CLUSTER DEVELOPMENT - II

A REPORT ON EXPLORATION OF STRATEGIC OPTIONS FOR

CHANNAPATNA HANDICRAFT & TOY CLUSTER

Submitted By:

BHARGHAVEE (MFM/16/94)

ISHA AGGARWAL (MFM/16/20)


Submitted To:

Department of Fashion Management Studies

Under the supervision of:

Ms. Nethravathi T.S.


Assistant Professor, FMS


NATIONAL INSTITUTE OF FASHION TECHNOLOGY, BENGALURU


07 May, 2018
 CERTIFICATE

This is to certify that this project report titled “A Report on Exploration of Strategic
Options for Channapatna Handicraft & Toy Cluster”, submitted to the Department Of
Fashion Management Studies, National Institute Of Fashion Technology, Bengaluru,
is a bonafide record of the work done by the authors mentioned below. It is based on
the research work conducted through the Institute’s Cluster Development Initiative,
under the guidance of Ms. Nethravathi T.S., Assistant Professor and Dr. Sanjeev
Sadashiv Malage, Associate Professor, Department of Fashion Management
Studies, National Institute of Fashion Technology, Bengaluru.

Mentor:

Ms. Nethravathi T.S.


Assistant Professor, FMS

07 May, 2018

Bengaluru

Authors:

Bharghavee (MFM/16/94)

Isha Aggarwal (MFM/16/20)

7 May, 2018

Bengaluru

i
 DECLARATION

The following project has been submitted in fulfilment of the requirements for the
subject Cluster Development - II, under the guidance of Ms. Nethravathi T.S.,
Assistant Professor, as part of the degree of Master in Fashion Management (MFM)
from the Department of Fashion Management Studies at National Institute of
Fashion Technology, Bengaluru, 2016.

We certify that except where due acknowledgement has been made, the following
work is that of the mentioned authors alone; the work has not been submitted
previously, in whole or in part, to qualify for any other academic award at the same
institute; the content of the research project is the result of work which has been
carried out within the institute; and, appropriate ethical procedures and guidelines
have been followed.

Bharghavee (MFM/16/94)

Isha Aggarwal (MFM/16/20)

07 May, 2018


Bengaluru

ii
 ACKNOWLEDGEMENTS

This work is not a sole endeavour but rather an integrated effort of many individuals
directed towards the same goal. We would like to extend our gratitude towards Ms.
Nethravathi T.S., Assistant Professor, Department of Fashion Management Studies,
National Institute of Fashion Technology, Bengaluru for showing great concern &
interest in our efforts and guiding us during the progress of the project, constantly
monitoring our progress at close quarters and throwing light on minute
technicalities and for providing guidance regarding appropriate formatting
techniques.

We would additionally like to thank Dr. Sanjeev Sadashiv Malage, Associate

Professor, CC-FMS, Department of Fashion Management Studies, National
Institute of Fashion Technology, Bengaluru for providing guidance, stimulating
enthusiasm and inspiring hard work.

Bharghavee (MFM/16/94)

Isha Aggarwal (MFM/16/20)

07 May, 2018


Bengaluru

iii
 TABLE OF CONTENTS

S. No. DESCRIPTION Page No.

1 CERTIFICATE i
2 DECLARATION ii
3 ACKNOWLEDGEMENT iii
4 EXECUTIVE SUMMARY 1
6 CHAPTER 1
 2
INTRODUCTION
7 CHAPTER 2
 6
INTRODUCTION TO THE CHANNAPATNA CRAFT CLUSTER
8 CHAPTER 3
 24
RESEARCH METHODOLOGY
9 CHAPTER 4
 28
ANALYSIS
10 CHAPTER 5
 37
SUGGESTIONS: STRATEGIC OPTIONS
11 CHAPTER 6
 45
LEARNING OUTCOMES
12 CONCLUSION 47
13 REFERENCES 50
14 APPENDICES 53
 LIST OF FIGURES

Figure 1.1: Exports of handicrafts
 4

Source : http://www.epch.in/moreDetails.htm
Figure 1.2: Exports of Wood Wares
 5
Source : http://www.epch.in/moreDetails.htm
Figure 1.3: Country-wise share (%) of Wood wares, 2015-16
 5
Source : http://www.epch.in/moreDetails.htm
Figure 4.1: PEST Analysis for Channapatna Craft Cluster 31

Figure 4.2: Competitor Analysis Map for Channapatna Craft Cluster 33

Figure 4.3: Value Chain Analysis for Channapatna Craft Cluster 34

Figure 4.4: Strategic Implications for Channapatna Craft Cluster 36

Figure 5.1: Ansoff’s Product/Market Matrix
 38

Source: Ansoff 1988, cited in Johnson and Scholes 2006, p341

v
EXECUTIVE SUMMARY

India is one of the largest suppliers and exporters of handicrafts and gift products to the
global market. This report is an explorative case study which explores the strategic options
for Channapatna handicraft & toy cluster. Identification and analysis of the market growth
opportunities, the structure and the characteristics of the competitive market environment
for the Channapatna products have been conducted by theoretical business models such as
SWOT analysis, Value chain, Competitor analysis and PEST analysis.

Political, economic, social, technological progress indicates an increasing and attractive

market to be exploited by Channapatna cluster. The rising population and eco-friendly
community provides for increase in market share of these handicrafts but there are few
problems that still need to be addressed in order to increase awareness, sale and value of
these products.

The theoretical model of Ansoff’s Matrix has been used to identify strategic options to
address the underperformance of Channapatna products in the domestic market in an
attempt to build a stronger brand image to create consumer awareness and thereby increase
market share.

!1
CHAPTER 1

!2
1. INTRODUCTION

1.1 INTRODUCTION TO INDIAN HANDICRAFTS

India is one of the biggest supplier and exporter of handicrafts and gift products to the
world market. This industry is spread all across the country in rural and urban areas and
due to this reason it is considered to be highly unorganised and decentralized. The sector is
very labour intensive and considered as the second largest employment-generating sector
after agriculture with numerous artisans engaged in craft work on a part-time basis. The
industry offers employment to over 6 million artisans, including a large number of women
and people from the weaker sections of society. The present day craftsmanship custom of
India is an impeccable case of absorption between the conventional outlines and cutting
edge methods. The quickly developing interest for Indian handiwork and blessings items
have made this division an undeniable huge scale sorted out industry that is developing
step by step. The handiworks part is essential for the Indian economy as it is one of the
biggest business generators and records for a critical partake in the nation's fares. The
states and local bunches that contribute altogether to painstaking work send out. The
Indian handiworks industry is divided, with more than 7 million provincial artisans and
more than 67,000 exporters/trade houses advancing local workmanship and craftsmanship
in the household and worldwide markets. The aggregate fare of crafted works is relied
upon to about twofold to US$ 2.7 billion in FY 2015-16 and further increment to US$ 3.8
billion by FY 2020-21.

1.2 KEY MARKETS AND EXPORT DESTINATIONS

India‘s rich cultural diversity and heritage provides a unique and huge resource for
developing craft products. The Indian Handicraft Industry is showing continuous growth
rate of 20% every year. Handicrafts industry is one of the important segment of
decentralized sector in India. Major parts of industry operates in rural and semi urban areas
throughout the country and has potential Indian and International market with around
67000 exporters to tap the market. According to the national census of handicrafts,
undertaken by the National Council for Applied Economic Research the value of

!3
handicrafts produced last year were of Rs.26,213 Crore. This Industry provides huge
employment opportunities to artisans that include women and people belonging to
backward and weaker society. This is one of the major source of income there. The Indian
Handicraft Industry is a $100 billion industry worldwide. India‘s contribution in world
market is 1.2%. The total exports of crafts items is Rs. 13412.92 Crore. Industry‘s share in
India's exports is 1.51%. In 2014–15, Indian handicrafts exports stood at US$ 4.5 billion,
up approximately 15.4 per cent over the previous year‘s exports. Exports of Indian
handicrafts have increased at around 16.4 per cent since 2008–09. Indian handicrafts are
exported across geographies, with the top 10 destinations being the US, the UK, the UAE,
Germany, France, Latin American countries (LAC), Italy, the Netherlands, Canada and
Australia. The US alone accounted for approximately 26.1 per cent of India‘s total
handicraft exports in 2014–15. It was followed by the EU, which accounted for
approximately 24.7 per cent. The UAE was the third-largest importer of Indian handicrafts,
with imports worth US$ 410 million in 2014–15.
[Sourced from Indian Brand Equity Foundation; http://www.ibef.org/exports/handicrafts-
industry-india.aspx]

Fig 1.1: Exports of handicrafts


Source : http://www.epch.in/moreDetails.htm

!4
!

