Kathmandu University School of Management

Marketing Report on
Daraz

Submitted to:

Mrs. Sunanda Sharma

Submitted by:
Salim Lal Awale (17302)
Sunny Deshar (17308)
Kritika KC (17314)
Babita Pandey (17320)
Tajshree Rana (17326)
Ankita Shrestha (17332)
 Executive Summary

This report is an outlook to the marketing plan of Daraz. Through this report, we make an

effort to understand how Daraz has used marketing theories and entailed that it in its

marketing plan. After the analysis, we identify new marketing opportunities for Daraz and

offer recommendations on how it can be implemented.

Chapter I: We first analyze the background of online marketing through which we try to

derive the source of customer needs. In response to this, we identify the marketing

philosophy that Daraz has been using.

Chapter II: We analyze the internal factors of the company with regards to its strength and

weakness along with the external factors such as opportunities and strengths to check the

feasibility of the organization and identify the key areas that the company needs to work on.

Chapter III: We take in consideration the macro and micro environment that affects the

company. Through this, we find the variables that might affects the company’s performance

and can be an important consideration for the operational and strategic planning.

Chapter IV: After SWOT analysis and considering the micro and macro environment, we

identify the potential problem of the company through which we develop a research question.

The research question entails the main objective of the marketing plan.

Chapter V: We identify the major segments that Daraz can appeal to. Based upon the

feasibility of the target group and more importantly, the company’s goal, we identify a target

segment. We the position our company on the basis of the target segment we wish to focus

on. After analyzing what they have done so far, we offer recommendations regarding new

segments that it can cater to.

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Chapter VI: We evaluate the processes that Daraz has to go through in order to acquire the

product or ensure delivery of its product whilst bridging the communication between the

suppliers and the final customers.

Chapter VII: Based on our target segment and position, we design the 7 Ps of our service.

We take important considerations such as the pricing strategy, distribution network, process,

people, physical evidence, product and promotion. We also provide recommendation with

regards to how the 7Ps have been designed and how it can be improved.

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Contents
1.1 Background ......................................................................................................................5
1.2 The Marketing concept ....................................................................................................7
Chapter II: SWOT Analysis .......................................................................................................8
Chapter III: Microenvironment and macro environment .........................................................14
3.1 Microenvironment factors: ............................................................................................14
3.2 Macro environment factors ...........................................................................................15
Chapter IV: Research Problem and Objective .........................................................................20
Chapter V: Segmentation, targeting and positioning ...............................................................21
5.1 Market segmentation ....................................................................................................21
5.2 Market targeting ............................................................................................................23
5.3 Market Positioning .........................................................................................................25
Chapter VI: Business Buying Process .....................................................................................26
Chapter VII: Designing the 7Ps ...............................................................................................29
7.1 Product ...........................................................................................................................29
7.1.1 Product classifications ............................................................................................29
7.1.2 Service differentiation ............................................................................................31
7.1.3 Product systems and mixes ....................................................................................32
7.2 Promotion ......................................................................................................................37
7.2.1. Advertising .............................................................................................................38
7.2.2. Sales Promotion .....................................................................................................40
7.2.3. Events and Experiences .........................................................................................42
7.2.4. Public Relations and Publicity ................................................................................43
7.2.5. Direct Marketing ....................................................................................................43
7.2.6. Interactive Marketing ............................................................................................44
7.3 Price ...............................................................................................................................48
7.3.1 Steps in setting the price: .......................................................................................48
7.4 Place ...............................................................................................................................55
7.4.1 Place for Daraz ........................................................................................................55
7.4.2 Does the purchaser search for your item or services? ...............................................56
7.4.4 Market Logistics ......................................................................................................58
7.5 People ............................................................................................................................59
7.6 Process ...........................................................................................................................62

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7.7 Physical evidence ...........................................................................................................68

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Chapter I: Introduction
1.1 Background

With growing urbanization and fast moving lifestyle of people, shopping is no longer about

visiting the physical store and spending about half a day picking out the things you like.

Customers no longer want to go through the hassle of assessing the shops nearby to bid the

best price or bargain with the shopkeeper to get the best deal. Thus, internet brought

opportunity for the customers to gain a shopping experience which was only one click away.

Online shopping has been a breakthrough for customers, offering them their favorite

products from their favorite stores, without spending their time in commuting to the

destination. However, one of the major drawbacks of online shopping has been with regards

to the quality. There has been problem regarding information asymmetry, questioning their

trust on online sites.

Daraz is a rebranding of what was previously known as Kaymu. It is backed by Rocket

Internet Ventures and led by Ahmed Khan as its MD in Asia. Kaymu/Daraz is registered in

Nepal as an ecommerce site which brings buyer and seller together. Kaymu has targeted

online marketplaces in various countries like Nigeria, Pakistan, Morocco, Ghana,

Bangladesh, Afghanistan, and Middle East including Nepal and expanding over. Kaymu was

first launched in Nepal in May 2014. Since its launch, Kaymu/Daraz has quickly become

Nepal's fastest growing online marketplace. Daraz has offered multiple transactional modes

to support and facilitate buyer-seller via payment gateways- the most popular being Cash on

Delivery. Without any doubt, Daraz Nepal is one of the largest ecommerce platform in Nepal.

However, unlike the business model of Amazon and even eBay, Daraz accepts promotional

and transaction responsibility without maintaining any inventory itself.

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Daraz has expanded its online shopping experience in Nepal to mobile platform with the

launch of its Android and IOS mobile application. The application has been developed with

the vision of making buying and selling online faster and more convenient. The Daraz app

also features unique services to improve user experience, such as a shipping fee calculation

system to organize more personalized and cheaper delivery.

Daraz in Nepal is currently being managed by Mr. Rajiv Amatya as a managing director and

Mr. Laxman Basnet as a human resource manager.

Daraz has, for most part been able to identify the gap between the customers’ demand that

most online sites have not been to offer; by introducing branded products to the consumers.

Much of speculations in terms of online sites have been because of unverified suppliers who

are unable to ensure the quality of the product. Although online sites have been growing like

mushrooms, they haven’t been able to differentiate themselves from one another and mostly

been competing on price. Daraz has been able to differentiate itself from the other online sites

in terms of the quality of their product and service along with providing verification of the

vendors. Through his, Daraz has made an attempt to restore the customers’ faith on online

stores and fill the gap between the consumer needs. The needs of the customers can be

analyzed in the following needs:

Types of needs

Stated needs Customers want to purchase products of good quality at the cheapest

price.

Real needs Customers want products that are durable and of high quality even

though the price may be a little high.

Unstated needs Customers want fast and proper service from Daraz.

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 Delight needs If Daraz installs a new software that can track the products they

ordered and provide countdown of when their product will arrive.

Secret needs Customers may want to be perceived as a time conscious person by

their peers.

Changing lifestyle of people, urbanization, growing middle class and easy accessibility of the

internet have been mostly in favor with Daraz. Since much of their product offering is that of

high quality, their target audience are mostly middle and upper class customers who have a

fast lifestyle. They are customers who wouldn’t mind paying more to as long as their

products and services ensures quality and has a big brand tag.

1.2 The Marketing concept

Daraz has been focusing on what customers wanted transfiguring the customers’ value into

their service. They have been providing a wide range of product offering ranging in different

price and quantity, which customers can easily pick in terms of what brand they prefer. Along

with just the product offerings, it has also been adding value to their service by ensuring

delivery of their products to all customer locations within their target location. They also take

continuous feedback from its customers in the form of online ratings. It has been able to

create its presence in social sites to be more interactive with customers to find out what they

want and take recommendations on how they can improve their service.

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 Chapter II: SWOT Analysis

SWOT analysis is a study undertaken by an organization to identify its internal strengths and

weaknesses, as well as its external opportunities and threats. The SWOT analysis of Daraz is

as follows:

Strength:

1. Brand Image:

Daraz has brand value all over the world and also in Nepal it has been able to

establish itself as one of the prominent online sites in Nepal.

2. Strong Supply Chain:

Since just about anyone can sell their product through Daraz, it basically has

unlimited supply chain.

