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EXPORT OF GARMENTS TO AUSTRALIA BY

RAI INTERNATIONAL,JAIPUR

INTERNATIONAL MARKETING MIX

MANAGEMENT
To study the international marketing

function of Skon International,

Jaipur with specific emphasis on:

• To analyze the readymade garments (RMG) export

market from India.

• To provide a vivid picture of Skon International, its

background, functions, market structure and potential.

• To study the marketing program (including

organizational information and promotional

arrangements) of Skon International with specific

emphasis on its domestic and global competitive

situation.

• To identify the challenges in internationally marketing its

products.

• To make recommendations that could allow Skon

International to gain competitive advantage and be a

successful global player.


• To understand the international marketing function of

Skon International in its entirety and learn how

theoretical concepts may be successfully applied to the

actual business.
METHODOLOGY

• Data collected from the following primary sources:

• The Managing Director and the employees of

Skon International.

• The Buying Agents in New Delhi.

• Deputy Director, AEPC

• Additional data on the ready made garments exports was

collected from the following secondary sources:

• Magazines: Clothesline, Garment Business

Trader

• Newspaper articles: From Economic Times,

Business Standard

• Internet sites:

• www.nrf.com

• www.aepc.com

• www.indiamart.com
• Analysis of the information in relation to the

international marketing function at Skon International,

factors affecting the process and major challenges faced

by the firm.

• On the basis of the above analysis, recommendations are

being made to the firm to successfully face the

challenges posed and improve its overall efficiency and

effectiveness.

PRODUCT OF STUDY

India has traditionally been a high volume exporter of

textiles. In the recent past the Indian government has

encouraged the export of readymade garments in an

attempt to move up the value chain by developing its

products and pursuing opening markets.

The readymade garment industry has three main segments

of users based on which the market is formed: Men’s wear,

Ladies garments and children’s clothes. This study is

dealing with Ladies garments. Within Ladies garments there

are two types based on the fabric: Woven and knit. As Skon
International deals exclusively with woven products the

scope of this study follows the same.

INDUSTRY NOTE

India has been exporting garments for a number of years

now and in the last few years has established a distinct

presence in the world of clothing market. From a

country traditionally known to be producing low cost

products, it is now being increasingly looked upon as a

major supplier of high quality fashion garments. Indian

garments have now reached all the leading markets in

Europe, North America. The Nordics, Australia, Japan

to mention a few of them.

The garment industry has been evolving over the years. In

this process, its profile has undergone discernible changes.

Technology has been gradually upgraded and there is a

qualitative improvement in the garments produced in the

country. Many leading fashion labels are now being

associated with Indian products.


The product matrix today has a repertoire of synthetics,

cotton blends and knitwear items. The industry is shaping

itself to meet the demands of product specialization in a

highly segmented buyers market. Although our exports

continue to be directed towards the restricted markets,

there has been a steady growth in exports to non-restricted

countries and of non-restricted items.

Countries with which India has entered into bilateral

agreements under the Multi-Fibre Arrangement account for

a very sizeable portion of garment export from India.

During 1998-99, U.S.A. the single largest market accounted

for 28.47% of our total garment exports [i.e. 20.5% of

total exports]; E.U. the largest market block, accounted for

29.46% [i.e. 17.1% of total exports]. The other quota

countries (Norway and Canada) accounted for another

5.85% [i.e. 1% of total exports]. The countries covered by

the MFA, thus accounted for approximately 65% of the

garment exports, the rest being to non-quota countries.

The garment export industry in India witnessed a

phenomenal growth in a short span of time. Only a few

years ago in 1987, the industry had set for itself a self-

imposed target of Rs.1450 crores. Needless to mention, the


target was surpassed and export amounted to Rs. 1857

crores in that year. Since then the industry has continued

to exceed the targets fixed for all succeeding years. As per

the Apparel Export Promotion Council of India, that

promotes and regulates the growth of Readymade

Garments in India, the last published figures show exports

reaching a figure of US$ 5525.4 million (Rs.23983.39

crores) during the year 1999-2000. It has emerged as one

of the most active sectors of the Indian economy and is

today the single largest net foreign exchange earner for the

country.

