Executive summary

The following is a preliminary report containing the findings of an analysis of a specific target market to be followed by a marketing plan regarding the expansion of Laksala handloom products to the international market, the initial step of the expansion being to introduce the product to the Australian/Melbourne market. The preliminary report presents findings which aids in constructing and understanding the best marketing plan and strategic congruence points which need to be considered when implementing this action plan.

The market in Melbourne, Australia, is one of the most potentially excellent points where opportunity lies in creating a firm international-based company of Laksala. As pointed out in the latter part of the report, the legal framework of Australia provides an ideal scenario for international businesses to enter in their local market, especially in the apparel industry. Preliminary research also indicated that the country’s economy faced the global financial crisis relatively better in comparison to other western countries of the same economic caliber.

The Synergy Consulting Group has devised the preliminary report, which is to be followed by the marketing plan, regarding the expansion of Laksala (handloom products) to the Australian/Melbourne market within the financial year of 2012/13.

The introduction of the preliminary report discusses the socio-cultural and economic context in Australia, followed by a discussion of the product as an innovation and barriers to product acceptance. Following this, an analysis has been conducted to understand the target market segment in the partitions of advertising and promotion, pricing strategy (1^st financial year), competitive rivalry, market size (and a model for forecasting sales), and finally, government participation and related intermediaries.

This all-inclusive two-fold report communicates an immense reality about the vast opportunity that lie in Melbourne/Australia for our client’s product. Through understanding the preliminary market analysis and the marketing plan to be followed, Laksala would be able to expand into horizons unimaginable, knowing the returns to be super normal and the entire plan to be feasible, as has been proved throughout the entirety of the report.

Table of Contents

1. Introduction

A. Socio-cultural analysis

1. Social Life and Cultural Dimension

2. Religion

3. Language

4. Relationships and Communication

5. Business Meeting Etiquette

6. Negotiating and Decision Making

7. Dress Code

B. Economic analysis

1. Gross Domestic Product (GDP)

2. Inflation Rate

Recent Inflation Rates for Australia

3. Taxation

2. The Product

A. Evaluate the product as an innovation as it is perceived by the intended market

1. Relative advantage

B. Major problems and resistances to product acceptance based on the preceding evaluation

3. The Market

A. Describe the market (s) in which the product is to be sold

1. Geographic region (s)

2. Forms of transportation and communication available in that region

3. Consumer buying habits

4. Distribution of the product

5. Advertising and promotion

6. Pricing strategy

B. Compare and contrast your product and the competition’s products

1. Competitor’s products

2. Competitor’s prices

3. Competitor’s promotion and advertising methods

4. Competitor’s distribution channels

C. Market size

1. Estimated industry sales for the planning year

2. Estimated sales for your company for the planning year

D. Government participation in the market place

1. Agencies that can help you

2. Regulations you must follow

4. Reference list

1. Introduction

The Handloom fabric Industry in Sri Lanka has a century’s aged history. This hand-loom weaving patterns has been brought from generation to generation, and thus plays an important role in forming the Sri Lankan culture and traditions. The Sri Lankan weavers succeeded in creating a different uniqueness of their own by changing the traditional woven patterns and color ideas into the gorgeous, attractive fabric designs (Expo industrial products, n.d.).

Laksala is to pleasure consumers by giving those excellence quality, novel, modern products island-wide at reasonable prices whilst ensuring acceptable and happy returns to the company’s stakeholders. Laksala manufacturers are talented in creating and distributing attractive hand-loom textile products to the global market with a variety of designs and colors to tailor to the diverse yet specific demands of the global market. Sri Lanka’s hand-loom division is one of the low cost but high earning trades, and statistically, is one which brings in a great partition of revenue to the country’s economy. The hand-loom fabric export business is rising as an industry with brilliant projection for Sri Lanka, especially since the end of the 30 year old war in the year 2009 (Invest Sri Lanka, n.d.).

The purpose of preparing this report is to recognize and analyze the main factors which influence the trade of hand-looms when expanding it in to the international market, namely Melbourne, Australia.

A. Socio-cultural analysis

1. Social Life and Cultural Dimension

Australia’s different culture and lifestyle reflects its broadminded democratic traditions and values, geographic convenience owing to the strategic location of belonging to the Asia–Pacific region, and the social and cultural influences of the thousands of migrants who have settled in Australia since World War II. Because of this diverse cultural frame, they are experiencing different cultural festivals (The National Festival of Australian Blues Music, Art Festivals, Tattoo, etc) which they use as a tool for socializing. This type of socialization not only brings together communities with different value systems, but also brings in profit for various companies as well as the government (Guide to Australia, n.d.).

Significantly, wide-ranging color groups of hand-loom products would add a fresh, new value to these festivals. Not just as products for sale, but also, as a fashion statement. Halloween is one festival which is celebrated in most parts of Australia, including Melbourne. As such, Halloween costumes can be created through the use of hand-loom products, adding to the variety of the festival, bringing in a traditional touch, while providing the wearer a pleasant and unique comfort.

