Report on New Venture Creation – A sample
Introduction:
In today’s rapid moving and extremely busy life where almost everybody is multitasking,
people are forgetting about the petty things which bring happiness. Gifts always bring a
smile on the face, the smile is wider when the gifts touch your heart; and spreads when
they are harmless to the environment. This enterprise will provide handmade,
personalised gifts and cards made out of recycled articles; at your doorsteps.
Having a good hand at arts and craft, a creative mind and an innovative bend, I never
purchased gifts, rather made them myself. It started as a hobby, developed into
expertise and became a habit. My first employer was a home tutor, who hired me to
make farewell gifts for her 10 students. With scissors and glue as capital, I created
personalised pen stands out of toilet paper roles, mobile holders using candy sticks and
wind shines out of used CD disks.
Concept statement
TouchArt will start as a sole proprietary home based business providing personalized
and low cost gifting solutions and delivery for all occasions. The aim is to release the
customers’ tension of hunting for the perfect gift and provide maximum customer
satisfaction. Recycling and minimizing waste will offer best prices. This will save their
time, money and energy which they can concentrate on other important activities. The
idea is to move away from electronic emotions and retain human emotions and feelings
through the long forgotten traditional gifting and inviting methods. A wide range of
choices in the kind of gifts or invitation cards, personalization (names, photos, personal
messages, favourite objects, activities etc inscribed on the cards/gifts) as well as in the
delivery method will provide unique experiences like the customers would have never
imagined. If they already have their own ideas but not time or way to act upon; we are
ready to implement it with added expertise at their command.
Products:
Personalised gifts for all occasions made at home.
Gift baskets and return gifts for large groups of people.
Customised invitation cards and other invitation ideas.
Gifts wraps made up of recycled paper or other substitutes of paper (like fabric,
decorative plastics etc)
Services:
Doorstep delivery or posts (single or bulk).
Jingles, poems, songs or personal messages sung or read at your dear ones’ doorstep.
Expert consultation and tailored advice for gifting and inviting solutions.
Order placing anywhere, anytime and anyhow.
Flexibility in payments.
USP:
All products, including wraps and packaging will be handmade or custom designed and
as far as possible using recycled articles and scrap (like newspaper, magazines, other
used paper and paper articles, used plastics etc which are easily found at home or
industries). Unique ideas for surprising loved ones will also be offered which no shop or
website can provide. Trained experts will personally meet the clients at a convenient
place and time offered by the clients to discuss in detail their desired needs, how they
want the gifts or invitations to be designed and delivered where, when and how.
Alternatively, orders can also be discussed via telephone or email.
Secondary Research
Since my business started at home, it will be expanding from Mumbai, India. Mumbai is
India’s financial capital, largest and busiest city also considered as the business hub with
rapid development of corporate and jobs.
This business falls under small enterprise, retail, lifestyle, outsourcing service, recycling
as well as stationary industry.
Industry Analysis
According to Economywatch report (2010), “Small and Medium Enterprises play a vital
role for the growth of Indian economy by contributing 45% of industrial output, 40% of
exports, 42 million employments, create one million jobs every year and produce more
than 8000 quality products for the Indian and international markets.” Speedy
technological advancements have led to reduced communication cost in this field. This
industry is moving towards becoming more consumers oriented and providing cost
effective prices. The government also supports this sector by providing various grants,
concessions and incentives. According to Key Note Media Centre press release (2010),
Stationary is a rapidly expanding global market in India. With an estimated growth of 10
– 15% per annum, this sector is booming in terms of innovation, knowledge,
employments, exports, tax revenues etc. Many MNCs are already using India as an
outsourcing hub. However, this industry faces major competition from China which has
more production capacities, better infrastructure, lower tax rates and beneficial
government policies. The following table from ingene.blogspot.com shows shifting
trends in this sector:
According to A. T. Kearney’s Global Retail Opportunity Report (2007), Indian youth
accounts for 60% of Indian population. These youth are already eco-cool and moving
towards more cultural and traditional methods of lifestyle and encouraging healthier
and eco-living. (Questionnaire and focus group results) Some Indian companies like
Pepsi and Hindustan Lever have identified “focus on health and well being”, “return to
nature” and “increased social consciousness” as emerging trends. (ACNielsen Consumer
Confidence and Opinions Survey, 2007) Dharavi district in central Mumbai offers ample
scope for this sector with ever increasing and substantial amounts of recycling industry
and 15,000 single room factories. Recyclable wastes from all over the city are processed
here. (mumbaiproperties.info, 2010) Thus a major source of raw materials for TouchArt
business is readily available at close proximity.