However with the burgeoning number of firms in the same

sector, the inevitable shakeout has begun. Readymade

garment manufacturers and exporters such as Skon

International are attempting to gain an edge and stay

competitive in global markets.

MARKET SIZE

Market size is the total volume of a product that would be

bought by a defined customer group in a defined

geographical are in a defined time period in a defined

marketing environment. The current market size of the


readymade garments exports is around 45.83 billion

dollars.

MARKET POTENTIAL

Market potential is the limit approached by market demand

as industry marketing expenditures approach infinity for a

given marketing environment. Readymade garments are a

major item of the Indian textile exports. The cap of 24% on

FDI has been a big handicap till now. Now with 100%

status allowed, it is possible to install the state of the art

machinery and produce garments of high quality at

reasonable prices. Internationally reputed brands that could

be made in India can help make a big jump in the value

added garment export. India’s market potential is steadily

increasing due to the cheap labour, development and influx

of superior technology and the lowering to barriers to

entry.

ACHIEVEMENTS OF THE READYMADE GARMENT

INDUSTRY

Sheer enterprenuership and booming world demand are the

key factors that have bought the Indian garment Industry

into the unique position it occupies today the top foreign


exchange earner for the country. The achievements of the

Indian garment industry over the past few years are many.

More notable one are:

• There are relatively larger scale units today compared to

only small scale operations in earlier years.

• Manufacturing methods have definitely improved over

the years and thus from the casuals, the industry is

moving into higher fashion. Many famous international

brand names are now associated with the Indian Apparel

Industry.

• Export of garments have surged in both quality and

value terms, in both rupee and hard currency. The

average export prices have also gone up considerably

indicating the improvements in the quality of

merchandise.

• Though cotton garments are India’s main forte, there

has been a distinct improvement in synthetic/ man made

fabric [MMF] base garment exports in recent years.


USAGE

In the case of readymade garments, the exporter’s

customers and the end user consumer are quite different.

The customer is the buying house, agent or retail store,

who in turn attempts to woo individual customers to buy

and consumers to wear the readymade garments for sale.

While it is consumer driven fashion trends that dictate what

the manufacturer must make for export, very often such

trends can only be understood with the help of the

customer [in this case the buying house, agent or retail

store]. Since markets are dynamic one must observe

market growth and population trends. In the case of

garment export, each market being exported to, has its

own demands, cultural and business nuances that must be

understood by the exporter in order to successfully transact

with them.

Women’s readymade garments are exported for sales in

various countries and Skon International attempts to target

the middle class woman through its clothing design. The

trends in fashion affecting such middle class women in


Skon’s current and target markets set the framework for

Skon to work within.

INTRODUCTION TO SKON INTERNATIONAL

Skon International is a 100% Export Oriented Unit (EOU)

with an annual turnover of Rs.5 crores. It is one the leading

manufacturers & exporters of ladies readymade garments.

It has an in-house designing, stitching and packaging

facility. The factory covers an area of 20,000 sq. ft. and

has a production capacity of 90,000 pieces a month. Skon's

products find ready markets in U.S.A., Japan, South

America and certain parts of Europe.

INCEPTION

Established in 1992, SKON International is a manufacturer

and exporter of a wide range of ladies readymade

garments. This move was made after careful deliberation.


EVALUATING PRODUCT GROUPS IN 1992-QUANTATIVE

ANALYSIS
Criterion 1 Criterion 2 Criterion 3
CAPABILITY ENVIRONMENT EXPORT MARKET
CONDITIONS CONDITIONS ATTRACTIVENESS

1. Level of technology 1. Size of domestic 1. The average growth


required is low, labour market for export rate of garment exports
intensive quality garments is low from India was 20%.
2. Cost structure- 2. Domestic competition - 2. Import restriction
availability of abundant low [quotas] in some
cheap labour 3. Fewer quality countries
3. Skilled manpower conscious mfrs. 3. Cost of manufacturing
available 4. High demand for is higher than
4. Easy access to Raw Indian manufactured importing in
materials garments due to low Indiacountries
cost 4. China was the only
major competitor

EXPORT POTENTIAL
EVALUATION

Product Groups Product Groups


with Low Potential with High Potential

1. Incentives given by the income in the form of 100% tax exemption on export
income
2. Indian Trade Promotion Organisation (ITPO) formed to promote exports
3. Easy to set up manufacturing base in Jaipur as major centre for tie and dye and
other traditional products
DECISION TO ENTER
INTERNATIONAL ACTIVITY

The key factors that motivated Skon International’s

decision to enter into the readymade garment export sector

were:

1. Background of trading

The entrepreneur concerned had an established background

in trading and was interested in seeking out new and

upcoming business opportunities to expand the existing

business.

