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Table of Contents

Acknowledgement : 3

Introduction 4

Archies & Indian Social Expressions Market 4

Literature Review: 5

Research Objective: 7

Research Methodologies: 7

Market Size Estimation: 8

Outcome-Analysis: 12

Market Size Estimation based on survey outcome: 15

Overview of Results: 16Conclusion: 18

References: 19

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Acknowledgement :

I take this opportunity to extend my sincere thanks to Vinod Gupta School ofManagement, IIT Kharagpur for offering this unique platform to gain exposure and

garner knowledge in the field of marketing research, strategy and business

development.

I am deeply indebted to my project guide Prof. Sangeetha Sahney, Professor, VGSoM,

IIT Kharagpur for guiding me throughout the project and providing valuable inputs

and insights. Her knowledge and experience served as a continuous source ofencouragement and motivation for me.

I also wish to thank all the professors at VGSoM, IIT Kharagpur for the valuable

education I was imparted with and the continued guidance throughout the research

period.

I would also like to thank all my friends and students of IIT Kharagpur for their whole-

hearted support and cooperation in helping me achieve my objective.

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Introduction:

In terms of both dollars spent each year and how they make givers and receiver feel, gifts are a

particularly interesting part of consumer behaviour. Products and services chosen as gifts represent

more than ordinary everyday purchases. Over the years, gifts & greetings cards has been used as

a medium to express love, affection, care and lot more emotions to friends, family members and

well-wishers in the most appropriate way. India with its favourable demographics, with its

Traditional & Emotional values and decent enough disposable income has made immense

progress in the growth of social expressions industry over the last couple of decades.

IIT Kharagpur with its strong 9000+ student population and 550+ faculty and their families seems to

have the right demographic fit for a branded gift shop like Archies gallery. The purpose of this

research is to determine the business viability of a branded social-expressions gift store inside the IIT

Kharagpur campus, with Archies as reference frame. Taking into account the various factors that

would determine the success of failure of such enterprise in the IIT KGP campus.

Archies & Indian Social Expressions Market:

Before the advent of Archies, the Indian social expressions industry as gifting has come to be

defined was controlled entirely by the unorganised sector. The gifts comprised such standard

offerings as flowers, books, sweets, garments and in some exceptional casessilver and semi-

precious stone trinkets. The arrival of Archies began to slowly change this predictable Indian

mindset. A whole new range of unique items were now available and lent a dash of lan and colour

to gifting. At the same time the quality of merchandise, too, underwent a complete transformation.

The evolving consumer base with its increasing exposure to developed markets, rising per capita and

disposable incomes, a more liberal view of western cultural practices and the sheer joy of being alive

that Indians are wont to display, have added a whole new dimension to social occasions. For every

one of these, Archies has developed a range of merchandise designed to best express the

sentiment.

Today, Archies is India's apex market leader in the social expressions industry with over 50% market

share in the organised sector (Source: internal estimates). Having championed the path-breaking

concept of branded retailing in India, Archies has expanded its operations in sync with market needs.

The brand currently operates 120 company stores in fourteen states and 36 cities across India, inaddition to more than 350 franchise outlets in 100 Indian cities and five countries.

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Though still in its formative years per capita consumption of greeting cards is estimated at a low

0.5 compared to over 32 in the UK and about 22 in the US the social expressions market is growing

at 12%-15% per annum.

Archies had a turnover of Rs. 118 crore (US$ 24.60 million) in 2007/08 and Rs. 138 crore (US$ 29.80

million) in 2008/09

Literature Review:

Pricing Strategy & Revenue Management:

Jacobs T.L., Ratliiff R. and Smith B.C.(2009) say there holds a relationship among pricing, revenue

management control and capacity which influence the profitability of the company. This paper

develops the concept of price based statistics (PBS) which represents the change in revenue due to

unit change in fair prices.

Profit per unit is larger when the margin is large. But, less number of sales may decrease the overall

profit. Decrease in price also decreases the margin although sales increases. The tradeoff has to be

balanced so as to meet the objective of the business. This is called revenue management where the

sales vary on various external factors. Example: special occasions like Valentines day, college fest

etc.

