SAINT MARY'S UNIVERSITY

COLLEGE OF GRADUATE STUDIES

DEPARTMENT OF BUSINESS ADMINISTRATION

MARKETING MANAGEMENT
(MBA 541)

MARKETING PLAN
INDIVIDUAL ASSIGNMENTS

PREPARED BY:-

NAME: DERBE YIMER

ID NO: SGS/0064/2014A

SECTION: C

INSTRUCTOR: YIBELETAL NIGUSE (AST. PROF)

FEBRUARY, 2022
 Table of Contents

1. Executive Summary ……………………………………………….……….….…………..... 1

2. Situational Analysis…………………………………….…………………….….….…..……1
2.1. The Market Summary………………………………………………….……….…….……...2
2.1.1. Macro-environment ………………………………………………………….…………... 2
2.1.2. Macro-Demographics……………………………………………………….…………......2
2.1.3.Market Needs..................................................................................................................…..3
2.1.4. Market trends and Growth…………………………………………….……….……….....3
2.2. Competition analysis………………………….………….…………….…….….………......3
2.3. SWOT Analysis …………………………………………………………...……………..…6
2.3.1.Strength………………………………………………….…….….………….……………6
2.3.2.Weakness……………………………………………….……….……….….….………….6
2.3.3.Opportunities…………………………………………….…………….….……………….7
2.3.4.Threats……..…………………………………………….……………….….…………….7
2.4. Keys to Success……………………………………………………….…….………………7
2.5. Critical Issues……………………………………………………….……………………….8
2.6. Channels…………………………………………………………………….……………….8
3. Marketing Strategies…………………………………………………………………………8
3.1.Mission Statement……………………………………………………….…….…………….9
3.2. Marketing Objectives…………………………………………………….…....……….……9
3.2.1.Short term marketing objectives …………………….………………………...…………. 9
3.2.2.Long term marketing objectives ……………………….……………….………….…...….9
3.3. Financial objectives………………………………......……………………….....……….....10
3.4. Target Market……………….……………………………………………………….…..….10
3.5. Marketing Strategiesto be used – the 4 p’s and competitive position……………….….…. 10
3.5.1. Product Strategies…………………………………………………………………….…...10
3.5.2. Pricing Strategies……………………………………………………………………….....12
3.5.3. Place Strategies …………………………………………………………………….….....13
3.5.4 .Promotion Strategies……………...........….........................……....…………………..….13
4.Financial, Budgets and Forecasts ……………………......…………….……….......................13
4.1. Break –even Analysis……………...……………………………………………………..…13
4.2. Sales Forecast…………...……………………………………………………………..……14
4.2.1. Monthly Sales Forecast…………………………………………………………….……..14
4.3. Expense Forecast………..…………………………………………………………….……15
4.4. Linking sales and expenses to strategy..........................................................................…....18
4.5. Contribution Margin……………………………………………………………….…….....18
5. Control…………………………………………………………………….……………….…19
5.1. Implementation Milestones (specific point’s measure)………………………..….………...19
5.2. Marketing Organization………………………………………………………………….…20
5.3. Contingency Planning ……………..………………………………………………….……20
6. Conclusion ………………………………….………………..……………………………….21
7. Reference ………………………………………………………………..................................22

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List of Figures and Tables
Figure 1. Target markets………………………………………………….………………….…. 2
Figure 2. Women’s and men’s Product…………………………..……………….…………… 11
Figure 3. Women’s Products and Prices…………………………………..…………………… 12
Figure 4. Men’s Products and Prices……………………………………………………………12
Figure 5. Budget Requirement for sales forecast monthly………….…….…………..….……. 14
Figure6. Budget Requirement for sales forecast annually ………….………….………..……. 15
Figure7. Budget Requirement for raw materials per monthly…………………………………. 15
Figure8. Budget Requirement for raw materials per annually…………….….……….………. 16
Figure9. Budget Requirement for employees salary per annually ……….….…….….………. 16
Figure 10. Budget Requirement promotion through TV, radio, magazines and social media as per
annually…………………………………………………………………………………………..16
Figure 11. Budget Requirement for shop rent and utility expense per annually………………..17
Figure 12. Budget Requirement for stationery items and refreshment expense as per annually
……….………………………………………………………………………………….…….... 17
Figure 13. Budget Requirement Summary ………….…………………..…………….….……. 17
Figure 14. Profit and loss statement……………………………………………………….….... 18

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1. Executive Summary

The Leather industry has been around from many years as leather is one of the most attractive
and interesting fashion and furnished material around the world. It is a business that has
continued to climb high despite its challenges. A leather manufacturing business usually
purchases finished leathers from different supplies to make products according to the customers
demand.