Fig 1.2: Exports of Wood Wares


Source : http://www.epch.in/moreDetails.htm

!
Fig 1.3: Country-wise Share (%) of Wood Wares, 2015-16

Source : http://www.epch.in/moreDetails.htm

!5
CHAPTER 2

!6
2. INTRODUCTION TO CHANNAPATNA CRAFT CLUSTER

2.1 CRAFT CLUSTER INITIATIVE

The Cluster Development Initiative of the National Institute of Fashion Technology

(NIFT) is a carefully developed formula for integrating the crafts sector of the country
with the mainstream. NIFT, with active support from the Ministry of Rural Development
and the Office of Development Commissioner (Handicrafts & Handlooms), is developing
and implementing a craft cluster initiative towards the overall progress of craft, the cottage
industry and vocational activities. The intention of the project is to involve the institute’s
professional capabilities in the areas of design, technology, marketing and management
along with external expertise, and synergise all developmental activities by various
government and non-government agencies.

2.2 CHANNAPATNA CRAFT CLUSTER

A 200 year old craft in India, the Channapatna craft cluster is still bursting with innocence
and colours. Based in the state of Karnataka in Southern India, the Channapatna craft
cluster flaunts lathe turned wooden lacquerware toys crafted from eco-friendly vegetable
dyes. The cluster development project involved learning the processes of the handicraft
industry in Channapatna and understand the lifestyle of the artisans through a 5 day field
interaction. The project also involved primary and secondary research on the history,
supply chain and relevant details of the selected craft cluster. It was followed by
developing suggestions to improve the existing supply chain.

!7
2.3 CHANNAPATNA TOYS

Channapatna toys are a particular form of wooden toys (and dolls) that are manufactured
in the town of Channapatna in the Bengaluru Rural district of Karnataka state, India. This
traditional craft is protected as a geographical indication (GI) under the World Trade
Organization, administered by the Government of Karnataka. As a result of the popularity
of these toys, Channapatna is known as Gombegala Ooru (toy-town) of Karnataka.
Traditionally, the work involved lacquering the wood of the Wrightia tinctoria tree,
colloquially called Aale mara, a form of ivory-wood, interchangeably also known as hale
mara.

Large scale settlement of artisans and the availability of raw materials, in and around the
village made Channapatna the main centre for manufacturing wooden toys and dolls. The
people of Channapatna are known for their skill of moulding ordinary wood into
beautifully carved and painted toys. Toy making in Channapatna started in the beginning
of the 19th century. Tipu Sultan, ruler of the sultanate of Mysore, invited artisans from
Persia to train the locals of Channapatna. They started by carving toys out of ivory initially
then switched to rubber, cedar, and teak. In the beginning, these toys were hand crafted by
the artisan, as there were no machines to carve out and shape these toys. They were cut,
carved and coloured to perfection by competent hands of skill personnel without any
flaws. This dexterity added to the value of these toys, in comparison to the ones made by
engine lathe machinery these days. This craft has existed and grown since then, and has
become well known in India, and in countries like USA, Australia, Britain and Brazil. This
is one of the oldest crafts practiced in Channapatna, which has flourished over 200 years of
changes and development, and has shifted hands between four generations of the
craftsmen. The age-old craft developed further, giving Channapatna the wonderful name-
“The Toy- land”. The art has gone global in the recent years and there has been a great
demand of toys from the UK and the US. Rocking horses, jumping clowns and the
clapping monkeys have recently become one of the favourites amongst the children in
India and abroad.

Channapatna toys are a particular form of wooden toys (and dolls) that are manufactured
in the town of Channapatna, The craft has diversified over time; in addition to the

!8
traditional ivory-wood, other woods—including rubber, sycamore, cedar, pine and teak—
are now used as well. Manufacturing stages include procuring the wood, seasoning the
wood, cutting the wood into the desired shapes, pruning and carving the toys, applying the
colors and finally polishing the finished product. Vegetable dyes are used in the coloring
process to ensure that the toys and dolls are safe for use by children. The product range has
spread its tentacles from traditional toys to producing articles meant for interior
decoration, household utility articles, spice box, salt and pepper box, coaster sets, coat
hangers, key chains, mobile holders and an extended range of corporate gift items.

2.4 HISTORY

The origin of these toys can be traced to the reign of Tipu Sultan who invited artisans from
Persia to train the local artisans in the making of wooden toys. For nearly two centuries,
ivory-wood was the main wood used in the making of these toys, though rosewood and
sandalwood were also occasionally used. The lacquer-ware industry began as a household
craft that catered to the local tourist market of Karnataka. Many artisans sold their wares
on the roadside at Channapatna leading to a low productivity rate. In the previous two
decades, the industry has grown rapidly. It now exists as both small and medium scale
enterprises, serving as large export market avenue. Due to the phenomenal growth and the
influence of market forces from abroad, the nature of employment, the demands on
artisans and the character of the artisans has changed dramatically.

As early as 1892, hereditary artists, called “chitragars” were engaged in wood-turnery

which is the basis of lacquer ware artistry. Bavasmia, a local artist, is known as the
originator of the craft in Channapatna and nearby areas. He went to study lacquer ware in
the northwestern state of Punjab. After a period of experimentation, he introduced study of
the craft at the Industrial School in Channapatna. Bavasmia also mechanized the craft
through the power lathe. Though Bavasmia introduced lac-turnery to encourage the
chitragars, their response was hesitant, so admission was opened to students of other castes
and religions. Bavasmia convinced Muslims and scheduled caste members to join the
course; even today, the majority of Channapatna craftspeople belong to these communities.

!9
A number of interesting features concerning women's participation emerge at Channapatna
including the fact that more urban than rural women are involved in the toy making
industry, participation is religion and caste based, over 90% continue to work on hand
lathes, women continue to produce traditional products required for local markets,
women’s earnings are significantly lower than men’s, the number of women in lac-turnery
is declining.

In rural villages, with few exceptions, lacquer ware artisans are predominantly male with
only a handful of female artisans in each village. These village women are mostly self
taught, presumably with the help of male artisans in the family. Female participation in the
craft is greater, however, in urban areas. In the urban areas of Channapatna a good number
of Yelakeri Adi Karnataka (Scheduled Caste) women and a smaller number of Muslim
women are involved in lacquer ware production. Rural women engage in seasonal
agricultural work which is not available to their urban counterparts. Additionally, urban
women have easy access to the institutions and training centers which have nurtured the
industry. The distance, the need for daily travel and the low stipend all limit rural women's
participation in urban training programs. Women make different products than men. And
these products determine the market and income levels to which women have access.

2.5 DEMOGRAPHICS

In reality, the entire toy making industry is a small scale industry. Some are so small that
the work is done right outside the homes of these skilled artisans. But, the majority of them
are shops where four to six people can work together.

● The population consists of a majority of Muslims with a small section of people

being Hindus.

● The major languages spoken are Kannada and Urdu.

● There are 32 Panchayats and 45 villages in Channapatna.

● It has a population of about 1,98,239 (census 2014) and constitutes of about 46,849
families.

!10
 ● The city has 245 government primary schools, 23 higher secondary government
schools and 8 post university government colleges.

● It has 1 government hospital,14 primary health centres and 8 private nursing

homes.

● Major occupations persuaded in the area are wooden lathe turned toys, twisting of
raw silk, coconut, mango harvesting, animal husbandry and farming.

● The water for this town comes from a tributary of the Shimsha river and there is a
check dam called Kanva dam on it too.

● The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA)

which is a legal guarantee for one hundred days of employment in every financial
year to adult members of any rural household is provided in the city.

2.6 ARTISANS

A mass of artisans who have dedicated their lives to toy making and wooden handcrafts in
this beautiful town, are almost unsung heroes. There are more than 1,000 makers of these
famous wooden toys who are struggling to earn their daily bread. They get meagre
earnings from the industry as middlemen buy products at a low cost and there is no scope
for the artisans to make much profit.

Every month, the owner of one of the toy factories in Channapatna gets the opportunity to
sell his goods on the footpath outside Cauvery Emporium in M.G. Road, netting huge
profits, but they are also not very concerned about the wages or part of their income to be
paid to the artisans.
Channapatna Crafts Park is India’s first crafts park with crafts cluster of over 3000
traditional artisans engaged in the production. The park was established mainly to help
preserve, nurture and help to grow their skills of artisans by providing them with
employment opportunities.

!11
The artisans work independently and most of them are turning to export markets for their
living. In the domestic market, the toys are facing stiff competition from their cheaper and
more attractive, durable Chinese counterparts. In order to meet the needs of the local
market, the artisans have come up with alternate and newer product categories like home
accessories and jewellery that could help them boost their earnings to some extent.

