Afroze Final

2 015 Report of Strategic Marketing Management

Submitted by:Komal Siddiqui (3050)Ali Hyder Shah (2860)

Nazish Ali (1005)Humaira Arshad (5155)

Submitted to:Sir AyazRafique

Date:20 th Dec’2015

Letter Of Acknowledgment

Dec 20th’2015

Dear Readers,

We would first like to thank Almighty ALLAH for giving us the strength and endowing us with the privilege of completing our report.

We are also extremely thankful to our mentor Mr Ayaz Rafique for his constant support, encouragement and guidance, without which we could not have successfully achieved our task.

We would also like to thank Mr. Abrar Manzoor of Afroze Towels and his marketing and financial departments, and our course fellows who spared their valuable time to help us and provided us the guidance to finally come up with this report. We will seek your continuous assistance and support in future.

Sincerely,

Komal Siddiqui

Ali Hyder Shah

Humaira Arshad

Nazish Ali

Table of ContentsExecutive Summary ………………………………………………………………………………….4

History of the Company……………………………………………………………………………....5

Introduction …………………………………………………………………………………………..5

Management…………………………………………………………………………………………..5

Core Values ………………………………………………………..…………………………………..6

Mission………………………………………………………………………………………………...6

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Vision……………………………………………………………………………..……………………7

Factory Details…………………………………………………………………………………………7

Product Lines…………………………………………………………………………………………..7

SWOT Analysis ……………………………………………….……………………………………....8

Tows Matrix…………………………….……………………………………………………………...9

Marketing Mix …………………………………………………………………………………....10-11

Porter’s five forces …………………………………………………………………………….….11-12

Porter’s four corners Model ……………………………………………………………………….....13

BCG Matrix …………………………………………………………………………………...……...14

Marketing Strategies…………………………………………………………………………………..15

Countries to Export ……………………………………………………………………………….15-16

Financial Data …………………………………………………………………………………….17-19

Recommendations …………………………………………………………………………………....20

Executive Summary

The report at hand provides useful insight about Afroze Towel Private Limited, a private

organization producing 100% export quality towels. Established in 2005, currently a leading as a

towel manufacturer company in Pakistan, provide Bath towels, Bath Robes, Beach Towels, Face

Towel, Kitchen Towels and Terry Towels. This facility is vertically equipped with most modern and

latest machines for weaving, dying and finishing process. The production capacity of this industry

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includes Terry Towels 2000 tons per month, Bath Towel 1000 tons per month, Bath Robe 1000 tons

per month, Beach towel, Face towel and Kitchen towel is also same 1000 tons per month.

Undoubtedly they have an educated and experienced workforce that geared up their efforts to meet

and exceed the targets and challenges to achieve record production with increase of export level.

They are well familiar with their best towels of first choice exporting huge quantity of products every

year to USA, UK & European countries and being amongst the largest exporters of Pakistan, wining

every year the largest exporter trophy since 2004.

After the introduction the Afroze Towels core values, mission and vision statement, factory

detail, product lines, SWOT and Tows analysis, marketing mix, porter 4 corners model, Porter’s 5

forces, BCG matrix, marketing strategies, competitor analysis and in the last financial analysis of the

company has been done. Finally, certain recommendations are also given at the end of the report.

HISTORY OF COMPANY

Afroze Towels Industries Private Limited is a well renowned group in home textile sector and unfolded its memorable history while in 1973 a man named MahboobAlamLari started trade of home textile products by manufacturing & launching export quality Terry Towels into international market and quickly earned trust from across the countries. The acknowledgement and appreciation of his

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entrepreneurial expertise encouraged him to step up into the home textile arena. From here on, there was no looking back. Owing to dynamic manufacturing quality oriented product capabilities and determined conviction across all management and workforce to achieve and exceed the targets and challenges.

INTRODUCTION

Established in 1973, Afroze Towels Industries (Pvt) Ltd has four decades of manufacturing and market experience. The company was founded by late Mr. MahboobAlamLari. Since our inception Afroze Towels has been focused on quality customer satisfaction innovation and specialization through technological advancement.

Afroze Towels is managed by qualified and motivated professionals under the dynamic leadership of company directors Mr. FerozeAlamlari and Mr. AfrozeAlamLari. With annual export capacity of USD 200 million Afroze textile has earned a top position among the country's leading towel and bed linen exporters recognized and appreciated by our international clients.

