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Business Marketing

Assignment # 1

Lecturer: Patrik Gottfridsson

Submitted by:

Usman Tariq Bhatty (840415-R238)

Ahsan Raza (841017-T659)
Salman Ahmad Awan (860813-T390)
Mehmood Ali Irfan (8
Business Marketing Management

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THIS PAGE INTERNATIONALLY LEFT BLANK.

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Content

Abstract ................................................................................................................... 05

Introduction ............................................................................................................. 06

Company’s Business Environment.......................................................................... 07

B2B Market Characteristics..................................................................................... 08

Analyzing Business Structure using Network perspective....................................... 10

Way of doing business using relationship marketing perspective ........................... 11

Supply Chain and Marketing Channels ................................................................... 13

Conclusion .............................................................................................................. 15

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Abstract

Artistic Milliners, a textile and apparel manufacturing company based in

Pakistan is selected due to its pure B2B nature of business. Also it is the
fasted growing organization in the region. We have analyzed the way they
do business and maintain their relations with customers which has put
them on a fast track. The business environment in region is very tough due
to the competition and a survival is based on the how strongly a company
follows strategies. We have theoretically analyzed the company’s business
environment based on structure using network and relationship marketing
perspective along with its supply chain and marketing channels.

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 BUSINESS MARKETING MANAGEMENT

STUDY OF

ARTISTIC MILLINERS

Artistic Milliners (AM) is one of the leading manufacturers of

Textiles and Apparel Industry Established in 1949. They
specialize in Jeans manufacturing and has there working all
around the world with most reputed brands in the market. It
is completely B2B Company and does not offer any product
to Consumers directly. AM provides special customized package deals such as product
development at source, design support, shorter lead times, on-time deliveries and
warehousing facilities.1

AM having the vertically integrated setup takes edge on other

local suppliers. They have their own in-house yarn spinning,
fabric weaving and garment stitching and laundry facilities.
With the capacity of 3 million meters of fabric per month and
300,000 pieces of garments per month the main focus is on
innovation and quality.

1
www.artisticmilliners.com

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Company’s Business environment:

Artistic and its partners lie in the category of commercial consumers which includes
manufacturers, servicing companies, transportation companies, retailers etc.

The company has manufacturing facilities in Pakistan and has their sales offices in New
York, San Francisco, Milan and Tunis. They actively participate in exhibitions in EU and
US.

Company has a very close relation with their business customers which are mostly
retails and some cases wholesalers. Its customers include Levi’s, H&M, GAP Inc.,
Abercrombie & Fitch, Polo Ralphlauren, Diesel, Lindex, Kappahl etc.

Artistic has five production setups which are near to each other; two of them produce
fabric, one for yarn and two for garment and laundry. They have one head office where
sales, purchasing, logistics and exports are handled.

• Entering Goods; - Manufactured Goods (Jeans)

Classification of Product to supply

• Rapidly growing market in US & EU and Japan

Nature of Market

• key participants includes Procurement

Nature of Organizational Manager, Technical Manager, Operational
Buying Process Manager

• Quality, Price, Reliability, Reputation, Trust in

Key Criteria Used by Supplier and Timely Delivery
Buyers

•Strong Marketing base with high customer retention

Direction of Marketing •Focus on Research & Development with Continuous Improvement

Strategy •Reliability in the business with a history of successful events

Business Market Classification2

2
Hutt, Michael D. & Speh, Thomas W. (2007). A Business Marketing Perspective. Business marketing management:
B2B. USA: Thomson South-Western. pp. 20-24

