Prithvi Patel, 003810-004

Business and management Higher level. Internal assessment.

How can Sahakar General Stores in Ghatkopar, Mumbai change its product mix to fight competition?

Main essay: 2124 Research proposal: 193??? Executive summary: 178

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Research Proposal
Research question How can Sahakar General Stores in Ghatkopar, Mumbai change its product mix to fight competition? Rationale for study Sahakar General Stores is a shop which started in 1977, and is operating till now, where the FMCG goods are sold, which helps the owner to earn faster revenue. Currently, it is facing problems of low profits due to lower sales. M/S Sahakar General Stores is not able to generate revenue as before due to varied factors. Thus due to the issues being faced by this store in generating greater revenue this research is intended to explore the array of ways the owner can take into account to solve the problem of falling sales. Theoretical framework 1.2 Types of Organizations 1.6 Organizational Planning Tools 1.7 Growth and Evolution 3.1 Sources of Finance 3.3 Working Capital 4.1 The Role of Marketing 4.3 Product

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Methodology Sources Dharmesh Mehta, owner, Sahakar General Stores Methods Interview Information needed Operating promotional mix Changes in the market, in terms of competition Significant difficulties faced by the firm Their present views and potential expectations The effectiveness of the product mix and analyzing the market gap

Current customers of Sahakar

Questionnaire

The data accumulated is solely based on the ways of primary research, as there was no scope of obtaining any sort of existing data of the company in the newspapers or internet, or any other source of secondary information.

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May 8th onwards June July Augus t Septe mber Octob er Nove mber Dece mber Januar y 6th

Action Plan

Choose the company

Write a research proposal

Submit the research proposal

Write an introduction

Write and finalize a questionnaire Prepare questions for interviews Submit questionnaires and interview questions Research Sahakar General Stores

Interview Sahakars owner

Analyze and evaluate results of the research

Prepare the first draft

Write conclusions and recommendations

Prithvi Patel, 003810-004

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Prepare the final draft

Complete the project

Prithvi Patel, 003810-004

TABLE OF CONTENTS Executive summary Introduction Objectives and methodology Main findings Analysis Conclusions Recommendations Bibliography and references Appendices

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EXECUTIVE SUMMMARY
After establishing itself successfully in the market for more than 25 years, Sahakar has now been facing healthy competition in the market, with competitors offering additional services and stealing on the market share. The aim of this research is to analyze the ways in which Sahakar can regain its market share, mainly by focusing on its product mix. Research question: How can Sahakar General Stores in Ghatkopar, Mumbai change its product mix to fight competition? Method: Analysis in based on information collected only through primary research, like interviewing the owner of Sahakar and asking its customers to fill in the questionnaires. Then the data was evaluated using frameworks namely BCG matrix and SWOT Analysis. Main findings: Limitation of budget Seasonal sales fluctuations Improper product mix selection High stock of inventory

Recommendations: Have reliable sources of finance Keep adequate level of stock during festive seasons Restructure the product portfolio Rearrange the stock to make maximum utilization of the storage space Introduce additional services, such installing a stationery shop

Word count: 178

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INTRODUCTION
Sahakar General Stores is a general store that provides the customers with goods that can come under various household categories and food items. I decided to work on their product mix as it is a key factor in earning maximum revenue. It speeds up the process of gaining revenue and improves the cash flow of the company, providing with a persistent way. This can be controlled and monitored by the stores owner to help maintain the brand loyalty and attract new customers too. So, to sum it up, it can be said that it is an essential component of the marketing strategy to generate enlargement in their sales. Initially, before Benefit had started operating, the market share was divided between Sahakar and Home Mart, as other small businesses didnt exist due to Sahakar having a great market share. The condition was something like:

Sales before 2007

30% 70%

Sahakar Home Mart

Figure 1 But recently, it has been facing competition from Benefit General Store and Home Mart, along with other small competitors trying to establish themselves in the market. Their approximate market share is displayed below:

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Sales in 2010
14% 26%

Sahakar Benefit Home Mart

24% 36%

Others

Figure 2 As seen from the graph, Benefit has the highest market share, followed by Sahakar just more than Home Mart, and then others still running with some acceptable profit levels. Sahakars profit levels fell by 20% compared over the previous years. So in order to takeover Benefits lead and to recapture the market, Sahakar will have to primarily focus on its product mix to attract more customers. Thus arises the research question, How can Sahakar General Stores in Ghatkopar, Mumbai change its product mix to fight competition? Moreover, the competitors offer additional services, which are listed below: Stationery items Name of the firm Sahakar Benefit Home Mart Additional services offered Free home Credit delivery facilities

Exchange

The table clearly indicates what extra facilities the three top contenders provide in order to achieve market growth. Benefit has all the four services, adding to their suitable location to satisfy the customer needs and wants. Sahakar offers 2 out of 4 services, whereas Home Mart provides the consumers with only the stationery items