2.7 INCOME LEVELS

The makers of the famous Channapatna wooden toys are struggling to earn their daily
bread. There are many toy factories located in Kalanagar in the city of Channapatna,
located 60 kilometers southwest of Bangalore, and there are more than 3,000 artisans
whose livelihood depends on making toys there. But lately, they have been struggling to
continue with toy making as they are not earning enough to support their families. When
artisans were asked, they said they earned Rs. 100 per day which is not sufficient for a
proper livelihood. Middlemen buy products at a low cost and artisans do not make much
profit.

Every month, the owner of one of the toy factories in Channapatna gets the opportunity to
sell his goods on the footpath outside Cauvery Emporium in M.G. Road, netting huge
profits, of which he is required to give 35 percent to the emporium. Citing lack of demand
for costly handmade toys, Cauvery Emporium has stopped showcasing wooden toys made
by Channapatna toymakers and is importing toys from other countries, including China.

2.8 RAW MATERIALS

There are various kinds of raw materials used to manufacture these toys:

2.8.1 WOOD

The wood used in Channapatna craft is Halemara wood scientifically known as
Wrightiatinctoria. It is a soft ivory wood. Hale wood is close grained, moderately hard and
is best suited for turning and lac application. It is found on village wastelands and in the
forests in several parts of Karnataka. The wood used by the artisans comes from both

!12
forest and non-forest land surrounding Channapatna. But slowly now rosewood,
sandalwood, teak, cedar woods etc. are being used.

2.8.2 LAC

Lac or Shellac is a natural resin secreted by a microscopic tiny insect, popularly known as
Lacciferlacca. Lac is an organic non-toxic finish and can be used in food as well as non-
food products. Products made using lac is referred to as lacware products.

2.8.3 LEAVES

Channapatna artisans use Talegiri (Pandanus odoratissimus) leaves also known as screw
pine .This leaf is an important accessory in lacquerware production. It is used for
polishing; it imparts translucence to the finish.

2.8.4 COLOURS

Natural dyes are colours extracted from naturally available sources. The source of these
dyes can be plants/ trees, animals or minerals. Generally lac sticks are used for this
purpose.

2.9 MANUFACTURING

The craft has diversified over time; in addition to the traditional ivory-wood, other woods
including rubber, sycamore, cedar, pine and teak are now used as well. Manufacturing
stages include procuring the wood, seasoning the wood, cutting the wood into the desired
shapes, pruning and carving the toys, applying the colours and finally polishing the
finished product. Vegetable dyes are used in the colouring process to ensure that the toys
and dolls are safe for use by children. As of Oct 2006, more than 6,000 people in
Channapatna, working in 254 home manufacturing units and 50 small factories, were
engaged in the making of these toys. The Karnataka Handicrafts Development Corporation
(KHDC) provides assistance with marketing efforts. Most oldest and popular
manufacturing unit Bharath Art and crafts helps in developing innovative products.

!13
2.10 GROWTH

Channapatna, the toy town of Karnataka famous for its wooden toys for ages was reeling
under severe financial crunch for more than a decade and the craftsmen community
involved in the manufacturing of the same reached near starvation a few years back.
However, with the help of the involvement of the Karnataka Handloom Development
Corporation, the craft has been revived and the artisans involved are being trained on
changing trends in the industry, to help them become accustomed to the competitive global
industry. The Government of Karnataka has also aided their development by constructing a
Lacquerware Craft Complex, which has a manufacturing centre with 32 turning lathe
machines, at Channapatna. With the cooperation of the Dutch Government and the
Karnataka Government's Vishwa scheme, financial assistance has also been provided to
the artisans.

Over the past few years, various companies and social enterprises have been reviving the
Channapatna craft to incorporate the preferences and tastes of the modern consumer. iFolk
Channapatna toys and handicrafts, a group formed by Bharath Art and crafts, promotes and
supports lacquerware artisans to introduce innovation and modernize the products.
Bangalore- based NGO Maya Organic, is another organisation involved in development of
the Channapatna toy industry. The artisans need support in terms of marketing and re-
inventing the art to suit today’s markets. And even though the administration has made
some half-baked attempts to save the art, it is by recognising the immense potential in
these toys, that many young entrepreneurs have come forward to make the toys more
appealing to customers.

Firms like Channapatna-based Maya Organic, Bengaluru-based Varnam and Channatoys

have introduced online marketing strategies to reach out to more customers. By
maintaining quality and constantly innovating designs, these firms have been able to
capture large chunks of the market. Since the income from toy making isn’t fixed, the
government should focus more on training the artisans about modern designs and also
come up with a plan or scheme that can substantially help the toymakers rather than acting
as middle men.

!14
Over a hundred artisans work with Maya Organic of which 70% are women. As an
organisation, Maya Organic has its own limitations and can work with only small group of
artisans while helping them design their products and market them in a better way. Such
efforts have been successful and if done on a large-scale, could help Channapatna retain its
name and fame as the ‘Land of Toys’.

2.11 PROCESS

The production of lacquerware through the lac-turnery process involves both natural and
synthetic materials. The industry is therefore totally dependent on forests for the primary
raw materials. These forest-based products are the wood of the Aale (Wrightia Tinctoria)
tree, lac produced by the insect (technadria Lacca) and the leaves of the talegiri (Pandanus
Odoratissimus). Synthetic materials include paints and pigments and are only provided to
customers without the requirement of eco- friendly system.

The process of making a toy starts from the procurement of raw material, which is sourced
from the local wood suppliers and then it is seasoned for 1-3 months depending on the size
of the planks. Though the government supplier supply seasoned wood but to achieve cost
effectiveness the artisans prefer to buy the wood locally and season them at home itself.

• The seasoned wood is cut in different sizes according to the need. These small pieces are
mounted on lathe machine and with the help of different types of chisel the wood is shaped
in spherical, circular or oval shapes per the design.

• The form is then rubbed with a sandpaper in order to smoothen the surface.

• Once the wood is shaped in desired form the lacquering process starts. The artisans press
the lacquer stick against the wooden piece while it is still on lathe and due to the heat
produced by friction lacquer gets applied on the wood.

• The applied lacquer is spread uniformly over the surface with the help of dried palm leaf.
This also gives shine and lustre to the product.

!15
• For measuring the size and maintaining the precision, artisans frequently use Varner
caliper and divider.

• Once the product is made it is detached from the lathe and further surface embellishment
or assembling of different parts (if the toy is made of 2 or more parts) is done. Other
decorative works on the surface of toy are also done at this stage.

2.12 MARKETING

Markets for lacquerware products are changing dramatically. Many old markets are
collapsing with the proliferation of cheap plastic substitutes for children’s toys and
educational materials, once the mainstay of the industry and the area with greatest
participation by women. The advent of the ball-point pen has decreased demand for
lacquerware pens and pen nib holders, which were used with pots of ink in schools and
offices.

Plastic chess pieces and beads for curtains frequently replace those that were formerly
made by hand from wood. At the same time, a growing export market with demanding
quality standards and large orders is changing the nature of production. Mechanization, in
the form of the electric lathe, is expanding and is being monopolized by men. Larger
orders and electrification have led to larger production units and small to medium size
factories are replacing household enterprises.

This has further displaced women, for whom small scale and household production are the
major benefits of traditional lac-turnery. Export products must respond to new demands
and specifications. These new products have to meet more exacting standards of quality
and may require more sophisticated artwork or finishing than those which are sold in local
markets.

!16
2.12.1 Segmentation

2.12.1.1 Demographic

The Channapatna toys are generally segmented for children between the age group of 0-10
years. However, now, Channapatna crafts have diversified their operations and target
customers who are adults and fall within the age group of 35 years and above. Most of
these products are generally purchased by children and women. Amongst the customers
abroad, U.S and Europe and Japan have eye for these toys.

2.12.1.2 Psychographic

The customers are generally those who are mostly into handmade products and have an
affinity towards buying traditional handicrafts with unusual features and do not mind
paying a little extra for products that are eco-friendly as well.

2.12.1.3 Behavioural

The major customers of the Channapatna crafts are those who prefer handmade and
traditional products above Chinese machine made products. They know about the pros of
sustainable products and the quality of the products that are made.

2.12.2 Targeting

The target group was initially children within the age group of 0-10 years. However with
the development and addition of new products, the target group now includes consumers
between the age group of 35-60 years as well.

2.12.3 Positioning 

The Channapatna craftwork is positioned as an age old craft of the Karnataka region that
has its roots back in the days of Tipu Sultan. A distinct traditional craft technique is used in
the making of the toys by lacquering the ivory wood. They are positioned as eco-friendly
toys made of non-toxic vegetable dyes and also the government of Karnataka has given the
status of Geographical Indication for this traditional craft of wooden toys under the World
Trade Organization.