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For better understanding of how the garment industry usually works in the world; Value
Chart of the (Jeans) product flow is as follows:
INFORMATION FROM RETAIL STORES –
IN USA & AROUND THE WORLD
HEAD OFFICE APPOINTS DIFFERENT
FABRIC SUPPLIERS – WITH RESPECT TO
PRESENTATIONS GIVEN TO THEIR
DESIGNS TEAMS IN THEIR HEAD OFFICES
SAMPLES USING FABRIC FROM THESE
SUPPLIERS SEND BACK WITH PRICE
QUOTATIONS TO REGIONAL OFFICES
FABRIC MANUFACTURER SUPPLIES
TO GARMENT MANUFACTURERS
WHO IN RETURN MANUFACTURES
GARMENTS AND SEND THEM TO
DIFFERENT RETAIL STORES ACROSS
THE GLOBE
DATA SEND TO HEAD OFFICES
TECHNICAL DETAILS SEND TO GARMENT
FACTORIES TO PREPARE SAMPLES
REGIONAL OFFICES SEND SAMPLES
TO HEAD OFFICE FOR FINAL
APPROVALS
GARMENT MANUFACTURERS PLACE
ORDERS TO FABRIC SUPPLIERS
8
FORCASTING THE FUTURE DEMAND
BASED ON PAST SALES AND FUTURE
MARKET DEMAND
INFORMATION SEND TO REGIONAL
OFFICES REGARDING THE FUTURE
DEMAND OF THE SEASON AFTER ONE
YEAR
FINAL GARMENT MANUFACTURER
AND FABRIC SUPPLIER SELECTED
REGIONAL OFFICES PLACE FINAL
GARMENT ORDER TO GARMENT
MANUFACTURERS
B2B Market Characteristics:

a) Derived Demand

Product demand is derived from the end consumer. The demand for apparels will rise
from consumers directly to the retailers and that will be derived to manufacturers of the
product. Ultimately creating demand in all the businesses included in the manufacturing
of product3 e.g. In Fall’10 season the demand from H&M rose for the female skinny
jeans, also in the same season other retails increased their orders due to high demand
from the consumers.

b) Fluctuating Demand

Demand patterns should be monitored carefully by companies to act according to

fluctuating3 e.g. Last year inflation in US and EU affected manufacturers to a greater
extent, so Artistic targeted Wholesalers rather than retailers as they stock the goods for
longer period and sale later on in good times.

c) Stimulating Demand

Other than just keeping in view the activities of final customer businesses also reached
directly to the ultimate consumer3, Artistic is an authentic producer of Cordura® fabric
which is used in military and other durable clothing like hiking suits and special clothing
for outdoor activities4. Cordura® is a brand of Invista the largest synthetic yarns and
chemical producer. Invista has also endorsed Artistic during the exhibitions. Also Artistic
advertised directly in a sportswear magazine5.

d) Price Sensitivity

It refers to the responsiveness of the quantity demanded to the change in price. The
demand is elastic when it changes along with price an inelastic when demand does not
change with the change in price.3 At Artistic the price is very sensitive, levi’s canceled
an order of million meter fabric just over a price increase of one cent per meter.

3
Hutt, Michael D. & Speh, Thomas W. (2007). A Business Marketing Perspective. Business marketing management:
B2B. USA: Thomson South-Western. pp. 12-13
4
Fiber2Fashion; Cordura brand arrives in fashion capital- June 04, 2010 (France) [Elektronic] Available At:
http://www.fibre2fashion.com/news/textile-news/newsdetails.aspx?news_id=87012 (2010-09-08)
5
Wichita, Kan.; INVISTA’S CORDURA® Brand Team Unveils New ‘Hard Working Comfort ‘Denim Fabric - January 26,
2010 [Elektronic] Available At: http://www.invista.com/news_releases/2010/pr_cordura_denim.shtml (2010-09-
08)

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Below is the diagram representing the involvement of different businesses in the supply
chain and this becomes a network as different activities are performed among them and
resources are either shared transferred or modified.