A Lucy leather handmade bag is looking to grow its business, expand its customer base and
make customers more aware of the brand itself. In order to produce and sell the expected amount
of products, more skilled man powers will be recruited. In addition to this to help the recruit
more talented, an arts advocacy center and apparent ship program will be created in Addis
Ababa. To increase the value of Lucy leather handmade business and make the skilled artisans
more relatable to customers, the artisans’ stories will be attached to different websites. Lucy will
open 5 to 10 small boutiques in different sub cities of Addis Ababa as well as big boutiques in
each of regional state cities. So, customers can interact with the products and purchase them.
Each items are unique, completely hand mad bags.

2. Situational Analysis

Lucy leather handmade bags all started a year ago in Ethiopia, Addis Ababa by A young woman,
by the name of Mahelit Simur, with a passion for design, was walking by a leather products store
and the displayed products took her attention. She walked into the store and took an up-close
look on the bags. She was happy and excited, because the room was filled with a smell of fine
pure leather and the bag she picked was so smooth. She was unhappy, because it was poorly
designed and finished.

The fact that Ethiopia has largest livestock population in Africa, with a cattle population of more
than 65 million, and sheep, goat and camels population of 40 million and 51 million respectively
as well as the availability of high quality leather in Ethiopia, the lack of originality in designs and
poor finishing touches topped with her passion for design, drove Mahelit to start designing bags.
This paved the way for the birth of Lucy leather handmade Bag.

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2.1. Market summary

2.1.1. Macro – environments

To satisfy the societies need and keep their cultural values, Lucy leather bag Company will
produce variety of briefcase as well as clutch bag. To go in line with the economic conditions of
the market, Lucy leather handmade Bag Company will ready its product for various customers
with appropriate price. As Lucy leather handmade Bag Company settles at Addis Ababa, it will
be easy for it to get raw materials and distribute its products to the rest of the country.

2.1.2. Market Demographics

Lucy leathers Bag Company has many target markets:-

Gender Men’s & Women’s

Age 24 to 44
Family Cycle Young, Adults, Single, Married with children, Married without
children, others
Occupation Business Men’s and women, Office workers, Professionals, Students,
Housewife
Income Ranging Birr 5,000 to 15,000

Figure 1. Target markets

In terms of gender, marketers segmented it by men’s and women’s since our products fall under
accessories and designed for them.

In terms of age is between 24 to 44, marketers segmented it by which mostly career women are
earning money is the well-paid segment having the good income levels.

In terms of family cycle, marketers segmented it by young, single, married with children and
without children which includes almost all possible purchasers.

In terms of occupation, marketers segmented it by business women, office workers,

professionals, students and housewives and allowing only those who are financially stable or
supported to purchase the product.

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Lastly, in terms of income, marketers segmented it from birr 5,000-15,000 which shows that the
product can be purchased in relatively competitive prices.

2.1.3. Market Needs

The needs of the leather handmade bag is increasing day-by-day in tune with the growth of
industrialization, economic standards of people, tourism and fashion consciousness. The
important customers of such products are medium and high-income group people belonging to
service, business and executive classes. So Lucy leather handmadebags is one of the most
attractivequality product and interesting fashion with faire price to serve customersneed.

2.1.4. Market trends and Growth

The leather sector is one of the leading manufacturing sectors for Ethiopia. The industry bases
itself on the country’s livestock resources. Ethiopia possesses one of the world’s largest livestock
population with 65 million cattle, 29.1 million sheep, and 29.3 million goats is eighth, twelfth
and eighth place from the world respectively with the share of 2.75 percent from the world total
(FAO, 2019b). About 8 million of cattle hide 12 million of sheep skin and 8 million of goat skin
is available annually. The livestock sub-sector contributes about 12% of national GDP, over 45%
of the agricultural GDP and 16% of total exports.

2.2. Competition analysis

A. Ker Ezhi Ethiopia Leather manufacturing

 What is their value?

Ker Ezhi Ethiopia Leather Manufacturing was established at Addis Ababa since 2017. It is
owned by ZelalemMerawi.

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Deliver top quality leather products, high quality, unique designed women and men bags and
accessories.