!17
2.13 MARKET POTENTIAL

2.13.1 STRENGTHS

• Availability of skilled artisans at the local level.

• Easy and cheap availability of labour.

• Demand in both the domestic & foreign markets.

• Rich craft heritage.

• Marginal capital investment.

• Uniqueness of products.

• Recyclable nature the of product.

• Possibilities of innovation and designing.

• Caters to both higher end market as well lower strata of the society.

2.13.2 WEAKNESS

• Lack of technical facilities for the development of new product.

• Lack of marketing opportunities for local people.

• Lack of literacy among the artisan.

• Lack of awareness regarding quality assurance techniques, leading to a high rejection

rate.

• Lack of appropriate design intervention. Emphasis still placed on old techniques without
aligning the product designs and colors to the latest trends.

!18
• Lack of affiliation with overseas handicrafts organizations and trade related association.

• Lack of conformity to product specifications and difficulty in mass production since the
artisans are scattered.

• Lack of proper infrastructure and amenities including modern machinery for

manufacturing, finishing and packaging processes.

2.13.3 OPPORTUNITIES

• Potential rise in demand both in the domestic and export markets.

• Potential for product diversification.

• Linkage with large industries to enhance the efficiency of the craft sector.

• Training to upgrade skill and pass on traits to the coming generations.

• Potential women entrepreneurship development especially in rural areas.

• Economy of scale can be achieved due to large number of artisans in this craft.

2.13.4 THREATS

• Competition is on rise from the global markets especially in the fields of price, quality
and designs.

• Traditional use disappearing with the lack of creativity and innovations there is an
unmatched customer demand and satisfaction.

• Low monetary returns discourage the younger generation to take this craft as their
profession.

• Chinese toys and more popular wooden toys are a threat to Channapatna toys.

!19
2.13.4.1 Threat of Chinese Toys

Over the year, Chinese toy industry has grown significantly to figure in the universal
market. By 2006, profiting from financial of scale and shabby work, Chinese toy industry
had come to rule the worldwide market, representing around 75% of the world's yield.
Thus unbranded, shabby toy items began flooding Indian toy advertise. Unbranded toy
don't hold fast to rules, for example, weights and measures-obligatory for indigenous toy
organizations. Many don't print the locations of producers/shippers, the most extreme retail
cost or produced date. The cheap Chinese toys have supplanted the marked Indian toys. It
has been evaluated that right around 80% of the toy showcase has been taken over by the
Chinese items. The Chinese offering toys at low costs with extensive assortments to look
over. They look alluring and are inside the span of ordinary citizens. For instance, a basic
toy which is sold by Indian producer at Rs. 25 will sold at Rs. 20 by their Chinese partners.

Regardless of the way that toys and antiquities made in Channapatna were picked as
Karnataka's commitment to the 2015 Republic Day parade, and the Obama's given a
goodie pack filled with articles made in the conventional Channapatna lac-turnery method,
the soundness of the little artisans' town close Bengaluru is a long way from hearty.
Furthermore, one pointer of that is the way that China-made duplicates of Channapatna
plans have overflowed the market, and are notwithstanding being sold inside a short
distance of the craftsperson homes at neighbourhood restaurants and stores. Chinese
producers have the capacity to altogether undermine costs offered by remote contenders
over an extensive variety of items. Today, because of the “china price,” China has caught
more than 70% of the world's piece of the pie for toys. In any case, the aggregate Indian
Handicraft Industry is a $100 billion industry worldwide and India‘s contribution in world
market is 1.2%. Indian share of toys market is minimal. The major drivers of China‘s
competitiveness in toy sector :

● Counterfeiting and piracy

● Export industry subsidies

● A highly efficient ―industrial network clusteringǁ

● Superior infrastructure both general and specific to toy sector

!20
 ● Large scale operation.

All in all cost of the items created, better Trade terms offered, expanded and better
mechanical support and R&D by competing nations, mainly China, are the significant
difficulties to Channapatna toy to contend in the worldwide market.

2.14 MAJOR RETAILERS



2.14,1 Aatike

Aatike promoted by SK Nirmiti, focuses on production, distribution and sale of Handmade
Indian Toys, Home & Office Décor products having a traditional charm with a modern
flair. Aatike products are inspired by natural colors, textures, shapes & traditions of India.

2.14.2 Cauvery Emporium


In order to market the products made by the artisans across the state 11 retail sales outlets
popularly known as 'Cauvery', Karnataka State Arts & Crafts Emporium at major cities
such as Bangalore, Mysore, Mangalore, Hubli, Chennai, Secunderabad and New Delhi
have been established. Karnataka State Handicrafts Development Corporation Limited,
(KSHDCL) was established in the year 1964 under Companies Act 1956. The objective of
the corporation is to preserve, develop and promote handicrafts. Government of India and
Government of Karnataka are the shareholders in the organization.

Karnataka State is richly endowed with widely practiced, accepted and acclaimed crafts
since time immemorial. The major crafts are sandalwood carvings, rosewood inlay,
channapatna lacquer ware & toys, Mysore traditional paintings, bidri ware, kinhal toys,
Navalgund dhurries, stone carvings, other wood carvings, traditional jewellery, mirror and
embroidery, banana fiber, terracotta, bronze icons, Pile carpets and many more. Karnataka
State Handicrafts Development Corporation Limited is the pioneer in establishing 13 craft
complexes across Karnataka state wherever there is concentration of artisans for various
crafts. Common facility centers are also built at these craft complexes for the benefit of
artisans. Around 4544 artisans are registered with the corporation and over 50,000 artisans
are indirectly depending upon the corporation for preserving, developing and promoting

!21
their craftsmanship. The corporation has provided 1222 living cum work sheds to the
eligible and deserving artisans. Raw materials such as sandalwood, silver and zinc are
being provided to the artisans at subsidized rates. Workshops and training programs are
conducted periodically to upgrade the craftsmanship and skills of artisans. Besides,
providing forward and backward support to the traditional artisans, courses are conducted
to the interested persons in learning and sustaining the craftsmanship in various crafts.

2.14.3 Maya Organics


Maya Organic is a livelihood development initiative involved in developing a network of
artisans, workers and micro-entrepreneurs capable of producing high quality wooden
products. They are a non-profit company registered under section 25 of the Indian
Companies Act and a member of the World Fair Trade Organisation. Currently Maya
Organic is working with the artisan community in Channapatna. In addition to supporting
existing artisans with contemporary design/product development support and consistent
orders, the initiative has also been training several new artisans, particularly women into
the handicraft cluster in order to revive the cluster with an infusion of fresh skills, designs
and markets and supporting the artisans to build viable micro entrepreneurial alternatives.

2.14.4 Oodees

Jufaro Craft Private Limited is a design and brands startup from Bengaluru, India with
OODY & OODEES as their brands. They design and create innovative, exciting, wooden
toys & home decor products -handcrafted by a consortium of humble and cheerful women
artisans using a 200 years old traditional lacware craft. They blend lessons from modern-
day research in child development and the traditional, environmentally responsible Indian
craft to make delightful and functional toys. Their toys are of international quality, while
retaining their essential Indian-ness.

2.14.5 Shilpa Trust


Established in 1992 in Bangalore, India, “Shilpa Trust” is a renowned as one of the
foremost manufacturers, exporters and suppliers of Lacware toys, sandalwood craft, silk
stoles, artistic furniture and key chains. To bestow their customers with a fine quality range
of products, they have developed a state-of-the-art manufacturing unit, in which their

!22
products are fabricated with the latest production processes. These products are fabricated
using high grade raw material procured from their reliable vendors of the market.

2.14.6 Sri Kaveri Handicrafts Emporium


Sri Kaveri Handicrafts was established way back in 1899 at Channapatna (Karnataka).
With its wide industrial experience, the company has carved a niche in the Handicraft
industry as a Handicraft Item Manufacturer, Exporter, and Supplier. Under the aegis of the
CEO Mr. MV Nagendra, the company is gradually rising to newer heights of success. Due
to its exceptionally designed products, the company has set up a benchmark for the
competitors. Sri Kaveri Handicrafts commenced its journey as an exclusive wholesale
wooden handicrafts Manufacturer from a small shop. With its extensive experience, the
company has now reached a distinct position in the industry as a Handicraft Manufacturer,
Exporter, and Supplier.

2.14.7 Varnam

Varnam (meaning ‘colors’) is a multi-award winning social enterprise that has been
working with artisans Channapatna, for over 4 years. It has produced a series of designs
interpreting this 200-year-old toy-making craft in the home and lifestyle, women’s
accessories space, giving tradition a contemporary twist.