The field of entrepreneurship is also very novel and deafening in Indian markets. The
National Knowledge Commission’s report (2008) shows the following growth trends:
Social and personal services are one of the emerging sectors in Indian markets and at
the highest level of entrepreneurial activity and importance. Also, there has been a
tremendous increase in the number of companies registered in this sector. Starting with
1000 companies in 1991-92, there are around 3000 companies now which is the highest
figure ever. Firms in this sector have always outnumbered those in other three areas .i.e.
old economy or traditional, trading, agricultural and other sectors.
Market Analysis: from national to regional.
India, with a current GDP growth rate of 7.3%, offers a very attractive market for starting
a new enterprise. According to the forecasts given by McKinsey Global Institute, India
will develop into the fifth largest consumer market in the world by 2025 with a market
size of US$ 1521 billion. Indian consumer market will soar to $1500 billion with 68% of
its growth contributed by urban areas. (india-reports.in, 2010)
Project income levels are expected to triple in 25 years and number of people belonging
to middle class families is anticipated to escalate from the current 50 million to 583
million. This is because of the ever increasing population and workforce thereby
resulting in 100% raise in their real spending power as shown below. (McKinsey Global
Institute’s research report, 2007)
Another survey by ACNielsen Consumer Confidence and Opinions (2007) revealed
interesting findings; “even as India once again topped the 45-country survey with a
consumer confidence index of 137, suggesting the highest optimism about the future,
Indian consumers do not seem to be willing to spend much.” These conservative
consumers do not demonstrate freewheeling shopping habits and deposit most of their
spare cash in investments like shares, mutual funds etc; or save it in their banks
accounts. Such consumer behaviour illustrates that market potentials have not been
exploited completely thereby offering us ample opportunities to perform and prosper
by making our services more relevant to them. It is this spare cash that we are targeting
at as Indians are now willing to spend a little extra for their convenience. (Questionnaire
and focus group results)
According to the Maharashtra Development Report (2007), number of urban units in this
state is raising at an increasing rate. Out of the six classes of cities in 2001, 80% urban
population lives in class 1 cities. Mumbai is a primate class 1 city with a population of
11,914,398 and a literacy rate of 77.45% which is higher than the national average of
64.8%. (Census, 2001) This offers a huge attractive customer base. The World Gazetteer
extrapolations (2008) show a tremendous increase in this population as 13,662,885 in
Mumbai and 20,870,764 in Mumbai Metropolitan Area. (mumbaiproperties.info, 2010)
Target customers and their needs:
Busy working class: Most adults in the family are now working which gives them very
little spare time but more disposable income for time consuming activities like gift
shopping, personally inviting a long list of guests etc.
Rich upper class: Convenience-lovers, getting personal work done by others are luxury
for them; they like being pampered and spend for status symbol.
Corporate Bodies: Companies often send gifts and invitation to their clients, staff,
employees’ families, customers and other stakeholders, spend to enhance their personal
and professional image, organizations add to their goodwill by caring for the
environment and reaching out to their stakeholders personally.
Groups: Kitty parties, societies and other groups, show concern towards recycling, want
updated information about latest trends, fashion etc.
Youth and others: believers of non-conventional ways, think different, prefer ‘Hard to
find’ unique items/ideas, green/eco consumers etc. (questionnaire and focus group
results)
The Report on Working Class Family Income and Expenditure Survey (1999-2000) shows
that Mumbai has 14.43 lakh working class families with 20.16 lakh people employed.
99% families reported expenditure on savings and investments. Out of the total average
monthly income of Rs 7594.84, 89% families have an average surplus income of Rs
2080.75 over an average monthly expenditure of Rs 5514.09. This 28% of income which
is either saved invested or now being spent on convenience and comfort is our target
concern.
Ernst & Young director retail industry Ashok Rajgopal (2007) stated “By targeting the
youth population in India, retailers will be investing in the future as they will be able to
influence and create loyalty from the start.” Especially due to India’s rising affluence rate
and favourable psychographic and demographic conditions, there is a huge demand for
luxury and lifestyle products and services here.
Competition:
This concept does not exist in India. It is a new innovation and hence has no direct
competition. Indirect competitors in Mumbai include:
Gift/novelty/souvenir shops: above 300 shops and 7 companies.
Handicraft shops: above 218 shops and 14 companies.
Stationary shops: above 722 shops and 17 companies.
(yellowpages.webindia123.com, 2010)
Major brands like Archies Galary, Shoppers Stop, Lifestyle, Florida, 49 to 99 etc dominate
in Mumbai but cater only to high-income groups due to high prices or less accessibility.