3. Low stock of product:

Daraz has the advantage of not needing to keep much stock of its product since its

business model allows transferring of product from seller to buyer directly through

online shopping. Daraz acts as the platform where buyer and seller meet.

4. One of the first movers:

Daraz is one of the first online shopping platforms in Nepal so it has been able to gain

advantage of entering into relatively fresh market.

5. Wide variety of goods:

Daraz offers wide variety of goods for shopping such as electronic products, clothing,

beauty products, jewelry, watches and many more.

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 6. Easy accessibility:

Since it is an online platform, it is easy to access Daraz. Telecommunication and

internet development has greatly helped in easy accessibility of Daraz.

7. Economies of scale:

As the business of Daraz grows it has been able to enjoy the economies of scale as its

average cost per customer service is reducing as the number of customer grows. Also

its investment in infrastructure will be low when it needs to expand its business.

8. Large resources:

Since it is backed by international company, it has huge capital.

9. Wide variety of customer:

It has wide variety of customer from teenagers to middle age people and also some

old people. Also their customers are from different professions and sectors.

10. Aggressive promotional technique:

Daraz has been able to make great use of aggressive marketing techniques to its

advantage. Digital advertisement in sites such as Facebook, Youtube and Google

AdSense publisher website has great helped Daraz to make its mark in market.

11. Customer database recommendation:

Daraz has computerized system in which it suggests customer with its

recommendation with the help of the past shopping habit providing customers with

pleasant shopping experience.

Weakness:

1. Lack of proper quality control:

Daraz has no proper control over the products that are sold in their website since any

business person can sign up to sell their products.

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 2. Late delivery and inefficient supply chain:

Customers have complained time and again about the late delivery of the goods,

which suggests supply chain is not efficient for delivery.

3. Lack of delivery personnel training:

Daraz works with multiple logistics partner but the delivery personnel are often

untrained.

4. Limited distribution channel:

The major distribution channels of Daraz include only city areas and it cannot deliver

its products to the people from rural areas.

5. Misrepresentation of products:

Since the Daraz has no proper control over the quality of products sold in their

website there is often misrepresentation and customers often receive faulty orders.

6. Lack of trust:

Because of quality issues customers do not trust Daraz as a quality service provider.

Opportunity:

1. Growing internet users:

The number of internet users is increasing day by day. This is an opportunity for

Daraz to expand its business as people prefer to shop online to save their time and

money.

2. Change in life style of people:

The life style of people has changed due to education, better job, modernization,

urbanization. These all factors have further created better opportunity for Daraz to

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 increase its customer’s base and market coverage as people don’t have enough time to

shop physically because of their busy schedule.

3. Infrastructure development:

In our country Nepal, the infrastructural facilities like: electricity, transportation,

communication etc. have reached to the various areas which have further contributed

to the increase in opportunities for Daraz to be used by the people residing over there

for online shopping.

4. Trend of online advertisement:

The increasing online advertisement in various social media such as Facebook,

Instagram etc. has helped Daraz to increase its customer’s base and market coverage.

5. Growing electronic payment:

Daraz allows electronic payment which is an opportunity for Daraz to attract more

users to use it.

6. Untapped market:

Online shopping is new concept in Nepali market which does not have a lot of major

online firms competing for their share in market. This can be an opportunity for an

international organization such as Daraz.

7. Search engine optimization:

Daraz has used search engine optimization to its great effect but still it has the

potential of expanding on search engine optimization by incorporating more key

words to its repertoire.

Threat:

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1. Threat of new entrants:

As the e-commerce business is in the rising trend, there are lots of competitor

companies emerging providing similar services as Daraz.

2. Traditional shopping habit:

Being a country where the culture of online shopping is still new and not so popular is

a major threat for Daraz.

3. Consumer perception:

The customers are have trust issues when it comes to online shopping as they still

value those product which they can see, touch, feel and check personally.

4. Threat of indirect competition:

There is also an indirect competition from the offline stores which are not actually an

authorized stores or companies but providing similar facilities like Daraz on online

platform.

5. Increased customer awareness:

The customers using e-commerce are well informed and sophisticated where the

people are more aware about the online shopping market. They know about the price

and quality and compare it with other online store hence crating more competition.

6. Security threat:

The facilities of internet securities in our country are still lacking increasing the

chances of hacking the customer’s private information as well as the potential threat

of hacking the Daraz’s website itself.

7. Government regulation:

Our country lacks proper regulations regarding the Foreign Direct Investment where

the foreign company faces various difficulties such as repatriation of profit is one of

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major problem for many FDI’s.
Strength
• Brand Image
• Strong Supply Chain
• Low Stock of Product
• One of the first movers
• Wide variety of goods
• Easy accessibility
• Economies of scale
• Large resources
• Wide variety of customer
• Aggressive promotional technique
• Customer database recommendation
SWOT Analysis
Opportunity
• Growing internet users
• Change in life style of people
• Infrastructure development
• Trend of online advertisement
• Growing electronic payment
• Untapped market
• Search engine optimization
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Weakness
• Lack of proper quality control
• Late delivery and inefficient supply
chain
• Lack of delivery personnel training
• Limited distribution channel
• Misrepresentation of products
• Lack of trust
Threat
• Threat of new entrants
• Traditional shopping habit
• Consumer perception
• Threat of indirect competition
• Increased customer awareness
• Security threat
• Government regulation
 Chapter III: Microenvironment and macro environment

The microenvironment forces of Daraz consist of the factors within the organization that

affects the performance of Daraz in the market. These factors are mostly within the control of

the organization and can be reinforced with short run and strategic planning.

3.1 Microenvironment factors:

a) Customers

The core mission of Daraz is to serve its customers and offer value in their service. Daraz

needs to keep check of what customer wants and whether they are delivering value to the

customers to keep their operation successful. The changing need of customer can be dealt

with more product offering, value addition and continuous market analysis.

b) Employees

The people within the organization must be properly trained and motivated to ensure

productivity. Employees are crucial especially on service organization like Daraz since they

come in direct interaction with the customers. If the employees are not well trained and

unhappy with their job, it results lagging in the service and could result improper delivery of

value to the customers.

c) Suppliers

Since Daraz does not produce its own product, the credibility of their service highly depends

on whether the products that are advertised in their site meet the quality demanded by the

customers. If the quality is not in par with what customers want, Daraz will lose its market

share and the integrity of the organization maybe questioned.

d) Competitors

Online sites such as Sastodeal, Threadpaints, Muncha, etc. can be a threat to Daraz. In order

maintain its share in the market; Daraz needs to continuous keep track of what its competitors

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are doing. Its competitor can come up with new product offering and schemes that directly

compromise the sales of Daraz. Thus, it needs to stay one step ahead and offer unique value

to its customers to outsmart its competition.

e) Marketing intermediaries

Marketing is not only about informing the customers, but also planning the right place and

right time to do it. Daraz has been associated with various social sites to advertise its service.

Daraz needs to be considerate about platform/ intermediary it uses to connect with its

customers and through what medium it chooses to do so as it has a direct impact the brand

perception of Daraz.

3.2 Macro environment factors

The factors that cannot be directly controlled by Daraz and requires precautionary and

speculative plan in order to be dealt with are the macro environment factors. They can be as

follows:

a) Demographic environment

 Population

With increased urbanization and migration of people from rural places to the Capital,

the population of Kathmandu is increasing daily. Since Daraz’s main operation is in

the Kathmandu city, this increases the number of prospect customers. Moreover, this

also results in the increase in middle and upper class families as people start to

migrate for more job opportunities, thus the target group that Daraz wishes to cater

widens in scope.

 Population age mix

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 The most recent statistics have shown that an average of Nepal as of now is 22 years.

This means that most of the population in Nepal is youths. This can act a favor to

Daraz as youths are the target group of Daraz.

 Ethnic and diversity

Ethnical mix and diversity helps Daraz cater to the different needs of the customer.

When introducing a product, Daraz has seen a certain receptiveness and openness to

change in case of Nepal. This could be because of the laid back nature of the Nepalese

population.

 Educational groups

Nepal has strived in educational development after denouncing itself as a kingdom.

