HL Research Project - Sahakar

8/2/2019 HL Research Project - Sahakar

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Prithvi Patel, 003810-004

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Business and management

Higher level.

Internal assessment.

How can Sahakar General Stores in Ghatkopar, Mumbai change its product mix to

fight competition?

Main essay: 2124

Research proposal: 193???

Executive summary: 178


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Research Proposal

Research question


fight competition?

Rationale for study

Sahakar General Stores is a shop which started in 1977, and is operating till now,

where the FMCG goods are sold, which helps the owner to earn faster revenue.

Currently, it is facing problems of low profits due to lower sales. M/S Sahakar

General Stores is not able to generate revenue as before due to varied factors. Thus

due to the issues being faced by this store in generating greater revenue this research

is intended to explore the array of ways the owner can take into account to solve theproblem of falling sales.

Theoretical framework

1.2 Types of Organizations 1.6 Organizational Planning Tools 1.7 Growth and Evolution 3.1 Sources of Finance

3.3 Working Capital 4.1 The Role of Marketing 4.3 Product


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Methodology

Sources Methods Information needed

Dharmesh Mehta, owner,

Sahakar General Stores Interview Operating promotional mix

Changes in the market, in

terms of competition

Significant difficultiesfaced by the firm

Current customers of

SahakarQuestionnaire

Their present views and

potential expectations

The effectiveness of the

product mix and analyzing

the market gap

The data accumulated is solely based on the ways of primary research, as there was no

scope of obtaining any sort of existing data of the company in the newspapers or

internet, or any other source of secondary information.


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Action Plan

Januar

y6th

Dece

mber

Nove

mber

October

Septe

mber

August

July

Ju

ne

May8th

onwards

Choosethecompany

Writearesearchproposal

Submittheresearchproposal

Writeanintroductio

n

Writeandfinalizea

questionnaire

Preparequestionsfo

r

interviews

Submitquestionnaires

and

interviewquestions

ResearchSahakarGen

eral

Stores

InterviewS

ahakarsowner

Analyzeandevaluatere

sults

oftheresearch

Preparethefirstdraft

Writeconclusionsand

recommendations

Preparethefinaldra

ft

Completetheproject


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TABLE OF CONTENTS

Executive summary

Introduction

Objectives and methodology

Main findings

Analysis

Conclusions

Recommendations

Bibliography and references

Appendices


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EXECUTIVE SUMMMARY

After establishing itself successfully in the market for more than 25 years, Sahakar has

now been facing healthy competition in the market, with competitors offering

additional services and stealing on the market share. The aim of this research is toanalyze the ways in which Sahakar can regain its market share, mainly by focusing on

its product mix.

Research question:


fight competition?

Method:

Analysis in based on information collected only through primary research, like

interviewing the owner of Sahakar and asking its customers to fill in the

questionnaires. Then the data was evaluated using frameworks namely BCG matrix

and SWOT Analysis.

Main findings:

Limitation of budget Seasonal sales fluctuations Improper product mix selection High stock of inventory

Recommendations:

Have reliable sources of finance Keep adequate level of stock during festive seasons Restructure the product portfolio Rearrange the stock to make maximum utilization of the storage space Introduce additional services, such installing a stationery shop

Word count: 178


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Figure 2

As seen from the graph, Benefit has the highest market share, followed by Sahakar

just more than Home Mart, and then others still running with some acceptable profit

levels. Sahakars profit levels fell by 20% compared over the previous years. So inorder to takeover Benefits lead and to recapture the market, Sahakar will have to

primarily focus on its product mix to attract more customers. Thus arises the researchquestion, How can Sahakar General Stores in Ghatkopar, Mumbai change its productmix to fight competition?

Moreover, the competitors offer additional services, which are listed below:

Additional services offered

Stationery

items

Free home

delivery

Credit

facilitiesExchange

Nameofthefirm Sahakar

Benefit

Home Mart

The table clearly indicates what extra facilities the three top contenders provide in

order to achieve market growth. Benefit has all the four services, adding to their

suitable location to satisfy the customer needs and wants. Sahakar offers 2 out of 4services, whereas Home Mart provides the consumers with only the stationery items

Sales in 2010

Sahakar

Benefit

Home Mart

Others

26%

36%

24%

14%


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like photocopying papers etc. Thus recommendations to Sahakar would be to widen

their customer base for home delivery. Previously, they offered this service to

residents living in the radius of 2 km, now they can expand it to 3 or 4 km, and also

the purchase made by the customers should be worth Rs. 200, which can be further

reduced to Rs. 100.