2. Religion

Australia is a largely Christian country, with around 64% of all Australians identifying as Christians. However, most other major religious beliefs are also experienced, in the society (Department of foreign affairs and trade, n.d.). Majority of people prepare for Christmas months ahead of December. Being an opportunistic company with a detailed eye for opportune moments, Laksala can easily target the seasonal time for Christmas as well as the New Year season since it is known that Australian are of the habit of changing household goods during these times, which, of course, would include clothing and other products created using hand-loom. Thus the company can come up with more modern and artistic designs during those periods. It should also be borne in mind that trade discounts as well as sales promotions would further induce customers into buying more of the product during the seasonal times.

3. Language

English is the main language spoken in Australia, yet their colorful vocabulary, pronunciation, phonetics method and jargon ('Strine') can take a lot of getting used to. This rather unique accent uses a different dialect of English, and is completely different from UK English or US English. In fact, the Australian’s have a large population of Gypsies, whose vocabulary mannerism is even more unique, containing many punctuation and dynamics which would be almost impossible to recognize as English! Currently, Australia has no stated certified language. English is spoken by most of the Australia's population, and thus acts as a substitute certified language for the whole nation. After English, immigrants talk Italian, Greek, Cantonese, Arabic, Mandarin and Vietnamese, based on their different culture, nationalities, and religions (Kwintessential, n.d.).

English being the most spoken language in the country as well as during business transactions, promotions campaigns should be designed through utilizing a simple form of English for the benefit and ease of the retailers. Moreover, having fluent and confident employees are an essential requirement to communicate with our retailers in order to get rid of the dissatisfaction of them, and to ensure that professionalism is highly regarded in the company.

4. Relationships and Communication

Australians do not need long-standing delicate relationships before they do business with people in the business context, as opposed to so many cultures. Australians are quite open in their conversations with others, and this same openness will be extended on our part.

5. Business Meeting Etiquette

In industry meetings, their programs are important and moderately simple to schedule. Punctuality is much more vital in business circumstances. In fact, early arrival to the place of rendezvous is best (Australia business etiquette and culture, n.d.). Meetings are usually peaceful, calm and contented. Sensation, emotions and feelings are not significant in the Australian business atmosphere.

Giving a present is not a usual performance during trade. The business set up for Laksala also would comply with all the above conditions in order to gain respect and regard in the local market productively, effectively and to grow recognition.

6. Negotiating and Decision Making

Australians are straight in business talks and for most of the time, strive to achieve a win-win condition during conflicts or ambiguous situations. Australians get down to business relatively quicker than other western cultures, with a least amount of small talk and pleasantries. They value conciseness and they are not impressed through overwhelming much features. Negotiations carry on speedily, and conflict is avoided, while reconciliation is valued during an unlikely conflict situation. Moreover, bargaining is not a first-rate consumer performance in Australia. They will look forward to early suggestions with a proposal to have a little border for negotiation. Decision-making is determined at the top of the business, although decisions are made after discussion with subordinates, which indicates that leadership is democratic and considerate of followers.

7. Dress Code

The types of clothing that people wear mirror the cultural diversity in the society just as much as the difference in climate. There are no laws, rules, regulations and policy on clothing, but certain types of clothing may be compulsory according to either safety conditions, or professional requirements. Most companies have clothing principles, i.e.: standardized uniforms and etc. People dress what they want outside of the work place—individuals wear for console, the communal circumstances or the weather. Clubs, show theaters and other places have need of people to dress in tidy, clean clothes and wear suitable footwear. Australia does not have representative national clothing, as seen in Sri Lanka. People from other countries can prefer to wear their national dress. They may be religious, traditional or customary (Living in Australia, n.d.).

B. Economic analysis

1. Gross Domestic Product (GDP)

The financial system of Australia is one of the largely developed current market financial systems in the world. Australia’s economy raised 1.3 per cent in the first three months of this year (2012), owing to the well-built growth in mining and private investment as well as consumer expenditure. Growth was a healthy 4.3 percent higher than in the first quarter of 2011, the fastest pace in more than four years (Business with the wall street journal, n.d.).

This substantiates the economic flexibility and the relatively high standard of living. Thus when setting up the business in Australia, Laksala should get hold of a certain assurance so as to ensure business performance without complications.

2. Inflation Rate

Inflation rate refers to a general increase in prices calculated against a standard level of purchasing power. Australian inflation rose 1.2% through the year to the June quarter 2012, compared with a rise of 1.6% through the year to the March quarter 2012 which indicates the value of the dollar has improved relative to the previous years, where the profits of the businesses would gradually increase (Trading economics, n.d.). Laksala should concentrate about the inflation rate when they putting up a business in Australia where the net value of the money would ultimately lose its value should there be a reduction of value of the money.

