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The Way Indians Greet

Brand management

Case Introduction

1) Analyze the circumstances in which Anil Moolchandani stared Archies and highlight the

reasons for the company’s runaway success. Why do you think Archies could not sustain its

profitability growth in 2000-2001?

By 1990s, Archies was operating in three businesses

Greeting cards

•contributed 69% of the total revenue, with sales volume of 85.8 mn cards

Gift items•contributed 15% of total revenue. •Includes items photo albums, frames, clock, stuffed toys, mementoes, sunglasses etc

Stationery products

•contributed to 16% of co’s revenue. •Includes items such as autograph books, diaries, calenders, posters, gift wraps, designer & fancy sationery.

Its products were marketed through following channels:

•first exclusive store, 500-1000 sq ft in sizeArchies Gallery

•smaller in size than Archies galleries.Archies-The Card Shop

•shops with an area of 100-150 sq ft with around 85% of Archies merchandise.Paper Rose Shoppe

•In april 2000, Archies took over the popular 25-store ‘Feelings’ chain of greeting cardsArchies Feelings

•They were premium Archies Galleries, exclusive Archies showrooms with lot more shelf space than other outlets.Vision 2000 stores

Factors Responsible for its runaway success

1. Venturing into greetings2. Market segmentation & acculturation3. Operational economies4. Clientele base5. Wide range of products6. Dedicated retail formats7. Distribution8. Franchise9. Smart marketing

Decline of profitability post year 2000

1. e- Cards: • To tackle the threat posed by e-greetings Archies came out with

their dedicated portal- archiesonline.com. • The number of registered users reached a phenomenal 0.6 mn and

the number of e-cards sent through the site touched 54 mn. • However this service was a drain to the company’s finance since it

made no profit. This was due to the fact that the online services hitherto were free and the margins were insufficient to cover the creating and hosting costs hence the company suffered a loss of Rs. 13.5 mn.

• To cover this as a measure archiesonline was converted to a paid up site. This resulted in loss of existing registered users and the tie up with yahoo was snapped

Decline of profitability post year 2000

2. Retail revamping: •Archies was on a spree for exclusitivity drive.• Most of the franchises were taken back and exclusive retail

chains were established with stress on direct contact with customers. This called up for huge real estate expenses. Moreover company took back all the stocks lying with the distributors thereby increasing the working capital requirements.

•The ERP initiatives were taken back which contributed to the net decline of the business. To cover up these losses funds were outsourced which incurred a heavy interest burden.

Decline of profitability post year 2000

3. Catastrophic events: • Companies revenue took a severe beating in 2000-01 due to

a nationwide postal strike in end 2000 that affected the Christmas and new year cards in 2001• Valentine’s day celebrations were hit hard due to opposition

from fundamentalists and earthquake in Gujarat which was a major market for Archies.

Decline of profitability post year 2000

4. New rivals : • ITC’s entry into the greeting card business was a challenge to

Archies.• It posed a threat to its market share and profitability due to

its established brand equity in the market. • The music segment was threatened by Saregama and Tips

cassettes. Hindustan Lever and Cavin Care were a threat in the perfume segments

2)Critically comment on the Archies’ franchising and distribution strategies for expansion. DO you think the company’s strategy in the initial years was right in the light of the rationalization exercises? Give reasons to support your stand.

3)Do you think the measures taken by Archies to meet the threat of e-greetings were adequate? Was the company’s decision to make its website a aid one, a sound business move? Justify your answer.

4) Discuss if Archies will be able to maintain its market share and leadership in the future with the entry of players such as ITC? Will the

company’s current strategies help sustain its competitive position?