INTERNATIONAL MARKETING

INTERNATIONAL
MARKETING PLAN
KHADIM INDIA LIMITED

GROUP 9
Mohammed Shakeel (P16139)
Aibel Johny (P16167)
Deepak Jayan (P16183)
Rajil Chandra (P16207)
Anjali Viswam (P16109)
Contents

Introduction .................................................................................................................................................. 2
Strengths ................................................................................................................................................... 2
Key risks / weakness ................................................................................................................................. 4
Why Southeast Asia? ................................................................................................................................ 5
Four filter model ........................................................................................................................................... 5
Filter - 1 : Macro level factors ................................................................................................................... 5
Filter 2 : General market factors related to product category .............................................................. 6
Filter 3 Micro level factors specific to the product ................................................................................ 7
Filter 4 The final screening of target markets ........................................................................................ 7
Market Segmentation ................................................................................................................................... 8
Targeting ....................................................................................................................................................... 8
Positioning .................................................................................................................................................... 8
Marketing mix elements ............................................................................................................................... 9
Marketing Action Plan .................................................................................................................................. 9
Implementation plan .................................................................................................................................. 11
Controlling Mechanism ............................................................................................................................... 12
Conclusion ................................................................................................................................................... 13
References .................................................................................................................................................. 14

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Introduction

Khadim India Limited (KIL), incorporated in 1981 is one of the leading footwear brands in India
with a two pronged focus on retail and distribution of footwear. Company operates exclusive retail
stores (contributes ~70% of its net revenue) under the 'Khadim's' brand with major presence in
East India and is one of the top three players in South India (FY2016). KIL has manufacturing
facilities at Panpur and Kasba (in West Bengal) and 4 distribution centers across India. Khadim's
both business verticals complement each other, as each of them predominantly own customer base,
sales channels and product range. Khadim's retail business has grown at a CAGR of 17.2% while
distribution business has grown at a CAGR of 42% over FY15 to FY17. Khadim has a scalable,
asset-light and less capital-intensive business model to operate its exclusive retail stores. With its
affordable product offerings commanding high brand recall, Khadim has carved out a special place
for itself in the Indian footwear industry. Backed by better product mix and increase in average
selling price (ASP), revenue from its premium sub-brands increased to 52.3% in FY17 from 42.7%
in FY13 and Gross margins grew from 42.5% in FY13 to 46.9% in FY17. With GST
implementation, organized player like Khadim with its premium sub-brands is expected to benefit
from the transition and boost its revenue and profitability.
KIL also had the largest footwear retail franchise network in India in FY16. KILs core
business objective is Fashion for Everyone, and the company has established and identity as an
affordable fashion brand, catering to the entire family for all occasions. Khadim can expand its
business to other developing countries. Their strategy of affordable fashion can satisfy the
aspiration of middle class of a developing country.

Strengths

1) Leading footwear brand.

The company is the second largest footwear retailer in India in terms of number of exclusive retail
stores operating under the Khadims brand, with the largest presence in East India and one of
the top three players in South India, in FY16. Also, the company has the largest footwear retail
franchisee network in India as of FY16. Company's product range offers a wide variety of designs
and styles, and caters to various customer segments across a wide range of price points. Company's
brand and sub-brands command high consumer recall and is associated with high quality products
at affordable prices. Owing to affordable fashion positioning, the company has been able to
straddle both the retail and distribution business verticals and grow seamlessly across geographies.
2) Two-pronged business model.
Company operates through two distinct business models, retail and distribution, each with its own
customer base, sale channels and product range. Retail business operates through company owned
or franchised exclusive retail stores, catering to middle and upper middle-income consumers in