Few websites like moonpig ecards etc are very rare and unknown. None of these
competitors consider recycling or personal delivery. In view of Hand and Sineath (2010),
performance of gift/novelty/souvenir stores is often allied with five key factors .i.e.
quality of the products, service convenience, price – value relationship, specialization
and management expertise. TouchArt intends to excel in all these aspects better than
the competitors. The strategy is to provide better quality products and more customised
and prompt services than them and aim at total consumer convenience and satisfaction
at lower cost. With regular updating of market trends, new fashion, current prices etc,
shopping with us will be made easier, more convenient and cost effective. A shift of
approach from materialistic to humanistic is already emerging from the fact that
handwritten messages in cards are more valued than printed ones. (Questionnaire and
focus group results)
Marketing and expansion:
The first customers shall be developed from personal references. India being a country
of diverse cultures and traditions, trade fairs and exhibitions are often held on festivals
like the famous Kumbh Mela, Bandra Fair etc. These provide scope for demonstrating
the products and services to all kinds of customers and suppliers. Strong interpersonal
relationship with all stakeholders shall furnish word of mouth marketing and help the
business grow. Sending occasional gifts to them, which act as a promotional tool, shall
retain customer and supplier loyalty. Their database shall be maintained to remember
dates, occasions, likes and dislikes etc and provide gifting suggestion on days of
importance to them. Their feedback shall be used as a measure for improvement and
innovation. According to Jolson and Spath (1973), success of gift/novelty/souvenir
stores is determined by four key factors .i.e. quality of the products, services offered,
specialization and price – value relationship. All these factors are well groomed in
TouchArt business.
Financial Implications:
Initial and working capital shall be low (approximately Rs 20,000-30,000) since recycled
materials and scrap that are easily available at homes, shops, offices and factories will be
used as far as possible. Other materials include stationary articles and other
miscellaneous items. The fixed costs would include:
Promotional materials like business cards, catalogues, brochures etc (self-designed on
recycled paper). (Rs 10,000)
Internet connection, telephone line and instrument. (Rs 10,000)
Computer, printer etc for designing products and maintaining database. (Rs 50,000)
Bicycle (non-polluting) for small orders. (Rs 10,000) Later a delivery van/vehicle for bulk
orders.
Since this will start as a home based business, products can be made at home or any
small space with little training. For bulk orders, an empty room, ample time and lots of
dedication shall be required. An initial start up capital of around Rs 100,000 will be
required. During the first year, low introductory costs with minimal profit margin over
the expenses incurred will make our products and services affordable to all. More
employees, capital assets and greater profit margin shall be added once the sales
stabilize.
Primary Research
Online Questionnaire Survey:
From an online survey of 100 people (mostly Indians), it is determined that this business
has great potentials to flourish. These people ranging from teenagers to 60 year olds are
studying, working or both or unemployed and belonged to all three income-groups
(Figures 1,2 and 3).
Almost all respondents believe in buying gifts. Out of these, birthdays and anniversaries
are seen as the most celebrated occasion. 36% buy gifts on other festivals and
occasions, 18% on visits to and from guests, 10% for corporate employees, their
families, clients, customers etc and 33% like to give surprise gifts without any occasion.
India being a multicultural nation with hundreds of diverse festivals and occasions
provides great scope for business throughout the year. (Figure 4)
One third respondents are price conscious while 54% sometimes considered price when
buying gifts. They serve as customers for the low cost homemade gifts or those made
out of recycled materials. The rest 13% said price did not influence their choice and
hence shall be attracted to the added services offered like personal delivery or adding
personalised surprise elements etc. (Figure 5)
Around 76% people are environmentally conscious and will be attracted by the USP of
using recycled waste. Rest 24% may not care for nature but may still be fascinated by
the USP of personalized, handmade designs and unique surprising ideas. (Figure 6)
This is supported by the fact that out of the five choices provided, 83% preferred
personalised gifts, 43% handmade and handicrafts, 40% eco-friendly gifts only around
20% chose luxury/cheap items. (Figure 7)
More than three quarter of participant organized parties and events. Though most
people preferred quick means of invitation like mail, phone or SMS, almost 69%
respondents still preferred to invite their guests personally. These people would
certainly be interested in trained professionals delivering their messages and/or cards
personally. (Figures 8 and 9)
Unstructured Focus Group Discussion:
This idea received 94% positive responses. Participants described this service as
interesting, innovative, creative, cool, convenient, easy and beneficial. The personalised
additions and surprise elements made gifts more interesting, added warmth to the
feelings and had greater impact than usual gifts/messages. Some said there is a need to
save time and energy as life has become hectic. Hence personal delivery should work in
today’s busy schedule. Even those who do not throw parties themselves found this
service as a better way to organize one. Others preferred TouchArt because it
encouraged eco friendly lifestyle.
Some positive and negative comments of participants are attached in appendices.
Conclusion
Thus from primary and secondary research results, it is evident that this business has
great scope for flourishing in Mumbai metropolitan areas and setting new trends in
recycling, lifestyle and leisure industry. Anticipating that this idea will soon be copied by
other retailers, the aim is to excel in our USP and provide friendly, unique and most
convenient services. With the ability to determine what exactly our clients need,
TouchArt products/services shall soon be converted from luxury to demand.