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like photocopying papers etc. Thus recommendations to Sahakar would be to widen their customer base for home delivery. Previously, they offered this service to residents living in the radius of 2 km, now they can expand it to 3 or 4 km, and also the purchase made by the customers should be worth Rs. 200, which can be further reduced to Rs. 100. Another important factor that helps Benefit gain a greater market share is its geographical location, which helps it cover a wider customer base, and even makes it convenient for a few residents of the locality to walk lesser. Here Sahakar is helpless as working over relocation would be non-effective, and they cannot afford to relocate to some other area. Thus, due to lack of financial resources, the stores cannot re-locate and neither canit indulge in heavy promotions and so the only way to increase revenue is modify the product mix

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OBJECTIVES AND METHODOLOGY

The prime objective was to work on their product mix and help them re-formulate their product mix. So in order to improve their performance, the following methodology can be used: a. Using SWOT analysis, the stores weaknesses and threats can be worked upon, and its strengths and opportunities can be emphasized. b. By using the Boston Consulting Group Matrix, the low-selling products can be eliminated and best-selling products can be worked upon.

The methodology incorporates collecting data from sources such as interview with Sahakar General Stores owner to converse about their limitations, current product mix and the sales levels. Secondary research includes inquiring from the stores owner, and primary research includes interview with the owner, questionnaires made for the customers and data collected from the sample. The above combination enables us to get more or less an equal balance between quantitative and qualitative information. In order to analyze clearly, tools like SWOT and BCG Matrix are used.

Possible difficulties predicted to come during the research: Meetings with the owner may not be very often, as being a sole trader he has his own leisure time and can choose his own hours of work and holidays. Thus to avoid this problem, appointments can be taken and fixed with the store owner. Moreover, the customers are likely to give biased information and even complete financial data by the owner may not be revealed. The personal records are subjective, but to obtain authentic results from the customers, I can make them feel comfortable about the discussion and the questionnaire before they fill it, avoiding any intimidating questions and respecting their time.

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MAIN FINDINGS The data gathered from the interview of the owner revealed a few drawbacks in the product mix, which are: a. Limitation of budget1 High financial constraints drift away the owner from taking high risks and expanding. Even the new released products cannot be ordered due to the fear of high risk and failure of the product. b. Seasonal sales fluctuations2 Due to the change in the economy and in tastes and fashion, the shop had seen fluctuation in its sales. Moreover, there have been more sales during festivals. c. Improper product mix selection3 Due to the lack of knowledge of the latest trends in the market, there is a poor choice of selection in the product line which avoids further sales and larger closing stock. d. High stock of inventory There is a large amount of inventory kept in order to keep an adequate supply. But this leads to a cash flow problems as money is stuck in the form of stock. e. Falling counts of foot-falls4 The number of people visiting the store reduced, which meant that there was certainly a fall in the sales volume. f. Decreased revenue5 The owner of the store revealed that his revenue compared to the last few years declined by 20%.

The information that was obtained from the customer survey shows some disappointments like:

1 2

Appendix 9.1 Appendix 9.1 3 BCG matrix 4 Appendix 9.1 5 Appendix 9.1

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a. Demands not being met often Customers were dissatisfied as the demands were not being met at times, which led to the decreased visits and going for its competitors. b. Short radius of home delivery The store provides home delivery services, but as per the convenience of the store. This practice can be changed to help fight the competition.

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ANALYSIS 5.1 SWOT Analysis Strengths Loyal customers Already established business Easy access to the store by customers Products available for almost all market segments Seasonal demands are also met Opportunities Expansion of the business Widen their customer base Modifying the product mix Introduce value added services Weaknesses Limited variations Insufficient sources of finance No fixed working hours Poor management of inventory No eye-catching displays

Threat New business opened nearby Other stores have better location, making it convenient for many existing customers Competitors have other subsections also, like a stationery shop

The loyal customers and the easy access to the store for customers guarantee Sahakar to have more walk-ins, along with seasonal products, which are mainly during festivals are also being sold very well. These factors assure fixed sales, which can further be increased by key factors like expanding the business, modifying their product mix to widen their customer base and providing more value added services. But only these factors wont help boost its sales. They have to improve on the weaknesses, which include a certain limit in the variations, which may sometimes displease the customers and they go empty-handed. Another weakness is that even after establishing themselves, there are very less sources of finance, which will make their expansion plans even more challenging. Another is that being a sole trader, he works for personalized hours. This might not be appreciated by many customers. Likewise, a poor display kept for the consumers might disinterest them from buying goods from here. Not only the outer display, but the inner management of stock blocks space that can be needed at urgent deliveries. These are a few problems they can overcome internally, but the problems, like one of its competitor Home Mart running a stationery shop, and Benefit General Stores coming up with a better location, cannot be dealt with. Overall they hold much of the

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market due to the support of its loyal customers and a well-established name, but in the long run they need to revise their product mix to ensure satisfactory sales.