 Approach: How do they create value?

The company currently resides in Addis Ababa, kazanchis in front of ECA around Elili
Hotel (out let).

The company has out lets in different hotels in Addis Ababa like Bole around Edna mall in front
of monarch hotel gulf Aziz buliding ground floor, Kazanchisinfront of #ECA #UN gate 2and
Bishoftu (deberezeyit) kuriftu water park villa.

Great products for customers and their home, participate in various trade fairs, bazars and
fashion shows.

 Price and Product: what categories do they fall in?

 2,655 birr men bags
 1,003 birr women bag
 Merchandize mix:
 Women 67%
 Men 25%
 Accessories 8%
 Strength :
 Wide varieties of design products.
 Completely handmade
 Diverse price range based on sub level
 Weakness:
 Limited verities of color
 Why they are competitor?
 Similar design styles in both men and women leather hand bags,
 Use of finest materials
 Completely handmade
B. Sheba LeatherPlc

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 What is their value?

Sheba leather Plc. has started its operation in 1993 in Ethiopia, at Addis Ababa.
Men’s hand leather bags, madeofpreciousleathers, crafted and sewn by hand, assign of luxury,
not heavily branded; exclusive.

Approach: - How do they create value?

Boutique at theAfrica avenue, Bole Road in front of Shoa Shopping, Bole road, near Bole
Printing next to NejatComputerAddis Ababa, Ethiopia, Addis Ababa.Each item is unique,
completely with the finest leather. Define their product as the life style for the owners.

Price and product: what categories do they fall in?

 2,540 birr men bag
 959 birr women bag
Merchandized mix:
 Women 65%
 Men 25%
 Accessories 10%
Strength:
 Graceful, classy, wide range of product categories.
Weakness:
 Limited verities of designs, colors and products.
 The products are not completely handmade.
Why they are competitors?
 Similar design and styles especially the men’s business hand bags.
 Luxury without heavy branding

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2.3. SWOT Analysis

As we are living in globalization world, identifying the strength ,weakness, opportunities and
treats related to business computation is crucial for accompany. So, the SWOT analysis is
discussed briefly as follows.

2.3.1. Strength

 Many businesses sell their products at the cheapest price to have the largest margins- no
matter how bad the quality of the materials are-and make the largest possible profit. Lucy
leather handmade bags Company on the other hand, works day and night to satisfy the
needs of the target market demography. The products that the company sells are also
handmade, high-quality leather, high quality finishing leather bags that will last for long
time and give customer’s good value for their money.
 Excellent trained staffs that are highly trained in producing handmade leather bags.
 The company will produce leather hand bags that can satisfy nations and nationalities of
Ethiopia as well as those who can appreciate different cultural values.
 Motivated work force.

2.3.2. Weakness

 The biggest weakness is that the company is still very new, so there is a lot to do so as to
grow the customer base. It will take a lot of work to gain acceptance from customers for
Lucy leather handmade bags products and to tell customers about the quality of the
product.
 Most customers are buying Lucy leather handmade bags from store rather than searching
from webs and purchase it.So, there is a gap in promoting the product thorough modern
technologies like TV, radio and so on. And this becomes a disadvantage for the company
not to be known globally. Besides this the production of limited quantity is another
weakens of the company.
 As the company is new, limited marketing budget may challenge the company.
 Less publicity when compared with competitors.

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2.3.3. Opportunities

 The opportunities seen by the company to enter the industry are the facts that men and
women are fond of bags and another is people seek for innovative products so the
company comes up with unique product.
 The increasing number of colleges and universities in different areas of the country is one
of the good opportunities of the company, because most customers of Lucy leather
handmade bags are those who graduate either from college or universities.
 The increasing of the tourism sector is another opportunity for the company to sell its
product for tourist who is coming from abroad. As it is veryknown, the leather handmade
bags which is produced by Lucy Company, are initially designed to reflect the culture of
nations and nationalities of Ethiopia.
 The growing market in leather handmade hand bags.
 The presence of cheap man power in the country.
 Enhancing government policy on leather industry.
 The Advancement and need of using technology with in the society.

2.3.4. Threats

 It is obvious that profit is essential so as to insure that the company will grow but rapid
Expansion and mass production of leather handmade bags bother companies may hurt the
Lucy leather hand bags company.
 Must compete against handmade and non-handmade leather hand bags.
 High standard of living.
 Internet connection problems.
 High rent space.
 Unconditional changes in government rules and regulations.