Success of a Business model:

Masanell R.C. and Ricart J.E.(2007) describes business models by putting three questions Who are

the customers, what do these customers value, and how to deliver value at an appropriate cost?

A good business model should consist of four elements a customer value proposition, a profit

formula, key resources, and key processes. These are the choices that executives make about the

operation of the organization choices like compensation practices, procurement contracts, location

of facilities, extent of vertical integration, sales and marketing initiatives, and many more.

Biggest drawbacks in todays practice by many managers business models are designed in isolation

which leads to failure when leashed to interaction. This is because external factors have much larger

effects on the performace of the business.

Angot J. et al (2010) describes business model as a conceptual tool which contains set of elements

and the way they relate and express logic to earn profits. Though the business model may represent

the connection with the customer, but it also imperative to study its connection with other

constituents of the model.

Customer participation involves seven inputs:

1. Mental input Information provided by the customer and mental effort put to obtain theproduct.

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2. Physical input The tangible and physical efforts made by the customers.

3. Emotional input All the emotions felt by the customers while interacting with the

employee.

4. Financial inputs The price paid by the customers to get the product.

5. Temporal Inputs The price consumer takes to participates thinking about the products

design or technical specification.

6. Behavioural inputs How the customer behaves on the technical and functional quality.

7. Relational inputs Customers expected and future behaviour is derived from the past

relationship.

Johnson M.W.., Christensen C.M. and Kagermann H. (2008) explain roadmap to a successful businessmodel First step is to understand the opportunities to satisfy the customers which demands

getting the job done. Second is to draft a blueprint to fulfil the need of the customer involving the

four elements of the plan. Third is to compare the new business model with the existing one to see

how much it has changed to capture the opportunities. The four interlocking elements of a business

model are

-Customer value proposition

- Profit formula

-Key resources

-Key processes

When do we need a new business model ?

Five strategic circumstances:

1. When the existing solution are too expensive and complicated and are suing away the

customers.

2. To capitalize a new invented technology

3. It can be implemented in a place where the customers job is not done to its satisfactory

level. There exists more room for manoeuvre to apply new business model.

4. As a strategy to keep up with the competition.

Franchise Business and its implementation:

Juarez M. (2003) tells about the relationship between the franchisor and franchisee evolves

eventually as the changes takes place. The investors also have some interests in the investment for

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the franchise. The franchisees input is given due consideration as it is the one interacting with the

customers. When the franchisees operation get stable, the franchisor now concentrates on other

franchisees.

Conforming to benchmarks The franchisor looks for the franchisee to follow the benchmark

standards in its operation It could be difficult for the franchisee to follow if it has developed robustly.

But this is how the consistency of performance of the franchise is confirmed. It is a difficult task to

dictate changes to the franchisee, especially the change in business model.

Research Objective:

To determine the viability of a branded gift shop (comparable to Archies) inside IIT Kharagpur

campus.

Research would involve estimating the market size & revenues, analysing the cost structures,

technical feasibility and financial viability of the business.

Research Methodologies:

The Framework adopted:1. Demonstrate technical feasibility

2. Size the opportunity

3. Confirm the customer requirements

4. Analyze your ecosystem

5. Show financial viability

The alternative model:

1. Determine dimensions of Business viability

2. Assign component weights to dimensions

3. Determine respective key measures of dimensions

4. Assign weights to key measures

5. Assess each measure and Weigh each dimensions individual viability

6. Weigh collective viability of the business

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Dimensions of Business Viability:

Market Viability

Technical Viability

Economic & Financial Viability

Business model viability

Key Assumptions & Scope:

Gift items: All items stocked by Archies

The dimensions of viability and their measures

The size and SKUs for calculating costs

Assuming overall business viability to be a function of Financial, technical, market and

business model viabilities.

Market Size Estimation:

The first step in establishing the viability of the business is to size the opportunity or in other

words the market size of the product offering. Here we have used exploratory studies to

primarily understand the target group and market in general and a descriptive research in

the form of survey is employed to determine the market size for gifts and cards inside IIT

Kharagpur.