3. Taxation

Australian government is giving a 2% of tax cut to every novel industry in their country and as Laksala is new to Australia, we also get that opportunity and we consider this as a major advantage for our company mainly because that it will cover our initial start-up cost at least to a certain sizable level. From the point of view of a new company entering an international market, it is quite admirable what the Australian government is doing, since it provides an incentive. Laksala should be able to capitalize upon this opportunity, providing the company with not only a very great strength, but also opportunities with the money that we would be saving.

Australia has also taken steps to restrict some imports especially to motivate local businesses. Therefore the Australian government has limited some goods into Australia. Before exporting our clothing products into the Australia we must consider their restricted products (Prohibited and restricted imports, 2010) and we have to pay customs, taxes (10% GST on import goods) and duty to Australian governments based on the quantity of products. However, since our preliminary research indicates (later on) that there are competitors in the Australian market with hand-loom products, this in turn shows that hand-loom products aren’t considered as restricted products according to the Australian government. However, certain equipment which aid in creating hand-loom or other material may be considered as restricted, and therefore, Laksala needs to consider all aspects in relation to the primary product and barriers to entry.

2. The Product

A. Evaluate the product as an innovation as it is perceived by the intended market

1. Relative advantage

The product itself contains a relative advantage. Laksala hand-loom is having vibrant color range, good quality, and most importantly, Eco-friendly material which have high durability. Since this is absolutely handmade materials, these products can easily compete with the same products which are created through the use of machines. Machine generated looms aren’t as beautiful, comfortable, or eye-catching as much as hand-made looms. At the same time, Laksala has retained experience and skilled workers where they have not only be trained well to compete with their competitors, but also have years of experience in designing handlooms (Laksala, n.d.). Currently, the Sri Lankan garment industry has a broader recognition which, in turn, can gain a competitive advantage on Laksala hand-loom products too when sold in an international market such as Melbourne, Australia. Furthermore, in comparison to our competitor’s price, our price is reasonable and also affordable (as will be described toward the latter part of the preliminary report through the first year’s pricing strategy). As a business, we consider the price factor quite important in creating a competitive advantage, and also to create value in the mind of the customers, where they will know that the product that they purchase from Laksala is not only of high quality, but also of an affordable price range in comparison to competing hand-loom companies.

2. Compatibility

From the former research conducted, it was found that the Australians are looking for rare, valuable products to arrange their households and to dress themselves. Even in Sri Lanka, it is a common site to see tourists from Australia parade the local garments, and in the same manner, they soak up the cultural aspects from any country, especially one which is a tourism destination. At the same time, locals in Australia highly value and respect eco-friendly products since they are perceived as environmental lovers. Laksala hand-loom products are made by using natural raw materials which fit to the current trend in Australia.

Australia is so large that it experiences most climatic conditions, from tropical monsoons to hot, dry weather as well as snow. Generally, however, the climate is warm and temperate; particularly in the major coastal cities which are a major benefit for Laksala to extend their products in Australia (Department of foreign affairs and trade, n.d.). Since the cotton wool and yarns can provide for both hot or cold temperaments found in Australia; the silkiness and softness of the hand-looms for the warmer climates, and the warmth of the wool for the colder temperaments.

3. Complexity

Complexity is high in this product. Complexity affects the rate of adoption of a new product entering a market in a negative way. To reduce this negativity, product information such as its benefits, need to be communicated efficiently and appropriately to the target market. Another complexity is manufacturing hand-loom through the weaving machines is a difficult process and it’ll take more time to come to the end rather than using technology-intensive machinery.

4. Triability

Laksala hand-looms cannot conduct a trial since the company sells this product only for retailers and not for the end users. But the retailers can touch and feel the products softness of the materials before they decide to bond or sign a contract with Laksala, thereby deciding whether or not the material complies with the standards and requirements which they have in mind.

5. Observability

The customers are fond of observing a new product prior to buying it openly. Customers will be able to prepare for the new product by looking at the model showrooms, dummies and other methods arranged by the retailers. Due to the product characteristic of being tangible, the customers have the chance to assess the product in all three consumption stages, which are pre-purchase, purchase and the post purchase stages. Furthermore, observability will occur through positive word of mouth. Once the product is purchased by members of the Australian community, it is hoped that they will take pleasure in the new product and tell their family and friends about the new product’s high quality and other valued features on the market.

B. Major problems and resistances to product acceptance based on the preceding evaluation

Easy sailing throughout the first year of operations is impossible for any company belonging to any industry especially when working under international and globalized circumstances. Thus it is only to be expected that there will be certain complications in product acceptance in Australia, which are described through pre-planned evaluation of the market segment.