!23
CHAPTER 3

!24
3. RESEARCH METHODOLOGY

3.1 TITLE

EXPLORATION OF STRATEGIC OPTIONS FOR CHANNAPATNA HANDICRAFT &

TOY CLUSTER 


3.2 STATEMENT OF PROBLEM

Though the Channapatna handicraft and toy industry employs more than 5000 toymakers,
1033 of which are even government registered, the cumulative number of artisans has
declined drastically in the last decade mainly due to the heavy influx of cheaper Chinese
alternatives. As the various efforts made by the central and state governments to save the
domestic toy industry have not proven fruitful yet, the artisans of Channapatna require
immediate support to suit today’s markets. They are in dire need of both marketing and
design interventions in order to fight against the Chinese lookalikes and reach out to larger
markets thereby increase their market share in the handicraft industry. This research
focuses on exploring various ways to increase the market share of the Channapatna
artisans in the handicraft segment.

3.3 OBJECTIVES

• To investigate, analyse and evaluate Channapatna cluster’s external and internal

environment
• To generate strategic options that Channapatna cluster could adopt, derived directly
from the internal and external analysis

3.3.1 RESEARCH QUESTIONS


1. How is the Channapatna cluster positioned currently in the target market and the
handicraft segment in India?

To answer this question, a market analysis is to be conducted combining the relevant
aspects of the Handicraft segment, Channapatna cluster and the target market. The

!25
 Channapatna cluster is examined by defining its current market share, its current
business actions in the market and by analysing how the current products meet the
market demand. The analyses of the market and the segment support the Channapatna
cluster analysis by defining the present trends, demands and key success factors.

2. What are the growth opportunities in the handicraft segment for the Channapatna
cluster? How do the Channapatna products meet the demands in the segment?

These questions identify and analyse the market growth opportunities, the structure and
the characteristics of the competitive market environment for the Channapatna products.

3. How can the present market share be increased in the handicraft segment in case growth
opportunities exist for Channapatna cluster? How can the current capabilities be
channelized and utilized differently to broaden the market position?

These research questions help identifying what is required from the Channapatna cluster
in case there are opportunities for growth and development in the market. Furthermore,
the question concentrates on exploring what kind of a development plan the
Channapatna cluster should adopt in order to meet the demands of the market.

3.4 RESEARCH DESIGN

The research is based on exploratory case study method, and aims to generate strategic
options to improve the current scenario by employing the theoretical models for internal
and external analysis like PEST analysis, Value chain analysis, Competitor analysis,
SWOT analysis and Ansoff’s Matrix.

3.5 DATA COLLECTION

• Type of Data:
Primary: Interviews with Channapatna craft making firms and artisans.
Customer interviews to understand the demand in the handicraft segment.
Secondary: Existing data available from brand websites as well as various books,
online journals, articles etc.

!26
• Sampling Design:

Population: Channapatna artisans, managers, retail outlet owners, consumers

Sample unit:

Sampling Technique: Judgement and Convenience sampling

Respondents: Channapatna artisans, managers, retail outlet owners, consumers

Sample size:
• Data collection Tool: Personal Interviews
• Data analysis: Data collected through the interviews conducted has been utilised to
further create the theoretical models for internal and external analysis like PEST analysis,
Value chain analysis, Competitor analysis, SWOT analysis and Ansoff’s Matrix in order to
generate strategic options for the industry.

3.6 SCOPE

The scope of this research is restricted to the Channapatna handicraft and toy industry and
the limited interviews conducted. Future applications of this research include:

• Refining & enhancing the strategic options for the Channapatna handicraft and toy
industry;
• Understanding the Channapatna handicraft and toy industry in detail, from he point of
view of the artisans, managers, retail outlet owners and consumers;

• Understanding and analysing the heoretical models for internal and external analysis like
PEST analysis, Value chain analysis, Competitor analysis, SWOT analysis and Ansoff’s
Matrix in order to generate strategic options for the industry.

3.7 LIMITATIONS

The constraints under which the research has been conducted include:
• The paucity of time to collect relevant data
• Dependency on availability of respondents to conduct interviews
• Language barrier; requiring external aid to translate from local language
• Limited access to sensitive internal data


!27
CHAPTER 4

!28
4. ANALYSIS

4.1. EXTERNAL ANALYSIS

The external environment is referred to as the macro-environment. This includes the broad
environmental factors which will affect organizations at various levels. The external
environment plays a critical role in shaping the future of entire industries and those of
individual businesses. To keep the business ahead of the competition, managers
continually adjust their strategies to reflect the environment in which the businesses
operate.

4.1.1. PEST ANALYSIS

The following PEST analysis has been used to identify how future trends in the political,
economic, social, technological environments influence the Channapatna handicraft and
toy industry.

PEST TRENDS INFERENCE FOR

FACTORS CLUSTER
Political Make in India concept by PM More access to increased
Narendra Modi. market share and skill.
Government promotes development of Greater and faster exposure
handicrafts through various schemes to variety of buyers.
for marketing support, export
promotion and training. (Datta and
Bhattacharya)
High government investment in B2B
events to promote Indian textiles &
Handicrafts. (The Economic Times,
2017)

!29
Economic The handicrafts industries in rural Lowers unemployment of
India economy registered an annual artisans.
growth rate of 15% consistently over Opportunity to increase
the last decade and it is estimated to market share.
grow at the rate of 42% over the next Opportunity to increase
f i v e y e a r s a n n u a l l y. ( P r i m e market penetration.
International Research Journal, Vol. Opportunity to increase
III, Issue 2, April, 2016) share in export market.
The Indian toy industry is estimated to
be worth 1700 crore INR and growing
15-20% annually. (The Economic
Times,2016)
According to a Euromonitor study,
spending on toys and games in India is
set to grow at 157%, much faster than
other Asian countries such as China
(84%), Taiwan (35%), South Korea
(33.1%) and Singapore (17.2%).(The
Economic Times, 2016)
India's handicrafts exports are likely to
cross Rs 24,000 crore mark by FY
2020-21, according to a recently
concluded sector-specific study by
ASSOCHAM.
(Business Standard , 2015)

!30
 Social Increase in online social networking New channel for marketing
(Global social media research of channapatna products.
summary 2017) Channapatna products that
The growth of urbanism, distancing root from nature,culture and
from genuine values, and immersion in history can act as a way to
a bulk of soulless and senseless revive the elegant forgotten
commodities have greatly impacted past and establish a link
one’s life. ( Shojnoori et al., Int. J. Rev. between man and his lost
Life. Sci., 5(10), 2015) identity.
Educational toys have the potential Opportunity to venture into
to grow at around 15 percent year-on- new educational product
year in the next five years.(dna. 2017) designs.
Consumers moving towards quality Need to create a strong
driven products. brand
Going green trend and packaging.
Rise in price of raw materials & Need to create awareness
difficulty in sourcing wood from about the eco friendliness of
forests. channapatna products t o
Indian handicrafts sector is mostly capture t h e i n c r e a s i n g
unorganized sector that constitutes going green community.
about 93% of the workforce. Need to consider difficulties
overcoming demand of
product.
Need to convert the
unorganized sector into
integrated networks.

Technological Rapid development of ecommerce New channel for increasing

networks. sales of channapatna
products.
Fig 4.1: PEST Analysis for Channapatna Craft Cluster

Summary
Political, economic, social, technological progress indicates an increasing and attractive
market to be exploited by Channapatna cluster. The use of internet as a social networking
channel has created new opportunities to be exploited in terms of creating awareness and
increasing sales. The rising population eco-friendly community provides for increase in
market share. The problems in raw material sourcing should be addressed. The
unorganized sector should be connected or made into integrated networks.

!31
4.1.2. COMPETITOR ANALYSIS

4.1.2.1. INTERNATIONAL COMEPTITORS

Toy imports have increased at a compound annual rate of 25% between 2001 and 2012,
according to an August 2013 report of the Associated Chambers of Commerce of India
(ASSOCHAM).The toy industry in India is concentrated mainly in the small and cottage
sectors. Efforts by the central and various state governments to save the domestic toy
industry have not been of much help. The demand for Channapatna toys are collapsing
with the proliferation of Chinese toys because they are cheaper, offer a lot of variety, have
innovative designs (like music chips), are more vibrant and colourful, and seem more
educational (pre-recorded tech toys).

