Online scheme for candle retailing in India

Strategic insights into the fragrance candle retail market

2/18/2012

The major aim of this document is to analyze and recommend online schemes that can be incorporated in the online retail operations of Ekam candles and leverage the loyalty program to build a strong consumer base for the candles. Group R- TAPMI, Manipal, Karnataka India

Loyalty schemes for online retailing by Primacy global healthcare

Company Brief Ekam candles are a brand of scented and luxurious candles being manufactured and distributed abroad and in India by primacy global health care. Major clients: -Wal-Mart, Pier 1, Candle Artisan, Dollar Store, Bill Blass Indian operations: - several small and corporate retail stores spread across major cities in India Current focus of the company The Company wants to start its online retail business in India to strengthen its presence in the domestic market. The company aims to achieve greater awareness of its products among consumers so that it can operate in a more product pull market as compared to the current situation of a product push market wherein the major presence of the Ekam products is at retail stores. Objectives to be achieved a) The company is looking to expand awareness amongst consumers about its product through online retailing. b) The loyalty schemes are a method to ensure continued consumer involvement with the companys product and ensure development of repurchases intent. c) The schemes would help supplement sales at the companys vast network of stores (owned and franchised, dealers, and retailers). d) Loyalty schemes administered by way of loyalty cards and loyalty identification number which can be used online as well as offline. e) Offline advertising and schemes also can be formulated to supplement the above project objectives. Constraints a) The overall project for Ekam entails an MIS project, of which the loyalty scheme is one part. Any recommendations need to be kept in perspective of the larger goal.

b) The company currently gives out a margin of 20% to retailers and 12 % to wholesalers on its product. Hence any Loyalty scheme should work within the financials of the profit margins. Actionable a) Formulate a draft strategy documents detailing our key deliverables. b) Chart out key areas and assign responsibility areas. c) Research companys current operations in retailing of the Ekam candles, draw up a process flow chart and look for areas wherein the loyalty schemes could fit in. Strategy to be adopted by the group to achieve the objectives Carry out competitor analysis, market segmentation study and behavioural analysis of consumers to find factors for online purchase. Research on existing loyalty schemes and use it to formulate unique loyalty schemes for the online website. Integrate the loyalty scheme to its target segment identified in step 1. Look into uses of ad words for marketing of the loyalty schemes. Formulate strategy to tie up loyalty schemes which could be redeemed on other gifting/online purchase websites. Loyalty program A loyalty programme is meant to attract a customer again and again to a store. It encourages a customer to spend more to buy more. Many huge retailers offer extraordinary reward programs for regular shoppers wherein they get discounts on repurchases by way of reward points which can be redeemed. Some examples 1) Pantaloons Green card holders get Instant discounts, Complimentary Parking, Complimentary Home Drop (after alterations), Relaxed Return Policy (90 days), Complimentary shipping across India, Exclusive Sale Preview 2) Hyper city Discovery club members get additional discounts as Discovery Reward Points. Exclusive offers available across all outlets, two year validity on the reward points, lifetime validity of cards etc

3) Shoppers Stop - A powerful loyalty program offering a multitude of advantages for consumers. 4) PAYBACK - is Indias largest loyalty program. It presents many advantages over traditional, stand-alone customer loyalty schemes restricted to one brand or company only. Using one single card, members earn loyalty points when they shop at a wide range of different merchants and brands - offline and online. Importantly, PAYBACK partners are mostly market leaders in consumer segments covering daily needs, ranging from food to travel and entertainment. As a result, members are able to accumulate a large number of points quickly. A coalition of strong partners united on the common PAYBACK platform also multiplies redemption opportunities.

Major components of the online loyalty scheme identified A reward point system which generates large number of points with each purchase System should be linked to many other channel partners, which serve a wide category of products, to enable accumulation of points and redemption. Reward point system which can be redeemed at Ekam website or at other channel partners Benefits should include discounts on purchases through points earned or through coupons and exclusive special offers, special occasion offers. Tie up with major reward systems which provide a common platform for earning points, such as Pay back Channel partners should ideally be market leaders into product segments which can attract consumers to buy more online candles. Example buying Ekam candles could entitle a consumer to earn reward points that can be redeemed for Pizza Hut vouchers. Home drop facility for orders above a certain limit Customize option on repeat purchase - Example a consumer can order customized candles, hand crafted and delivered to his choice of address with any special message and in a special packaging upon a repeat purchase.

Consumer Analysis Carry out consumer research to find factors leading to online purchase. Research for buying behaviour of fragrance candles in India. Identify target group for fragrance candles. Recommend appropriate loyalty scheme for target consumers identified.

(Note: The group recommends formulation of a document detailing the uses for different types of fragrance candles. This can help onlinebuyers find alternate uses of candles while deciding on their purchases.) Carry out secondary research and see what ways a loyalty scheme can increase share of wallet? Analysis through frameworks

Our project is currently in the stage of Fermentation, as we are conducting requirement analysis, primary research, and analysis of available resources which can potentially be utilized for creating a strategy.