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metros, Tier I Tier III cities. Distribution business operates through a wide network of
distributors catering to low and middle-income customers in metros and Tier I Tier III cities.
Both business verticals complement each other, as each of them predominantly have separate
product ranges, target audience and channels of sale. This two-pronged business model has helped
the company to capitalize on growth potential, and target the Indian branded retail footwear
market, which is proposed to grow at a CAGR of 18%, and the branded footwear distribution
market which is proposed to grow at 23%, from fiscal 2016 to fiscal 2020. Conversely, Khadim's
retail business has grown by a CAGR of 17.22% from FY15 to FY17 while distribution business
has grown by a CAGR of 42.04% over the same period.
3) Extensive geographical reach.
The company has a wide network of 853 and 829 exclusive retail stores across 23 States and one
Union Territory in India, as at June 30, 2017 and March 31, 2017, respectively. In FY16, Khadim
had the largest retail footwear franchisee network in India. As at June 30, 2017 and March 31,
2017, out of company's 853 and 829 exclusive retail stores, 685 and 667, respectively, were
operated by franchisees. In the distribution business, the company have established its presence
across East and South India and have also forayed into markets in West India and primarily in
Uttar Pradesh in North India. Khadim has a network of 377 and 357 distributors for the three-
month period ended June 30, 2017 and fiscal 2017, respectively, which include 291 and 280 in the
East, 25 and 19 in the South and 61 and 58 in North and West India, respectively
4) Asset light model with minimum capital expenditure.
Khadim has a scalable, asset-light and less capital-intensive business model to operate its exclusive
retail stores. Company's net revenue from new exclusive retail stores over the last five fiscal years
was Rs343.32cr, with capital expenditure of Rs14.3cr for the same period. Also, the company has
applied the asset light approach with regards to its procurement of products. The portion of
products procured from outsourced vendors with respect to retail business amounted to 89.18%
and 85.60% of products, in the three-month period ended June 30, 2017 and FY17, respectively.
In the distribution business, the company started tracking it as a separate business vertical only
from FY15, and has grown distribution business, by adopting an asset light model of
manufacturing, by engaging contract manufacturers.
5) Improved product mix, better performance from sub-brands.
Company's revenue has grown at a CAGR of 9% over FY14-17 while operating profits increased
at a CAGR of 31% over the same period. Revenues from retail business grew by 13.52% to
Rs456.4cr in FY17 from Rs402.1cr in FY16, with the expansion in network of retail stores, driven
by growth in existing network of stores and 60 new stores being opened during FY17 while
revenues from distribution business grew by 35.74% to Rs134.7cr in FY17 from Rs99.2cr in FY16
as the company increased sale to existing distributors, widened distributor base and expanded into
new geographies. The company suffered losses in FY15 due to higher expenses and inventory
build-up. Revenue from all 9 sub-brands (Pro, Lazard, Softouch, Cleo, British Walker, Turk,
Sharon, Bonito and Adrianna) as a percentage of retail footwear business revenue increased to
51.21% in 3M FY18 and 52.38% in FY17, from 42.76% in FY13. The change in the product mix

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along with reasonable price increases has led to increase in average selling price (ASP). The ASP
increase, coupled with management's ability to pass on cost increases, has positively impacted
retail business gross margins which has grown from 42.54% in FY13 to 46.89% in FY17 and
47.14% in 3M FY18.

Key risks / weakness

Inability to expand into new geographic markets or penetrate existing markets may adversely
affect growth.
Any delay or default in payment from franchisee operated stores or distributors could adversely
impact profits.
Inability to maintain and enhance the Khadims brand, the sales of products may suffer which
would affect financial condition.
Failure to successfully procure raw materials or to identify new raw material suppliers could
adversely affect results of operations.
The target markets
Asia is a shining star in the otherwise drab landscape of the economic stalwarts of our recent past.

The region has been resilient through the global financial crisis and has experienced consistent
average annual GDP growth rates in the range of 5% to 8%.

By 2050, Asia will account for 45% of the estimated world population, an increase of 23% over
the regions population in 2013.

63% of the worlds 440 fastest emerging cities are in this region. This growth will add a billion
new consumers and a total purchasing power in excess of $10 trillion to the global economy.

Asia will house one of the youngest and largest workforces, numbering around 3 billion and
representing 52% of the global workforce. By comparison, North America, South America and
Europe combined will account for only 21%.

Dwarfed by the size of and focus on China and India, the tiger economies of Southeast Asia have
been quietly but unrelentingly gathering economic steam.

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Why Southeast Asia?

The region is urbanizing rapidly. The cities of Southeast Asia will support 81 million people by
2020, creating greater affluence through high workforce participation.

The region is bucking the aging demographic trend. By 2020, almost half of Southeast Asias
population will be below 30 years of age, providing an ongoing and steady stream of talent that
will grow in experience and maturity each year.

