Customers' Dreams'', Economic and Political Weekly, Vol. 41,
No. 31 (Aug. 5-11, 2006), pp. 3367-3368
4. Fabindia Crafting Success, Businessweek
http://www.businessweek.com/stories/2008-10-01/fabindia-crafting-successbusinessweek-businessnews-stock-market-and-financial-advice