Agricultural
Industry.
(Cotton Logistics
Security
Growers) Support (By
Services
air, road & sea
(Provides
transportation
security for the
of samples and
premises)
bulk)

Machinery
Wholesalers Manufacturers
(Act as (Provides
business machinery and
consumers) services for
operations)

Agents (For
Chemical
technical
information,
markets
Yarn, Fabric & Producers
(Provides dyes
analysis and Garment and other
chemicals for
business
contacts) Manufacturer the process)

(Artistic
Milliners)
Testing Labs
Retailers (Act (Provides
as business fabrics &
consumers) garment
testing)

Banks IT Support.
(Handles (Provides ERP
company solutions &
accounts) hardware)
Insurance
Government
Companies
Support
(Provides
(Provides
insurance to
electricity,
company’s
water and gas)
assets)

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Analyzing Business Structure using Network perspective:

A network consists of actors, activities and resources. A business a dependent on

resources held by others therefore to perform the necessary activities among the actor
and successful network is required.6
 Actors:

Organization or part of the organization performing activities and controlling

resources are known as Actors. In AM’s network the actors are companies among
which the activities are being performed, like manufacturers, buyers, suppliers etc.

 Activities:

When the recourses are combined, exchanged or shared among actors the activities
takes place. For e.g. AM purchases chemicals from Invista and delivers readymade
apparel goods to the retailers the resources are shared and activities are performed.

 Resources:

There are tangible and intangible resources. Cotton, machinery and manpower are
tangible resources; however the intangible resources are the expertise to run the
machinery, knowledge of market trends and information of competitors.

Way of doing business using relationship marketing perspective:

“'Relationship marketing' is about maximising long-term profitability through the

intelligent use of information and the use of superior service. The information is used to
enhance and to create superior relationships with customers and provide better service
more customised to the individual customer.”7

Relationship marketing is developing a successful relationship with customers as the

loyal customers are far better than customers which are price sensitive and are open for
other alternates. Artistic has created a value based relationship with its customers. Its
focuses on few but important customers and strengthen their relation with them. One of
the sales members is always ready on customer’s call and provides services. In times
when there was a lot of pressure on manufacturers and they were unable to fulfill the
requirements lots of miss commitment did happened however Artistic was there to face

6
Patrik Gottfridsson. Lecture 3, Businesses as Networks-The Interaction and Network Perspective. Business
Marketing Management: B2B. Slide 4-11
7
http://www.crm-forum.com/relationship-marketing.html (2010-09-07)

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the customers and this was very well appreciated; it helped to build reliability in the
relationship.8
AM offers the product at the right moment when required; they offered there supper
stretch skinny jeans range of products when it was highly demanded by the end
consumers thus carrying out a transactional exchange. Due to the relationships and
good credit rating with suppliers when there was a shortage of T400 synthetic fiber AM
was having a sufficient supply of it.

The company shares some common software with Gap Inc. and Polo Ralphlauren and
the flow of information is timely therefore building a good operational linkages.

The contracts are often exchanged b/w AM and its customers in which prices and
quantities are decided for the season. Beside these economic and technical ties over
the period AM also carries out extensive social efforts. They have recently collected a
good amount for the flood affected people in Pakistan. These are the collaborative
exchanges which company carries out over the time.

According to Allen C., Kania D. & Yaeckel B. in “One-to-One Web Marketing”:

“The strongest link creation can only be done by establishing a learning relationship by
following these four steps:

 Finding out customer needs through interaction and feedback;

 Meet those needs by customizing your products and services;
 Have continuous interaction and feedback with the customer to identify the
individual needs;
 Keep customers satisfying to avoid losing them to your competition.”9

Implementation of the learning relationship theory of Don Peppers and Martha Rogers
has also been observed in AM. AM has a strong and regular Interaction and feedback
system implemented to meet the satisfaction of the customers.