All the above factors favored the choice of the Southeast Asian countries :

1) Indonesia
2) Thailand
3) Malaysia
4) Philippines
5) Vietnam
6) Singapore
7) Myanmar
8) Cambodia
9) Laos
10) Brunei
11) Timor-Leste

Four filter model

Four filter model is used for appropriate market selection

Filter - 1 : Macro level factors

Khadims look for mass markets. A relatively big economy is always a positive factor to do the
business. So the management decided to go for countries whose GDP is above $500 billion.
So from the above 11 countries 5 countries with GDP above $500 billion was chosen:

1) Indonesia - $ 3,028 bn
2) Thailand - $ 1,161 bn
3) Malaysia - $ 863 bn
4) Philippines - $ 801.9 bn
5) Vietnam - $ 594.9 bn

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Filter 2 : General market factors related to product category

There is significant upward mobility of the population, a burgeoning middle class that is
gaining in size and wealth, stoking demand for consumption of goods and services. Disposable
income continues to rise across all segments of the population in each country. Ever greater
spending power will support demand for services and higher value-added products. Footwear
consumption has ever increased in the countries with higher population. Ecommerce sales can
be boosted in a population with good level of digital literacy. Awareness about brands other
than local brands among people, international media exposure through internet and other
mediums (for following new trends in footwear) are some of the desirable characteristics of a
population that will help Khadims grow its business. Population and internet users are used to
filter countries this time.

Population

Indonesia 248 million

Philippines 103 million

Vietnam 91 million

Thailand 65 million

Malaysia 29 million

Internet users (in thousands)

Indonesia 55,000

Vietnam 30,859

Philippines 33,600

Thailand 18,310

Malaysia 17,723

Management decides to shortlist countries which has population above 80 million and internet
users above 25,000 (in thousands). Thus the following countries were selected :

Indonesia

Philippines

Vietnam

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Filter 3 Micro level factors specific to the product

There criteria used for shortlisting 3 countries is the total footwear export from India to those
countries.

Footwear export form India (US$ Thousand)

Indonesia 7825.69

Vietnam 7325.77

Philippines 2293.88

Since Philippines offer less scope for footwear exports in terms of exports, Indonesia and
Vietnam are shortlisted from the above list.

Filter 4 The final screening of target markets

Although the business climate in Vietnam is improving all the time, obstacles still remain. The
challenges faced by overseas companies include:

corruption and bureaucracy

shipping and customs tax issues

tax burden

an opaque legal framework and the slowness of Vietnams judicial system

poor infrastructure

Above risks make it difficult for a new player to do business in Vietnam.

When compared to Vietnam, Indonesia is a more welcoming market. Bata has been operating there
for quite some time. Footwear recorded robust value growth of 7% in 2016 due to growing demand
for high-quality and sophisticated products, provided by many new domestic brands such as
Buccheri. The growing number of internet retailers also contributed to growth in 2016.

Sepatu Bata Tbk Pt led footwear in 2016 with a value share of 4% and sales of IDR1.4 trillion.
Bata is a longstanding brand in Indonesia and has a large number of stores, even in remote areas
of the country. In addition, the brands affordable prices cater to a wide range of consumers from
low-middle income to middle-high income groups. Footwear is expected to continue to grow over
the forecast period due to the support it receives from the Indonesian government, which has
named the footwear industry as one of its priorities for development by 2021.

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India and Indonesia have shared two millennia of close cultural and commercial contacts. The
Hindu, Buddhist and later Muslim faith travelled to Indonesia from the shores of India. The
Indonesian folk art and dramas are based on stories from the great epics of Ramayana and
Mahabharata. The shared culture, colonial history and post-independence goals of political
sovereignty, economic self-sufficiency and independent foreign policy have unifying effect on the
bilateral relations.

In 2016, Indonesia exported 661 million pairs of footwear, a 2.9 percent increase year on year
(yoy), while it imported 394 million pairs, a 16.9 percent increase yoy. Also according to World
Footwear Yearbook 2016, Indonesias footwear consumption in 446% higher than Vietnam. So by
taking all the above reasons into consideration Indonesia is selected as the target market.

Market Segmentation
Segment the market into Men, Women and Kids categories.

A separate athletic wear segment is also created.

A segment where affordable footwear with quality should be created

Targeting
Average age of population in Indonesia is 28, So the young and sporty generation should be
the main target. Also, as they do in India, they can cater the needs of entire family by
introducing a line of products.

Positioning
Khadims should position themselves as affordable fashion provider. The high level of
disposable income among Indonesian customers is a great opportunity for Khadims.

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Marketing mix elements
Product

All variants of Khadims products. It includes brands such as Turk, British Walkers, Lazard,
Clio etc.

Price

Prices need not be fixed. Can be increased strategically according to the rising income levels
of consumers. Affordability is the most important perceived feeling for the customer.

Place

Initially the direct outlets are opened in cities. Later develops the network to rural areas through
franchise. E-commerce also can be tried once the market is stabilized.

Promotion

Promotion includes outdoor advertisements, social media advertising, Newspapers etc.

Launching campaign should be implemented extensively.

People

Experienced sales personnel bringing up the first point of contact for customers with top
management including Indonesian business professionals with knowledge about the local
market.

