An Analytical Study of Scoobee Day Products Pvt.

Ltd

Institution: Rajagiri Centre For Business Studies Group Members: Cyril C Patani Jitu P Joseph Mevin Mathew Sujit A.S

Table of Contents
Executive Summary.1 2 Introduction Company Profile...2 Business Strategy4 Analysis of Critical Issues.. 6 Future Business Plans9

Executive Summary:

Scoobee Day is a pioneer in the branding of school bags in Kerala. The brand is from the Anna Group which is a major player in the textile and Aluminium products in the state. Scoobee Day became a quick success through a very careful brand building process. The brand knew the pulse of the target market and the strategies were bang on target which primarily focussed on the young school children in the KG and Pre-primary segment. Scoobee Day's success is a classic example of brands built on story telling. When entering a market dominated by unorganized players, the critical factor for success lies in differentiation. Scoobee Day differentiated itself from the rest through strong brand elements backed by product quality. Now the Kerala market is flooded with branded school bags. But Scoobee had the first mover advantage and hence created huge equity and brand recall among the consumers. With increasing number of competitors in the market and increased brand consciousness, future strategies need to be carefully formulated to ensure stable growth of the company. In this report we analyse a select set of critical aspects with regard to Scoobee day bags that could, moreover need to be improved upon. The suggestions relate to expansion of current customer base, plant location related concerns, considering alternative sources of funds and segmentation & positioning plans.

Introduction

Company Profile

Anna Group started out as an aluminium products manufacturer, Way back in 1968, and expanded into other sectors such as food and spices, textiles and more. The group is committed to quality and highly competent to identify new business opportunities and challenges. After Anna Aluminium, its flagship company, Anna Group also established a textile unit, Kitex Ltd in 1975 at Kizhakkambalam Always in Eranakulam district. This prestigious company one of the vibrant divisions of Anna Kitex group of companies is a celebrity among industrial giant in our country. Their products have high demand and they were trying to create and maintain their customers in this competitive world with their high quality. The shares of the company are held by the proprietors themselves. Kitex has strength of well experienced managers who guide the organization towards excellence. Kitex has ISO 9001-2008 certification. Kitex Limited has seven departments and they follow military type of organization structure. Through the years, the company has carved a niche for itself in this highly competitive industry with its tradition of world class quality of its products. The Kitex range of garments manufactured in the multi core factory is popular brand that is recognized not just within India, but abroad too. Catering to the fashion conscious markets across the world made from 100% combed cotton. Kitex bed sheets are suitable for all climates and come in a variety of shades and designs. Kitex Limited is a union free company. The plant has the capacity to produce cotton fabrics, polyester blends, grey cloth, bed sheets, lunges, dhoties, fabrics school and college bags, travel bags, inner wears, shirting and suiting, kids wear etc. The plant functions around the clock in three shifts and it has a capacity to produce 35,000 square meters per day. The products are marketed through the network of over 2000 dealers. The company was established to set up an efficient estate that provide technical, industrial, financial and marketing facilities to power loom owners and to create job opportunities.

To create unemployed considerable infrastructure facilities have been built up by way of building, electrical distribution systems, supporting machineries for warping, sizing etc, to help power loom owners. About 400 power loom were established in the premises under the banner of Kizhakkambalam Textile Limited (which has been renamed as Kitex Limited). The group got highest regard for the welfare of the employees and public several charitable programs are organized for the lower strata of the society. The group is also providing a very good accommodation and canteen facility to employee who hails from all over India

BUSINESS STRATEGY Product: Scoobee day bags are premium priced in view of the high quality they provide. They carry out 100% inline and end line Quality Inspections throughout various stages of production. 3-step Meticulous Inspection Method To Maximize The Quality Standards 1. Pre-Production Inspection 2. Mid -Production Inspection 3. Final Inspection

Quality Tests For Finished Products Drop test Handle snatch test Jerking test Dimension, stitching and finishing

R&D department: The R&D department has been working meticulously to bring in various innovations into their products. Some of the innovations include, developing the ergonomics of the bag straps so as to decrease the impact of weight of the bag on the shoulders. Due considerations has been given to the climate of the locality by water proofing the bags. Also special storage spaces has been provided for lunch boxes. Pricing: When Scoobee day was introduced to the market, the market was dominated by local and Chinese bags which provided high margin and credit period to the retailers. This resulted in different prices in different retail outlets. On the other hand Scoobee day bags were priced uniformly with a fixed margin to the dealers. The margin provided was comparatively lower. The fixed prices projected a premium feel to the products. The demand for the product did not fall in spite of the premium price as it was backed by quality. Promotion: For the purpose of advertisements, the company introduced a brand mascot which featured in film ads and comic strips. Scoobee Day quickly captured the attention of the kids.

One of the reason for the quick attention and recall of the brand was the brand's phonetic resemblance to the popular comic character Scooby Doo. During the launch of Scoobee Day, Scooby Doo cartoons were a huge hit among kids. The brand told consistent stories which involved kids being chased by dragons and monsters and how Scoobee rescues the kids and tames the demons. The brand also had the tagline Scoobee Day en Changathi (in Malayalam) translated to Scoobee Day, My Friend. Distribution: As the company was new to this segment, it had to create a dealer network from the scratch and it only focussed on the Kerala market. The company had to create a fresh network as the existing dealer network of Anna group was not sufficient to market school bags. The bags are currently supplied in Kerala and Tamilnadu and a small share is exported to the Middle East.