8
Hutt, Michael D. & Speh, Thomas W. (2007). A Business Marketing Perspective. Business marketing management:
B2B. USA: Thomson South-Western. pp. 90-91
9
Peppers D. & Rogers M. (2001). One to One Web Marketing Overview. One to One Web Marketing. Canada: John
Wiley & Sons, Inc. pp 5-7

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Supply Chain and Marketing Channels:

According to a report by Sarah-Margaret Church prepared for TTM 581 December

2007:

“Apparel companies have used several strategies in order to keep their supply chains
working efficiently and tackle problem areas. An efficient and cohesive supply chain
allows companies to keep a competitive advantage by supplying superior service to
their customers and by keeping loss of inventory at a minimum.”10

AM uses multiple channels, new advances in technology, and streamlining in order to

create a very efficient supply chain as shown in the figure below:

Suppliers from different part of the glob are chosen based on their product quality and
customers requirement. Cotton which is basic requirement is purchased from Pakistan
and sometimes Egypt. The other raw materials include synthetic fibers and chemicals
are mostly purchased from German based companies. Machines are purchased from
Germany as well. Usually the raw material purchased is for the period of one to three
months based on its procurement time. The manufacturing is done in company’s
facilities; however subcontracting is carried out in case of special requirements. When
AM has the order on non-denim white fabric which needs bleaching and ultra-whitening

10
Sarah-Margaret Church (2007); Analysis of Premium Denim [Elektronic] 2 (3), 4-5 Available At:
http://www.nctextileconnect.com/documents/Premium%20Denim%20Edited.pdf (2010-09-09)

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in the process it was subcontracted not because AM does not has the capability but it
was time consuming and not cost effective.

Quality checks are carried out in-line at every stage, however the final audit and
inspection is done before packing. The packed product is then moved to the warehouse
for delivery. Logistics department takes care for the dispatch to different destinations by
means of sea and air transportation. The garments are shipped to US, EU, Japan and
Middle East.

Marketing channel is a link b/w manufacturer and customer. These include both direct
and indirect channels11. Artistic uses both direct and indirect channels however the
direct channels are preferred and are high on priority.

 Direct channels are subdivided into three channels direct sales, online
marketing and telemarketing. AM carries direct sales due to the product
requirement. Sales team visits to customer very often to keep them updated with
their new developments, for e.g. there are new developments every season and
these are presented to customers regularly. AM’s US sales team visits each
customer in US every month to keep them engaged in the new offerings and
after sale services if required. Jeans is a complicated product which requires
direct interaction b/w the manufacturer and retailer. Often complications occur
after washing the garment when the behavior of the fabric changes. Due to the
significantly large volumes the direct contact is very important.

 Indirect channels include the manufacturer’s representatives and Industrial

distributers e.g. AM used to work with distribution warehouse by the name of
“Bluefalls Apparels” in U.S. However last year in recession due to unsuccessful
business the company focused on their own representatives for the indirect
sales. Also in Tunisia the company operates through its agents because of the
complexity of the market. These indirect channels help companies in such
markets where it becomes difficult for them to approach directly. For e.g.
language barriers and other cultural and business norms must be taken into
account to capture such markets.

11
Hutt, Michael D. & Speh, Thomas W. (2007). A Business Marketing Perspective. Business marketing
management: B2B. USA: Thomson South-Western. pp. 292-294

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Conclusion:

We have implemented all the theories and Analyzed that Artistic Milliners overall follows
the general theories and the processes as per mentioned by Michel D. Hutt & Thomas
W. Speh. AM has developed a strong link with his customers by providing them high
level of satisfaction and timely delivery. AM is a purely B2B company providing goods
and services to the retailers and wholesalers. The end consumers of the goods are not
connected directly to the company. Thus the company follows the parameters and
characteristics of a B2B organization. The company’s business structure is found to be
of an international standard. The relationship among its customers and suppliers are
strongly built and are based on trust. It is hard to maintain relationships in tough
business environment but AM successfully kept its relations. The exchange of
resources at the right time is very essential for both manufactures and customers to get
benefit from the business. The supply chain of a textile and apparels manufacturer is
very complicated however we have managed to avoid the complexity and defined their
supply chain in a simple way. Also they have followed the typical marketing channels
defined by the author in Business Marketing Management: B2B. Both direct and indirect
channels are being used in the company. AM has enormously grown over the last few
years as it has increased its customer based and invested in its research and
development.

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