Economic Indicators for hand tool industry

MAKETING PLANING AND STRATEGY

A REPORT ON MARKETING PLAN OF HAND TOOL COMPANY

SUBMITTED TO :Mr. S.P. KETKAR

SUBMITTED BY :ANKIT KAPOOR PRASHANT KAPOOR SAURABH SINGH SARAVJEET SINGH KAPIL KIRSHNA

EXECUTIVE SUMMARY We here present a business plan to set up a new venture in hand tools industry. Our company is “P.P. hand tools solution.” which will basically operate in Delhi and NCR region, But we are willing to take orders from all over the India through website ordering. The hand tool industry is totally fragmented industry which has large small players in the given area. Our offering of hand tools is different from these local players in the sense that we provide all kind of hand tools under one umbrella of P.P. hand tools solution. We have tools from commonly used hammers, scisors to verneir caliper ,micrometers. There are few organized players in the sectors also like Stanley India, Argeos ltd, Taparia tools, Klvein ltd .These players also offer good range of hand tools in the markets. They have created their names in the field. So our fight is not directly with these players but we first of all try to make a space for ourself in the local markets with catering to the orders of far areas which come through our sites. Our first objective is to become a common name in the Delhi NCR region and then take on these national level players. To become popular in the local area ,we are using the best material to make hand tools reliable and durable, pushing it in markets with providing good discount to the retailers on bulk purchase , creating positive word of mouth effect , handling the problems of current users effectively After this we will expand to the national level players , by further improving the standards and specification of hand tools and reaching out to the industrial buyers of the region ,simulataneously promoting the order taken on internet. Our sale target is for few months is large because we need to expand quickly in the local area with low margin we get for every sales. In this phase we will derive major profits from the orders that come from internets In next phase our profit maximsation will be better because we will be well known brand in the region.We will search out for better revenues from the Industrial buyers who purchase in bulk.

Analysis of the current situation: Hand tools are those types of non-powered tools which are designed for use by experts as well as in Do-It-Yourself (DIY) projects, like home repairs, general maintenance, woodworking, building, mechanics and gardening. The hand tool industry is facing new challenges related to worldwide business globalization and the invention and use of electronic business. Every single manufacturer, irrespective of its size and importance in the market, should watch the movements in its business environment, in order to adjust activities accordingly. Characteristics of the industry x

A labor Intensive Industry: A source of employment to many, hand tools industry is basically labor intensive in nature, whose development is of great importance for a competitive as well as a self-reliant industrial structure. The manufacturers of hand tools produce a comprehensive range of hand tools, right from carpentry and plumbing tools to striking and cutting tools.

x

Energy intensive industry: Apart from being a labor intensive industry, this industry is also an energy intensive one. It is estimated in a recent study that in most economies adoption of energy efficient processes and technologies can yield in energy savings of up to 30 to 50%.

x

Effective contributor to the economy: Adding positively to the income of a country, hand tools industry has contributed to economy in terms of development and technology up-gradation.

(A) Market Situation :Hand Tool Market of India India has a competitive advantage in the hand tool industry compared to other countries because of easy availability of raw materials, entrepreneurship skills and skilled labor at competitive wages. The hand tool industry as a whole is witnessing a shift of manufacturing base from traditional manufacturing countries in Europe and Taiwan to the developing world and this is a good sign for India to benefit. There has been an average growth of 17% per annum of the hand tool market in India for the last 7 years. Estimated No. of Unit in India SSI Units Large Unit Estimated number of workers Major Manufacturing regions Total Export in 2001-02

2500 12.8 million 7 25000 Jallandhar/Nagpur $33 billion

Macro environmental situation Economic Indicators The Small Scale Industry today constitutes a very important segment of the Indian economy. The development of this sector came about primarily due to the vision of our late Prime Minister Jawaharlal Nehru who sought to develop core industry and have a supporting sector in the form of small scale enterprises. Small Scale Sector has emerged as a dynamic and vibrant sector of the economy. - Today, it accounts for nearly 35% of the gross value of output in the manufacturing sector and over 40% of the total exports from the country. - In terms of value added this sector accounts for about 40% of the value added in the manufacturing sector. - The sector's contribution to employment is next only to agriculture in India. It is therefore an excellent sector of economy for investment.