Since Daraz has been appealing to educated people by sponsoring educational events

such as debates, educational level can have a big impact on Daraz.

b) Economic environment

 Income distribution

Kathmandu mostly comprises of middle level and low level income people. Since

middle class is increasing in the city, more customers can afford to use Daraz service.

Thus, if there is a dramatic change in the income, it could result the prospect of Daraz

to relatively shrink or widen.

 Income, savings, debt and credit

The income of the people directly affects their spending pattern. Moreover, if they

save more, they are more likely to invest or spend on capital resources. Similarly, the

interest rate can have a direct impact on the money flow.

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c) Socio-cultural environment

 Persistence of core values

However receptive to new culture may a country, it will like to keep some of its core

values intact. In case of Nepal, white isn’t much preferred when it comes to

traditional dress. Similarly, when it comes to food, beef is not typically acceptable in

Nepalese culture but it might be acceptable for customers in Pakistan.

 Existence of subcultures

Since different cultures have different perception and taste, the more diverse their

consumption pattern is. Existence of subcultures brings more opportunities for the

sellers to diversify their product line and bring about more segments for the market.

d) Natural environment

Daraz doesn’t manufacture any product, thus availability of raw materials doesn’t necessarily

concern it. However, if its suppliers can’t deliver their product to their website when the

customers demand it, it directly impacts the image of the company. Thus, unavailability of

natural resources can indirectly affect the credibility of Daraz.

But importantly, the ecological changes, structure of land form; natural calamities can

influence Daraz’s operation. In a landlocked country, Daraz may have difficulties acquiring

resources from other countries and may result in increase in transportation. Moreover, in a

country like Nepal where transportation is particularly difficult due to the ecological

composition, Daraz may not be able to transport the products and services to its customers in

time or in a worse scenario, they may have difficulty widening their operation due to the

ecological constraint.

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e) Technological environment

 Accelerating pace of change

Technology has been striding every day. With increased globalization, customers are

no longer under the rocks when it comes to new advancement. For example: online

selling was a budding concept a few years but already, having an online site is not

enough; they are also introducing mobile applications with response to customer

demand. Daraz needs to keep itself updated to the technology change in order to be

fast and efficient and maintain competency.

f) Political-Legal environment

 A sprouting business like online shopping is sure to catch the attention of the

government. The Nepal government has made an attempt to regulate the online sites

of Nepal the help of CEOs from major online shopping sites.

 Along with that, the instability in the political situation can result in a lag in service;

resulting a halt in the operations of Daraz. Strikes, blockades and other political

disturbance can result a massive impact on Daraz’s operation. Moreover, for an

international company like Daraz, policy regarding repatriation of the money to its

home country can also be a major issue to take into consideration.

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 Chapter IV: Research Problem and Objective

The concept of e-commerce in the business sector has been growing like anything in Nepal

nowadays. This is attracting many business especially online shops, being one of the main

booming businesses recently. Due to such cutthroat competition Daraz might be facing some

complication in positioning its brand image. Although, Daraz is an established brand with its

franchise in different countries, it is still not been able to completely differentiate it from the

rest of its competitors. And also because of its recent rebranding, it has created confusion

among customers.

4.1 Research Question

What marketing strategy can Daraz adopt to differentiate itself from its competitors?

4.2Research Objectives

To identify market scope of Daraz through proper STP.

To find out areas in which Daraz can differentiate itself than its competitors.

To plan a proper IMC plan feasible for Daraz to increase its brand image.

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 Chapter V: Segmentation, targeting and positioning

5.1 Market segmentation

Market segmentation is a process that entails division of customers into different groups that

have unique characteristics. It is done to identify the target markets so that the company can

design and develop various marketing programs to satisfy the target market.

Daraz also segments the overall market into various sub divisions so that it can identify the

most effective marketing strategies for different markets. It uses different variables to

segment its markets which are as follows:

1. Demographic Segmentation

It classifies its customers according to the various characteristics which include

gender, age, income and education.

 Gender: Different gender tends to have different need. Hence, Daraz divides its

market into men and women. It offers various kinds of products such as clothing,

shoes and accessories to both the genders.

 Age: Daraz has divided its market into different age group such as children,

teenager, youth and adults. It has mainly focused on youths so that most of the

products showcased in its site is to attract them.

 Income: It has divided its market into low income, middle level income and high

income groups. Daraz offers premium products at best price so that not only the

upper class but also the middle class people can purchase its products.

 Education: Daraz also uses education as it base to segment its market as it tends to

attract those people who are internet users and can access its website without any

hassle.

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  Occupation: Daraz has classified its customers as college student, employees and

professionals.

 Generation: Daraz has segmented the market into four main generation i.e.

millennial (Gen Y), Gen X, Baby Boomers and Silent Generation. Mostly

millennial shoppers spend their money in online sites. The millennial, are highly

socially conscious and have spending power. It has targeted the millennial

generation and offered its products accordingly.

2. Geographic Segmentation

Daraz has segmented its market on the basis of various cities and regions. It provides

delivery service within Kathmandu, Lalitpur and Bhaktapur districts and also across

17 cities outside Kathmandu valley which includes Pokhara, Dharan, Janakpur etc. it

has focused mainly on the populated areas.

3. Psychographic Segmentation

This strategy focuses on the customers’ lifestyle activities, attitudes, values and

opinion and examines how these affects the purchasing judgment of the customers.

Daraz has mainly targeted Tech-Savvy customers to build on their high basket value.

It sells only premium brands so that it can attract people living a moderately high

lifestyle.

4. Behavioral Segmentation

Daraz focuses mainly on occasion variable under behavioral segmentation. Buyers

can be distinguished according to occasions when they develop need, purchase a

product or use a product. During occasion such as Dashain and Tihar, Daraz is

planning for “Dashain and Tihar Sale” as people tend to buy new goods during this

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 time. Similarly, it also keeps track of people who regularly use the internet so as to

identify its potential customers.

Recommendations:

 Integrated segmentation establishes the optimal balance among individual customer

history, recent behavior, and market trends which is still rare. Daraz can segment its

market on the basis of visit frequency. It can have multiple real-time triggers in place

responding to recent online activities of a customer.

 It can also segment its market on the basis of time. It should adapt to customers’

changing schedules over time. People may browse through offers in the mornings via

their mobile phones or tablets. But they may still prefer to make the final purchase

via their laptops in the evening after consulting with their families and friends.

 It can also segment its customers on the basis of loyalty status. It has the potential to

transform anonymous browsers into loyal customers. By segmenting both

anonymous and registered users, it can capture valuable consumer impulses guiding

registration, initial purchase, and loyalty decisions.

 It can also segment its market on the basis of purchase frequency. Repeated

customers are most likely to become your “Loyal Customers”, so it is necessary to

follow up with them and make sure they are satisfied with its products and service.

5.2 Market targeting

Targeting is the process of selecting market segments that will become the focus of the

firm’s marketing programs. Targeting has enabled Daraz to channel its resources and
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activities to the most attractive market segments. Targeting will also allow Daraz to

overcome the problem of limited marketing budget by focusing on few customer segments

rather than the entire market.

There are three types of targeting strategy which entails undifferentiated strategy,

differentiated strategy and concentrated strategy. Daraz has used differentiated strategy which

means that it offers different products for different market. For example it offers toys and

kids games as well as baby diapers and napkins for children whereas it offers various

electronic gadgets and fashionable wears for teenager and youth.

Recommendations:

Daraz market segmentation should match with its overall objectives. Objectives define an

organization so its decision to segment should be in line with its objective. Similarly, it needs

to consider is the size of the segment as it is the main determinant of profitability. It should

also take into consideration the number of competitors within the segment as it has ability to

increase business cost and reduce revenues. It needs to select market segments that are least

saturated.

Growth opportunity is another important aspect to be considered. The major consideration is

the accessibility of the market. Daraz needs markets that have adequate technological

infrastructures since inadequate technological infrastructure may prove inaccessible to the

company.

 Daraz can target its products in suburban areas. By doing so it can increase its

customer base.

 It can also target the old age or senior people who do not have energy to visit physical

store to purchase products.