Another important factor that helps Benefit gain a greater market share is its

geographical location, which helps it cover a wider customer base, and even makes it

convenient for a few residents of the locality to walk lesser. Here Sahakar is helpless

as working over relocation would be non-effective, and they cannot afford to relocate

to some other area. Thus, due to lack of financial resources, the stores cannot re-locate

and neither canit indulge in heavy promotions and so the only way to increase revenue

is modify the product mix


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OBJECTIVES AND METHODOLOGY

The prime objective was to work on their product mix and help them re-formulate

their product mix. So in order to improve their performance, the following

methodology can be used:

a. Using SWOT analysis, the stores weaknesses and threats can be worked upon,and its strengths and opportunities can be emphasized.

b. By using the Boston Consulting Group Matrix, the low-selling products can beeliminated and best-selling products can be worked upon.

The methodology incorporates collecting data from sources such as interview withSahakar General Stores owner to converse about their limitations, current productmix and the sales levels. Secondary research includes inquiring from the storesowner, and primary research includes interview with the owner, questionnaires made

for the customers and data collected from the sample. The above combination enables

us to get more or less an equal balance between quantitative and qualitative

information. In order to analyze clearly, tools like SWOT and BCG Matrix are used.

Possible difficulties predicted to come during the research:

Meetings with the owner may not be very often, as being a sole trader he has his own

leisure time and can choose his own hours of work and holidays. Thus to avoid this

problem, appointments can be taken and fixed with the store owner. Moreover, the

customers are likely to give biased information and even complete financial data by

the owner may not be revealed. The personal records are subjective, but to obtain

authentic results from the customers, I can make them feel comfortable about the

discussion and the questionnaire before they fill it, avoiding any intimidating

questions and respecting their time.


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MAIN FINDINGS

The data gathered from the interview of the owner revealed a few drawbacks in the

product mix, which are:

a. Limitation of budget1High financial constraints drift away the owner from taking high risks and

expanding. Even the new released products cannot be ordered due to the fear of

high risk and failure of the product.

b. Seasonal sales fluctuations2Due to the change in the economy and in tastes and fashion, the shop had seen

fluctuation in its sales. Moreover, there have been more sales during festivals.

c. Improper product mix selection3Due to the lack of knowledge of the latest trends in the market, there is a poor

choice of selection in the product line which avoids further sales and larger

closing stock.

d. High stock of inventoryThere is a large amount of inventory kept in order to keep an adequate supply.

But this leads to a cash flow problems as money is stuck in the form of stock.

e. Falling counts of foot-falls4The number of people visiting the store reduced, which meant that there was

certainly a fall in the sales volume.

f. Decreased revenue5The owner of the store revealed that his revenue compared to the last few years

declined by 20%.

The information that was obtained from the customer survey shows some

disappointments like:

1Appendix 9.1

2Appendix 9.1

3

BCG matrix4Appendix 9.1

5Appendix 9.1


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a. Demands not being met oftenCustomers were dissatisfied as the demands were not being met at times, which

led to the decreased visits and going for its competitors.

b. Short radius of home deliveryThe store provides home delivery services, but as per the convenience of the

store. This practice can be changed to help fight the competition.


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ANALYSIS

5.1 SWOT Analysis

Strengths Weaknesses

Loyal customers Already established business Easy access to the store by

customers

Products available for almost allmarket segments

Seasonal demands are also met

Limited variations Insufficient sources of finance No fixed working hours Poor management of inventory No eye-catching displays

Opportunities Threat

Expansion of the business Widen their customer base Modifying the product mix Introduce value added services

New business opened nearby Other stores have better location,

making it convenient for many

existing customers

Competitors have other sub-sections also, like a stationery shop

The loyal customers and the easy access to the store for customers guarantee Sahakar

to have more walk-ins, along with seasonal products, which are mainly during

festivals are also being sold very well. These factors assure fixed sales, which can

further be increased by key factors like expanding the business, modifying their

product mix to widen their customer base and providing more value added services.

But only these factors wont help boost its sales. They have to improve on theweaknesses, which include a certain limit in the variations, which may sometimes

displease the customers and they go empty-handed. Another weakness is that evenafter establishing themselves, there are very less sources of finance, which will make

their expansion plans even more challenging. Another is that being a sole trader, he

works for personalized hours. This might not be appreciated by many customers.

Likewise, a poor display kept for the consumers might disinterest them from buying

goods from here. Not only the outer display, but the inner management of stock blocks

space that can be needed at urgent deliveries.

These are a few problems they can overcome internally, but the problems, like one of

its competitor Home Mart running a stationery shop, and Benefit General Stores

coming up with a better location, cannot be dealt with. Overall they hold much of the


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market due to the support of its loyal customers and a well-established name, but in

the long run they need to revise their product mix to ensure satisfactory sales.