4.1.2.2. DOMESTIC COMPETITORS

Banaras Wooden Toys
Bright and colorful lacquered toys are made in the Varanasi district of Uttar Pradesh, India.
These toys were given the Geographical Indication tag in 2014, along with other lacquer
ware produced in this region. Wooden logs are sourced from jungles of Chitrakoot and
Sonbhadra.Keria (Coraiya) wood from Bihar was used earlier and it is still the preferred
type of wood for toy-making.
Etikoppa Toy Industry
Etikoppaka is a small village with many people occupied in field of farming. They have
indulged themselves in making of several artifacts in order to sustain their living.
Approximately there are 200 people of Etikoppaka region who are artisans and have
introduced themselves in manufacturing of ear rings, bangles, toys, boxes and
mythological carvings and figures. These Etikoppaka toys are user friendly as well as eco-
friendly. These toys usually comes in various price ranges and are economic.
Kondapally Toy Industry
Kondapally Toys are the toys made of wood in Kondapalli of Krishna district, a village nearby
Vijayawada in the Indian state of Andhra Pradesh.Bommala Colony translates to Toys Colony
in Kondapalyis the place where the art of crafting takes place.These toys were one of the

variety of toys assembled in the houses during the festivals of Sankranti and Navratri and

!32
is referred as BommalaKoluvu.The Kondapalli toys are made from soft wood known as
TellaPoniki which are found in nearby Kondapalli Hills. The wood is first carved out and
then the edges are smooth finished. The later step involves colouring with either oil and
water-colours or vegetable dyes and enamel paints are applied based on the type of the
toys.The artisans mainly work on producing figures of mythology, animals, birds, bullock
carts, rural life etc., and the most notable one is Dasavataram, dancing dolls etc.

Summary
Geographical Scope

Chinese toys

Etikoppa Channapatna
Kondapally
Banaras toys

Product Line Breadth

Fig 4.2: Competitor Analysis Map for Channapatna Craft Cluster

Summary
The geographical scope of Chinese imported toys is the highest. Product lines are
maximum too. Chinese toys are considered to be the biggest threat or competition to
channapatna toy industry. The geographical scope for the Etikoppaka Toy Industry is
similar to that of Channapatna since they are both locally manufactured and sold, though
the variety of products sold in Channapatna is more than Etikoppaka toy industry.
With respect to the Kondapally toy Industry, both the geographical scope and product
variety is not clearly defined to achieve a high market share yet.

!33
4.2. INTERNAL ANALYSIS

4.2.1. VALUE CHAIN ANALYSIS

The table below indicates examples of how Channapatna cluster has created value in its
value chain activities.

PRIMARY ACTIVITIES
Inbound Outbound Marketing &
Operations Service
Logistics Logistics Sales
The primary Vegatable dyes are Both the Maya Organic They do
raw material is used in the coloring organized and has its own quality tests
ivory wood process to ensure the website and before
which is easily that the toys and unorganized simultaneously shipping the
available as it dolls are safe to use. sector has a deals sell their product and
grows in most Care is taken to room where products via accept if any
areas in ensure that there are products are Amazon and rejection
Karnataka. not any sharp edges. stored before Flipkart. happens.
the delivery.

SUPPORT ACTIVITIES
Firm Infrastructure
The organized and semi organized toy industry have a good infrastructure which
includes separate spaces for storage, machinery work, packaging, etc.
The manufacturing unit has facilities for wood turning, lacquer creation, colouring and
storage facilities.
Human Resource Management
Channapatna Crafts Park with crafts cluster of over 3000 traditional artisans was
established mainly to preserve, nurture and help grow their skills of artisans by
providing them with employment opportunities.
The organizations are trying to train & aid as many women artisans as possible.
Technology Development
They use machine tools instead of hand tools thus making the work easier and
production faster.
Procurement
They procure their raw materials from local suppliers and vendors. They have good
contact with the local

Fig 4.3: Value Chain Analysis for Channapatna Craft Cluster

!34
4.3. SUMMARY OF ANALYSIS

4.3.1. SWOT ANALYSIS

4.3.1.1 STRENGTHS
1. Traditional production skills derived from indigenous knowledge
2. Availability of skilled man power at comparatively low cost
3. High involvement of women artisans
4. From time immemorial Channapatna toys have been embraced in the overseas market,
when the toys were started being given as momentos to high profile guests. This
provided awareness about the craft.
5. The GI held by Channapatna products that prevents similar toys from being produced
anywhere else in the world.

4.3.1.2 WEAKNESSES
1. Limited capitalization and low investment
2. Limited reach outside Karnataka and south India
3. Limited educational level and low access to use e-commerce
4. Absence of strong & professionally managed Toy Industry Associations
5. Poor process capability because of low technology, inferior tooling and use of general-
purpose machines for specialized jobs
6. Reluctance to introduce new product designs because of unfavourable economies of
scale

4.3.1.3 OPPORTUNITIES
1. Internal B2B,B2C market
2. Emerging markets in Latin America, North America and European countries
3. Putting efforts into marketing and increasing awareness about the product nationally
4. Low cost manufacturing base-enabling strategic alliances/Potential cooperation with
large customers and multinationals

4.3.1.4 THREATS
1. China and other countries corner major market share of the growing Indian toy market
2. Technology obsolescence is creating road blocks to rapid changes in product design
and also for adjusting to consumer preferences.
3. Slow response to safety & quality standards based on international market
requirements
4. The ready availability of Chinese toys in the market acting as substitutes
5. Use of black poster colour instead of Indigo dye due to its high price

!35
4.3.2. STRATEGIC IMPLICATIONS

The key strategic implications for Channapatna cluster are:

1. Eco – marketing campaigns
2. Organized group to help organized sector
3. E-commerce platform.
4. Should endorse the toxic free environment friendly products to mark a niche for
themselves.
5. Broad market system and the development of products from input supplier to end
market buyers and no middlemen involved.
6. The suppliers , artisans and associated institutions create direct and indirect synergies
among them.

The following table highlights the key strategic implications for Channapatna Cluster:

Analysis (Technique) Key Point Strategic Implications

PEST Analysis Handicrafts Industry is Eco-marketing Campaigns,
booming, Going Green Organized firms can group
trend, Increased Consumer the unorganized artisans and
spending, Development of tap their potential, E-
E-commerce, Government commerce platform
Initiatives and Exports
Competitive Analysis The proliferation of cheaper Channapatna cluster should
Chinese toys sustain its competitive
advantage by marketing its
toxic- free environment
friendly products
Value Chain Mapping Sentimental value, Non- Broad market system and the
toxic products, Unique and development of products/
vibrant, Environment services from input suppliers
friendly to end-market buyers,The
suppliers, artisans and
associated institutions create
direct and indirect synergies
among them. Take advantage
of the key points in the
market to remain
competitive

Fig 4.4: Strategic Implications for Channapatna Craft Cluster

!36
CHAPTER 5

!37
5. SUGGESTIONS: STRATEGIC OPTIONS

Ansoff’s Product/Market Matrix (Ansoff 1988, cited in Johnson and Scholes 2006, p341)
has been used to identify possible directions for strategic development of Channapatna
cluster.

Fig 5.1: Ansoff’s Product/Market Matrix


Source: Ansoff 1988, cited in Johnson and Scholes 2006, p341

5.1. STRATEGIC OPTION 1: Protect/Build - Market Penetration

Through the secondary research and previous analysis, it can be noted that there is a heavy
lack of awareness of Channpatana products in the domestic market. Hence, the
Channapatna products have been underperforming in the domestic market, and in order to
address this underperformance, the options below attempt to build a stronger brand image
to create consumer awareness and thereby increase market share. Also, as there is a
growing trend for educational toys, market share can be captured by increasing the product
range.

!38
5.1.1 Raise Awareness
In order to raise awareness and build a stronger brand image, the channapatna handicraft
and toy industry as a whole needs to engage its consumers through exhibitions
brochures, trade fairs, and hoarding, and extensive marketing (both online & offline).

5.1.2 Broaden Product Portfolio

It is essential for the industry to increase its product share and sales in order to create a
impact in terms of acquiring a larger market share, this can be achieved by broadening
the product line breadth and introducing design interventions.

These options have been analyzed further on the grounds of acceptability, suitability and
feasibility, as follows:
Suitability
The PEST analysis reveals a high growth in Indian toy industry and high
consumer spending on toys/games.
The consumers are moving towards eco-friendly and high-quality products.
Feasibility
Government trade fairs/b2b markets can be used for marketing activities.
Market penetration will be less capital intensive than entering a new market.
Acceptability
The penetration into the market will help in getting a sustainable lifestyle for the 

artisans.
Direct marketing will eliminate the squandering of profits by middlemen.
If Channapatna increases its market share in the growing industry, it benefits all
the stakeholders.

5.2. STRATEGIC OPTION 2: Product Development

This option recommends the addition of educational toys for both kids and adults.
These options have been analyzed further on the grounds of acceptability, suitability and
feasibility, as follows:

!39
Suitability
Competitor analysis has identified that Chinese companies offer wide range of 

educational toys. So by choosing this strategy Channapatna cluster will be able to
be competitive.
There is also a potential growth prediction for educational toys.