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5.3 Market Positioning

Positioning is all about creating a brand image in the mind of customers. Daraz has tried to

position itself as an online shopping site that offers premium and branded products at best

prices. This helps to differentiate itself from its competitors and to achieve market leadership.

Repositioning a brand or product means altering its place in the minds of the consumer.

Daraz has rebranded itself from Kaymu to Daraz trying to change the consumers’ perception

of a brand. This rebranding is done to position itself as a premium brand. However, this

rebranding has created confusion among customers in the target market. To avoid this

confusion, Daraz is involving in various activities such as “Mobile week”, case study in

educational institution, Daraz Ten i.e. offering 10% discount in every item purchased etc.

Recommendations:

Daraz should analyze the positioning strategy of its competitors and understand the market so

that it can develop a distinct brand image in the mind of customers. Daraz should identify

both tangible and intangible benefits sought by customers. It should be able to identify

attributes of its products and services that the customers consider as vital. Only after doing

so, it would be able to design its product and communication approaches so provide value to

its customers. In order to differentiate its product from its competitors, it can provide various

attractive offer that customer deems valuable.

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 Chapter VI: Business Buying Process

Daraz goes through following business buying process:

1. Problem Recognition

Daraz acts as a middleman where all of its products are directly procured from its suppliers;

companies who showcase their products on their site. However, it’s a challenging work for

Daraz to sort out its suppliers. The main aim for Kaymu to change into Daraz was to focus on

the premium market so it is a problem to select the proper suppliers who can provide quality

products for its customers.

Despite being an established brand in the market, Daraz had been facing lots of challenges in

term of the authenticity of its brand. The qualities of the products were not ensured. In order

to address this problem, Daraz started looking for the suppliers of high-end products.

In our economy there is ever changing demand of new and innovative products due to which

marketing department has to continuously upgrade the existing product.

2. General need description

In order to ensure that the quality has not been compromised, Daraz has taken an initiation to

limit its suppliers and only include products of trusted brands. Since its target customer are

young adults Daraz needs products such as mobile accessories, laptops, bag-packs, etc. With

consideration of this context, let us focus on the buying process of laptops.

3. Product specification

Before going into the details of the products, Daraz first assess the demand of the consumer

on the basis of laptop brand, price, color, size, processor, memory, etc along with these

factors Daraz also needs to be upgraded with the newest models of the laptops. For instance,

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Daraz may look for Dell laptops with specification of price ranging between Rs. 80,000 to

90,000, color – black, size – 14”, memory 8 GB and processor inlet i5.

4. Suppliers Search

After determining the product specification, Daraz looks for the suppliers who can provide

these products. While selecting the supplier, Daraz makes sure that the suppliers are certified

and they can offer quality products at reasonable price. Also they should be able to guarantee

the authenticity of the product.

5. Proposal Solicitation

Although Daraz does not follow traditional means of communication such as newspaper

advertisement for connecting to the potential suppliers, it mainly relies on its brand image

and promotion (such as online promotion, event sponsorship). By doing this, they not only

create awareness among their customers but also attracts their probable suppliers.

6. Suppliers Selection

Once they get approached by the suppliers, Daraz evaluates the proposing company in every

aspect. They collect the information about the background of the company in terms of their

reliability, quality of their product, image of the company and customer satisfaction. If any of

the criteria is not met, Daraz rejects the company as their supplier. In case the vendor meets

the criteria, Daraz and vendor come into the contract.

7. Order Routine Specification:

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As an intermediate, Daraz doesn’t stock inventory but acts an agent between the consumers

and the suppliers. As it uses JIT inventory technique, it doesn’t really have a consistent/

routine order. Thus, when an order is placed by the consumer, Daraz bridges the information

and provide the specifications to the company. For example, Daraz may according to the

consumer demand, place an order of 1 unit of Dell laptop, model XPS of black color to be

delivered to a consumer of Kumaripati, Lalitpur on 14th August.

8. Performance Review

After the delivery has been made, with regards to the quality of product and customer

feedbacks, Daraz determines the performance of the suppliers. From customer perspectives, it

evaluates the customer rating of the supplier. In addition to that it also evaluates the sales

quantity, delivery punctuality and customer service of the supplier.

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 Chapter VII: Designing the 7Ps

7.1 Product

In the past few years, the concept of online shopping is getting common. It is evident that

customers are building their trust in online shopping and most of the purchases are now made

through online stores. Major shopping events like Black Friday have reported heavy traffic

towards online shopping stores including the very famous online shopping store in Nepal

“Daraz”. Daraz is the ultimate online shopping solution for all the customers. It offers a wide

and assorted range of products including clothing, footwear, accessories, electronics, mobile

phones, home and living and much more. Daraz was previously known as Kaymu.com.np.

Kaymu online shopping announced union with Daraz and promised to provide the same high-

quality products and purchase protection to its customers. Kaymu Nepal and Daraz are now

one store and striving to grow customers and sellers base with every passing day. Daraz

provides a unique digital market platform where sellers and buyers can interact and a one

stop shop for buying and selling. This is what makes Daraz Nepal unique from other online

shopping sites in Nepal and provides the best online shopping experience to its customers. As

we know that Daraz is an online shop that does not produce any products rather it takes the

products from the authorized sellers according to customers’ orders and delivers those

products to the respective customers.

7.1.1 Product classifications

Marketers have traditionally classified products on the basis of characteristics durability,

tangibility and use (consumer or industrial).

1. Durability and tangibility

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The products of Daraz can be classified into three groups, according to durability and

tangibility:

 Nondurable goods

They are tangible goods normally consumed in one or few uses like beer and soap.

Daraj does not offer fast moving consumer goods but offer products like soap,

toothpaste etc. It offers a wide and assorted range of products including clothing,

footwear, accessories, electronics, mobile phones, home and living and much more.

 Durable goods

They are tangible goods that survive many uses like footwear, refrigerators, machine

tools and clothing. The durable goods available at Daraz are: clothing for men and

women, home appliances, mobile phones, electronics etc.

 Services

They are intangible, inseparable, variable and perishable products. The main services

provided by Daraz are delivery of products to the respective customers, training to its

authorized sellers, price return for its customers within seven days of purchase etc.

2. Consumer goods classification

The goods can also be classified on the basis of shopping habits as convenience, shopping,

specialty and unsought goods.

 Convenience goods

These goods are usually purchased frequently, immediately and with a minimum of

effort. These goods are further classified into staples, impulse goods and emergency

goods. Daraz offers convenience goods like soap, toothpaste etc.

 Shopping goods

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 These are the goods that the consumers, in the process of selection and purchase,

characteristically compare on such bases such as suitability, quality, price and style.

The shopping goods that are offered by Daraz are: clothing, footwear, mobile phones

etc. Shopping goods are further classified into homogeneous shopping goods and

heterogeneous goods.

 Specialty goods

They have unique characteristics or brand identification for which a sufficient number

of buyers are willing to make a special purchasing effort. The specialty goods

available at Daraz are stereo components, photographic equipment etc.

 Unsought goods

They are those goods that consumers do not know about or do not normally think of

buying. The unsought goods offered by Daraz are not many but offer encyclopedia.

3. Industrial goods classification

They can be classified in terms of how they enter the production process and their relative

costliness. We can distinguish three groups of industrial goods: materials and parts, capital

items and supplies and business services. Such goods are not available at Daraz.

7.1.2 Service differentiation

The main service differentiators of Daraz are:

 Ordering ease

It refers to how easy it is for the customers to place an order with the company. Daraz

has eased the ordering process allowing the customers to see their products online and

make orders.

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  Delivery

It refers to how well the products or service is delivered to the customers. It includes

speed, accuracy and care attending the delivery process. Daraz delivers the products

to their respective customer according to their orders and takes delivery charge of

Rs.50 inside the ring road and Rs.100 outside the ring road.

 Customers consulting

It refers to data, information systems and advice services that the seller offers to

buyers. Daraz provides all the information related to it and its products through its

websites and pages in social medias like facebook, instagram, twitter etc.

 Seller training

Daraz offers training to its authorized sellers on how to use their website, how to

place the products etc.