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5.2 Boston Matrix

Market share

High Low

Marketgrowth

High(growing) Stars

Beverages (Coffee) Breads Condiments Paper products Snacks

Problem Children

Baby items Pasta Dairy products Sweets

Low(mature) Cash Cows

Baking Beverages (Tea) Cleaning supplies Health and Beauty

Dogs Breakfast Frozen foods Miscellaneous Beverages (Water, cold

drinks)

Produce Beyblade

Sahakar General Store doesnt have to worry about the cash cow products, which arebaking items, as there is already a huge existing market, with Sahakar having a great

market share. Other products falling under cash cows, namely tea, cleaning supplies

etc help Sahakar in minting money because the purchase of these goods is always high

and nearly everyone in the market buys these products.

The stars are coffee, breads, condiments and others are relatively new in the market,

as people earlier preferred having chapattis instead of breads. But with the

modernization of the world, people became exposed to different products, which is the

case in Ghatkopar East. Thus the market growth is very high, and as Sahakar is one of

those few offering these goods, its market share is also high.

However, there are some products still questionable, as sale of these items is highly

fluctuating. These are the problem children, as the growth in the sales of these

products is unpredictable. Even though the market size of these products is increasing,

these products are not being sold very well by this store. This is because the baby

items and pastas, under the question mark products are being sold by its competitors

in a more appealing way, there is a famous sweets shop and a dairy store located

nearby.


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The last category is dogs, where products like breakfast items, frozen foods and

Beyblades etc are not being sold till the expected limits. The breakfast items are going

unsold because the families prefer having bread and butter with tea over breakfast

items like cereals and cornflakes. Beverages like packaged water bottles and cold

drinks go unsold, because situated right next to Sahakar is a cold drinks and ice-creamshop, which attains more customers. And hence these products are well existent and

have a matured market growth, but the market share of Sahakar for these is low, se

they are considered to be Dogs and need to be phased out.


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6. CONCLUSIONS

The observations we obtain from the analysis will help to come to certain conclusions

about the store, its competitors and the market.

The strengths under SWOT need to stay focused, so as not to lose track of their sales,

revenue and profits. Moreover, Sahakar will have to surmount the weaknesses, which

will make a significant increase in its sales. Also, grabbing the opportunities

appositely will provide it with optimum growth in sales. And even though the threats

cannot be dealt with, coming up with better offers may overshadow the treats. Then,

star products are to be maintained, as they expect rapid market growth; cash cow gods

are working well; hence certainly no changes are to be made. Not only this, but also

the question marks need more attention that will help the store to earn relatively

higher revenue. And finally, there are high probabilities that dogs need to be

eliminated completely from the product mix.


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7. RECOMMENDATIONS

To generate higher revenue, Sahakar General Stores needs to work on their product

mix and predict its the future trends. And here are some suggested changes to beadopted:

a. After evaluating the SWOT Analysis, it is clear that Sahakar needs to makealterations and adopt some solutions to overcome their weaknesses. Primarily,

they should offer more variations for the customers, then try to arrange for

more sources of finance so as to make the expansion easier. Besides, the owner

should keep fixed working hours of the store so the customers are aware of its

timings. Lastly, Sahakar should even re-arrange the display to make it

appealing and attention-seeking.

b. The product mix should be restructured based on the evaluation of the BCGmatrix. The cash cow products should be kept in adequate amounts and on-time

supply. The stars must also be kept at the right quantity so as to obtain

maximum sales. And hence, implementing the just-in-time method for these

goods would be the finest choice. Then, question mark products should be

worked upon, in ways like offering better brands of the same product,

displaying them in an eye-catching way in the store and even ordering them by

adopting the just-in-case method. And in the last section, Dogs, products are

least successful, thus phasing out these goods would be the most appropriatemethod.

As the research is based solely on varying the product mix, more emphasis

should be given to the results of the BCG Matrix, which focuses on the

performances of these products. Thus change is needed in the product mix by

continuing with cash cows, further extending the starts, promoting the question

marks, and phasing out dogs. However, utilizing only this solution will not

have optimum effect on sales. Along with this, suggestions from the SWOT

Analysis should be taken, like working on the displays, fixing proper working

hours etc. And even the changes in competitors behaviors should besupervised carefully, so as to not lose further sales.


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8. BIBLIOGRAPHY AND REFERENCES


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9. APPENDICES

9.1 Interview with the owner

Q:

A:

Q:

A:

Q:

A:

Q:

A:

Q:

A:

Q:

A:

Q:

A:


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9.2 Consumer survey

The data accumulated from the questionnaires gave was as observed below:

1. How often do you visit Sahakar General Store?No. of customers % of customers

Daily

2-4 times a week

Weekly

Fortnightly

2. What draws you to the store?No. of customers % of customers

Proximity

Variety of products

Customer service

Other facilities

3. Are you happy with the current product range and the variety?No. of customers % of customers

YesNo

4. Are you happy with the current service at the store?No. of customers % of customers

Yes

No

5. Are you happy with the current home service?No. of customers % of customers

Yes

No

Documents

HL Research Project - Sahakar