Exploratory Study:

Exploratory study is generally used to clarify thoughts and opinions about the research

problem or the respondent population, or to provide insights on how to do more conclusive

(causal) research. It helps in knowing a little more about the problem, or the consumer, or

the way questions should be formulated, or which factors should be included in the study.

Exploratory Study 1:

Data collection Instrument: Personal Interviews with IIT KGP students

Location: CCD, Tikka, Heritage, Tech Market

Outcome & Analysis: Students mostly divided in their opinion. Some felt that there

is a need for branded gifts shops and it would be nice if Archies is present inside the

campus. The other half (mostly gangs of boys) felt that there is not much of a need

for such shops. But both gangs were of the opinion that the people in a relationship

would be the major customers of such shops. We observed that girls were in general

more positive than guys. The take away from the study was that the gender factor

and relationship factor has to be tested for their significance in establishing marketsize and studying consumer behaviour within our target group.

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Exploratory Study 2:

Data collection Instrument: Personal Interviews with Retailers

Location: Shops inTech Market selling gift items & cards.

Outcome & Analysis: Revenue per gift shop in Tech Market ranges from 35000-

45000 per month as claimed by the shop keepers. Teddy bears are the most sought

after and fast moving item with about 4-5 teddies getting sold from each shop per

day. The profit margin is about 15% on gift items. Items are brought from Big bazaar,

Kolkata. About 10% of the people go disappointed over not finding what they want

on an average. Based on the interviews we can conclude that the sales revenue for

gift items inside tech market stands at around INR 100000 120000 per month.

Descriptive Research : Cross-Sectional design

Sampling Population: All 9000+ students of IIT Kharagpur who are potential

customers of a branded gift shop.

Questionnaire Design considerations:

Fatigue: Fatigues is a phenomenon where consumers get weary of

answering questions and give incorrect or not so representative answers.

To avoid this market researchers are always advised to keep it short and

simple. The sampling population being students of IIT kharagpur and modeof data collection being in personal at the eateries we have kept the

questionnaire as minimal as possible.

Desirability Bias: There is a tendency on the part of respondents to give

wrong but socially acceptable answers because of the bias factor. This was

taken into consideration while designing the questionnaire.

Sequencing of questions: Questions in a questionnaire should appear in a

sequence starting from non-threatening or ice-breaking or introductory

questions, and then proceed to main body of questions. This is also taken

into consideration and hence relationship status of the respondents is made

the last question.

Validity of crucial questions: Validity is a property by which a questionnaire

measures what it is supposed to measure. Validity of the questionnaire can

be checked by comparing it with previously used items measuring the same

thing.

Sampling Plan: Stratified Random Sampling

Stratified sampling technique is employed when the target population is divided into

strata or segments on the basis of some important variables. Since our target

population is segmented as different years of study we have chosen this techniqueas we suspect a significant difference in their buying habits.

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Population Demographics:

Degree # of Students

UG 5500

PG 3500

Total 9000

Year & CourseNumber ofstudents % of total

UG 1st year 1100 12.22%

UG 2nd year 1100 12.22%

UG 3rd year 1100 12.22%

UG 4th year 1100 12.22%

UG 5th year /Phd / Others 1100 12.22%

PG 1st year 1750 19.44%

PG 2nd year 1750 19.44%

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(Ideal Sample Sizes for a population size of 9000)

Error5% 6%

Confidence Level

90% 264 185

95% 368 259

99% 618 438

Distribution of sample size as per the segments:

At 5% error & 90% confidence

Year &Course % of total

SamplesRequired

Samples asof now

UG 1st year 12.22% 32 14

UG 2nd year 12.22% 32 14

UG 3rd year 12.22% 32 25

UG 4th year 12.22% 32 17

UG 5th year/Phd / Others 12.22% 32 19

PG 1st year 19.44% 51 23

PG 2nd year 19.44% 51 69

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Actual Sample Size as of now: 181

The distribution of students in the current sample:

Outcome-Analysis:

Have you purchased or felt the need to purchase any of the following items in the last one year?