2.4. Keys to Success

There are many benefits of using social media to market our small business. Each of our postings
to social media sites will include a tractable link. We need to know how many people click on
each post. Using online tools like link redirectors (i.e., bit.ly, tr.im and others); we can also see
how many of readers and followers repost or forward such links. We will also include tractable

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links within our email marketing messages. Using online analytics tools; we will be able to see
how many people click on various links in our media campaigns.

2.5. Critical Issues

As we are starting our handmade leather products we may face several critical issues.

 To promoting our self to the market.

 To evaluate our performance against similar providers.
 To satisfy the customers need.

2.6. Channels

 It’s announce the brand name through electronic media like TV, radio, various websites
and capture new customers so as to be more competitors in the market.
 To posted in Publication magazines, local news features and influencer posts every
quarter

3. Marketing strategies

As obviously stated, Lucy leather bags products are handmade and of high quality. For this
costumers will be informed on the web site and other plat forms so people looking to make a
purchase can compare Lucy leather handmade bags to other options and make decision. Through
information should be available to the customers, so they will know where the leather comes
from, why it is of higher quality than another business, how long it take the designer to hand
make each hand bag and other relevant information. In this way, this market can find the
information they need to see it is a good product.

Lucy leather handmade Bags Company is focusing in producing leather hand bags that reflect the
societal cultural values. So, in reaching those Ethiopians who are living inside the country
different boutiques will be opened. Specifically those who are settled at Baherdar ,Awassa and
other state cities of Ethiopia are promising to buy the product because of the young professional
demographic, the income they earned, and there attitudes towards their culture. In addition to
this, by contacting 5- 10 small boutiques that are found abroad, the company will try to get send
its products. To capture boutiques, the companies will offer incentives to boutiques by

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givingthem a discount rate if they order or sell a certain number of hand bags. So boutique order
50 or more bags, they could receive 30percent off the purchase.

3.1. Mission

As a strategic program Mahelit Addis Ababa, former Lucy leather handmade bags, entered into
the market with missions that integrate designing, manufacturing and distributing unique, sassy,
fashionably sustainable and top of the line finished leather products both for the local and
international markets. Currently the company is mainly engaged in designing, manufacturing and
distributing leather products of different types to both the local and International markets.

Vision

Mahelit Addis Ababa envisions becoming one of the leading high quality leather products
manufacturers in the world by ethically and efficiently implementing a sustainable fashion
concept as a business model. It also plans to expand and diversify its products, production unit
and sales outlets.

3.2. Marketing objectives

Lucy leather Bags Company has its own short term as well as long term objectives. To achieve
these objectives the company is doing a lot of works. The short term and the long term objectives
of the company are listed below.

3.2.1 Short term marketing objectives

 To make Lucy leather handbags to be identified as luxury brand thorough out the country
as well as abroad.
 Announce the brand name through electronic media like TV, radio, various websites and
capture new customers so as to be more competitors in the market.
 Create brand loyalty.
 To posted in Publication, that is in magazines, local news features and influencer posts
every quarter

3.2.2. Long term marketing objectives

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  Expand and diversify its products, production unit and sales out let.
 To be one of the leading qualities leather handmade bags products in the world by
ethically and efficiently implementing various fashion design concepts.
 Open 2 to 4 small boutiques in various zone areas of Ethiopia by 2026.
 Open small boutiques in Canada ,Israel, south Africa, and German by 2029 .This will be
accomplished through building relationships with boutique owners (Ethiopians who lived
abroad).
 To be market leader in handmade leather hand bag manufacturing and distributing
segment.
 Increase sales by 30% by 2026.
 Introducing new products in to the market based on the costumer need assessment result.

3.3. Financial objectives

 Obtaining financing to expand manufacturing capabilities and increase distribution.

 Increase revenue by at least 20 percent each year.

3.4. Target marketing

Lucy leathers handmade bag users consists of young people, since the young people
demographic is so large, it is also very profitable. These active consumers represent a
demographic group of well –educated and successful individuals; they are single or married and
raising families. Regardless of their age (whether they fall at upper or lower end of the target
range), they lead active lifestyles. They are somewhat status oriented but not overly so. Currently
Lucy leathers handmade bag customers tend to live in Addis Ababa, Hawasa and Bahirdar.
However, one future goal is to target consumers in Canada and people who are living in various
zones of the country areas.