Feasibility
The artisans have some experience in making educational toys.
Each new product design has high sales for approximately 6 months for an artisan 

before coming down. There can be no such variations in case of educational toys
making them profitable.
Acceptability
The new product development will add variety to the Channapatna product
portfolio thereby increasing sales.
Good sales of products help in the growth of the cluster. 


5.3. STRATEGIC OPTION 3: Market Development

Omni-Channel retail as a platform for market development helps the craft cluster to
establish themselves in new emerging markets through platforms like online retail. Online
selling enables organizations to start selling in new markets and find appreciative buyers.

Omni-channel is a cross-channel business model that companies use to increase customer

experience. Omni-channel retailing uses a variety of channels in a customer's shopping
experience including research before a purchase. Such channels include retail stores,
online stores, mobile stores, mobile app stores, telephone sales and any other method of
transacting with a customer. Transacting includes browsing, buying, returning as well as
pre-sale and after-sale service. Extending across channels and devices, shoppers can visit
stores, how and when they want. Although omni-channel is said to be dictated by systems
and processes, it is the customer that dictates how a transaction occurs. Systems and
processes facilitate the customer journey to transact and be served. Omni-channel is the
new buzzword in the retail world – like eCommerce was a few years ago. While

!40
eCommerce has already demonstrated its might, omni-channel remains largely
uncomprehended by the retail industry in India. Having said that, it’s likely to pick up pace
rapidly and we foresee omni-channel retail changing the face of handicrafts in India.
Besides helping the brand reach across the country, omni-channel retail has a bag full, or
rather a gunny bag full, of advantages. Not only does it allow you to win over the customer
and get them hooked to you, thereby leading them to your online store from your offline
and vice versa seamlessly, but also the omni-channel platform allows you to track their
likes, dislikes and buying behavior and tailor them to make customized offers. It provides
a physical form for the handicraft industry to be represented on the social media as well.
Omni-channel is a reality that every retailer needs to embrace for several reasons. Growth
and sustainability, visibility and effectiveness of engagement depend on being intelligently
present in multiple channels.

The importance of handicrafts in India can hardly be emphasized enough. It is the

country’s largest source of employment after agriculture, employing millions, many of
them from the poorer sections of society such as the Dalits and women. But for all the
good it does, the handicraft sector suffers from major ills, including difficulty in marketing
the products to the global audience. E-commerce promises to change this situation, giving
hope to millions of artisans and workers who depend on handicrafts for their livelihood.
The handicraft sector, however, suffers from being unorganized, with the additional
constraints that the artisans who manufacture handicrafts lacking education, having low
capital, and absence to the marketplace. Perhaps the biggest handicap that hurts both the
market and the artisan who produced the goods is the dependence on the middle man. The
middle man would source the goods from artisan at cheap prices, thus keeping the artisan
in poverty, and provide the same at a high price to the retailer or wholesaler, thus earning a
huge amount in the bargain. Traditionally, Indian handicrafts are sold via retailers (direct
sales) or go through wholesalers/distributers, both of which usually source their goods via
a middle man. The new and emerging sales platform is e-commerce, which promises to
revolutionize the sale of handicrafts.

The world is moving fast, with thousands of products being created and sold every day:
what is new today, will be obsolete soon. If the world is moving fast, the tech world is

!41
moving faster. However, in Channapatna, a small town of artisans, time has almost been
stopped. Most of the workers here are employed in the production of a traditional
handicraft skill named ‘Lacware’, which consists of wooden toys created using eco-
friendly manufacturing processes.

As a small business owner, an individual might have a mix of channels s/he sells through,
some online and some offline. The online presence might include having an e-commerce
store on e-marketplaces like Flipkart or Amazon. In the physical world, the artisan might
sell his/her products through a brick and mortar retail store and participate in trade shows
or craft fairs.

However, one thing that's been missing for artisans and smaller retailers is the ability to
bring everything together into a single omni-channel retail strategy. Rightfully so, given
the technology up until now was privy only to household brands who could afford it.
Despite that, things are beginning to change and the same integrated technology is now
more accessible than ever to smaller merchants. For example, today a Flipkart merchant
can have a single dashboard for their inventory, sales, and customer information, while
simultaneously being able to sell online, offline, and quite literally anywhere in between. It
is essential for the artisans as well as smaller retailers to be trained in more than one means
of retail to attain profit maximization. The need of the hour is for more organisations like
Maya Organic to assist artisans in developing and marketing these ‘Lacware’ toys. The
organisation needs to provide support to artisans and small entrepreneurs through
marketing, product development, skill training and skill enhancement.

We suggest initiating a livelihood development organisation, like Maya Organic, involved

in developing a network of artisans, workers and micro-entrepreneurs capable of
producing high quality wooden products. In addition to supporting existing artisans with
contemporary design/product development support and consistent orders, the initiative
could consider training the artisans in the field of technology and e-marketing, supporting
the artisans to build viable micro entrepreneurial alternatives.

The first step towards training the artisans and smaller retailers would involve educating
them on basic computer and mobile usage. It would include a multi-stage process

!42
comprising of all the various uses of these technological implements, aiding at least
rudimentary computer literacy.

The next step would be to introduce them to commerce platforms like Flipkart and
Amazon. Subsequently, they need to learn how to create merchant dashboards, maintain
“soft” inventory and manage new orders. While this may seem like a menial task, it is a
major step for the artisans who lack access to such information and learning. The root of
the problem can be diagnosed in the unavailability of the proper information and proper
guidance. Rural Indian population does not know what kind of benefits it may have if it
switches to using the latest computer technology. Even if they somehow manage to get the
relevant information they face structural issues. To combat this, proper infrastructure must
be made available in rural areas. Along with that it should be made sure that properly
trained staff and facilities are available to utilize the infrastructure in most optimal way
possible. It must also be made sure that digital information collected via various means
and modes is available to everyone and proper training facilities are available to utilize that
information too.

These options have been analyzed further on the grounds of acceptability, suitability and
feasibility, as follows:
Suitability
India is one of the fastest-growing e-commerce markets in Asia-Pacific along with
China.
With increase in Internet penetration, adoption of smartphones and lower data
rates are completely changing the way India shops.
Feasibility
The Indian Government realizes the potential of the online retail industry. Hence,
they have teamed up with major online marketplaces to increase the sales of
Indian handicrafts.
Acceptability
Online platforms help in further creation of job opportunities.
Good sales of products help in the growth of the cluster. 


!43
5.4. STRATEGIC OPTION 4: Diversification
This option recommends the cluster to approach various industries and supply
intermediary products to the industries to make finished goods.
These options have been analyzed further on the grounds of acceptability, suitability and
feasibility, as follows:
Suitability
Increasing awareness of eco-friendly products
Channapatna artisans have an experience of making virtual reality boxes for 3D
virtual reality glasses. Similarly they can make wooden speaker boxes and
diversify into b2b clients.
Feasibility
The artisans can be trained to adapt to the new product designs.
Government can share the training cost of the artisans to help in the sustainable 

lifestyle.
Acceptability
Product diversification will help the Channapatna cluster to expand into new
markets with new products.
The cluster will increase market share in the growing industry through
diversification, thereby benefiting all the stakeholders. 


!44
CHAPTER 6

!45
6. LEARNING OUTCOMES

Through this craft cluster study, we have gained a deeper understanding of the Indian
handicraft industry at large, and we understand the general condition of the artisans who
are a part of this industry. The threats by Chinese products hamper the growth and
evolution of the Indian Handicraft segment, thereby, forcing a lot of traditional handicraft
techniques into oblivion. Through this study, we now have a better understanding of the
entire process of the working of the Channapatna craft cluster. The value chain process of
the craft cluster is a complex web of artisans, who have been working in poor financial
conditions.
This study has made us more aware of the predicaments faced by the artisans as a part of
the supply chain process, and have inspired us to suggest innovative techniques to improve
the existing strategy being employed by the Channapatna handicraft & toy industry. In
making these suggestions, we have gained a deeper insight to the efficacy and the
feasibility of the suggestions that we have made.

!46
CONCLUSION

!47
7. CONCLUSION

The purpose of this study was to study the existing market of the Channapatna craft
cluster, analyse the internal and external environment through theoretical models like
PEST analysis, Value chain analysis, Competitor analysis, SWOT analysis and Ansoff’s
Matrix in order to generate strategic options for the industry. Crafts are an integral part of
any culture or tradition around the world. An urgent need for improved resources,
retainment of skills, materials and processes within the craft industry has been noted
through the research process. Based in the state of Karnataka in Southern India, the
Channapatna craft cluster flaunts lathe turned wooden lacquerware toys crafted from eco-
friendly vegetable dyes. The cluster development project involved learning the processes
of the handicraft industry in Channapatna and understand the lifestyle of the artisans,
managers, retail owners and consumers through a 5 day field interaction and interviews
conducted for data collection. The project was concluded with generating strategic options
to improve the current state of the Channapatna handicraft and toy industry.