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5.2 Boston Matrix

Market share High Stars Beverages (Coffee) Breads Condiments Paper products Snacks Cash Cows Baking Beverages (Tea) Cleaning supplies Health and Beauty High (growing) Low Problem Children Baby items Pasta Dairy products Sweets Dogs Breakfast Frozen foods Miscellaneous Beverages (Water, cold drinks) Produce Beyblade

Market growth

Low (mature)

Sahakar General Store doesnt have to worry about the cash cow products, which are baking items, as there is already a huge existing market, with Sahakar having a great market share. Other products falling under cash cows, namely tea, cleaning supplies etc help Sahakar in minting money because the purchase of these goods is always high and nearly everyone in the market buys these products. The stars are coffee, breads, condiments and others are relatively new in the market, as people earlier preferred having chapattis instead of breads. But with the modernization of the world, people became exposed to different products, which is the case in Ghatkopar East. Thus the market growth is very high, and as Sahakar is one of those few offering these goods, its market share is also high. However, there are some products still questionable, as sale of these items is highly fluctuating. These are the problem children, as the growth in the sales of these products is unpredictable. Even though the market size of these products is increasing, these products are not being sold very well by this store. This is because the baby items and pastas, under the question mark products are being sold by its competitors in a more appealing way, there is a famous sweets shop and a dairy store located nearby.

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The last category is dogs, where products like breakfast items, frozen foods and Beyblades etc are not being sold till the expected limits. The breakfast items are going unsold because the families prefer having bread and butter with tea over breakfast items like cereals and cornflakes. Beverages like packaged water bottles and cold drinks go unsold, because situated right next to Sahakar is a cold drinks and ice-cream shop, which attains more customers. And hence these products are well existent and have a matured market growth, but the market share of Sahakar for these is low, se they are considered to be Dogs and need to be phased out.

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6. CONCLUSIONS The observations we obtain from the analysis will help to come to certain conclusions about the store, its competitors and the market. The strengths under SWOT need to stay focused, so as not to lose track of their sales, revenue and profits. Moreover, Sahakar will have to surmount the weaknesses, which will make a significant increase in its sales. Also, grabbing the opportunities appositely will provide it with optimum growth in sales. And even though the threats cannot be dealt with, coming up with better offers may overshadow the treats. Then, star products are to be maintained, as they expect rapid market growth; cash cow gods are working well; hence certainly no changes are to be made. Not only this, but also the question marks need more attention that will help the store to earn relatively higher revenue. And finally, there are high probabilities that dogs need to be eliminated completely from the product mix.

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7. RECOMMENDATIONS To generate higher revenue, Sahakar General Stores needs to work on their product mix and predict its the future trends. And here are some suggested changes to be adopted: a. After evaluating the SWOT Analysis, it is clear that Sahakar needs to make alterations and adopt some solutions to overcome their weaknesses. Primarily, they should offer more variations for the customers, then try to arrange for more sources of finance so as to make the expansion easier. Besides, the owner should keep fixed working hours of the store so the customers are aware of its timings. Lastly, Sahakar should even re-arrange the display to make it appealing and attention-seeking. b. The product mix should be restructured based on the evaluation of the BCG matrix. The cash cow products should be kept in adequate amounts and on-time supply. The stars must also be kept at the right quantity so as to obtain maximum sales. And hence, implementing the just-in-time method for these goods would be the finest choice. Then, question mark products should be worked upon, in ways like offering better brands of the same product, displaying them in an eye-catching way in the store and even ordering them by adopting the just-in-case method. And in the last section, Dogs, products are least successful, thus phasing out these goods would be the most appropriate method.

As the research is based solely on varying the product mix, more emphasis should be given to the results of the BCG Matrix, which focuses on the performances of these products. Thus change is needed in the product mix by continuing with cash cows, further extending the starts, promoting the question marks, and phasing out dogs. However, utilizing only this solution will not have optimum effect on sales. Along with this, suggestions from the SWOT Analysis should be taken, like working on the displays, fixing proper working hours etc. And even the changes in competitors behaviors should be supervised carefully, so as to not lose further sales.

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8. BIBLIOGRAPHY AND REFERENCES

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9. APPENDICES 9.1 Interview with the owner Q: A:

Q: A:

Q: A:

Q: A:

Q: A:

Q: A:

Q: A:

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9.2 Consumer survey The data accumulated from the questionnaires gave was as observed below: 1. How often do you visit Sahakar General Store? No. of customers Daily 2-4 times a week Weekly Fortnightly 2. What draws you to the store? No. of customers Proximity Variety of products Customer service Other facilities 3. Are you happy with the current product range and the variety? No. of customers Yes No 4. Are you happy with the current service at the store? No. of customers Yes No 5. Are you happy with the current home service? No. of customers Yes No % of customers % of customers % of customers % of customers % of customers

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