The strategy we envision for Ekam candles loyalty scheme for online retailing is a turnaround strategy. If implemented successfully, it taps into a huge untouched market of consumers who probably would not have purchased or were unaware of Ekam candles, but are strong proponents of online shopping. If they are converted to loyal customers and consequently the online purchase opportunity gains popularity and usability, it will provide an extremely profitable avenue for the business as the other competitor attempting to revive this channel currently is Dabur Odonil. It does not require major changes to the Business Operations as a separate channel is being created for sales, but the strategy is required to be changed when it comes to online retailing. However, even in the event of the online sales not taking off, it does not significantly affect the current market value of Ekam candles as the current communication channel for retail stores remains unaffected.

The Evolution of the Ekam candles strategy is currently in the Expansion stage, as an entirely new channel for sales is being created and launched; online retailing is an avenue that is not attempted in this product category due to its implementation risks, as the product is not a lifestyle neither a consumer necessity. However, since the ability to execute and the opportunity size is not very large, the risk is a Quick Win Factors The below mentioned are the factors on which the loyalty program will depend.There are three categories to be considered here -1) Program related factors 2) Consumer Related Factors 3) Competition Related factors Program related factors 1) Participation Requirements a) Convenience of participation b) Cost of participation 2) Point Structure a) Point Issuance/ratio

b) Point thresholds 3) Rewards a) Cash Value b) Aspirational Value c) Variety of options d) Reward forms 4) Program Management a) Utilization of Customer Information b) Organizational Support Consumer Related Factors 1) Purchase Segmentation a) Usage level b) Perceived effort advantage 2) Consumer Traits a) Demographics b) Shopping Orientation c) Future Orientation d) Variety Seeking e) Price Sensitivity Competition Related Factors 1) General Competition a) Market Share/Position b) Product Substitutability within category c) Category Expandability outside category 2) Loyalty program a) Program Saturation b) Program Differentiation c) Order of Entry

Competitor analysis Aim To find out current competitors and their market offerings. To align all loyalty schemes keeping in mind current competition in the market.

www.myaromaworld.com Competitor Varieties offered www.myaromaworld.com T-light candles, Pillar candles, Glass candles, Floating candles, Taper candles, Votive candles Varieties of fresheners, body lotions etc. Illuminations, Illuminations Chic, Impulse Rs.59 - 750 Sales & Discounts, Newsletters on subscription

Brands offered Prices offered (Candles) Promotions

www.zansaar.com Competitor Varieties offered Brands offered Price offered (Candles) Promotions www.zansaar.com Candles, candle holders Huge variety of home furnishings Philips, Ekam, Illumination, Zansaar Rs.149 to 499 250/- Reward on registration, Sales

Framework 1.

Purchase of candle from store

Allotment of unique online consumer code

Consumer fills loyalty number online and is given a login

Loyalty card dispatched to consumer

Consumer's facebook account added to facebook account of company

Company monitors consumer activity and regularly updates consumers on schemes available from company

Gift vouchers ranging from pizza hut vouchers to discount codes to be directly given to the consumers

1) 2) 3) 4)

Consumer purchases a candle from a storeHe is awarded a free loyalty card number on the spot These loyalty card numbers have been bracketed based upon purchase price Example a purchase of rs 500 and above entitles you to a number which delivers better schemes as compared to a number having rs 100- Rs 500 scheme 5) The idea is to capture the total wave of consumer spending behaviour starting from the lowest price point on the wave till the highest point on which the consumer will spend money 6) Consumer can log into Ekam website and key in the card detail 7) A card bearing the name of the consumer and his details will be displayed and then dispatched to the consumer 8) The company would create a face book page in which consumers who bought ekam shall be added. 9) The face book page would be used to let consumers know details of any schemes targeted at them 10) The face book page would require customer care executives to be constantly in touch with fellow online customers and update them on any new schemes available. 11) Schemes such as a gift voucher of Rs. 500 dine in at Pizza Hut would be dispatched.

Types of schemes 1) Scheme: Pizza Hut vouchers Pizza Hut vouchers No of customers targeted Sales value realized( range 100-500) Cost of 100 vouchers Assumed margin for the company Profits Net profit( after deducting cost of vouchers) 200 vouchers costing 250 each 1000 500000 50000 50% 250000 200000

Recommendations for MIS The software should sort data of the consumers to analyze the mean purchase value of first 1000 consumers Analysed data to be sorted to generate a list of consumers having purchase value near or above the mean Using a random number generator then choosing a consumer from the data set to choose a voucher winner Once gift has been allotted by the system, the consumer name will return back to the pool of all available consumers. Face book functionality to be built in to the software to keep in touch with consumers.

Framework 2

A person who books candles through

Framework 3- Building corporate consumer base

a) b) c) d)

Introduce a corporate gift buying section on the website Bulk order buying should be shipped directly from Ekam stores Corporate discounts of up to 40% should be given on the stated purchase price To build the network of corporate clients approach hotels where corporate meetings occur e) Sales team to directly pitch for corporate clients f) Distribute samples of Ekam during such corporate events g) Ensure

Framework 4 for targeting astrologers, interior designers