7.1.3 Product systems and mixes

A product system is a group of diverse but related items that function in a compatible

manner.

A product mix (also called a product assortment) is the set of all products and items a

particular seller offers for sale. A company’s product mix has a certain width, length, depth

and consistency.

The width of a product refers to different product lines. The depth of a product refers the

number of versions of each product. The consistency of the product refers to how closely

related the various lines are. The product line length refers to the number of items within the

lines.

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The product mix width, depth, length and product line length of Daraz are shown in the

figure below:

33
In case of mobile phones the product mix depth is shown in the figure below:

Product-Line Analysis

In offering a product line, companies normally develop a basic platform and modules that can

be added to meet the different requirements .Product-line managers need to know sales and

profits of each item in their line in order to determine which items to build, maintain, harvest

or divest. They also need to understand each product line’s market profile.

 Sales and profit:

The performance of each product line of Daraz is reflected by its sales and profits

figures.

 Market profile:

34
 It refers to the positioning of the company’s product line against their competitors in

the market. Daraz was previously known as Kaymu.com.np. Kaymu online shopping

announced union with Daraz and promised to provide the same high-quality products

and purchase protection to its customers. Kaymu Nepal and Daraz are now one store

and striving to grow customers and sellers base with every passing day. Daraz

provides a unique digital market platform where sellers and buyers can interact and a

one stop shop for buying and selling.

Line Stretching

It occurs when a company lengthens its product line beyond its current range. The company

can stretch its line down-market, up-market or both ways. The line stretching of Daraz

depends on different companies that produce different products as it is only the online retail

shop in Nepal and is not involved in producing the goods. For example Samsung galaxy J1

and Samsung galaxy J7 prime is the down market and up market stretch of Samsung mobile

phone.

Line Filling

Line filling is lengthening its product line by introducing more items within its present range.

The main reasons of line filling for Daraz are: Reaching for incremental profits, trying to

satisfy customers who complaint of sales loss due to missing items, trying to utilize the

excess capacity, trying to be a leading full line online shop, trying to plug holes to keep

competitors out. Line filling is harmful l if it results in self cannibalization and customer

confusion.

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Product-Mix Pricing

Price-setting logic must be modified when the product is part of a product mix. In this case,

the firm searches for a set of prices that maximizes profits on the total mix. Pricing is difficult

because the various products have demand and cost interrelationships and are subject to

different degrees of competition-n. There are six situations involving product-mix pricing as

mentioned below:

a. Product-line pricing

It refers to setting different price range for different product lines. This will make the

customers perceive that there are different qualities products of same product lines. Daraz

offers bags for women of different price range. It also offers other products such as footwear,

electronics, mobile phones etc. of different price range.

b. Optional feature pricing

It refers to pricing an optional product, feature or services that is provided along with the

main product. Here the company has to decide which all features is to be provided free with

the main product and which ones are to be charged extra. This pricing is also set by Daraz

depending on the seller of products.

c. Captive product pricing

Captive products also known as Ancillary Products, are those products that the main products

cannot do without. So the manufacturers price the main product slightly lower and charge

higher for the captive product. But if the captive product is charged too high by the main

manufacturer that can cause the customers to start looking for cheaper options of competitors.

Daraz also offers products like razor, digital phones, cameras in which they price these

36
products low and set high markup on ancillary products depending on the sellers of these

products without which the main products cannot function.

d. Product bundling pricing

It refers to selling two or more products together and pricing them accordingly. Pure bundling

is when the manufacturers sell only in bundles. Mixed bundling is when the seller offers

goods both individually as well as in bundles. Daraz offers and sets the price of product

bundle depending on the type of product bundle provided by sellers.

Warranty

Although, Daraz directly does not provide any warranties for its displayed products, it

ensures that the suppliers that they are getting associated with, especially in case of high end

products’ suppliers, provide the customers with the warranties. Daraz also provides its

customers with 7 day free returns and exchange in case they don’t like the product.

7.2 Promotion

Communication is a process through which an organization attempts to inform, persuade, and

remind consumers, directly or indirectly, about the products and brands they sell. It voices the

company and its brand and helps to build relationships with its customers. A proper

communication with the customer affects a lot in the brand image as well as the sales of the

organization.

Daraz is currently adapting six marketing communication mix as its mode of communication.

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7.2.1. Advertising

Advertising is used by the company in order to communicate with the geographically

dispersed buyers. There are various forms of advertisements out of which some are cheap and

some are quite expensive. It is basically done to create brand awareness or to educate people

about the brand and in case of Daraz its both.

The current advertising objective of Daraz is informative advertising where it want its

customers to know its recent transformation from Kaymu to Daraz. Unlike Kaymu, it has

shifted its target market to be of elite customers and wants to establish itself as the company

providing “100% genuine products at best rates”. However, the primary objective is to

increase its sales.

The company has developed the advertising programs by identifying the target market and

buyer motives and came up with 5 major decisions, also known as “the 5M’s” which are

shown in the figure below.

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 Message
High-end
Quality
products

Mission
Money
To create brand Measurement
awareness Commission Increasing
(Transfer of Media Sales
Kaymu to Television
Daraz) Newspaper
Magazines
Social Media

Figure: 5M’s of Advertising

Briefly describing the 5Ms of Daraz:

 Mission

The ultimate mission of Daraz is to increase its sales. However, the recent mission of

Daraz is to aware its customers about the rebranding from Kaymu to Daraz.

 Money

Daraz is in the growth phase of the Product Life Cycle. Therefore, it already has a

huge customer base. In order to maintain its growth and differentiate itself from its

competitors, it has been going through aggressive promotion strategies. They are

investing a huge amount on advertising which they incur via commissions.

 Message

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 The message that Daraz wants to communicate to its customer is that they provide

“high-end quality products at reasonable price”.

 Media

They have selected different medias in order to flow there message such as

Television, Newspaper, Magazine, Social Media and many more.

 Measurement

The impact of all the above stated 4Ms is measured through the sales. The increase in

the sales will project that the above taken decisions are effectively done. If not, then

the decisions need to be revised.

In order to make its customers clear about the rebranding, Daraz has been spending a good

amount in its advertising. Daraz has been giving Television Commercials as well as print

advertisements such as newspaper ads, pamphlets and so on as its medium of advertisement.

It is also active in various social media such as Facebook, Instagram, Google Display

Network, etc. and using it as its advertisement platform in cheaper rates.

7.2.2. Sales Promotion

Sales promotion is one of the major promotion tools used by Daraz to attract its customers.

While advertisement offers a reason to buy, sales promotion offers an incentive to buy. Under

sales promotion, Daraz specifically focuses on consumer promotion more. Some of the

consumer promotion tools it uses are:

 Prices off

Daraz offers good dealings in products, especially the branded ones, at a very low

price than those at regular stores or discount stores.

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 For instance, If you go to buy a TV at the shop and the shopkeeper quotes Rs 30,000/-

but after bargaining, s/he gives you for NRs 25000/-.So, for that TV, Daraz will

display Rs 25000/-. It keeps the best prices so our customers don’t have to bargain.

Sometimes, we issue special vouchers during campaign time so our customers can get

value for money.

 Discount coupons

Daraz also has different discount coupons for its customers by the use of which the

discount holders will get the selected products at redeemed price. Also, it keeps on

offering frequent discounts in various products to increase its customer base and

retain them.

For instance, Daraz is providing NRs.250 discount for the first-time shoppers to

attract new customers. Daraz also provides its customers with a discount cards and

codes by the use of which its customers can get upto 50% discounts in the selected

products. Recently, Daraz has come up with Mobile Week where it had upto 75% off

on the mobile phones. Daraz’s Black Friday Sales is another major consumer

promotion. Similarly, Daraz has been coming up with various festival discounts in the

occasion of Dasain and Tihar.

 Cash refund offers

Daraz also provides its customers with 7 day free returns and exchange in case they

don’t like the product.

Warranties

41
Although, Daraz directly does not provide any warranties for its displayed products, it

ensures that the suppliers that they are getting associated with, especially in case of high end

products’ suppliers, provide the customers with the warranties.