2. Lucrative business with profitable margins

Based on research the entrepreneur found that ready made

garment exports was a lucrative business with substantial

profit margins based on volumes. Keeping in mind the

growth in the exports market the venture into the

readymade garments market seemed to be a well founded

decision.

3. Tax incentives in the form of complete exemption

In order to promote the readymade garment Industry, the

Government of India allowed for 100% tax exemption on


export income. This provided impetus to entrepreneur’s to

begin their own export oriented manufacturing units.

4. Availability of skilled and inexpensive labour

In the proposed area of operation Jaipur, the availability of

skilled and inexpensive labour was abundant. Additionally,

the area was known for tie dye and hand embroidery for

which there was a growing demand in foreign markets.

FIRST DEAL

Skon International initially began operations by tying up

with local suppliers, hiring a few experienced people and

creating some samples with the idea of gaining some export

orders. The company participated in India International

Garment Fair organized by AEPC in New Delhi 1992. The

fair served some main purposes for Skon International:

• Able to meet a host of buyers from all over the globe

• Able to understand the requirements of buyers more

accurately
• Able to show its own sampling and designs to

prospective buyers

• Able to understand the ferocity of competition.

Skon International was able to get its first order from a

buyer at the Fair. The order was for 5000 pieces of

assorted dresses, blouses and skirts from a Japanese

company, Rajko International.

INITIAL MARKETS

In the first year of operations Skon International was able

to garner buyers from new markets. The market that it

targeted successfully in its first year of operations was

Japan. In the subsequent years it enlarged its reach to

include the new markets of UK, Poland and the United

States.

VOLUMES AND SALES IN FIRST YEAR

In its first year of operations, 1992-93, Skon International

was able to garner sales worth Rs.0.81crores for a volume

of approximately 85000 pieces.

Besides its first deal for 5000 pieces of ladies garments for

Rajko International, Japan, other significant orders were


undertaken. These include 10000 bead work jackets for a

US buyer with a repeat order within the year for 25000

additional pieces. Another of the large orders came from a

Polish buyer for 20000 skirts & shirts.

GROWTH

After the establishment of SKON International in 1992, the

export market for readymade garments saw an initial

upswing allowing the business to burgeon.

Initially Skon International created sampling to show

potential clients at their own cost, keeping in mind the

fashion trends for the moment. To procure orders Skon

International participated in garment fairs and contacted

buying agents, paying them a commission as a percentage

[approximately 3%] of the order gained.

Turnover(Rs/cr)
5.6
Turnover

4.02 3.92
3.28 3.56
2.74 Sales(Rs/cr)
1.84
0.81 1.14

1990 1992 1994 1996 1998 2000 2002


Year
The above is a graph showing the growth pattern of Skon

International.

After a spurt in growth that saw the turnover increase by

almost 100% for the initial 4 years, Skon International

faced a slump in sales primarily due to a global recession in

the ready made export market. Additionally the South East

Asian crisis was responsible for certain problems in Skon’s

active markets.

PRODUCT MARKET MIX

With an increasing number of markets and companies

buying ready made garments from the company, Skon

International had to keep in mind the preferences of the

market in numerous ways. Some of the main differentiating

factors between requirements from markets was based on:

• Kind of fabric preferred

• Colours of fabric

• Print of the fabric

• Style of the garment


The following table shows the product market mix and the

relative importance of markets for the company:

Market Type of Design/ Styles Percentage

cloth pref. fabric colour export of Skon

International

Japan Cotton Yarn dyed Wrap 55%

checks, tie- arounds,

die, prints aprons,

dresses

USA Rayon Yarn dyed Blouses, 20%

checks, tie- shorts, skirts

die, prints – & dresses

pastels &

light shades

Italy Rayon & Prints & solids Dresses 10%

Cotton – soft colours


Skon has chosen the women’s readymade garments market

as its field of operations and further segmented the market.