One issue which has already been mentioned is one which any company faced in the modernized, globalized business world of today: competition. Companies and organizations which have been established in Australia for a longer period have the competitive advantage against Laksala in experience of the target market, positive recognition and perception of the target market and brand loyalty among the target market. These are issues which will create a challenge of a certain magnitude, at least for the first year of operations when Laksala initially begins. However, this minor drawback is dealt with through a carefully created IMC plan catered targeting the target market as well as through excellent pricing strategies for the first year of operations.

Another issue that was found was regarding finding retailers for the product with the storage facilities since the product is new to the market. In order to overcome this difficulty, Laksala shall build up a strong and energetic sales team consisting of people belonging to diverse ethnic groups within the urbanized area of Melbourne in order to create and maintain win-win relationship with potential retailers before entering into contractual and legally binding procedures. .

The final issue identified is less awareness about our products’ existence. New businesses starting up in foreign markets will face this difficulty regardless of the industry. Thus it is important that we need to come up with good marketing strategies to overcome this problem. Furthermore, certain Australian communities have a negative attitude towards the Asians and since we belong to an Asian country, this needs to be considered carefully. The threat here is that many Australians wrongly believe that all Asian products are low in quality, just because the price if affordable. Therefore an initial concern for Laksala would be to use IMC strategies in changing this negative perception toward Asian products.

3. The Market

A. Describe the market (s) in which the product is to be sold

A market plays a very important part in any organization. Production and distribution depends heavily on the marketing of a product. Therefore the market of a product is quintessential and contributes heavily to the succession of the organization.

We have identified Melbourne, Australia as the best place to introduce hand-loom products. There are 18.2% Asians who are involved in tertiary education and also employed living in Melbourne. Most of the Sri Lankans live in Melbourne comparing to other suburbs of Australia. This is one of the reasons why Laksala concerns in, not initiating to other states but, Melbourne.

1. Geographic region (s)

Melbourne is a local government area in Australia. This city has 36 square km of area and according to recent researches population of 93,625 by 2011. The population density of Melbourne is higher than all Australian capital cities combined together which are 540 people per sq km. (Australian Bureau of Statistics, 2010-11)

The main advantage of introducing Laksala hand-loom products in Melbourne is the target customers. Although we are also targeting local Australians having Asian people, mostly the Sri Lankan’s who are familiar with our products brings out many benefits. This benefit will create many opportunities in marketing aspects, especially positive word of mouth.

Below is the map of Melbourne which shows the geographic area where hand-loom products are to be introduced:

2. Forms of transportation and communication available in that region

2.1 Transportation

Melbourne has the second highest rate of public transport usage and also the world’s largest tram network. The city has many effective ways of transport like the largest freeway network in Australia, two major passenger airports and the port of Melbourne, Australia’s busiest port for containerized and general cargo.

As we have planned to ship our hand-loom products to Melbourne, Australia, having an effective transportation gives us a competitive advantage. We have chosen shipping because of having the advantage of transporting large amount of stock to one place to another. However even though it’s cheap there are some disadvantages like having to face climate changes, the time it takes to transport, as well as certain custom issues.

Trucks can be the safest and fastest transport method to be used within the locality of Melbourne. As Melbourne is known for having efficient transport systems for internal transportation, trucks can be used from the Airport or Harbor to the warehouse. Having large space to pack the products can also be considered as an advantaged for the decision to choose transportation via trucks.

2.2 Communication

We are selling our products through retailers. But to earn the shelf space in supermarkets we need the final consumer to be aware of our product. To communicate our product to the consumers we can use advertising. Most of Australian people are working, unlike Asians. Hence they are heavily familiar with print medias, internet, billboards and direct mails and also we use television advertisements and radio announcements (Australia-A Guide to the Market.-Direct Marketing, n.d.). Other than that we, can also use car tops and air balloons as promotional methods. We will also use internet facility and provide online shopping through Laksala website as most of the consumers likes on line shopping to save time. Mails, Video conferencing, and telephony could be used to contact the Sri Lankan headquarters to be in constant communication.

3. Consumer buying habits

Buyer needs

In today’s modern society, many consumers are too busy to take time for shopping. Therefore more consumers move in to online shopping. Laksala has also identified the new trends and with the retailers have provided online shopping for our consumers.

A. Product-use patterns

Mostly, hand-loom is known as clothes with long durability. Unlike in Sri Lanka, in Melbourne there are many seasons; especially in winter times and during Christmas the temperature get lowest, reaching an average of 50⁰C. Since our products are more in to thick and warm clothes, the best demand will be during the winter. However our decoration line can also provide high income throughout the year, regardless of the seasonal transitions.

B. Product feature preferences

The quality of a product plays a major role in the consumers mind. When marketing our product, we will be specifically highlighting the durability and the quality of the product to the consumers. We will also marketing the different radiant colors and attractively unique designs of Laksala hand-loom products.