3.5. Marketing strategies to be used – the 4 p’s and competitive position.

For an organization to be more profitable, the marketing strategies should be clearly identified
and discussed. So the marketing strategies that Lucy leather handmade bag Company uses is
discussed as follows

3.5.1 Product Strategies

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The product will consist of a luxury, traditional handmade, leather hand and shoulder bags line.
This line will be available both for men and women.The bags will range from large brief case to
women clutch,with everything in between available as well.This bags still be made with the best
materials. Each piece will be more of completely handmadeand half of used electricity on the
pieces at any time. The pieces will be constructed of leather covers and finished with brass hard
ware; the piece will be designed to last a life time. Because of deep care, the company takes in its
craftsmanship, there will be average 100 bags made and sold per month, making each bag an
exclusive item. They will also be offered in different color options with reflecting the culture of
the people.

Color: - Light Brown, Dark Green, Red, Black

Characteristics: - Durable, Simple, highly branded
Specification: -Finest saddle leather, brass hard ware, handmade, made in Ethiopia
Women’s line: -Small cross body, medium cross body, short handle satchel, clutch
Men’s line: -Large briefcase, medium briefcase, portfolio

Figure 2. Women and men product

 Women’s Products

 Men’s product

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3.5.2. PriceStrategies

Figure 3. Women’s Products and Prices

Women’s
product

Descriptio Small cross body bag Medium cross body bag Shorthandle Clutch
n satchel

Leather

Hard ware

(Brass) (Brass)
(Brass) (Brass)
price 600 birr 1,200 birr 750 birr 550birr

Figure 4. Men’s Products and Prices

Men’s
Product

Description Large briefcase Medium briefcase portfolio

Hard ware

price 2,600 birr 2,100 birr 1,650 birr

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3.5.3. Place Strategies

Specialty boutiques and small stores will be a great place to position the Lucy leather handmade
bags lines. But there will be e-commerce site for consumers who do prefer online shopping or
who may not live near one of the location the line will be sold in. The e-commerce site will also
have a good explanation of the company, accompanied with some educational Video so that
customers who are not properly educated about the brand in a store will still have the opportunity
to understand exactly the quality of piece they are purchasing.

Generally:

1. Target location:
Inside Ethiopia:-Addis Ababa in 3 shops:
 Bole inside Snap plaza 2nd floor
 Grje inside Bawa building 1st floor
 Sky light hotel out let
And thorough out the countries regional States cities.
 Abroad: - Canada, South Africa and Israel
2. Distributional Channels: - Special stores, Department Stores, Boutiques and e-commerce

3.5.4. PromotionStrategies

The promotion plan for the line of Lucy leather handmade hand bag will take place in various
mechanisms. One of the company’s key strategies is through communication with key social
media is huge source of information for readers and having this influential social Media
aboutand promote the Lucy leather handmade hand bags product will do a lot for getting the
Lucy name main streamed. This is the easiest way to remind people of Lucy leather handmade
bags name and drive sales because of the technology driven society we live in. Generally by
using local magazine, life style bloggers, local news channel Features, you tube and face book
Lucy leather Bag Company will advert its products.

4. Financial, Budgets and Forecasts

4.1. Break –even Analysis

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The break-even analysis is used to determine when your business will be able to cover all of its
expenses and begin to make a profit. It is calculated using a formula, which is the total annual
sales minus costs of goods sold dividedtotal annual sales the difference amount divided by
annual fixed costs of the business. From this formula we can determine the quantity of products
that need to be sold in order to generate annual sales that equal total annual costs.
The formula to calculate the breakeven production level is as follows:
Breakeven Point per units =Fixed Costs/ (Sailing Price per units - Variable Costs per units)
=722, 0000/ (1,652.50-795.77)
=722, 0000/ (1,652.50-795.77)
=722,000/856.73
=842.74 units
We have averaged all of the prices on our leather handmade bags to calculated the average price
per unit to be birr 1,652.50. Our fixed cost in year one, as noted in the expenses, is birr 722, 000.
Using these numbers we were able to calculate that the quantity needed to be sold in order to
break even is 842.74 units, which at a selling price of birr 1,652.50 is equal to birr 1,392,627.85
in sales.
4.2. Sales Forecast

4.2.1. Monthly Sales Forecast

Lucy leather handmade bags to generate men’s birr 126,000 and women’s birr 39,250 in revenue
per monthly. For our financial projections we are going to assume this to be a reasonable starting
point for our income. However, we are expecting an increase in customers with time, and from
this we are forecasting a steady increase in sales by 20% annually for our first three years. After
the two year period we project our sales will stabilize, leaving us with an annual average revenue
of men’s birr 2,177,280 and women’s birr 678,240.