The buying patterns show that segmentation and the share

they appropriate in Skon’s business are as follows:

Buying House 80%

Wholesaler/ Distributor 20%

Initially, Skon International also used to operate in the

retail chain market where chain stores and single outlets

would purchase garments directly from them. However,

with a 30-50% duty on imports the retailers shifted to

using wholesalers/ distributors who are in the business of

consolidating multiple orders and making such imports

more feasible. So, while Skon does not directly cater to the

retail segment, it continues to do so through alternate

channels.

MARKETING MIX

Marketing mix is the set of marketing tools that the firm

uses to pursue its marketing objectives in the target

market.
Too often, marketing mix is confused with marketing

principals. Even though certain principles may be universal,

the in no way implies a uniform marketing mix for all

markets. To be customer oriented for example, does not

mean that the same marketing strategy should be repeated

in a different environment. Sound marketing principles are

universal. One basic principle states that marketers should

adopt the marketing concept [i.e. using the integrated

marketing approach to satisfy both customers and

corporate goals]. Regardless of their nationalities

marketers everywhere should be customer oriented.

Traditionally, the four P’s of marketing approaches are

valid. However in the case of the garment industry, it could

be argued that service plays an important role in gaining a

competitive edge in the international marketing arena and

therefore we need to look into the other four p’s-

production, probe, power and people.

PRODUCT

Skon International manufactures and exports woven ladies

garments. The product range comprises of Ladies hi-fashion

dresses, blouses, trousers, skirts, ensembles, rompers,


overalls, sarongs (pareole), scarves of Sanganeri &, Bagru

pigment, tie-dyes, hand & machine embroidery in the latest

designs.

The company prides itself on innovation and attempts to

experiment on new garments using new fabrics. Some of

these fabrics are: cotton, flax/cotton, woven checks,

stripes, dobbies, twills, jaquards, piece dyed poplins.

Additionally they use 100% viscose, yarn dyed stripes,

moss crepes, polynosic, twill, georgette, blends of

cotton/viscose and polyviscose.

The procurement of raw materials and certain outsourcing

functions are done from different places depending on the

ease of availability and cost considerations. The table below

identifies the places of procurement and functions:


Raw materials and Place of procurement

functions

Fabric Mumbai, Surat, Erode, Salem, Chennai,

Jodhpur and Tirupur

Labels and tags Jaipur and Delhi

Accessories [incl. Zips, Jaipur

buttons]

Applique, embroidery and Jaipur

lace work

Tie dye and Printing Ahmedabad, Jodhpur, Surat and Jaipur


PRICE

Skon International bases its pricing on three separate

platforms on the basis of the country to be exported to and

the buyer dynamics. The price is generally quoted in US $.

These three platforms are:

1. Free on board [FOB]

Under this method the duties of Skon International as the

seller, are as follows:

• Make available at the port of loading and to ship free on

board good matching in all respects the description in

the contract of sale.

• Pay all handling and transport charges in connection with

the above operation.


• Complete declarations required by customs and excise in

case of goods from bond or under drawback.

• Meet all charges arising in connection with the goods

upto the time of their passing over the ships rail at the

final destination port

2. Cost insurance and freight [CIF]

Under this contract it is the responsibility of Skon

International, as the seller, to complete the following:

• Arrange shipping space

• Pay freight charges

• Bear all transportation charges upto the port of

departure

• Bear loading charges at the ship

• Bear charges for insurance.

3. Cost and Freight [C and F]


This contract is similar to the CIF contract except that in

this contract it is the buyer who arranges the cost of

insurance and bears the cost of it, as against Skon

International, the seller.

Using one of these methods mutually acceptable to Skon

International and the buyer, the price quotation is created.

On acceptance of the quotation, the order is executed and

then payments are made in accordance with the terms of

the platform agreed upon.