C. Shopping habits

Australians do most of their shopping in holiday seasons. At the end of a year, they usually renovate their houses with new looks. Apart from clothes, we also have many items such as table linen, kitchen Linen, and curtaining. This can be an advantage for us to improvise upon since we can offer them new, different and stylish looks to their homes. We can inform them about Laksala hand-loom products through leaflets, promotions and via mails.

4. Distribution of the product

A. Typical retail outlets

It is proposed not to set up retail outlets in Melbourne as the cost of setting up a retail store there can be quite costly and it will not be supported by Laksala budget. However Laksala product will be sold in several established retail stores in Melbourne.

B. Product sales by other middlemen

Few other merchant middlemen too will be used for this purpose. A few selected middlemen who own small stores in Melbourne will be used for the distribution of the product. This method will be less cumbersome and would reduce start-up costs for the business (Business definition for: middlemen, n.d.).

5. Advertising and promotion

A. Advertising media usually used to reach your target market (s)

In order for Laksala to obtain shelf space for their products it is essential to create awareness and demand for the product as well as the brand in the market. It is also required to promote the product to the middlemen. As product distribution is limited to Melbourne, it is not advisable to use mass media for advertising. Internet advertising, especially social media, direct mail, brochures, magazines and even radio advertising can be used to create awareness and demand in the minds of the target market and also the middlemen.

B. Sales promotions customarily used (sampling, coupons, etc.)

Both push promotions and pull promotions will be used by Laksala. Push strategy involves any marketing strategy that “pushes” its way in front of users without the user initiating the request. Push marketing is great for generating brand awareness and promoting a new product or service (Effective Marketing Strategy push and pull, 2012). Push strategies in the form of trade discounts will be employed by Laksala to obtain more shelf space from the retailers and other middlemen.

Pull means your marketing strategy inspires consumers to demand your product (Pushing vs pulling, 2009). Pull promotions in the form of competitions and prize draws, buy one get one free promotion where Laksala will offer for example a small pencil case when purchasing a Laksala bag and also advertising these in large scale will help create the demand for the product.

6. Pricing strategy

Types of discounts available

Both trade discounts and consumer discounts will be offered by Laksala to promote the products.

1. Consumer discounts

Coupons

A coupon entitles a buyer to a designated reduction in price for a product or service. Coupons are the oldest and most widely used form of sales promotions. Coupons bear an expiry date and cannot be redeemed after the cut-off date (Consumer Sales Promotion and Methods of Promotion, 2008). These coupons will encourage brand switching, stimulate trial for a product and take off the attention from price.

· Competitions and price draws

Here some skill of the contestants will be tested and the winner will walk out with a pack of Laksala products which will, in turn, attract customers like no other method of discount. This method often creates excitement and generates interest for a brand, but the problems of administering these promotions are substantial. One problem is that the game itself may become the consumer’s primary focus, while the brand becomes secondary. The technique thus fails to build long-term affinity for the brand (Consumer Sales Promotion and Methods of Promotion, 2008).

2. Trade discounts

· Cash discounts

Cash discounts will be offered to retailers and middlemen as an incentive for timely payment of their liabilities in respect of credit purchases (Purchase Discounts, 2012).

· Bulk discounts

Discounts when buying in bulk will be offered to retailers and other middlemen. This will encourage them to buy a large quantity of goods at once.

· Advertising allowances

An allowance for in-store advertising and promotions will be given to the retailers. This would not only help promoting the products to the middlemen, but will also help in promoting the product to the end-user.

Compare and contrast your product and the competition’s products

1. Competitor’s products

By analyzing the handloom market for Australia our team have found there are more direct competitors, importers and buyers, therefore randomly we have taken leading key challengers Awava Handloom Products: The United Future Foundation (UFF).

· Brand name: Awava Handloom Products: The United Future Foundation (UFF)

UFF is an organization which is running by Australian NGO operating in Uganda. All about the UFF is to develop the country’s education, building a combined primary school and vocational training center in countryside Uganda. UFF is "breaking the cycle" of poverty.
They have partnered with Awava to develop couture and crafts progresses for their Technical and Vocational Education Training Program (TVET). They are offering training in crafts and skills but also awareness of against women in Uganda. UFF was founded in October 2010, and Awava have agreed a partnership contract which is said, that allows UFF to work with the Awava team to open the Australian market for Awava UFF Handloom and craft products. On the other hand, this will allow UFF to raise funds through the marketing of Handloom products in Australia, at the same time subsidizing to the employment and continued sustainability of Awava crafts workers. Therefore, UFF share a conjoint assurance with Awava to supportable poverty saving through skills education, access to resources, and connections to open marketplaces. According to the Analysis we found that they are the key competitor to our (Name) and we found they have got a greater amount of reputation because they are one of the well-known NGO in Uganda, around the Australians used to know this project formed in Uganda and the Price wise they have lower than us also they have produced different range of prices (The Awava Project, 2011)

· Brand name: Standardkint Fabrics

They are one of the Universal Textile Group, since 1954, in Sydney, Australia and they have been an essential part of Australia's textile. Standarakint are supplying to domestic and out of the country and they said 100% Australian made and owned fabric. Their commitments are proposing higher quality, reliable supply and quick service to customers in this precise competitive trade. They are producing a massive collection of weft fabrics in an extensive range of applications. All fabrics are dyed and finished in their high tech dye hours. Standardknit Fabrics has operated for emerging collection constantly to provide extraordinary performance production at the lead of enterprise and creativeness with the cutting-edge design trends. In this analysis we found they have got a greater amount of goodwill because they are one of the well-known domestic company and they have produced different range of prices.