Opportunities in SSI due to some factor Less Capital Intensive Extensive Promotion & Support by the Government Reservation for Exclusive Manufacture by small scale sector Tools & Tools utilisation support Funding Raw Material Procurement Reservation for Exclusive Purchase by Government

Opportunities in hand tool industry 17% annual growth rate 35% of the gross value of output in the manufacturing sector Growth in demand in the domestic market size due to overall economic growth Increasing Export Potential for Indian products

SWOT ANALYSIS:-

STRENGTH 1- Competitive Price. 2- Distribution network. 3- Innovative design of the products which can increase efficiency. 4- Direct delivery capability.

OPPORTUNITIES 1234-

Market Development? Industry trends? Technology development and innovation? Global influences:- (Government to remove 24 per cent FDI cap on SSI units.) 5- New market, vertical, horizontal? 6- Business Product development. 7- Partnership agencies and distribution

WEALNESS 1234-

Limitation of product line. Large Capital oriented. Cash flow, start-up cash-drain? Reliability of data, Plan predictability?

THREATS 123456-

Political effect? Environmental Effect? IT Development? Market Demand. New technologies, services, ideas? Insurmountable weakness?

Objectives:A:- Financial Objective:Long Term Objective: x x

Achieve a positive contribution to overhead and meet the break even point with in 3 years from the commencement of the business. Reach the target level of the average of 20% return on investment over the next 4 years.

Short Term objectives: First Quarterly Objective – x x

Achieve a positive contribution to overhead and sell 20000 kits in the market. Increase awareness about our entrance in the market. (It will be measured by no. of sales in the first three month.

Second Quarterly Objective – x x

Achieve a sales target 90000 Kits. Reach the target level of 5 % of the initial investment. Other objective will be decide after absorbing of the first two quarterly performance.

B:- Marketing Objective: x x x x

Improve market share and net sales revenue. Improve current level of retail distribution coverage. Control on marketing expenditure sufficiently to achieve profit contribution objective. Identify viable objective for future volume and profit expension.

SEGMENTATION: Our product is hand tools. It includes the axe, hammer ,chiesel , screwdrivers, drilling tools, boring tools, micrometers, scalpers etc. TARGETING: NOW after segmentation we are going with targeting in this we segment the profitable market. 1234-

Industrial players small labours who uses these hand tools In various houses where to do the day to day business In various instuitions of education where these tools are used

Industrial players who have few small work in their outlet or factory to be done. They use various hand tools for small works They buy these hand tools in bulk ,but they don’t have particular suppliers for it. So there is latent demand for the good suppliers, thus we can positioned our self as reliable and great supplier. There are large such players in the outskirt of NCR region .We will target these prospect clients to increase our base of loyal clients. The layman labours ,technician ,electrician all need hand tools to perform their jobs. They buy these tools from the local markets .So to reach these segments of ours we need that our hand tools are available at each and every nuke and corners. Secondly , the word of mouth is major marketing tool over here. So we should ensure that our product is better in terms of quality and features. As we are the only brand that serves all type of hand tools thus bad words in one sector can affect performance in other sectors too.

POSITIONING:

Before positioning we should know the critical factors that are perceive by the customers are: 1- Quality

2- Standard

3- Durability

4- Reliable

5-Good looks

6- Brand name

Ou r

positioning

competitors

Standards

Reliable So from the analysis we get that standards and reliability are major way of positioning .The most players are low in standard in terms of specification and quality but are reliable and durable products.

So we position our products as better in terms of reliability and meeting the world class standards that are prevailing in hand tools so we can definitely earn a brand name for ourselves.