MANAGEMENT

They believe that employees are the backbone of a successful organization.Factories are managed by specialized under the leadership of Mr.FerozeAlamLari and Mr. AfrozeAlamLari.

Department heads of Design ,laboratory,planning,processing,procurement,qualityassurance,stitching and weaving combine their expertise and knowledge to create the finest quality products.

CORE VALUES:

Care is at the core value of our business model

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We care about our customer's satisfaction and adding value to their businesses. We have made customer satisfaction the key focus of our manufacturing and service standard; to meet this goal we invest in innovation, give special attention to detail and adhere to deadlines.

We ensure that our employees are happy and motivated and our teams believe in value of respect, dedication and caring for the environment.

MISSION:

Setting a trend in textile sector that could deliver globally the value to our business partners through innovative technology with efficient workforce and to fulfill social,

ethical and environmental responsibilities.

VISION:

Afroze Textile Industries Private Limited aims at being the best manufacturer and exporter by providing effective management services in home textile sector for

efficient production, processing and marketing of high quality products.

FACTORY DETAILS

Afroze textile industeries(Pvt)Ltd. Companies of two fully owned vertical setups.The towel and bedding factories cover an area of 650,000 square feet and 800,000 square feet respectively.The combined work force totals approximately 3,000 people.Both the unit have top of the processing and stitching machines,fully equipped laboratories studios and currently the largest product portfolio in the home textile industry.

PRODUCT LINE

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TERRY TOWELS:

Bath towels Bath Robes Printed Beach Towels Hand Towels (for hospital and kitchen use) Woven Kitchen Towels

SWOT ANALYSIS

A SWOT analysis is a structured planning method used to evaluate the strengths, weaknesses, opportunities and threats involved in a project or in a business venture. We have conducted SWOT analysis of Afroze Textiles so that we would able to know their internal Strengths and weaknesses and external opportunities and threats.

Strengths:

State of the art dying processing unit

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Capacity to process more than 1200 tons towels/month One of the few Manufacturer and distributer in top ten suppliers and vendors to Walmart,

Tesco, Asdaetc for towels. Supply base of more than 100 international clients Modern and hi tech machinery

Weaknesses:• Low Gas pressure problem and Increase in cost of gas due to which production cost increases.• Water Supply problem (900000 gallons/day which is equal to the need of 1800 domestic

consumers)• Incomplete labor constraint

Opportunities• Capable to double the operations and production in approx. 6 months.• Huge market potential• Bangladesh towel sector is about to collapse due to their import of cotton which increases

their production costIndia is about to exit this sector as it is going in manufacturing hi-tech products locally

Threats:• Law & Order situation• Multicultural environment as it promotes formation of CBUs so the grouping can be a threat.• Complete Gas Supply shutdown in future will force us to use coal power generation as an

alternative• Production of towels is largely dependent upon locally produced cotton . If the production of

cotton reduces the company may not remain competitive.• International poltical situation

TOWS Matrix

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Super Swot

Strength:1. State of the art dying process unit2. Capacity to process more than 1200 tons

towels/month3. One of the few Manufacturer and

distributor in top ten suppliers and vendors to Wal-Mart, Tesco, Asda etc. for towels.

4. Supply base of more than 100 international clients

5. Modern and high tech machinery.6. Large amount of capital.7. New ideas of innovations.

Weakness:1. Low Gas pressure problem and

Increase in cost of gas due to which production cost increases.

2. Water Supply problem (900000 gallons/day, which is equal to the need of 1800 domestic consumers)

3. Incomplete labor constraint.4. Demand is greater than the

supply

Opportunities:1. Capable to double the

operations and production in approx. 6 months.

2. Huge market potential3. The Bangladesh towel

sector is about to collapse due to their import of cotton, which increases their production cost.

4. India is about to exit this sector as it is going into manufacturing high-tech products locally.

S-O

• They should look into and capture the Bangladesh towel market sector, as they have a large amount of capital and have a capability to produce and import internationally. (S6, O3)

• They should manufacture their product locally also as they have a capacity to process more than 1200 tons towel per month and they also have the ability to double operation as needed.(S2, O1)

W-O

• They should established their own water dams and plants for their operations and productions because still they are capable to double their production. (W2+O1)

• They should expand their operations to fullfil the market demand as they have the capacity to double their operations in 6 months. (W4+O1)

Threats:1. Law & Order situation2. Multicultural environment

as it promotes the formation of CBUs so the grouping can be a threat.