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Market Size Estimation based on survey outcome:

KGP Student Population 9000

% of people who purchased such items or felt theneed in last 365 days as per sample 59%

Extrapolating: the size of gift market is approx 5310

Accounting for 6% error in sampling 4991

Average expected number of purchases by thosewho answered 'yes' 4 per year

Average expected purchases per year for a giftshop(4991*4) 19964

Average expected purchases per month 665

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Average Purchase Level

(APL)

Revenue per

month(665*APL) Yearly Revenue Estimate

If at Rs.100 per purchase 66500 798000

If at Rs.200 per purchase 133000 1596000

If at Rs.300 per purchase 199500 2394000

Overview of Results:

The survey results and the above analysis shows a market size estimate of 665 purchases per

month (At 90% confidence level) and that corresponds to revenues between INR 66500 per

month to INR 199500 per month. This is very much in line with the estimates given by the

vendors at Techmarket. The sample size however is a cause of concern and it will be

improved to 99% confidence level at 5% error level in coming term.

Hypothesis 1:

H0 : There is no significant association between gender and purchase intention for gifts in IIT

kharagpur campus.

H1:There is a significant association between gender and purchase intention for gifts in IIT

kharagpur campus.

Testing hypothesis-1 using Crosstab:

Testing if there is any significant association between Gender and purchase intention(gift/cards).

Crosstab

NeedToPurchase

Total.00 1.00

Gender .00 5 28 33

1.00 69 79 148

Total 74 107 181

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Chi-Square Tests

Value Df

Asymp. Sig. (2-

sided)

Exact Sig. (2-

sided)

Exact Sig. (1-

sided)

Pearson Chi-Square 11.057a

1 .001

Continuity Correctionb

9.793 1 .002

Likelihood Ratio 12.302 1 .000

Fisher's Exact Test .001 .001

Linear-by-Linear

Association

10.996 1 .001

N of Valid Cases 181

Thus the Chi square test shows a very high significance level of more than 99% between

gender and purchase intention. Hence we can conclude that gender and purchase intention

of gifts and cards are strongly associated and by looking at the means , Female customers

are going to bring in far more revenues than male customers.

Testing Hypothesis-2 using Crosstab

Hypothesis 2:

H0 : There is no significant association between relationship status of students and purchase

intention for gifts in IIT kharagpur campus.

H1:There is a significant association between relationship status of students and purchase

intention for gifts in IIT kharagpur campus.

Testing if there is any significant association between Relationship status and purchase

intention (gift/cards). 0 corresponds to relationship status single and 1 represents

committed or complicated

Crosstab

NeedToPurchase

Total.00 1.00

RStatus .00 59 74 133

1.00 15 33 48

Total 74 107 181

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Chi-Square Tests

Value Df

Asymp. Sig. (2-

sided)

Exact Sig. (2-

sided)

Exact Sig. (1-

sided)

Pearson Chi-Square 2.509a

1 .113

Continuity Correctionb

1.995 1 .158

Likelihood Ratio 2.563 1 .109

Fisher's Exact Test .126 .078

Linear-by-Linear

Association

2.495 1 .114

N of Valid Cases 181

Thus the Chi square test shows a very low significance between relationship status and

purchase intention. Hence we can conclude that relationship status and purchase

intention of gifts and cards are not significantly associated.

Conclusion:

As per the scheme, the market size estimation has been completed, in the next term

other critical aspects of business viability including that of the financial viability and

technical feasibility will be studied and the overall business viability shall be

established. Franchise business model will be evaluated and any other alternate

business model which can be profitable will be suggested.

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References:

Kimes S.E.;Journal of Revenue and Pricing Management; Dec 2004, vol. 4, pg 95-97

Masanell R.C. and Ricart J.E.; SPOTLIGHT ON BUSINESS MODEL INNOVATION; 2007,

pg 100-107

Johnson M.W., Christensen C.M and Kagermann H.; Reinventin your business model;

Dec 2008,pg 51-59

Juarez M.; FRANCHISING WORLD; Oct 2003, pg 41-42

http://Wikipedia.com