PLACE

Place includes the various activities Skon International

undertakes to make the product accessible and available to

target customers. Skon uses three channels of distribution

to the final consumers. Skon had to identify, recruit and

link various marketing facilitators to supply its products and

services efficiently to the target market. It must

understand the various types of retailers, wholesalers and

physical distribution firms and how they make their buying

decisions. These channels of distribution are agents, buying

houses or wholesalers and retail stores. The goods are

either shipped directly to the customers or they are sold


through the agents who act as an intermediary between the

exporter and the importer. Skon International charges a

commission as a percentage of the sales generated by the

intermediary. Now Skon has developed a well-established

customer base therefore the shipments are made directly to

the customer.

PROMOTION

The purpose of promotion at Skon International is to

communicate with potential and existing buyers and to

positively influencing them. Keeping in mind its target

market and customers, promotion at Skon International

mainly involves participation in various trade fairs and

exhibitions both in India and abroad.

Advertising is not a part of Skon’s promotional mix as

advertising in India does reach It targets buyers situated

abroad and advertising in the foreign media proves to be

exhorbitantly expensive. Instead, Skon International

displays the entire range of garments in the fashion shows

organized in exhibitions where they feel potential buyers

would be able to see their products. Some of the trade fairs

and exhibitions in which Skon participates are:


• India International Garment Fair, New Delhi

• Japan Creation, Tokyo

• Buyer Seller Meet, Australia

• Techtextile Asia, Osaka

• International Fashion Fabric Expo, New York

• Interstoff South America, Sao Paulo.

Besides the trade fairs Skon mainly relies on publicity

through word of mouth. Currently the company is

constructing its website so that prospective buyer’s abroad

can get information about the company and the products

offered by it. The link for this site would be provided in

sites like indiamart.com and other search engines.

To promote goodwill and reward repeat purchase Skon

International also gives certain off-season discounts to

their buyers.

PRODUCTION
The marketing concept relocated the emphasis from

product to customer and in the process the product which

had been the focus under the earlier production orientation

concept lost importance. Skon International emphasises the

importance of production and uses imported Juki Machines

[as shown below], thus ensuring that the essence of

production is quality as defined by international norms and

the customer.

PROBE

This stands for scanning or information acquisition of

market opportunities. It involves gathering information

about markets and competitors as a basis for formulating

the marketing plan and programme. The marketing plan

and strategy are based on the research results. Skon

International’s marketing programme is limited to


understanding the market from a layman’s point of view.

The company feels that market research about competitors

both domestic and global may not be of as much use as

understanding ones own customer and fulfilling his needs.

Opportunities for new business in the market is obtained by

word of mouth referrals and limited participation in

garment fairs, where there is a high and sometime

concentrated focus of buyers.

POWER

The concept of power is related to the ability of the firm to

make the external environment congenial to its operations.

Skon International, unlike larger firms, is able to leverage

its relatively smaller size, and faces fewer problems on

entry into new export markets, beginning with small orders

and moving on to prove their worth in the form of the

deliverables. Their size allows them to manage their

external relations with ease and on a one-to-one basis.

However, the power equation is not without pitfalls for

Skon International, as often their small size leaves them

with lower credibility and bargaining power in potential and

existing markets.
PEOPLE

A marketing mix’s probability of success depends largely on

its implementation in an industry such as garment export.

People involved in the process become key in the case of

Skon International, as all efforts made by the firm are

dependent on the efficiency of the staff at every stage of

the process. Skon International being a smaller operation is

able to maintain some control on the efficiency levels and

uses personal enhancement and monetary rewards as the

checks for level of people involvement.

UNIQUE SUCCESS FACTORS

The unique success factors are what have grown Skon

International in 8 short years from a Rs.0.81 crore

company in 1992 to a Rs.3.56 crore in 2000. These factors

have a great impact on the way Skon conducts its business

and is perceived in the market as a serious player in the

garment export industry.

1. In-house design

Skon International has its own London-trained designer

from the London College of Fashion who constantly keeps


abreast with the fashion trends in both the existing and

potential markets. The designer attempts to understand the

middle class woman who is the main participant being

dressed by Skon International’s garments. So far the

designer has been applauded for her ingenuity and flair for

understanding the requirements and creating new designs

that have aesthetic beauty and functionality. This designer

can be attributed most of the acceptance of styles that

Skon International is able to find amongst its many buyers.