3. Complete Gas Supply shut down in the future will force us to use coal power generation as an alternative

4. Production of towels is largely dependent upon locally produced cotton. If the production of cotton reduces the company may not remain competitive.

5. International political situation

S-T

• They have produced a new type of towel which is made from bamboo (S7+T4)

• Afroze towels may use coal power instead of gas by investing in coal power generation. (s6+T3)

W-T

• The lowest Gas pressure problem and Increase in cost of gas due to which production cost, increasing day by day and it seems that complete Gas Supply shutdown in future so they will have to use an alternative way to fuel up their operations which could cause an increase in production cost so it will force them to shut down their operations. (W1+T3).

• Shortage of Labor and formation of CBUs in existing labor will largely affect the company’s productivity. (W3+T2)

MARKETING MIX

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4 P’s Of Marketing

Marketing is integral to the success of a business, large or small, with its primary focus on quality, consumer value and customer satisfaction. A strategy commonly utilised is the "Marketing Mix". This tool is made up of four variables known as the "Four P's" of marketing. The marketing mix blends these variables together to produce the results it wants to achieve in its specific target market.

The following are the Four P’s of Afroze textiles:

1. Product

Afroze is producing 5 types of terry towels and exporting them to 36 countries worldwide to fulfill the international needs of towels.

Bath towels Bathrobes Printed Beach Towels Hand towels (For Hospital use) Woven kitchen towels

2. Price Pricing is done after analyzing international market demand of towels and competitor offerings and to have a attractive amount of profit. 2% sales discount is offered to potential clients.

3. Place

Different international stores like Walmart, ASDA, TESCO etc. are mainly focused to have the product on display for mainly domestic use. There are other international business clients also like International Gyms, Hospitals, Water Sports, Restaurants

4. Promotion

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The marketing strategies used for promotion of the product are

Free Sampling Face to Face Marketing Special Discounts

PORTER’S FIVE FORCES (Industry Analysis)

The Porter's Five Forces tool is a simple but powerful tool for understanding where power lies in a business situation. This is useful, because it helps you understand both the strength of your current competitive position, and the strength of a position you're considering moving into.

With a clear understanding of where power lies, you can take fair advantage of a situation of strength, improve a situation of weakness, and avoid taking wrong steps. This makes it an important part of your planning toolkit.

Conventionally, the tool is used to identify whether new products, services or businesses have the potential to be profitable. However it can be very illuminating when used to understand the balance of power in other situations. We have conducted the Industry Analysis for Afroze Towels.

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Porter’s 5 forces of Afroze Towels

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Entry and exit barrierLow

Legal environment and incentive from government in towel industryEnergy crisis and no subsidiary from government.The government has raised special exercise duty from 1 % to 25 % and for this reason government of Pakistan making unfriendly policies in this this sector so the exit and entry barriers are very highExit barriers are also high for the foreign level operation.

Competitive rivalryModerate

Very few national level playersPresences of regional and local playersHigh competition between the national brand and retailor ownFix cost are high in this industry.

Availability of substituteHigh

Unorganized retailingE-retailingCatalog saleThe treats of substitution from the garment provided by the unorganized sector is high

Bargaining power of buyer

High demand for towel products in UK and USA market.Product differences and brand identity are quick quite highBuyer information is high thus the bargaining power of buyers are low

Bargaining power of suppliers

High availability of cotton low cost of labor.Presences of substitute inputs to cotton like pollster, wool and lycre are presentImportance's of volume to the supplier is very high thus the bargaining power of supplier is very lowBuyer information is high thus the bargaining power of buyers are low

PORTER’S FOUR CORNER MODEL(Al Karam Towels)

Porter’s four corners model is a predictive tool designed by Michael Porter that helps in determining a competitor’s course of action. Unlike other predictive models which predominantly rely on a firm’s current strategy and capabilities to determine future strategy, Porter’s model additionally calls for an understanding of what motivates the competitor. This added dimension of understanding a competitor's internal culture, value system, mindset, and assumptions helps in determining a much more accurate and realistic reading of a competitor’s possible reactions in a given situation.

We have taken Al Karam Towels as a competitor of Afroze Towels and identified the competitive four corners of Al Karam Towels which helps us in determining the competitor’s course of action.