Figure 5:Budget Requirement for sales forecast monthly

Qty per Monthly Total
Types Product Types Unit price
month Sales(birr)
Large briefcase 30.00 2,600.00 78,000.00
Men's Medium briefcase 15.00 2,100.00 31,500.00
Portfolio 10.00 1,650.00 16,500.00

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 Total Men’s 55.00 6,350.00 126,000.00
Small cross body bag 10.00 600.00 6,000.00
Women' Medium cross body bag 20.00 1,200.00 24,000.00
s Short handle satchels 5.00 750.00 3,750.00
Clutch 10.00 550.00 5,500.00
Total Women’s 45.00 3,100.00 39,250.00
Grand total 100.00 9,450.00 165,250.00

Figure 6:Budget Requirement for sales forecast annually

Types Product Types Annually Total Sales(birr)
Years 1 Years 2 Years 3
Men's Large briefcase 936,000.00 1,123,200.00 1,347,840.00
Medium briefcase 378,000.00 453,600.00 544,320.00
portfolio 198,000.00 237,600.00 285,120.00
Total men’s 1,512,000.00 1,814,400.00 2,177,280.00
Women' Small cross body bag 72,000.00 86,400.00 103,680.00
s Medium cross body bag 288,000.00 345,600.00 414,720.00
Short handle satchels 45,000.00 54,000.00 64,800.00
clutch 66,000.00 79,200.00 95,040.00
Total women’s 471,000.00 565,200.00 678,240.00
Grand total 1,983,000.00 2,379,600.00 2,855,520.00

4.3. Expense Forecast

Figure 7:Budget Requirement for raw materials per monthly
No Description Quantity Unit Cost Amount(birr)
1 Upper leather (sq.) 300.00 70.00 21,000.00
2 Lining fabric (m2) 200.00 50.00 10,000.00
3 Cardboard (m2) 140.00 40.00 5,600.00
4 Lining paper (m2) 200.00 35.00 7,000.00
5 Locks (pcs) 250.00 30.00 7,500.00
6 Zippers(pcs) 200.00 50.00 10,000.00
7 Buckles & Brass(pcs) 200.00 50.00 10,000.00
8 Glue(gallon) 50.00 210.00 10,500.00
9 Thread (m2) 100.00 50.00 5,000.00
Total cost per month 1,640.00 585.00 86,600.00

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Figure 8:Budget Requirement for raw materials per annually
No Description Annually Total Raw Materials(birr)
Years 1 Years 2 Years 3
1 Upper leather (sq.) 252,000.00 252,000.00 252,000.00
2 Lining fabric (m2) 120,000.00 120,000.00 120,000.00
3 Cardboard (m2) 67,200.00 67,200.00 67,200.00
4 Lining paper (m2) 84,000.00 84,000.00 84,000.00
5 Locks (pcs) 90,000.00 90,000.00 90,000.00
6 Zippers(pcs) 120,000.00 120,000.00 120,000.00
7 Buckles & Brass(pcs) 120,000.00 120,000.00 120,000.00
8 Glue(gallon) 126,000.00 126,000.00 126,000.00
9 Thread (m2) 60,000.00 60,000.00 60,000.00
Total cost per annually 1,039,200.00 1,039,200.00 1,039,200.00

Figure 9:Budget Requirement for employees salary per annually

No Employees No of Monthly Annually
Employees Salary(birr) Salary(birr)
1 Sales Manager 1 12,000.00 144,000.00
2 Sales 3 12,000.00 144,000.00
3 Casher 3 9,000.00 108,000.00
4 Store man 1 2,500.00 30,000.00
5 Helper(Loading unloading) 3 4,500.00 54,000.00
Total salary expense 11 40,000.00 480,000.00

Figure 10: Budget Requirement promotion through TV, radio, magazines and social media as
per annually
No Description Time No of shoot Unit Price Amount(birr)
1 Advertising Through ETV 15seconds 4 11,000.00 44,000.00
2 Advertising through Radio 15seconds 4 2,500.00 10,000.00
3 Magazines & others social media Inches 4 2,000.00 8,000.00
Total advertising expense 62,000.00