Process

Value delivery is through direct and franchised outlets with all elements of customer
satisfaction being delivered through the same.

Physical Evidence

The physical evidence being our product delivered, it is pretty much straight forward, on what
is being communicated to the customer as the physical evidence.

Marketing Action Plan

A major footwear brand in India has prominent presence in Indonesia and Khadims being a
positioned as a better alternative Indian brand will go down well with the huge number of foreign
tourists and western population visiting the country. This would also take Khadims outside the
country for global exposure and over sea market exploration while also taking the brand name to

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new heights. This venture opens up a whole new world of growth, opportunities, and good will in
taking the Khadims brand to whole new heights.
The primary objective of this new foray being the continuous growth of Khadims as a reputed
brand and acceptance by Indians as a brand of their own has resulted in a strong need for
strengthening the brand name along with the potential financial and monetary gains as a business
venture in a highly developing market for footwear, with a wide variety of affordable and premium
footwear for all members of a family in designs trending in local tastes, the brand acceptance
should be a given high.
The initial foray would be through direct company owned outlets which would introduce the new
market to the whole new world of Khadims and its exciting range of products catering to both the
sexes alike. The few locations in the new market would be the capital city of Jakarta, Semarang
and Bali. Strategic locations which would help cater to domestic and tourist population alike.
Semarang and Bali have a huge sandals and slippers culture which we are very keen on and Jakarta
has a huge population interested in the entire range of Khadims product list. We would also team
up with IFC, Indonesia footwear Centre (www.indonesiafootwearcenter.com) an initiative to
promote local and global brands in the country along with additional exposure for members, which
would go a long way in creation of awareness among the general population about Khadims and
its products.
This would ideally be the best way to tap into the new Indonesian market because Khadims is an
unheard brand in the new market and it is essential to create a bang by highlighting our
competencies and strengths through established institutions and pre-launch promotions as well as
post launch offers and introductory prices.
Nationwide campaigns, including newspaper advertisements, television commercials, and
billboard shout outs, promoting the launch of the new brand, highlighting the legacy and the way
forward with special introductory prices and attractive new designs, especially for the new market.
The further foray into the others parts of the country will be through franchising. Franchises are of
two types, exclusive franchise and dealer franchise, replicating the system in India.

Exclusive franchises would solely be dealing with Khadims products and will receive more
attention and support for growth and penetration including annual advertising campaigns. Dealer
franchises would be multi branded outlets also catering to Khadims products. With products to
suit the needs of each and every individual in the country, Khadims will get the right entry by
positioning itself as a strong competitor to the already existing market leaders by tapping into the
rural initially and the urban markets gradually.

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Implementation plan
Khadims can ensure its correct marketing plan through controlling procedures of top management
and with proper guidance to all departments of organization. The objectives of Khadims can be
correctively achieved by proper check and balance of companys market share, profit, sales, budget
and continuous analysis of all departments of company so that marketing plan could implemented
and could meet with targets.

Also through proper setting of milestones, budget and department selection to work on objectives
of marketing communication, channels and research then the marketing plan would be executed
in timely basis and with fewer errors.

Personal contact and meetings with the decision-makers in the shoe industry
Several telephone meetings should be held with the purchasing managers from retailer chains,
to ensure that they are aware of the market potential of the ecolabel and that they know how to
place environmental demands on their suppliers. The pamphlet is to be prepared and sent to them.
The idea is to give the companies a forum where they can discuss the market potential of the
product and what it will take for them to commit to the product. The next meeting will focus on
how to implement a management system to control and document the suppliers' compliance with
the product criteria.

Pamphlet for the decision-makers in the shoe industry

The pamphlet clarifies what the European ecolabel stands for, the market potential of the ecolabel
and the costs in connection with the product. The pamphlet gives a number of good reasons for the
enterprises to opt for the product and the enterprises can use the pamphlet in the dialogue with
their suppliers and customers.

Theme meeting for professional purchasers of shoes

The discussion is done to know how many private purchasers do not find the product criteria
comprehensive enough, mainly because the product does not address the workers health and
safety and social and ethical aspects but they can use the product criteria as a checklist when they
develop their own demands for their suppliers.

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Controlling Mechanism
Some of the tools and approaches are complementary or substitutes; some are broad in scope,
others narrower. The monitoring and evaluation methods are:
Performance indicators - These measure inputs, processes, outputs, outcomes and impacts
of development interventions. They are used for setting targets and measuring progress
towards them.

The logical framework (LogFrame) approach - This identifies objectives and expected
causal links and risks along the results chain. It is a vehicle for engaging partners and can
help improve programme design.