Through its close physical proximity to major retail centres like Bangalore and Mysore,
the Channapatna handicraft and toy industry has a large base for the consumption of this
highly valued art form and with a little effort we can help rejuvenate industry as well as
create a new image for the industry and its art form based on nostalgia in the minds of the

consumers. Certain drawbacks were identified through the research process, both in the
organized as well as in the unorganized sector, including a major lack of skilled artisans,
raw material procurement and lack of awareness and proper marketing for the industry at
large. It can also be noted that there is a huge demand in the industry for government aid in
terms of schemes for the upliftment of the town and the industry in order to restore the
faith of the artisans who have dedicated their lives to this art form. The analysis conducted
for the Channapatna handicraft and toy industry revealed future trends in the political,
economic, social, technological landscape which influence the demand and availability of
the Channapatna products.

!48
Through the research conducted, we can conclude that product diversification is essential
for the industry, with regular design interventions provided to the artisans specially in the
unorganized sector. The Channapatna handicraft and toys industry has the potential to
become a major source of economic boom for the country, and in order to achieve this, the
government needs to implement schemes that stop the influx of cheaper and toxic Chinese
alternatives which are hindering the trade of these authentic and eco-friendly, handcrafted
Channapatna products.

!49
REFERENCES


!50
REFERENCES

1. Sequeira, A., Times News Network, Building an army of designer artisans in

Channapatna. Retrieved on November 23, 2016, Wednesday, at 06:57pm hrs, from http://
timesnewsnetwork.com/ehost/detail/detail?sid=f7fd90b8-f4b7-4d0a-8c35

2. Raj, T., Culture of India, A Day with the Toy Artisans of Channapatna. Retrieved on
November 23, 2016, Wednesday, at 06:59pm hrs, from http://indianculture.com/ehost/
detail/detail?sid=fdsu0b8-f4b7-4d0a-8c35

3. Mani, E. and Nadeem, A., Why ancient toy makers of Karnataka are being forced to
leave the industry. Retrieved on November 23, 2016, Wednesday, at 07:27pm hrs, from
http://indianculture.com/ehost/detail/detail?sid=f7fd90b8-f4b7-4d0a-8c35

4. Youth Ki Awaaz, Culture-Vulture, Staff Picks, Artisans Give Up Their Craft. Retrieved
on November 23, 2016, Wednesday, at 07:27pm hrs, from http://indianculture.com/ehost/
detail/detail?sid=f7fd90b

5. GoRoadTrip, Lacquerware Craft Complex Info, Channapatna Toy Factory. Retrieved on

November 23, 2016, Wednesday, at 07:27pm hrs, from http://www.goroadtrip.com/
explore/india/karnataka/channapatna/attractions/channapatna-toy- factory-7339

6. Manoj, P., Online Edition of The Hindu, Chennai, India, GI certificate for Channapatna
toys, Bidriware, Coorg orange. November 12, 2014, The Hindu. Retrieved on November
23, 2016, Wednesday, at 07:27pm hrs, from http://www.thehindu.com/online/india/
latestnews/channapatna/attractions/channapatna-toy- factory-7339

7. Belgaumkar, Govind D. and Sastry, Kumar Anil, Online Edition of The Hindu, Chennai,
India, Unique symbols of Karnataka, September 22, 2014, The Hindu. Retrieved on
November 23, 2016, Wednesday, at 07:27pm hrs, from http://www.thehindu.com/online/
india/latestnews/karnataka/ssu797339

8. Azmathulla, Shariff, Online Edition of The Deccan Herald, Toy town changes with new
trends, dated 2005-03-29. Archived from the original on 2007-04-20. Retrieved on
N o v e m b e r 2 3 , 2 0 1 6 , We d n e s d a y , a t 0 7 : 2 7 p m h r s , f r o m h t t p : / /

!51
www.deccanheraldonline.com/toytownchangeswithnewtrends/newsupdate/shorts//
98e8chc8

9. Wikipedia, Channapatna Toys. Retrieved on November 23, 2016, Wednesday, at

07:27pm hrs, from https://en.wikipedia.org/wiki/Channapatna_toys

10. "Importance Of The External Environment". M360.sim.edu.sg. N.p., 2017. Web. 24

May 2017

11. Johnson, G., Scholes, K. and Whittington, R. (2006), ‘Exploring Corporate Strategy,’
Enhanced Media Edition, Prentice Hall, Harlow

12. Datta, DibyenduBikash, and Sankhadip Bhattacharyya. "An Analysis On Problems

And Prospects Of Indian Handicraft Sector". Asian Journal of Management 7.1 (2016): 5.
Web.

13. Govind, R. (2015) Bid to restore Channapatna craft to its original glory. Available at:
http://www.thehindu.com/news/cities/bangalore/bid-to-restore-channapatna-craft-to-its-
original-glory/article7941995.ece (Accessed: 25 May 2017).

14. Tragedy of Channapatna, the land of wooden toys in India (2015) Available at: http://
www.thenewsminute.com/article/tragedy-channapatna-land-wooden-toys-india (Accessed:
25 May 2017).

15. Channapatna craft park: Available at: http://craftspark.org/notification.html

(Accessed:25 May 2017)

16. News, reports, documents, blogs, data, analysis on environment & development (no
date) Available at: http://www.indiaenvironmentportal.org.in/content/176/artisans-the-
untold-story/ (Accessed: 25 May 2017)

17. Jayaraman, Pavitra, Channapatna, Karnataka - back in the game. Retrieved on

November 23, 2016, Wednesday, at 07:27pm hrs, from livemint.com/karnata/channapatna/
toys//lkjusdyf7893b009

!52
APPENDICES


!53
APPENDIX - I

A. INTERVIEW SCHEDULE (Self Developed) For MAYA ORGANIC

1. Annual sales of the company? Total annual sales for 2017? (1 – 1.5 crores)
2. No. of employees? (53-55)
3. Technology used? (Lacware traditional knowledge)
4. Where do you get the designs for the toys? (Traditional designs - modified)
5. Highest selling product and its MRP? (Lamps – 1500 INR)
6. What are the existing markets for your products? (70% export(Japan,Switzerland), 30%
India (Mangalore,tamil nadu etc))
7. Do you have your own website? (Yes, but the sales are not as effective yet)
8. How much has ecommerce affected your business? (Increased the sales by 15%)
9. Do you package your product for presentation? (No, for design, safety, simplicity)
10.Important challenges faced? (Design restrictions, Less packaging boxes, thinking about
simple shapes for products.)
11.Who is your direct/indirect competition? (China)
12.What is your competitive advantage? (Workers - artisans & support staff)
13.What are the barriers to entry?
14.List factors that affect the industry growth?
15.Are there any government regulation?

!54
APPENDIX II

B. INTERVIEW SCHEDULE (Self Developed) For artisans in Channapatna

1. Tell us something about the traditional art form or craft that you do.
2. How long have you been working as a toy/handicraft maker?
3. What materials do you use to make your crafts?
4. Where do you source your raw materials from?
5. What is your present income from these handicrafts?
6. Do you have any other source of income?
7. Do you earn a good sale price for your products?

!55
APPENDIX III

C. CUSTOMER SURVEY (Self Developed)

1. Do you purchase handicraft products? 


- Yes

- No 


2. If yes, then how often do you purchase, else go to Q.3 - Once in a week 

- Once in a month 

- Once in a year 

- Twice in a year 


3. If you want to purchase, what type of handicrafts do you prefer buying? 


- Sculptures and masks 

- Toys

- Jewellery

- Pots and vases

- Decorative show pieces

- Others specify ________________________________

4. Are you aware of Channapatna toys and handicrafts? 


- Yes 

- No 


5. If yes, how did you come to know about it? 


- Friends and Family 

- Newspapers

- T.V Advertisements 

- Internet 


!56
6. Have you ever purchased any Channapatna product? 

- Yes 

- No 


7. If yes, what was the medium of purchase, else go to Q.9 


- Local shops in Channapatna 

- Retailers In Bangalore 

- Shopping websites

- Wholesalers

- Others 


8. Why did you purchase the particular product? 


- Quality 

- Traditional value

- Aesthetic appearance 

- Eco-friendliness

- Creativity 


9. Do you prefer buying a Chinese product over traditional handicrafts? 


- Yes 

- No


10.10. Do you prefer to buy a handicraft if it is in an attractive packaging? 


- Yes 

- No

!57