Figure 11:Budget Requirement for shop rent and utility expense per annually

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No Description Measurement Quantity Unit Price Amount(birr)
1 Shop rent-3shops Pcs 12 15,000.00 180,000.00
Total rent expense 180,000.00
2 Power Kw 12 5,000.00 60,000.00
3 Water Liter 12 1,500.00 18,000.00
Total utility expense 78,000.00
Grand total rent & utility expense 258,000.00

Figure 12:Budget Requirement for stationery items and refreshment expense as per annually
No Description Quantity Unit price Amount(birr)
Stationery items as per annually
1 Notice Book 5 Pad 50 250.00
2 Brochure 1000 Pcs 6 6,000.00
4 Photocopy Paper 10 ream 300 3,000.00
5 Back up 4GB 2Pcs 3000 6,000.00
6 Pen 50 Pcs 12 600.00
Total 15,850.00
8 Contingency 10% of the total 7,585.00
Total stationery expense 23,435.00
Refreshment for office employees and customers as per annually
1 Coffee, tea and water Cup, Pcs 18,000.00
Total refreshment expense 18,000.00
Grand total stationery and budget refreshment expense 41,435.00

Figure 13:Budget Requirements Summary

No Description Budget required
year 1 year 2 year 3
1 Raw Materials 1,039,200.00 1,039,200.00 1,039,200.00
2 Salary and Wages 480,000.00 480,000.00 480,000.00
3 Shop Rent Expense 180,000.00 180,000.00 180,000.00
4 Total Utility Expense 78,000.00 78,000.00 78,000.00
5 Advertising and Promotion 62,000.00 62,000.00 62,000.00
6 Stationery Expense 23,435.00 23,435.00 23,435.00
7 Refreshment Expense 18,000.00 18,000.00 18,000.00
Total budget require 1,880,635.00 1,880,635.00 1,880,635.00

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4.4. Linking sales and expenses to strategy

Figure 14. Profit and loss Statement

Year 1 Year 2 Year 3
Revenue:
Sales 1,983,000.00 2,379,600.00 2,855,520.00
Direct cost of sales 1,039,200.00 1,039,200.00 1,039,200.00
Other cost of sales-Discounts 0.00 0.00 0.00
Total Cost of Sales 1,039,200.00 1,039,200.00 1,039,200.00
Gross Margin 943,800.00 1,340,400.00 1,816,320.00
Gross Margin % 48% 56% 64%
Expense:
Salary and wages 480,000.00 480,000.00 480,000.00
Shop rent Expense 180,000.00 180,000.00 180,000.00
advertising and Promotion 62,000.00 62,000.00 62,000.00
Utility Expense 78,000.00 78,000.00 78,000.00
Stationery Expense 23,435.00 23,435.00 23,435.00
Refreshment Expense 18,000.00 18,000.00 18,000.00
Total Operating Expense 841,435.00 841,435.00 841,435.00
Net Income/Loss 102,365.00 498,965.00 974,885.00
Net Income/Sales 5% 21% 34%

4.5. Contribution Margin

Contribution Margin units = Sailing price – Variable Costs

=1,652.50 -795.77
=856.73 units
Contribution Margin Ratio = Contribution Margin units /Sailing price
=856.73units/1,652.80
=52%

5. Control

In order to confirm thatstrategiesare on their way to being met on time, Lucy Leathers will utilize
several marketing controls.

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It is important to keep track of the progress for each strategy so that potential problems can be
identified and fixed earlier on in the process.

5.1. Implementation Milestones (specific point’s measure)

Throughout each year, Lucy Leathers will check up on the progress of each strategies. If
astrategiesis not where it should be, the reason why should be communicated and ideas for
solutions should be discussed. If, even with possible solutions, the strategies will not be met on
time, a revised plan of action should be created to set a new deadline that incorporates a more
realistic time frame based on past progress, including ideas to speed up the process if deemed
necessary.