Analysis of Critical Issues:

The issues are as follows:

1) Expansion beyond south India Scoobee day bags were popular in Kerala. It dominated the industry in the South. But they were not able to, or did not care to expand their market further. They should have expanded their network to the whole of India. The name and fame they gained in the South was enough to gain market share in other parts of the country. The company was so immersed in concentrating on South India, and were not able to recognize the potential of the rest of the country. Another point that they failed to understand was the opportunity associated with the export sector. The company should have exported their products to other countries especially the Middle East where the brand image of Kitex could come in handy due to the presence of large number of Keralites there. They could also expand their market later on to Europe, US and African countries. 2) Production facility location Scoobee day bags has production facility only in Kerala. The facility is located in Kizhakkambalom, Ernakulam. The current location of the factory and the warehouse is away from the city limits. This causes problems in the distribution network. Kerala is not generally considered as a preferred location for industries due to the costs associated with the setting up of factory, upkeep cost and the labour union problems. But as currently Scoobee Day caters only in Kerala, moving the location away from the state would lead to further complications. During further expansions it would be advisable to start another production facility in locations where there is cheap availability of power, land, labour etc. The warehouse should also be located in a central location from where it is accessible to the retailers without any hindrances. As part of expansion the company can also outsource its production to small scale industries. This will have a direct implication on cost of production and can also be a boost to the SSI sector. This would attract government benefits such as tax holidays, waivers etc. 6

The company should pay close attention while outsourcing because if they outsource production to a non-trustworthy company, it would affect quality and subsequently the goodwill of the bags. 3) Sources of funding In order to expand the business the company will need additional funds for its operations. The company is currently not listed in any of the stock exchanges. For additional funding the company has to register and get listed. This would enable the company to issue shares, debentures etc to raise funds from the public. A listed company can also avail various benefits and will get loans, credits and advances from banks and other financial institutions without any hassles. The company cannot go global without additional capital and this is possible only by issue of shares. 4) Segmentation and positioning After the huge hit of Scoobee day school bags the company came up with bags designed especially for college students. These bags were rebranded as Dezire. They wanted to differentiate this product from the school bag segment and therefore did not use the Scoobee day name in it. Unfortunately, this did not kick up much dust in the market. This may be because of the fact that the company did not advertise the Dezire bags extensively. It was shown as an extension of the School bag segment and therefore went unnoticed. The college bags should have been advertised separately so as to gain a personality of its own. In todays market, which is characterised by cut throat competition from prominent companies such as Puma, Nike, American tourister etc, Kitex will have to take extreme advertisement strategies to stay in the market. Another option with the company is to have tie ups with IT companies and to introduce bags designed to carry laptops and tablets. Today college students are required to carry only laptops and therefore a bag designed for this purpose would make sense. Apart from bags the company should also try to introduce other products such as pouches and other accessories. This could be launched on a commercial basis rather than giving it as free gifts along with bags.

5) Zipper issue

The issue with the zipper of Scoobee day bags came up 4 years after its introduction into the market. Over one lakh bags had to be recalled due to this issue. The failure with the zipper was due to the fault on behalf of the supplier of the zip and also the quality checking department. After this incident quality check became more stringent. The company made the recall in a very effective manner and this increased the customers trust in the brand. For the purpose of recall, the company initially informed all its dealers and distributors. It then created a team in order to go into the market to make sure that the faulty products are sent back to the company. The negative impact created by the recall was neutralized by compensating the customers indirectly by providing freebies such as pencil box, tiffin box etc. To avoid such events in future, it is highly recommended to ensure utmost care while selecting raw material by following stringent quality checks on the raw materials.

6) Demand and supply issue School bags being a seasonal product gains demand only during back to school seasons (April, May). There has been several instances where the company was unable to meet the market demand. This was mainly because the company was unable to effectively forecast demand. The company should conduct market research and analyse trends to understand the demand better allowing it more prepared to meet the increased demand.

Future Business Plans:

Online platform Currently the company is having an online portal. This is only for showcasing its product catalogue. The company should identify the potential of online selling and should think about getting into it. Starting an online platform for sales would be an uphill task. The most convenient method would be to sell through already established online shopping portals such as Flipkart, Snapdeal, Myntra etc that have a strong distribution network. Listing the company For further fund raising it would be advisable for the company to get registered in stock market. This would enable the company to raise additional capital through issue of shares and debentures. Rebranding It is high time the company consider steps to rebrand itself by making sufficient changes to its name as well as logo. At the time of introduction the logo and mascot had some sort of appeal among the children of that generation. But this strategy will no longer hold water due to various reasons. Outsourcing As part of expansion the company can also outsource its production to small scale industries. This will have a direct implication on cost of production and can also be a boost to the SSI sector. This would also benefit the company indirectly in the form of tax holidays, waivers etc.