2. Deliverables

Skon International keeps clearly in its view the key

deliverables: quality products and timely delivery

schedules. Skon International, in gaining an order


maintains the shortest possible process time and has a

100% success rate in delivering goods on or prior to the

due date. In addition they are able to maintain the highest

level of quality, thereby not compromising, but certainly

complementing the schedule they are keeping. The

combination of the deliverable’s time lines and quality has

found much appreciation in foreign markets where values

put on such services is often immeasurable.

3. Pricing strategy

Skon International believes in fostering long term

relationships with its buyers. Seeing the potential of

business with certain buyers, Skon International often

prices its readymade garments relatively lower than local

competitors. This pricing strategy calls for cutting margins

and making its pricing more attractive to the potential

buyer.

4. Family run enterprise

Skon International is a family ownership and its functioning

is completely in the hands of the family. This ensures that

there are strict checks on cost and quality control and that

the efficiency levels are high. Process efficiency is stressed


on and a family member oversees all functions from

procurement to packaging, marketing to designing at the

managerial level.

AWARDS AND RECOGNITION

Skon International has been exporting garments for a

number of years now. After having started as a small

player, it has slowly and steadily established a distinct

presence in the markets that it serves. Due to this

commendable performance it received a letter of

recognition from CII in 1996.

Skon International has also received a citation in 1998 from

the President of India’s offices to commend the export

performance.

COMPETITION

Manufacturers and exporters are moving towards

modernising their manufacturing facilities and employing

newer technologies to remain competitive.

DOMESTIC

The changes in the textile policy are attempting to organise

the entire garment export industry. The idea is to ensure


that once the quota system is phased out the assured

markets [comprising 75% of all export markets] for Indian

garments will not completely disappear. Self sustenance

and competitive edge is being encouraged by the policy and

the idea is two-fold:

• To bring quality standards up to world class levels

• To keep to timely delivery schedules

Under the earlier textile policy the garment industry as

reserved under the SSI, a limit of Rs.2 crores was imposed

on the purchase of plant and machinery for manufacturing

units. The new textile policy is encouraging foreign

investment for bigger units. This will give Indian industry a

boost by allowing it to gain some share of the volume

market that China is thus far catering to with such ease.

The smaller units/ players will continue to cater to the

smaller value business.

GLOBAL

The major partners for India in the trade in clothing are

USA, European Union, Japan, Australia, UAE, CIS and

Switzerland. Although some of them manufacture and


export garments, yet they offer potential markets for

Indian garment exporters as well. However, in view of the

high production cost they have increasingly turned towards

competitive sourcing overseas. Similarly in view of the

increased production cost in traditional supplying countries

like South Korea, Taiwan, Hong Kong etc., they are now

looking towards countries where the labour costs are

reasonably lower.

As per a 1991 study report published by Werner

International, in India, the labour cost is the cheapest at

US$0.72 on an average per worker per hour amongst most

of the garment producing countries in the Asian region. The

table below gives labour cost comparisons for the Asian

region:

Country Average Cost per worker per hour

[in US$]

Hong Kong 3.05

India 0.72

Japan 13.96

South Korea 3.22

Additionally, India is facing competition from China where

the cost of production is lower than India due to the tax


structure, availability of cheap and skilled labour and

economies of scale. China’s garment manufacturing is

mainly based on volumes and machine work thereby giving

it a competitive edge where large orders are concerned.

However, India is competitive in the segment handwork

based garment industry. While China can concentrate on

the volume business India is able to sustain and grow its

ready made garment export market by concentrating on

value business.

REVENUE FIGURES

Indian exports of RMG [US$ million]

5000

4000
3000
Export value
2000
1000
0
1993- 1994- 1995- 1996- 1997- 1998- 1999-
93 95 96 97 98 99 2000
Year
COMPETITIVE ANALYSIS

Global competitiveness is the ability of a company to

proportionately generate more wealth than its competitors

in the market.