 The first strategiesof expanding product availability by getting products stocked 5- 10 small
boutiques that are found abroad, the company will try to get send its products. Progress
should include building relationships with business owners in the area, deciding what
supplementary services or discounts should be offered to encourage retailers to stock the
product and evaluate how big of an impact discounts for retailers will have on Lucy’s
profits. Since the company is looking to get the products just in small businesses, it is
important to make connections with those owners in the area and show them the value of the
products and what value will be added to their small business if they stock Lucy leather. The
company should set milestones, such as having the products in 2- 4 small boutiques each
year until the strategiesis met.
 The second strategies Lucy leather handmade Bags Company is focusing in producing
leather hand bags that reflect the societal cultural values. So, in reaching those Ethiopians
who are living inside the country different boutiques will be opened. Specifically those who
are settled at Baherdar ,Awassa and other state cities of Ethiopia are promising to buy the
product because of the young professional demographic, the income they earned, and there
attitudes towards their culture. In addition to this, by contacting 5- 10 small boutiques that
are found abroad, the company will try to get send its products.

5.2. Marketing Organization

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Throughout the year the intention will be to undertake regular evaluation of our service &
marketing programs by comparing with our objectives, so as to ensure that we are in line with
our intended objectives. In summary we intend to undertake the following:

1. Market segment:

We intend to have the self-control to market segment focused.

2. Market Survey:

We will do market serve yearly basis to compare our Products with other competitors and to
adjust our service in a better way.

3. Profit and loss follows up:

We will do timely profit and loss follows up timely and we use the data to take corrective action.
We use standard financial transaction system for better evaluation and to make self-audit.

5.3. Contingency Planning

The following is a summary of the external challenges that are raised by respondents during the
interview.

 The quality issue and its link to the export share in output

Raw leather quality is one of the main issues in the leather industry, as it was constantly put
forward by the several managers interviewed during data collection, poor quality hides, and skins
is the major challenge of the Ethiopian Leather Industry. High qualityleather can be exported or
used for exportable finished goods, while low-quality hides and skins serve the local market
only.

 Seasonality in rawhides and skins supply

One major specificity of the Ethiopian tanneries is that their raw hides and skins supply can be
very irregular. During holidays periods raw hides and skins are available in large quantities
which lowers their price and with a long period of shortage they can be used when prices
skyrocket. This has two main consequences:

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 The necessity for the tanneries to buy and possess large stocks of raw hides and skins
(during holidays periods), and the emergence of competition between tanneries for the best
quality of raw hides and skins at the lowest price (during shortage periods). The first one
can be illustrated by the impact of holding costs on the tanneries’ profitability as well as by
a significant share of the working capital in the fixed costs. Evidence for the second can be
found when assessing the impact of the raw hides and skins price variation on the tanneries’
profitability.

6. Conclusion

Overall, Lucy leather handmade Bags that have a main focus on marketing to grow its customer
base and get the brand name and image better known. The business model is very unique
compared to many companies that make similar products, giving the company a competitive
edge over many other businesses. With Brandi going to start a year ago in Ethiopia, Addis
Ababa, it will be easier to grow the business by working with the people personally, by
developing good business practices from the operational side of things and by recruiting more
artisans to make the products. With these goals, Lucy Leathers handmade bags will be able to
grow its infrastructure so that it can make more products, get its products in small boutiques so
customers can interact personally with them and expand its marketing communications. The
company is in a growing industry, so with more emphasis on communicating the unique business
model, ethical emphasis and high-quality products, Lucy leather handmade bags can create a
successful business and loyal customer base.

7. Reference

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CSA.2020a. Agricultural Sample Survey 2019/20 [2012 E.C.]. Volume II report on livestock and
livestock characteristics (private peasant holdings). Central Statistical Agency (CSA): Addis
Ababa, Ethiopia.

Ethiopian Chamber of Commerce and Sectorial Associations (ECCSA), study’s Investment

Potentials and Opportunities in the Leather and Leather Product sectors on December, 2019

Ethiopian Leather Development S.C Email, elia.aalf@gmail.com. Website: www.elia-aalf.org.

Addis Ababa, Ethiopia

FAO.2019b. Poultry Sector Ethiopia.FAOAnimal Production and Health Livestock Country

Reviews. No. 11.Rome

Kerezhi leather manufacturinginfo@ker-ezhiethiopia.com Website: www.kerezhiethiopia .

com. Addis Ababa, Ethiopia.

Sheba Leather Industry Plc.Website: https://www.shebaleather.com Addis Ababa, Ethiopia.

World Bank,2017. International Development Association: Project Appraisal Document on a

Proposed Credit in the Amount of SDR 121.1 Million (US$ 170 Million Equivalent) to the
Federal Democratic Republic of Ethiopia for a Livestock and Fisheries Sector Development
Project (Project Appraisal Document No. PAD2396). Washington DC.

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