· Features

We have compared the features that have created and prepared in the competitors’ products.
Awava Products are Apparel, Hand Bags. Especially, raffia table mats and purses, banana fiber table mats, Napkins and Towels. Standaradknit product lines have clothing such as dyed ladies tops and home use cushion and pillow covers. We know that the demand for made in Sri Lankan handlooms are generally in a greater level around the world. Laksala exclusive products always move with an attraction look our Products are use cotton and silky raw material for the productions. But when we are focusing on Awava they are using basic materials such as organic based materials. And Standardknit’s production raw materials are dyed fabrics.

2. Competitor’s prices

According to the price level for the products are not the same, each has own fixed prices but it is not much difference therefor, market for the Laksala Handloom market is still opened to compete in Australia. The pricing strategy of Laksala is not the similar to the competitors’ prices. As a profit making industry we are much higher than the competitors. When comparing communal produces: Here we can see several products

Awava prices (Apparel, Napkins and Towels) $ 30 to $ 89

Standardknit prices (Apparel, Pillows, and towels) $ 25 to $ 75

3. Competitor’s promotion and advertising methods

(Awava) UFF’s public relations methods are pushed by the AWAVA they are the main organizers to the UFF such as event coordinating, project news, NGO fair trading Programs, the goodwill of their title is the major advantage. Most of the workforces who work with them are women (widowed, divorced, handicapped or from disadvantaged backgrounds). The project provides employees with skills training and supporting them well, Awava and UFF get together have done Black Tie and Barefoot Ball 2011 it was another huge success to their market and at the same time for the social service activities, with over 650 enthusiastic guests attending, and rose just over $100,000. Key sponsors for the event are Ridgeview Wines, Coopers, Canadian Club, Coca Cola, Red Bull and all the generous businesses who donated prizes for our raffle, live and silent auctions. (UFF, 2010)

Laksala could run through PR skills as their public relations technique when toward the inside to Australian marketplace as well, by building an enthusiastic background through anything organic such as Eco friendly could make them a standard marketer in Australia.

In Adverting methods competitors are stick to two main methods that are Internet based and Commercial newspapers, magazines and monthly National Fair trade handbooks. In this analysis competitors have covered up with the image gallery and designed page. Their main target is to attract the clients as their first step to view their online shop.

4. Competitor’s distribution channels

All the competitors have similar distribution channels such as Website: online shopping, Shipping Facilities, Retailers and agents, fiesta markets etc.

C. Market size

Identifying the market size and the demand that lies for a product is essential, and may make all the difference between successfully operating in a foreign market, or failing, resulting in huge profit losses and deteriorating brand loyalty. Thus understanding the market a company enters into plays a vital role, especially for a company entering an international market.

Laksala has created quite a name in the local market as a market leader in handlooms. When entering the international market, while Laksala will communicate and enter into deals with retailers in Melbourne, an understanding of the requirements of the product which the company is placing in the international market should be considered thoroughly. In other words, the demand for Sri Lankan handloom products in the Melbourne market should be considered in market size and profitability. While collecting statistics in relation to demand in Melbourne can be deemed to be a rather formidable task, certain statistics were identified in relation to the demand for Sri Lankan handlooms in Australia, which prove to be positive and perhaps, even beyond what was expected. Detailed in the subsequent partition is the place that local handlooms have in Sri Lanka, the support that the government extends to the industry, as well as the demand factor which will affect Laksala in the Australian context.

Local success and enhancement of the handloom industry

Considering the locality, after the end of the war, a tourism boom was seen, an opportunity which paved way for local handloom production to increase. On January 16^th, 2012, when addressing the Australian Deputy High Commissioner Sonya Koppe, Minister of Industry and Commerce Rishad Bathiudeen stated that it will be valued if Australia lent a hand in introducing the Private-Public Partnership model to the handloom sector in the locality. The minister further stated that the nation is doing everything possible to strengthen the continuation of the handloom industry in the country, saying that the demand for Sri Lankan handlooms have been increasing drastically over a period of time. He added that the government was taking steps to open district level handloom centers under the private sector management, mentioning that Australian Government support would be much appreciated to introduce the Private-Public Partnership model to the local handloom sector (Australia eyes Lankan handlooms, 2012).