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DriversAlkaram is one of the largest producer of fashion and basic bedding which are also complie with international quality, social and environmental standardsThey are largest yarn dyers manufactur in Pakistan

Current strategy

•They provide its customer with complete in-house design solution from its creative center is equips with state of the art designing and sampling equipment and skill textile artist

Al-karam towel industry will participate at the 2016 Heim textile

Management assumptions• Offering a diversified range of product• Alkaramis on a mission to provide its loyal customer with the most creative design while keeping the tradition impact

Capabilities• Environment friendly• Having different certification eg. ISO 9001:2008and supplier qualification program

The BCG Growth Share Matrix

Boston Consulting Group, Bruce Henderson, created this chart to help organizations with the task of analyzing their product line or portfolio.The matrix assesses products on two dimensions. The first dimension looks at the products general level of growth within its market. The second dimension then measures the product’s market share relative to the largest competitor in the industry. Analyzing products in this way provides a useful insight into the likely opportunities and problems with a particular product.Products are classified into four distinct groups, Stars, Cash Cows, Problem Child and Dog. Lets have a look at BCG Matrix of Afroze Towels for decision making process.

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Market G

rowth

Market Share

High

Low

High Low

Marketing Strategies Of Afroze Towels

Marketing strategy is the fundamental goal of increasing sales and achieving a sustainable competitive advantage. The Marketing Strategies of Afroze Towels are:

Whenever cost benefits are achieved over production, they are transferred as special discounts to consumers

Free Sampling Face to Face Marketing Special Discounts to potential clients Packaging and display is not less than International Standards

Competitive Advantage

Afroze differentiate its towels from the International competitors in terms of the quality of the towels which can b felt by touching and feeling the soothing and relaxation and softness of the towels.

International Competition Fierce

Chinese, Indian and Bangladeshi goods have entered into the International market due to which the competition has increased to a huge extent.

Countries to Export Algeria Austria Belgium Brazil Canada Chile Columbia Czech republic England France Germany Greece India

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Iran Ireland Italy Japan Kenya Lithuania Mexico Netherlands New Zealand Peru Poland Russia Saudi Arabia Slovakia South Africa Spain Sweden Thailand Tunisia UAE Ukraine USA Venezuela

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FINANCIAL DATA OF AFROZE TOWELS

PROFIT & LOSS STATEMENT

Sales….………………………………….…………56518250

Less:C.O.G.S……….………………….….……....(44804800) Gross Profit Margin………..……...………..………11713450

CONTRIBUTION MARGIN STATEMENT

Sales …………………………………..……… 56518250

Less: Variable C.O.G.S.….………………..………. (35843840)

Gross Profit Margin ………………….…………… 20674410

Less: Other variable selling costs ……………..…… (2568941)

Variable Contribution Margin ……………..………. 18105469

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CONTRIBUTION BY PRODUCT LINE

Bath Towels

BathrobesPrinted Beach Towles

Hand Towels

W.Kitchen Towels

Sales 24588000 6830000 20490000 2049000 2561250

Less:Variabl

e COGS16392000 4371200 12020800 1420640 1639200

Gross Profit 8196000 2458800 8469200 628360 922050

Other V.C 1541365 256895 513788 128447 128447

Variable C.M 6654635 2201905 7955412 499913 793603

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PERCENTAGE VARIABLE CONTRIBUTION MARGINS

Bath Towels

BathrobesPrinted Beach Towles

Hand Towels

Kitchen Towels

No. of

Customers8196000 1366000 2732000 2732000 1366000

Average

Price3.0 5.0 7.5 0.75 1.8

V.C / Unit 2.18 3.3 4.5 0.56 1.29

VCM / Unit 0.82 1.7 3.0 0.19 0.51

PVCM 27.33% 34% 40% 25.33% 28.33%

BREAKEVEN ANALYSIS

Breakeven = Totala Fixed Cost/UVC

Breakeven Point :

Bath towels = 4098000/ 0.82 =4997560 units

Bathrobes = 1092800/ 1.7 = 642824 units

Printed Beach Towels = 3005200/3.0 = 1001733 units

Hand Towels = 355160/0.19 = 1869263 units

Woven Kitchen Towels = 409800/0.51 = 803529 units

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RECOMMENDATIONS

Following are some recommendations for Afroze towel private limited:

The co-ordination between different departments of Afroze should be improved, it will lessen the bureaucratic cost and increase the efficiency of the company.

The activities like customer satisfaction day should be performed on a regular, basis, so the

company should know the feedback and satisfaction level of customers regarding the product

and the image of the company.

They could increase their effective policies and seriousness for local presences in their economy.

They could collaborate with buyers on forecasting and inventory management.

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