The company is pouring quite a huge amount of budget in sales promotion as make its

customer habituate of using its brand for quality shopping experience. Daraz incurs a cost of

$7 to $8 per customer acquisition. Although, it is planning to cover the cost in long run once

it succeed to gain its customers’ trust and their loyalty towards the brand.

7.2.3. Events and Experiences

Daily encounter with brands also affects a lot in consumers’ brand attitude and beliefs.

Becoming part of a relevant moment in customers’ lives through events and experience can

broaden and deepen a brand’s relationship with the target market. Daraz also follows the

same belief and is engaged in lots of events sponsorships. Recently, it has sponsored an event

named “Beer Day” at Evoke restaurant where they provided the audience with the free beers

once they install the Daraz app in their mobile phones. Daraz also streams Live shows in

Facebook where it feature different Nepalese celebrities such as Samriddhi Rai and also

distributes prizes to the most interactive and entertaining audience on the basis of their

comments.

Through the events and sponsorship Daraz wants to fulfill its objective to:

 Enhance corporate image.

 Identify with the particular target market and their lifestyles.

 Increase the salience of the brand name.

 Entertain its key clients.

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7.2.4. Public Relations and Publicity

Daraz has a separate department for handling the Public Relations (PR) of the brand. The PR

manager looks after the following aspects of the brand:

 It manages the press relation by presenting news and information about the brand in

the most positive and optimistic sense.

 It also focuses on Corporate Communication where Daraz organizes various college

level programs. Recently, it organized a case competition related to ‘Daraz’s inner

management condition’ in co-ordination with ACE Institute of Management. It also

provides seminars and guest lectures in colleges and universities to make the students,

who are basically its target market, aware about the brand.

It also provides counseling where it advises the management about public issues, company’s

position and its image during good and bad times.

7.2.5. Direct Marketing

Daraz also uses Direct Marketing as its IMC tools in order to communicate to its customers.

It aims to build a long-term relationship with its customers therefore, uses customer direct

(CD) channels to reach and deliver its services to its customers without the use of any

middlemen. Direct marketers can use various channels to reach its customers and in case of

Daraz, it uses the followings:

 Direct Mail

Daraz constantly sends emails to its associated customer in case of any offers and

discounts in their offered products. For instant, in every Black Friday Sale it sends a

direct mail to the customer as a reminder.

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  Catalog Marketing

Daraz has its own website where it implements the catalog marketing technique. The

website’s catalog consists of groups of many items together hoping to sell at least one

item to the recipient.

7.2.6. Interactive Marketing

The newest and fastest growing channels for communication and selling to customers directly

are via electronic and Daraz is also not in any less position in this matter. Some of the main

categories of Interactive Marketing that Daraz uses are:

 Websites

Daraz has designed its website in the consideration of every minute details. It website

embodies their purpose, history, products and visions and has managed to make it

attractive on first viewing and interesting enough to make the repeat visits. The

individual pages are clean and texts are readable with a very good use of colors. They

also have a chat section where the customers can post their queries and the company

will answer it within 24 hours.

The website is also easy to use as for the following reasons:

- The site downloads quickly.

- The first page is easy to understand.

- It is easy to navigate to other pages that open quickly.

 Mobile apps

Daraz also has its own mobile app feasible for both android as well as IOS users and

contains the same features as the website. The mobile app also follows the same

concept of catalog marketing.

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  Display Ads for Suppliers

Daraz has also been using the concept of display ads where it places the logos of their

branded suppliers’ company in their websites in order to obtain the confidence of the

customers that their products are 100% genuine.

 Search Ads

Daraz’s interactive marketing also consists of the Search Engine Optimization and

Search Engine Marketing techniques as its promotion tool. It places its online

advertisements on the web pages that show results from search engine queries. This

increases the promotion of the Daraz’s website by increasing its visibility in search

engine result pages primarily through paid advertising.

Promotion Campaigns of Daraz:

Combining of all the communication models, Daraz has developed its own promotion

campaigns. The promotional campaigns are categorized into 3 tiers.

 Tier 1

Tier 1 consists of the promotions that encompass all of the products offered by it. The

big offers such as Weekly Sales, Dashain Sale (COMING SOON) where they provide

heavy discounts and sales in every product.

 Tier 2

In tier 2, they become more precise towards the category sales. For instance, Daraz

has provided flat 20% discount in its hygiene products.

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 Fig: Tier 2 Promotion Campaign

 Tier 3

At last in tier 3, Daraz works on promoting a single product specifically. For instance,

Daraz is currently promoting OnePlus 5 where the ad of the phone pops out which

contains of all the information regarding the features and special discounts whenever

you visit Daraz website.

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 Fig: Tier 3 Promotion Campaign

Recommendations:

Daraz has excelled in almost every part of the communication mix. However, there still are

certain areas for it to improve on.

 Daraz has not implemented the Personal Selling in its IMC tools. So, it can work

on this aspect where it can address its regular customers and promote their product

personally as per their interest. This can be taken in action with the use of Direct

Mail to reach out maximum customers in low cost.

 Daraz is only focusing on increasing its customer base however, it is neglecting

the customer retention part. In order to encourage frequent buying process, Daraz

can come up with the membership cards or special discount coupons for its

regular customers.

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7.3 Price

Pricing plays vital role in the success of any business organization. Pricing is often very

complicated process and a lot of care should be taken care while pricing one’s product. Both

pricing too high or too low could lead to down fall of the company. Often it is prudent to do

take the decision regarding pricing with the long term goal and vision. Here in this chapter

we are discussing the strategies Daraz have implemented and is implementing in order to

succeed in ever growing ecommerce in Nepal.

7.3.1 Steps in setting the price:

1. Selecting the Pricing Objective

Recently with the merger of kaymu and Daraz across Asian countries under same brand,

Daraz is still trying to find its ground in Nepali market. Currently Daraz is trying to penetrate

into Nepali online market and it is trying to do so by competitive pricing. So products on

offer by Daraz are at bargain price and relatively low compared to the offline Nepali market.

This is a strategy implemented by Daraz in order gain long term profit by increasing brand

awareness, popularity and goodwill of the company. Currently Daraz is ready to face the loss

for few years until it starts making profit.

2. Determining Demand

Daraz determines its demand by conducted various online and offline surveys. Daraz

conducts various surveys both online and offline to determine the people’s liking towards

online shopping and online shopping experience. Along with that Daraz uses various

statistical analysis to determine the demand. Daraz uses various statistical tools such as

correlation and regression analysis gather information about the trend of the ecommerce in

48
Nepal. Kaymu did the research on state of ecommerce in Nepal in 2015 and determined the

growth rate of ecommerce in Nepal.

3. Estimating cost

Major cost incurred by Daraz are site promotion cost and development cost. Other costs

which are incurred by Daraz includes salary, overhead cost and office rent. Most of the above

mentioned cost are fixed cost and only variable cost incurred by Daraz is of logistics cost.

Logistic cost is of Rs.50 per transaction inside the ring road and Rs.100 outside the ring road.

Even though Daraz is incurring a lot of money but pricing of Daraz’s product is still low

compared to their cost. Daraz is willing to work on low return of product sales for the long

term growth.

4. Analyzing competitor’s costs, prices and offers

It goes without saying that the online market is really price sensitive and the perceived

pricing of any online retailer can play huge role in the success or failure of the company. So

analysis of the pricing of competitor such as sasto deal, muncha, hamro bazaar etc is really

important for Kaymu/Daraz and Kaymu has been able to maintain its competitiveness in

pricing by providing products at affordable and reasonable prices. Currently Kaymu/Daraz is

market leader in online retailer in Nepal and pricing strategy has got a lot to do with that.

5. Selecting a pricing model

Daraz is value delivering company where you get quality products at affordable prices. Daraz

offer wide range of branded products from jewelry, clothing, electronics etc. at reasonable

and affordable pricing. Ultimately Daraz is aiming to be value based online retailer rather

49
than the competing only in price. But at this early stage, Daraz is providing product at

relatively low prices to penetrate further into the market in the long run Daraz’s strategy is to

provide quality goods at reasonable prices. Daraz’s pricing model is based on the value

delivering model where customer will get the value of the money they spend through Daraz.