This report further substantiates that bonds between Australia and Sri Lanka in the context of handlooms is encouraged, while giving the understanding that continual support will be provided by the country to the handloom industry. In other words, the handloom industry in Sri Lanka is far from a dying breed of product, and as such, the continual support received by the local government and the connection between the Australian government would pave way for product awareness and lessen international barriers when Laksala enters the international market of the Australian economy.

Opportunities lying in the Australian market for Sri Lankan handlooms

During this meeting between the Australian Deputy High Commissioner Sonya Koppe and the Sri Lankan Minister of Industry and Commerce Rishad Bathiudeen, upon seeing a handloom creation by famous designer Senaka De Silva, the Australian Deputy High Commissioner was thrilled, stating that this project was terrific (Australia eyes Lankan handlooms, 2012). In other words, the ties between Australia and Sri Lanka from a handloom context certainly seem to be favorable. Adding to this, the localities $13 million worth handloom industry is on a surge upon the end of the war in 2009 and increasing tourism opportunities. Sri Lankan handlooms are also exported to Italy, Maldives, Germany, France, UK, Thailand, Netherlands, and Norway (Australia eyes Lankan handlooms, 2012).

When considering the opportunities that lie in exporting handloom to Australia, it should basically be understood that handloom would fall under the apparel and garment industry. Thus when considering the statistics of the apparel and garment industry in Australia, in the month of June 2012, the trend estimated for clothing, footwear and personal accessories had increased by 0.5%. Seasonally adjusted, this figure would be 1.8%. When considering the industry subgroup for footwear and other personal accessory retailing, this rose by 1.1%, while clothing retailing rose by 0.1%. Thus seasonally adjusted, clothing retailing recorded an increase of 1.7%, and footwear as well as other personal accessory an increase of 2.0% (Retail Trade Australia, 2012).

These statistics show the increase in the clothing industry as a whole, and since handloom products are part and parcel of the apparel and garment industry, it could be safely assumed that the demand for hand-looms is on the verge of increasing, definitely a positive point to consider when entering the international market.

As seen in the above graph, throughout the years of 2010 to 2011, there is a drop in clothing, footwear and personal accessories retailing. However, throughout 2011 to 2012 there can be see an increase in the retailing for each of these segments, substantiating that there is a measurable and sizable demand for clothing and apparel in Australia.

Facts for consideration regarding the target market

In comparison to people belonging to other western countries, Australians spend less on clothing, owing to the fact of their casual life style, and moderate climates. When considering the years 2005-2006, the retail turnover in the clothing retail stores was recorded as AUD$10.1 billion, which meant that after adding the sales of clothing in department stores, only about AUD$14 billion was spent for clothing per annum. In comparison to international standards rated against western countries with similar economies, this seems to be a rather minimum amount spent by the population in Australia for clothing (Weller, 2007).

Due to the geography seen in Australia, the population spends a comparatively higher household income on housing, transportation and communication equipment. When considering the household expenditure data, the three lowest segments of income earners spend AUD$12.75, AUD$19.50 and AUD$30.68 per week on clothing and garments respectively. The two highest income earners spend AUD$46.40 and $67.07 per week on clothing and garments respectively (Weller, 2007).

Overall, upon considering the recent data and trends in the clothing industry in Australia, the market in Melbourne would be ideal for Laksala handloom products, since opportunities seem to be on the rise in comparison to the early 2000’s.

1. Estimated industry sales for the planning year

In the previous segment of this report, a generalized idea was given in a condensed format as to the market in Melbourne, based on assumptions under the current Australian economical context. This partition of the report focuses on the past trends in sales growth, and provides a substantiated forecast on apparel industry growth in the years to come.

Industry sales over the past 5 years

Not so long ago, the Australian clothing retailing industry had to endure tormenting years due to lower consumer expenditure, depreciated values, increasing rentals, and the global financial crisis, which in turn affected the revenue drastically. In the past 5 years, up until 2011-2012, it was estimated that the industry revenue will be 0.8%, where the revenue was expected to increase by merely 0.5% in the years 2011-2012, for a total value of AUD$12.1 billion. When the global financial crisis struck the Australian economy, consumer expenditure patterns changed, affecting the clothing and apparel industry. In fact, an IBISWorld industry analyst, Kiera Outlaw, stated that due to the economic downturn, private savings reached a pinnacle since 1984 as the consumers tightened their belts (Clothing Retailing in Australia Industry Market Research Report now updated by IBISWorld, 2012).

Industry sales forecast for the future

Based on statistical reports and surveys, it has been reported that the Australian Apparel industry revenue will increase by 1.2% per year, eventually reaching a value of AUD$ 12.9 billion in the year 2016-2017 (Australian Apparel industry revenue is forecast to grow by 1.2% per annum to reach AU$12.9bnin 2017, 2012).