Theory-based evaluation - Similar to the LogFrame approach, this provides a deeper

understanding of the workings of a complex intervention. It helps planning and
management by identifying critical success factors.

Formal surveys - These are used to collect standardized information from a sample of
people or customers. They are useful for understanding actual conditions and changes over
time.

Rapid appraisal methods - These are quick, cheap ways of providing decision-makers with
views and feedback from beneficiaries and stakeholders. They include interviewing, focus
groups and field observation.

Impact evaluation - This is the systematic identification of the effects of an intervention on

households, institutions and the environment, using some of the above methods. It can be
used to gauge the effectiveness of activities in reaching different target segments.

Cost-benefit and cost-effectiveness analysis - These tools assess whether the cost of an
activity is justified by its impact. Cost-benefit measures inputs and outputs in monetary
terms, whereas cost-effectiveness looks at outputs in non-monetary terms.

Cultural controls
Corporate culture is a key for deriving maximum output and profitability and hence cultural control
is a very important attribute to measure the overall efficiency of a firm. It takes form when
employees of the firm try to adopt the norms and values preached by the firm.
Employees usually tend to control their own behavior following the cultural control norms of the
firm. Hence, it reduces the dependence on direct supervision when applied well. In a firm with a
strong culture, self-control flourishes automatically, which in turn reduces the need for other types
of control mechanisms.

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Cost and accounting comparisons

Cost and Accounting Comparisons is a financial approach. It arises due to the difference in
expenditure among various units of the subsidiaries. A meaningful comparison of the operating
performances of the units is necessary to get the full output from this approach. Cost accounting
comparisons use a set of rules that are applicable to the home country principles to meet local
reporting requirements

Conclusion
Indonesia has a GDP per capita of $3,604 ($11,700 at PPP) that exceeds many of its ASEAN
neighbors such the Philippines and Vietnam, and with 258.8 million people (IMF), Indonesias
economy comprises nearly half of ASEAN economic output. Indonesia is a thriving democracy
with significant regional autonomy. According to Euromonitor International, Indonesia has the
worlds fourth largest middle class with 17.3 million households as of 2014, and is forecasted to
expand to around 20 million households by 2030. The gap of availability of affordable footwear
which has high quality and pro-consumption middle class can be a great opportunity for Khadims
in Indonesia.

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References
http://www.euromonitor.com/footwear-in-indonesia/report

http://www.straitstimes.com/opinion/the-future-of-growth-in-south-east-asia

https://www.jpmorgan.com/country/US/EN/cib/investment-banking/trade-asean-future

http://reports.weforum.org/global-competitiveness-index-2017-2018/east-asia-and-pacific/

https://www.gov.uk/government/publications/exporting-to-indonesia/exporting-to-indonesia

http://mea.gov.in/Portal/ForeignRelation/India_Indonesia_DEC2016.pdf

https://tradingeconomics.com/india/exports/footwear-gaiters-like

https://www2.deloitte.com/content/dam/Deloitte/jp/Documents/consumer-business/cp/jp-cp-
ci2016idn-eng-1227.PDF

http://blog.euromonitor.com/2017/10/emerging-markets-apparel-footwear.html

http://www.strategyr.com/MarketResearch/Footwear_Market_Trends.asp

https://www.export.gov/article?id=Indonesia-Market-Overview

www.worldfootwear.com

World footwear Yearbook 2016

https://tradingeconomics.com/india/exports-of-footwear

https://wits.worldbank.org/CountryProfile/en/Country/SAS/Year/2016/TradeFlow/Export/Partn
er/all/Product/64-67_Footwear

https://wits.worldbank.org/CountryProfile/en/Country/IND/Year/LTST/TradeFlow/Export/Partn
er/by-country/Product/64-67_Footwear#

http://www.thejakartapost.com/news/2017/04/19/growth-of-indonesian-footwear-imports-
outpaces-exports.html

http://www.doingbusiness.org/rankings

http://www.haygroup.com/en/our-library/infographics/2017-global-salary-forecast/

http://www.worldbank.org/en/region/eap/publication/east-asia-pacific-economic-update

https://www.forbes.com/sites/sylviavorhausersmith/2014/03/07/opportunity-is-knocking-in-
southeast-asia-can-you-hear-it/#4546ec923b9a

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 https://www.sisinternational.com/market-opportunities-in-southeast-asia/

https://www.thebalance.com/export-potential-in-indonesia-1953479

https://www.pwc.com/th/en/publications/download/south-east-asia-web.pdf

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