Skon’s overall competitive framework will include all ready

made garment manufacturers and exporters. This can be

narrowed down to those manufacturing women’s woven

garments targeted at the middle class consumer. Skon

must take note of its immediate competitive framework in

order to understand its competitive position. Skon

international must study its local and global competitors

and identify and understand the following:

• Number of sellers, both local and global and the degree

of differentiation amongst them.

• The ease of entry, mobility and exit barriers that Skon

will face while entering new markets, growing its share

in those markets and editing those markets, if need be.

• Reaction patterns of competitors to certain situations.


• Customer value analysis to reveal the company’s

strength’s and weaknesses relative to various

competitors.

• Degree of globalisation of that industry within which the

company is operating.

Additionally, Skon International will be better able to

analyse its competitive position by viewing a SWOT

analysis:

STRENGTHS WEAKNESSES

• Location advantage [close to • No organised marketing

textile, handwork experts, division or plan

cheap labour]
• Improper categorization of

• Capacity for production the sales & marketing

functions
• In-house designer

• Lack of market intelligence


• Well established buyer base
system and benchmarking

• Financial stability
• Outsourcing leads to quality

• Able to maintain low prices and issues

thus an attractive proposition


OPPORTUNITIES THREATS

• Growth in the readymade • Competition by other

garments exports manufacturing and export

oriented units operating in


• Infrastructure development
the women’s readymade
with liberalization &
garment segment
entrance of MNC’s in this and

related industries • External infrastructure

blocks
• Development of knit wear

market • Textile policy to bring in

larger players with deeper


• Ample scope of growth in world
pockets and better
readymade garment export
technology
markets

• Non-tariff barriers being

lowered
THREE Q’s IN GARMENT INDUSTRY

In garment parlance, the three Qs have a special significance.

They stand for

1)Quota

2)Quality

3)Quantity

Apart from quantity and quality the quota factor is also very

important of India’s exports of garments is to countries with

which India has entered into bilateral agreements under an

arrangement known as Multi Fibre Arrangement or MFA.

The current pattern is that 75-80% of our garment export are to

the countries under MFA while the remainder that is 20-25% are

made to countries out side the bilateral agreements. Our Bulk

of MFA exports are made to the EU and the USA while the non-

MFA importing countries include Soviet Union. Switzerland.

Australia, Newzealand etc. Even in the case EU and USA free

export are allowed for categories/ items not mentioned in the

agreement.

With a view to distribute the quantities allotted under the

bilateral agreement, the government of India has laid down a


quota policy. The enables the exporters to know exactly how

much quota items they can export to a particular quota country.

Since the MFA and quota system are essential elements of

garment exports. It is necessary for an exporter to understand

these two terms properly.

The quantities allotted category wise, are not negotiated and

finalized with the importing countries under the bilateral

agreements. In order to allotted and distribute these quantities

amongst different exporters, the government lays down a quota

policy. This policy. This policy is enumerated and interpreted

by the Textile Commissioners office and administered by the

Apparel Export Promotion Council (AEPC). From time to

time, the quota policy has been modified keeping the following

objectives in the view.

♦ Maximisation of net foreign exchange earnings.

♦ A higher unit value realization.

♦ Fuller quota realization

♦ Optimum development of trade and industry.


Retail formulae in USA

TYPE OF CHARACTERISTICS Retailers

STRUCTURE
1. Chain Stores • Similar • Department

merchandising store chains

• Similar store décor e.g. Macy’s

and ambience • Speciality

store chains

e.g. Gap, The

limited

• Discount store

chains e.g.

Marshals
2. Speciality chain • Consisting of tens or • The Limited

even hundreds of • The Gap

stores spread

through out the

country
3. Discount stores • Every day low price • K-mart

stores • Wal-mart

• Soft and hard goods


4. Department • Large –scale • Macy’s

stores organization • Bloomingdale’


• Wide variety of goods s

• Merchandise is • Saks Fifth

offered for sale in Avenue

separate units of • Nordstrom

departments
5. Hyper markets • Combined

department store and

super market with

25,000 to 30,000

sq.m. area

• Features a large

assortment of general

merchandise
6. Catalogue • Some mail-order Lands End,

retailing houses offer Spiegel, etc

exclusivity through

catalogues

• Others

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