Facts regarding sales forecast for future

According to statistical data gathered, opportunities exist to grow through the exports to Australia in apparel such as knitwear, street-wear, children’s clothing, sports and outdoor wear, fashion for plus sizes, as well as corporate apparel, which certainly indicates a positive revenue for a veteran handloom specialist company such as Laksala (Australian Apparel industry revenue is forecast to grow by 1.2% per annum to reach AU$12.9bnin 2017, 2012).

2. Estimated sales for your company for the planning year

When taking into consideration past industry growth patterns and the forecasted models regarding the apparel industry in Australia, the pricing schemes which will be introduced to the market for the first financial year of operations would be as follows.

The pricing strategy for the first year would be a penetration pricing strategy. The competitive advantage that Laksala hopes to acquire and maintain or the first financial year of operations is to create a name and to avoid direct competition with others who have been in the local market for a longer time period with higher price ranges. With a lower price than competitors, Laksala would be able to

1. Capture a fair share of the market for handlooms in the locality of Melbourne

2. Provide higher quality handloom products for a reasonable price

Once a sizeable market has been established after the first year of operations, the pricing strategy could be improvised so as to suit the needs of the constantly changing market dynamics. However, it is important to have a competitive advantage when entering a foreign market, especially keeping in mind that the Indian market exports handloom products to the Australian apparel industry, further provoking direct competition. The competitive strategy that Laksala would utilize is to be the market leader in the lower price range, at least for the first financial year of operations. Once proven among the target market present in Melbourne, thereafter, the pricing strategies and the market leader positions can be duly adjusted.

Apart from a penetrations pricing strategy, trade discounts and sales promotions will also be carried out during the first quarter of the first financial year in Melbourne. This would further entice the target market to actually come forward and try the products, if not to test the quality, at least encouraged by the low price and the added value that they receive through trade discounts and sales promotions.

Based on this strategy, the estimated sales per yearly quarter in the category of handloom products are forecasted to be 200, and further, within the 2^nd yearly quarter, it is forecasted for this current sales number to double to 400 products per quarter.

D. Government participation in the market place

Governments involved in international trade. All such business on the market, have been forced to rules and regulations of the government. Therefore, the exporter of all, you need to know about trade restrictions of the host country and home country before entering the business, it is to comply with rules and regulations of both countries is important. It contains tax exports and imports, quality standards, safety regulations, etc.

1. Agencies that can help you

v Sri Lanka Custom

v Inland Revenue Department

v Export Development Board

v The National Chamber of Commerce in Sri Lanka

v Import & Export Control

v SLECIC

2. Regulations you must follow

Australia is regulated open and transparent government policies. Australia is a democratic provide a very low-risk business environment, the country was stable politically and economically.

Australia's tax system, has led to a substantial reduction in business costs. (GST) is currently at 10% of goods and services tax, which applies to all goods and services. Corporate tax rate is currently (Australian Taxation Office, 2010) to 30%.

To do business in Australia / Sydney, to register (ASIC) Australian Securities and Investments Commission has been mandated. When the business is registered, it will issue a (ABN), business will be able to start operating company number and then Australia. After registration is complete, the committee will pay a $ 212 annual fee of review (which is approximately SLR 24000 per year) in Australia.

2.1 Regulatory standards of the trade

Description of the trade must be printed in English, must include the weight and quantity, you must include the name of the country the goods are made. In Australia, has started the process of anti-dumping against a particular country (countervailing duty and anti-dumping), which is a certificate of origin, with bare feet is usually does not apply is not required as well fortunately. However, Australia has maintained a standard requirement of some limitations. Finally, the information of the commercial invoice sold, payment method, etc. (Australian Trade Commission, n.d.) and the price, you must include the name of the container number, and mark.

In order to clear the products to effectively deal of hand-woven products to the Sydney port, shall comply with the above requirements.

2.2 Regulations regarding packaging

Document is an important aspect to export goods to another country. To give the documentation is wrong; the penalty would result in a higher cost. The company, if you need to register on the Sri Lanka Export Development Board Sri Lanka Customs, Taxation and export individual articles or any of the commercial value of exports from Sri Lanka Sri Lanka procedure has been clearly stated.

Exporters to register the above organizations, you need to generate a business registration certificate or certificate of the original articles of incorporation. Therefore, before you export the product to Australia New South Wales, you must be registered with the agency listed above.

When Laksala to export the goods to Australia in Sydney, you will need them to prepare the pro forma invoice, send it to the importer. Pro forma invoice, the description of the product, has been packing and marking details, including quality, price, payment terms, and delivery conditions. (Australian Trade Commission, n.d.).

4. Reference list

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(UFF) United Future Foundation 2010, News: Press Coverage- Recent News (Last updated 23 August, 2011) Retrieved August 12, 2012, from http://www.uff.org.au/news.html

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Wednesday, July 1, 2015

International Marketing (Laksala Hand-loom Products) By Uvani Yashora Eleperuma