200 150

o u rs

100

stanley b ad o

50

aegon 0 1

looks

Durable

2

3

reliable Value grid

4

standard

What Makes Us Unique x

We offer a diverse and comprehensive products mix to meet the need of the industrial market. we manufacture tools for automotive and other industrial application.

x

Assistance in custom application. we have certified engineers on staff to help you with your custom required tools. We offer variety of services from products assembly custom parts and tooling for your convenience.

x

PROJECTED P&L A/C

PARTICULARS

PARTICULARS

AMOUNT

SALES

2 LACKS * 52 WEEKS

104 LACKS

LESS:COST OF PRODUCTION LESS:ADMINISTRATIVE COST LESS:SELLING AND DISTRIBUTION EXPENSES LESS:DEPRECIATION

40 LACKS

35 LACKS

10 LACKS

8 LACKS

15 LACKS

10 LACKS 5 LACKS

LESS:INTREST PAID

ON PLANT AND MACHINARY ON DEBT

TAXABLE PROFIT

=104-35-8-10-5-5

41

TAX

FLAT 30% OF GROSS PROFIT = 30% OF LACKS =41-13.8

13.8 LACKS

NET PROFIT

5 LACKS

27.2 LACKS

POTER’S FIVE FORSE MODEL OF HAND TOOL INDUSTRY

Threat of New Entry: 1- Expensive to enter the industry 2- Experience needed, but training easily available. 3- Some economies of scale. 4- Low barriers to entry. 5- New entry not too easy.

Supplier Power: 123456-

More suppliers in the market. Suppliers large. Similar products. Able to substitute. Able to change. Foreign supplier power.

Threat of Substitutes: 1- Some cross-products subst 2- Ability to import from oversees market.

Competitive Rivalry: 1- Many companies in the market. . 2- Low switching Cost. 3- High cost of leaving Market.

Buyer Power: 1- Homogeneous products. 2- Average price sensitivity. 3- High buyer power. 4- Large orders. 5- Product life cycle is large.

This worries: x x x x

The threat of new entry is not easy, if anyone looks as if they’re making a sustained profit, then competitors can come in to the industry. Competitive rivalry is extremely is high: because of many companies are already exists. Buyer power is strong, again implying strong downward pressure on prices. There are some threat of substitution.

What can we do? Product Differentiation:- The difference between the physical product is the packaging, trademarks, tone, style and price differences. In the hardware tool, screwdriver, pliers, wrenches belong to homogeneous products, hardware companies in the packaging and colors are also the trend of homogenization, only mark is different. Unless we are able to find some way of changing this situation, this looks like a very tough industry to survive in. Maybe he'll need to specialize in a sector of the market that's protected from some of these forces, or find a related business that's in a stronger position.

Distribution Network of Hand Tools :-

Gaining Distribution in the market :Direct to End Users

Sales through Dealer Network

We have a sales team that sell directly to Small scale units, Professionals (e.g.

We sell a product through a geographical network of dealers who sell to end-users in their areas. E.g. India Mart.

carpenters, plumbers, craftsmen, toolmakers etc), House Hold (DIY) We have a second product line for small business. Instead of using sales team, we sell this line directly to end –users through our website and marketing campaigns. We have two market and two distribution channels.

Our dealers are essentially our customer, and we have a strong program to train and support them with marketing campaign and material.

Sales through Value Added Reseller We sell a product to company who bundles it with services or other products and re-sell it. That company is called a Value Added Reseller (VAR) because it adds value to your product. e.g. Tie up with Automobile companies, Machinery manufacturing companies.

MONITORING AND CONTROL 1. Evaluation of performance will be done on monthly basis at initial period of 1 year than at quarterly basis for next 2 years. 2. Review of performance of our ancillary service providers will be done at quarterly basis to ensure that 100% commitment is made from them. 3. Continuous research and development will be taken to meet the change in needs of customers in terms of comfort and trends. 4. Evaluation of objectives will be done if needed to identify that they are under evaluated or over evaluated. 5. Separate department will be established to make corrections if required without wasting time and resources.

CONTINGENCY PLAN 1. We will focus on promotional schemes and discount to attract the customers if footfall is low. 2. Make our ambience more attractive for our customers to gain their interest. 3. We will organize special fest inspired by liberty to enhance our brand image if we found that target market fail to recognize us. 4. We may also shift our focus our attention to one of the market if we are doing continuously poor in one market (international and national).