Case Study An Indian manufacturing company wants to launch its own apparel brand in India.

Their capability lies in cotton & blended textiles that can be used in very soft clothing, both inner & outer wear. They would like to understand the Indian market scenario, the current players, the consumers etc. and decide what should their product line-up be, who should they target and where should they sell their brand. You'll need to answer the following questions:1. How would you approach this project - explain / illustrate the key steps you would take 2. List the activities you would do 3. Where would you look for to get the relevant data 4. Who all would you meet, talk to and observe to understand the dynamics of the market 5. What new and different things would you do to get inspired to generate new ideas

Indian Market Scenario

India, the worlds third-largest producer of cotton and second-largest producer of cotton yarns and textiles, is poised to play an increasingly important role in global cotton and textile markets as a result of domestic and multilateral policy reform. Production of raw cotton grew to 35.3 million bales in FY12, up from about 28.0 million bales in FY07. During the same period, production expanded at a CAGR of 4.7 per cent; its annual growth was at 4.7 per cent in FY12. Of overall amount of raw cotton produced in the country, domestic consumption totaled 25 million bales, while 8.5 million bales were exported Advantage for a company to grow in India Robust Demand Increased penetration of organised retail, favourable demographics, and rising income levels to drive textile demand Growth in building and construction will continue to drive demand for non-clothing textiles

Increasing Investments Over USD35 billion of investments have been made in the textile and clothing sector during the last four years, with the cotton textile segment accounting for around 75 per cent Competitive Advantage Abundant availability of raw materials such as cotton, wool, silk and jute India enjoys a comparative advantage in terms of skilled manpower and in cost of production relative to major textile producers

Policy support 100 per cent FDI is allowed in the sector SITP was approved in July 2005 to facilitate setting up of textiles parks with world class infrastructure Free trade with ASEAN countries and proposed agreement with European Union will boost exports

GROWING IMPORTANCE OF FIBRE BLENDS IN APPARELS The reasons for development of blends are Economy: or Economic reasons expensive fibres can be extended by blending them with more plentiful fibres. Eg. (Cashmere & Wool). Durability: To produce fabrics with a better combination of performance characteristics in the product. This is perhaps the most important reason for blending. In end uses where durability is very important, nylon or polyester blended with cotton or wool provide strength and resistance to abrasion while the wool or cotton look is maintained. A classic example is in durable press garments, where 100 percent cotton fabrics are not as durable as polyester/cotton. Physical Properties: To obtain better hand, or fabric appearance. A small amount of a specialty wool may be used to give a buttery or slick hand to wool fabrics, or a small amount of rayon may give luster and softness to a cotton fabric. Fabrics with different shrinkage properties are blended to produce bulky and lofty fabrics or fur-like fabrics. Color: To obtain cross dyed effects or create new color effects such as heather, when fibres with unlike dye affinity are blended together and then piece dyed. Appearance: To improve spinning, weaving finishing efficiency for uniformity of product as with self bends of natural fibres to improve uniformity.

Current Players The current market players of cotton and blended textiles are: a. b. c. d. e. f. Madura Fashion ITC Lifestyle Arvind Mills Mafatlal Industries Limited Raymond Limited Alok Industries limited

Questions/Answers 1. How would you approach this project - explain / illustrate the key steps you would take Answer. My approach would be to see the current growth trends in this sector at first, who are the major key players that drives this sector and what are the consumer preferences per se. For that I will first do the SWOT analysis of the cotton textile industry whether it is feasible to enter the market or not.

Strengths India's biggest strength lies in its big pool of cheap and talented workforce. However, apart from it there are few other important factors which contributes to its strength like

Huge Domestic Market consumption (due to its own population). Tremendous Export Potential (Indian products are in great demand among the western importers) The new age creative and risk taking entrepreneurs. Use of latest technology which produces high quality multi-fiber raw material. Supportive government policies. Weakness

The increased global competition due to WTO policies. Use of outdated manufacturing technology from the low end suppliers. Inefficient supply chain management. Additionally, this sector is still unorganized at many levels and needs a lot of government reforms for further improvisation. Opportunity The western countries are now setting up their manufacturing units in India which single handedly opens up a wide array of possibilities for all the stakeholders within the textile industry. Experts believe that the golden era of Chinese textile and apparel exports is over and the production base of global textiles is gradually shifting from China to India, Pakistan and other low cost destinations. Threats Presence of players who are already in this cotton and blended textiles section and are well

established. To mark a presence among the current players a new company has to come up with a wide range of product lines starting from inners like underwears and briefs to outerwears like jeans, trousers, shirts and suits, t-shirts etc. 2. List of activities I would do 1. Industry analysis a. Finding the Key competitors

b. Size, growth over the last 3-5 years, segmental presence, market share in each segment. c. Finding the key offerings of each of the competitors d. Finding the highly profitable product lines in the industry in which there is an opportunity to finding the market e. Growth rate over the past 3-5 years f. Key growth drivers g. Key performance parameters for the industry h. Dynamics of the industry (on what basis the competition is happening. Is it the price differentiation, costs etc.) i. Critical success factors

2. Market analysis a. Consumer buying trend analysis b. Region wise analysis of highest selling apparel product 3. Segmental Analysis a. What are the different segments? b. Share of different segments 4. Government regulations that affects the industry\ 5. Recent events : New entrants, new products, M&As, Bankruptcies, exits etc 6. Analysis of Costs and Profitability a. What are the major costs b. Margins and profitability 7. Strategic decisions taken in the past and their results. 3. Where I would look for to get the relevant data Answer. a. Data for industry analysis- CRISIL reports, b. Data for Market analysis Online/Offline Market research c. Data for Consumer behavior primary research aided with secondary research. 4. Who all would you meet, talk to and observe to understand the dynamics of the market