6. Selecting the final pricing

Daraz tries to price its product at reasonable and affordable prices. It is trying to position

itself as a formidable force in Nepali e-commerce as a value delivering company where you

can get quality products at affordable prices. Margin of profit it gains from one transaction is

fairly low and it tries to gain by increasing the number of transaction through Daraz. Final

pricing of the Daraz is done to gain long term profit and long term customer relationship.

Ultimately Daraz’s pricing depends on the brand of product, company policy, cost,

competitors pricing etc.

7.3.2 Pricing Strategy of Daraz

1. Price discounts and allowance:

Like most of the other online retailer around the world, price discounts and allowance

is the strategy applied by the companies to increase sales volume, increase customer

base and to enhance customer satisfaction. Daraz offer price discounts on variety of

its products. Currently, Daraz is offering discounts ranging from 4% to 75% discount

on variety of products such as in electronics, clothing, bags, shoes etc.

2. Promotional pricing:

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Daraz is practicing a lot of variant of promotional pricing to promote the benign brand

in the market.

For the customer who is ordering for the first time through Daraz, Daraz is currently

providing customer with the discount of Rs.250 for the first product. Through this,

Daraz aims to increase its customer base.

 Special event pricing:

Each year kaymu/Daraz organizes various special online events such as black

friday sales, mobile week, dashain campaign etc. Kaymu uses these special

events as a promotion tool and use various pricing strategy such as discount

offer, bargain pricing, prizes etc to create the interest among the customer.

Each year kaymu/Daraz organizes black friday sales offering bargain and

discount offers. Latest balckfriday sales of 2016 was held from 25thof

November (Mangsir 10) to 28thof November (Mangsir 13). In the online event

sales event, Kaymu also provided with free gifts worth 500 each to its first 200

customers. Along with that Kaymu offered the chance of wining you will be

getting a chance to win smartphones like OnePlus 3, ZTE Axon Elite, and

ZTE Axon Mini, if you do deals higher than NRs. 5000. With all these

discounts and giveaways, Kaymu has revolutionized the online shopping

experience in market creating the thrill and enthusiasm among the shoppers.

Some of the offers provided by Kaymu in 2016 Black Friday are included in

the table below:

Micromax Canvas 5 E481 16GB variant Rs 20,400Rs 14,350

Micromax Canvas 6 E485 32GB variant Rs 23,650Rs 19,000

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 Apple iPhone SE 16GB variant Rs 58,000Rs 54,560

Lenovo Ideapad 300 i7 6th Gen 8GB 2TB 17.3″ Rs 131,000Rs 104,650

Braven 770 Bluetooth Speaker Rs 12,000Rs 9,500

Mobile week is another of the Daraz’s big special events it organizes. In the

recent mobile week which took place from 2017 3rd July to 7th July,

Customers got to exercise up to 50% discount on the products.OnePlus, Xiaomi,

Apple, Huawei, Samsung, Nokia and Micromax were some of the brands that was

on offer. Along with the discounts Daraz gave away free gifts and vouchers to the

shoppers on the Mobile Week.

3. Warranties and service contracts:

Warranties and services of the products by Kaymu depends on the product and

suppliers of the product. Most of the product on offer by Kaymu comes with the

warranty and service contracts. Apart from the warranty and service contract, Kaymu

has 7-day payback period. If customer doesn’t like the product, buyer can return the

product within 7 days with full refund of their money.

4. Psychological discounting:

Like most of the online retailers, Kaymu/Daraz practices psychological discount to

attract the customers. Pyscholigical discounting such as “Pay only Rs. 1500 instead of

2500” is consistently used by Daraz promoting brand and increasing sales. Also

crossing out the principal price and offering product at discounted price which is

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 modified form of earlier discount model is also being used by Daraz. We can notice

this in earlier example of black Friday sales.

5. Psychological pricing:

Another strategy practiced by Kaymu is of psychological pricing. Psychological

pricing such as price ending with 9 are consistently practiced by Daraz.

Pricing strategy recommendation to Daraz:

 As Daraz is targeted more towards the high class market compared to Kaymu, Daraz

should try to use the strategy of skimming in some of the high profile brand it has to

offer. Daraz might need to gain exclusive rights to effectively practice skimming.

Anyway it could be one of the strategy to reach out to affluent class in Nepal who are

brand sensitive and take pride in luxurious and expensive products.

 Another strategy that Daraz can use is that of bundling pricing where two or more of

the complementary products are sold at one price. Bundling can be effective way to

increases sales of less preferred products and it can also increase the value perception

in the eyes of your customers, since you’re essentially giving them something for free.

Since Daraz has a huge range of product mix, it makes sense that Daraz sells product

with complementary products. Daraz is already practicing bundling prices in

commonly bundled products such as mobile phone, charger, ear phone etc. But it can

increase its bundling products by offering bundle in less bundled complementary

products such as laptop and speakers, jeans and shoes, selfie stick and mobile etc. to

attract more customers.

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54
7.4 Place

Place refers to distribution or the methods and location to use for the products and services to

be easily accessible to the target customers. The type of product and service dictates how it

should be distributed. If you own a retail shop, for example, the distribution chain ends with

you and you supply to your customers directly. If you own a factory, your options will be to

either sell your products directly or sell them to retailers or vendors as your distribution

strategy.

7.4.1 Place for Daraz

Daraz does not own any of the products it sells. It only facilitates the flow of information

about the goods and services that are sold by other offline stores. So, Daraz is itself a

marketing channel and there are no further channels. Because Daraz does not have to store

the inventory of the products the pricing is also relatively cheaper than in comparison to that

of market.

In order to ensure market coverage Daraz uses intensive distribution strategy. That is Daraz

sells its product from its website to as many locations as possible. It has contract with few

logistics company including aramex to deliver products to the customer at their door step.

Company has to pay close attention to the cost of transportation and distribution strategy to

be used. In the context of Daraz Nepal it has to pay Rs. 50 and Rs. 100 for collecting product

from the vendor then distributing it to the customer for the inside and outside ringroad of

Kathmandu valley respectively.

The places to deliver the product depend on the demand and feasibility of the customer. For

example Daraz cannot sell to places where there is not road access or if the transportation

cost is too high. Currently the market of Daraz is 75% inside Kathmandu and 25% outside of

Kathmandu valley. The different places other than the Kathmandu, Lalitpur and Bhaktapur

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includes Nepalgunj, Pokhara, Janakpur, Biratnagar, Birgunj, Butwal, Dharan, Itahari,

Narayanghat, Hetauda, Bharatpur, Kakarbhitta, Damak, Chandragadi, Bhadrapur,

Bhairahawa, and Birtamod are some of the cities to which Daraz is able to deliver its

product/service.

Its main head office is situated in Kathmandu, Naxal. Its location is placed in such a way that

they can have access to the major suppliers and reach its customer easily.

In order for Daraz to increase its delivery places following criteria has to be fulfilled so that

the cost can be covered and profit can be realized.

7.4.2 Does the purchaser search for your item or services?

There should be enough demand for the product or services you offer to the market. If the

cost of delivery is higher than the demand of the service then the supply chain may not be

extended. For example Pokhara has a favorable demand for the services provided by Daraz so

the service line is extended to that area.

6. Get the right distribution channel:

Daraz relies on the logistics company like aramex and if the delivery company is

unable to deliver to some parts of the country then Daraz cannot continue to sell in

those areas although there is demand.

7. Distribution channel of the rival companies:

Daraz is a service company and it does not need to buy the products and the

transportation bill is also paid by the customer themselves. So, regardless of the

presence of the rival company Daraz can sell products through its website.

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7.4.3 Channel Levels

The producer and the final customer are part of every channel. The number of intermediary

levels determines the pricing of the product, i.e. more intermediary means higher pricing. The

main objective of ecommerce is to minimize the intermediary and save on cost of

intermediaries. Following figure shows the difference between the traditional marketing

channel and ecommerce marketing channel.

