ANALYSIS OF QUARTER – 7
Quarter - 6 Quarter - 7
Total Sales (units) 293 318
MRP (₹) 80 89
Total Revenue (₹) 14416 14416
Gross Profit (₹) 4747 6834
Marketing Cost (₹) 0 1000
Market Share (%) 23 23
NET Profit 3932 4914
STRATEGY:
In Quarter 6, although the Net Profit increased after making a few changes for the same price, we
observed that the market share was still 23%.
In order to increase the market share, we decided to include some Marketing activities. Since the
product we designed was for Urban Commuters, we decided to market our bag in the Newspapers
first with 1x frequency. We didn’t want to be too excited about the marketing as it comes with a cost
and hence we decided to just choose Newspapers first and see if it made any difference to the
market share.
To account for the Marketing cost that we were bearing now, we decided to increase the price of
our product. But before that we wanted to look at the customer feedback to check for the targeted
segment and the other segments where we planned to do the cross-selling. We realised that the
customers gave a positive review about the product and also its price. Since the price was in
affordable range for all the segments we were targeting, we decided to increase it by ₹ 9.
For the cross-selling, we also made some changes in the positioning statement to make it relevant
for them keeping in mind the relevancy of the statement for our target segment.
In terms of sales from each distribution sales, we observed that the University store was giving us
the best Profit per bag apart from Direct selling but the sales there was stagnant. Also, the upper
limit of price to keep a product was ₹ 80. Since the sales was stagnant at the University store, we
decided to remove it from the distribution channels and also checked if all the distribution channels
we have chosen were giving us profit or loss per price. Since all the distribution channels that we
chose were giving us some profit per bag, we decided to not make any changes in the distribution
channels.
With all these changes, we ended our turn with the results for Quarter 7 mentioned in the above
table.
OBSERVATIONS:
1. Total Sales of the number of the product was increased even after the increase in the price
of the product. When we checked the sales from each segment, we observed that our
strategy of cross-selling was working and a significant amount of sales was coming from
High-End Outdoors and Luxury Trend followers.
2. We also observed increase in NET Profit even with the inclusion of Marketing cost. But we
realised that was maybe because of the increase in Price of the product and also the
increase in sale of number of bags.
3. There was no change in the Market Share and even though Sales and Net Profit improved,
the market share was stagnant.
ANALYSIS OF QUARTER – 8
Quarter - 7 Quarter - 8
Total Sales (units) 318 341
MRP (₹) 89 95
Total Revenue (₹) 14416 19513
Gross Profit (₹) 6834 8260
Marketing Cost (₹) 1000 3300
Market Share (%) 23 20
NET Profit 4914 4005
STRATEGY:
Since our strategy of improving the market share didn’t work for Quarter – 7, we decided to look at
what our competitors were doing, which marketing activities and strategies they were following. We
observed that our main competitor East & West Bags was marketing their product with 6x in
Financial Journals. And they were doing good in terms of Sales and Profit, we decided to use
Financial Journals to market out product. But since we were doing it for the first time, we wanted to
use it efficiently and hence we marketed our product 2x in the Financial Journals. Along with that,
we also used Social Media 1x times to market the product as almost everyone is on Social Media
these days, in one way or the other.
To account for these marketing costs, we further decided to increase our price by ₹ 6 with the same
strategy as used in Quarter – 7 i.e., Cross-selling was working and the bag was still in the affordable
range for the target segment.
Since we made a lot of other changes in the previous Quarter, we wanted to analyse if using more
marketing activities helped us in increasing the market share and therefore we did not make any
further modification in the strategy.
With this, we ended our turn for Quarter – 8, the results for which are mentioned in the table above.
OBSERVATIONS:
1. We observe the increase in total units sold, total revenue and Gross Profit but there is a
decline in NET Profit.
2. We also observed decline in market share from 23% to 20%, which is a major setback in
terms of the strategy we used. Although cross selling worked as the number of total units
sold increased even with the increase in Price but maybe the target segment wasn’t very
comfortable with the increase in the price.
And since the product was designed keeping in mind the specification that the Urban
commuters would want, it didn’t attract a lot of other segments.