Ecommerce

Fig: Marketing Channels

The main objective of the ecommerce is to reduce the number of intermediaries between the

manufacturer and the final consumer. And in some cases ecommerce businesses like Daraz

even bypass wholesalers which help to reduce cost.

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7.4.4 Market Logistics

It is the process of transfer of goods from one producer to the end consumer. It can be further

explained with the concept of supply chain management. Supply chain management starts

before physical distribution and includes strategically procuring the right inputs, converting

them efficiently into finished products, and dispatching them to the final destinations.

Place recommendation to Daraz:

i. Adding more logistics company to deliver products outside the capital.

ii. Developing customer database so that once the product is delivered to the customer it

won't be difficult to reach the same customer again.

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7.5 People

Daraz is a German based company registered in Nepal as an ecommerce website

Daraz.com.np. They have their operations in about 35 countries in east Europe, Asia, and

Africa. Its owner company is Rocket Internet and CBC which is owned by British

government. Mr. Rajiv Amatya is the managing director in Nepal who himself is experienced

in strategy international management and Mr. Laxman Basnet heads the operation of human

resources of Nepal. Both of them having working experience in Germany have applied their

knowledge in Nepal to make ecommerce a success in Nepal. They have their IT operation in

Pakistan and Portugal.

In marketing mix, people are also important. In fact, without them, products will not exist.

Without them, no one would be responsible for selling and getting those products out there.

People are the backbone of the company. So, in order to have right ones on hand various

activities have to be performed by the company as follows:

i. Training:

According to Marketing Mix People expert Jim Collins, one could think of a business

as a vehicle that’s stuck in a road and couldn’t move forward. Now, in order to move

forward, one has to start letting the right people stay in the vehicle, and let the wrong

people—the excess baggage—out. There is a major challenge for ecommerce in

Nepal in terms of training because the logistics system is not much proper and the

mapping system may not be accurate. At the same time the sellers are also not aware

of ecommerce and they have to be trained before doing business with them. In short,

if you have a company you need to make sure that proper trainings are done. From

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 the very first day that employees or seller start, you need to help them know what

they need to learn, and let them be regularized when they have already proven

themselves.

ii. Proper Customer Service:

A great company is the one that has the best customer service available. Daraz is a

kind of company where proper customer service is must because unlike traditional

selling ecommerce selling lacks the human interaction. So, companies have to replace

the human interaction with good customer service. It includes speaking and dealing

with customers. Customer services have to keep in mind that they need to try to

please their customer and make sure that they’re getting their money’s worth. In case

they get to have problems with your products, they have to feel like customers matter

to the organization and customer service is willing to attend their needs.

As already stated employees disposition and attitudes are important. They have to be

courteous, and they have to be helpful; there’s no need to brag or be arrogant. Good

training also helps to check this quality in an employee. A good customer service will

make customers talk about your company in a right manner which helps to get more

customers in the future.

Daraz also employs people for other reasons as brand promotion and its Facebook shows.

Khushboo Pradhan, NeranShahi and PramilaRai are some of the people who help promote

the brand in social media sites. Well-known person working for a company helps to promote

the brand. For example a well-known doctor gets more patient for his/her service than the one

who is not well known although having the same qualities. Daraz itself is a well-known brand

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in around 35 countries so people have more reasons to believe in the brand than other local

brands.

Daraz uses delivery Company like aramex to deliver its product. So, they have to ensure that

employees of aramex are well trained or not. Daraz trains its seller to go online and sell their

product in a large scale. These are some of the activities Daraz has to ensure for proper

employee and partners development.

Recommendation:

i. Employing more people on the delivery of the product to reduce the lead time in

delivery of the product.

ii. Employing authorized sellers to add items into the site to reduce fraud and ensure

quality of the product.

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7.6 Process

In a service industry process of delivery of service is really important. After all, no business

has survived without a proper plan in place to back it and no advertising campaign has been

successful without proper processes of execution. Customers must be educated about the

process of delivery of services to increase the confidence of the buyer. Processes includes the

steps from the knowing of the product to the delivery and return policy of the product. Daraz

itself is internet marketing process where seller sells their product to the buyers through the

use of internet.

Following figure shows the detail process of a complete transaction on Daraz platform:

Customer visits the site

www.Daraz.com.np

Search for the product

Select the product

Check the product details

Select address and register

Confirm Order

The website of Daraz is developed in Portugal, Daraz Nepal does not have its own IT

personnel. The ecommerce business is totally based on the data, where Daraz employees have

to keep record, add, update and reduce the number of items in its website. Although its main

objective is to sell the product Daraz does not have product of its own. Daraz only mediates

the sale of the product. Customers need to understand about the process of Daraz if they have

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to make purchase on their website. So, Daraz needs to have simple process which can be

understood by any person. Following are some of steps for making purchase on the Daraz

website:

1. Visit the site:

The site is developed by people in Portugal and most of the repair and maintenance queries

are handled by them. Daraz has a user friendly layout with option of messaging the

employees of Daraz. To make a purchase on Daraz one has to login to their site

www.Daraz.com.np or they can also use their official app in play store and ios. Secondly

customers have to register to their site with either email or Facebook. This makes sure that

the buyer is a potential customer and willing to give their address where delivery is to be

made and phone number to contact the customer for delivery.

2. Search for the required product:

After visiting the site there are thousands of items to choose from and customers have to

search for the required product by browsing over the categories or searching it manually.

Following is an example of product option available.

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3. Selecting the best product required:

After finding the required product selection of the product is to be done by clicking on the

product. There are many features and characteristics of the product. Before ordering the

product buyer has to make sure of the availability of the stock of the product and in case of

clothing wear the size and the type of material used in production of the goods.

4. Check the product details:

After adding different products into the cart customer has to check the product detail of each

item which is added in the wish list. This section may contain many items as they are added

into the wish list.

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5. Select address and register:

After selecting all the desired items one has to either register to the site for customer

identification or if incase already logged in select the address to be delivered. Address

selection option is given so that product can be delivered in any places customer want it to

be.

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6. Confirm Order:

This is the last step for the purchase process and after this step customer cannot edit the

product. This step gives final order to the system and purchase processing is started from

Daraz side. This section also provides the total bill of the purchase including delivery cost.

Besides this purchase process Daraz has to perform other activities as well. Daraz follows

inventory less model. It focuses more on data to know the availability of the products. So,

logistics partner is given responsibility of picking the product and then delivering the product

to the customer. Only after receiving the payment from the customer Daraz pays it to the

seller of the product. Daraz provides seven day free return policy of the product to ensure its

quality. The payment method currently used is only the cash on delivery system because most

people prefer to pay it through cash and the extra cost of investing on online payment is not

much beneficial to the company. But, in case of huge purchase then customer have to make

advance payment to reduce the chances of risk of failure of transaction.

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Recommendation for process modification:

i. The time required to place an order and receive the order is quite large. Three days of

processing time is not preferred by the customer so if this time can be reduced then

more customers will be attracted to online buying.

ii. Use of tracking system can be done because it normally takes between two to seven

days to receive the order. So, if customers can track the where their order have

reached customer can trust on the delivery of the product.

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7.7 Physical evidence

In Service Marketing, physical evidence is one of the most important element of marketing

mix. It is only element which the customers can actually see or experience that directly

contributes towards the perceived quality of the brand. Daraz has designed the physical

attributes of the company through two basic elements: the virtual element and the distribution

element.

 Virtual element: The major physical evidence in terms of Daraz is its website where

the customer can see what types and qualities of products it provides to its customers.

It has used orange color as its theme color especially when designing its website as

orange is generally associated with fun and adventure. Through this association, they

appeal to its target segment, i.e youth. Moreover, when showcasing its product

offerings, it offers a clear image of the product along with a close-up view, side view

along with a detail description of the product attributes and features. Similarly, it

showcases its products in terms of the different product lines that it falls into.

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 Corporate branding: On delivering its product, Daraz uses trained employees who

wear the t-shirt with the company’s logo in it. Moreover, even the delivery bag

carried by the delivery boy has the company’s logo imprinted on it. Similarly, the

product is wrapped on a bag which has details regarding the customer’s name, address

and product type stapled to it.

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