Pricing Strategy For Retail Leather Business

Pricing Strategy For Retail Leather Business 1. Executive Summary Pricing strategy is play very important role in any business and pricing is always based on the consumers perception .This research is based on the Pricing strategy of Leather Retail Business in Singapore this is my first step for having retail leather shop in Singapore. In this research the important to know what price range will make customer to buy leather products and to see gap or space in existing leather market. This paper investigates about the consumer preferred pricing for leather products- Handbags, Wallets, Jackets, Computer Bags, Mobile case , Shoes and belts and what price range they found product is Expensive and At what price range consumer think that product is cheap? These factors are very important to know about consumer pricing acceptance. Finally we have got consumer preferred price, expensive and cheap price also Research paper also investigates all the factors which are influencing consumer buying decision they are Price, Quantity, Brand and Country of Origin. We got that price is top most important factor for consumer in buying decision and Competitors Price offerings analysis shows that Store type Biz from home and Retail Leather store is much similar but store type Shopping Mall store is having high end products with high price. For this research, SPSS, Perceptual and excel is used to know about the difference between Consumer preferred price. Perceptual is used to know preferred leather product according to the consumer age and gender. SPSS for knowing the cluster of leather product so that can be used for offering packages on demand. Overall, Price is very important factor and there is gap between consumer preferred price and competitors offerings and there new store can enter in market for selling leather products in consumer preferred price. 1. Introduction An entrepreneurial venture I am going to practice is to step in, in the leather retail business. This dissertation is based on the Pricing strategy of Leather Retail Business in Singapore this start will help me to stand up on my own feet. Singapore is small place but It is known as shopping paradise for Singaporean and tourists also. All leather products are fashion symbol for teenager and youth generation in the world Singapore youths are also fond of leather products. In 2008-2009, each and every business was facing decline due to the global crisis and in that period Singapore recession started because of that people started buying only necessary things for them and they were less concerned about the fashion and style but From first Q1 of 2010 the shadow of global crisis started fading off and base on this I think Its right time to start Leather retail business .Leather products could never die although it might face difficulties, which is the part of business. Leather products will be purchased from wholesale leather industries, Dharavi, Mumbai. Dharavi is famous for selling all genuine leather products at cheap price. In order to move ahead with my plan, I have to make certain assumptions and get a fair idea of the market. For this, the group will be conducted a primary research on the local people on their desire to buy leather and their expectation from the leather product The details of overseas buyers/delegates who visited India during the three Indian International Leather Fairs in the last three years is given below: In which Singapore has entered in 2006-2008 It is taken from http://www.leatherindia.org/annexure Year Country Number of overseas Buyers 2005-06 Spain, Portugal, UK, Singapore, Oman Italy 14 2006-07 Italy, Romania, Turkey, Argentina, Mexico, UK, USA, Portugal, Philippines, Bangladesh, France, Germany, Vietnam, Mexico, Sri Lanka and South AfricaÂÂ   69 2007-08 Spain, Belgium, USA, Brazil, Brunei, Spain, Czech Rep, Netherlands, Ethiopia, Hong Kong, Israel, Kenya, Mexico, Nigeria, Namibia, UK, Romania, Poland, Finland, Colombia, Canada, South Africa, Turkey, Belgium, Portugal, Italy, Philippines, Singapore, Sri Lanka, Taiwan, Uzbekistan Turkmenistan 116 In Singapore seems to be a considerable potential for the entry or expansion of specialized retail chains for leather retail business. Singapore is very small country and here market of any service or product gets saturated very rapidly but during my initial research shows that total 98 retail leather shops are available in the market but in 98 retail leather shops. 25 to 30 retail shops sell Branded leather like Gucci, Bulgary. 1.2 Singapore retail leather Market In Singapore seems to be a considerable potential for the entry or expansion of specialized retail chains for leather retail business. Singapore is very small country and here market of any service or product gets saturated very rapidly but during my initial research shows that total 98 retail leather shops are available in the market but in 98 retail leather shops. 40 retail shops sells Branded leather like Gucci, The Indian durable goods sector has seen the entry of a large number of foreign companies during the post liberalization period. A greater variety of consumer electronic items and household appliances became available to the Indian customer. Intense competition among companies to sell their brands provided a strong impetus to the growth for retailers doing business in this sector. Increasing household incomes due to better economic opportunities have encouraged consumer expenditure on leisure and personal goods in the country. B2B meetings between India exporters and over seas buyers. Changes in consumer needs, attitudes and behavior: The growth of modern leather retail is linked to consumer needs, attitudes and behavior. Rising income levels, education and global exposure have contributed to the evolution of the Singaporean middle class. As a result, purchasing and shopping habits have been inculcated and are increasing day by day. Historically, Singaporeans have been the ones to splurge on luxury items. Today, people are willing to try new things and look different, which has increased spending on fashion and beauty products apart from apparels, food and grocery items. 1.3 Competitors of Retail leather stores In Singapore many competitors are available but leather market is not saturated. Pls see below the list of Company Name who runs retails leather business in Singapore http://www.singaporebusinessguide.com/category/Leather_Goods.htm Here almost all retail leather shops are concentrating Leather wallets, Hand bags, key case, leather jackets and card holders and in the list few of company are selling all these above products but rest of them concentrating few product items and some of them concentrating on one product like only men belts and some only hand bags. I have visited retail store of Artisan where they sell all leather products. Pls see the below Pricing for some demanding products. In in leather industry Pricing is good factor in retail business and importantly if you are selling the product which you got in low price where Product has a high value so seller willingly sale product in good profit margin. Business strategy of selling product in low price which can be adopted , if you have enter in existing market where competitors are already gaining good profit margin so there differentiation can be made by selling product with low profit margin and make profit from selling large quantity. 1.4 Target Customer People who stays in Singapore Locals, PR or EP holders anyone who stays in Singapore and like to buy product with good quality in reasonable price. After recession hit in 2008 -people who were keen to buy branded products from showroom and malls are moving into this customer segment Customers are segregated according to their Monthly family Income and their buying behavior. Other factors will be their preference for any particular leather product and availability of the product 1.5 Literature Review (Pricing Strategy) 1.5.1 How Competitive Forces change strategy Price is big factor for buyers and sellers both in retail business. Typically in Singapore It is very much observed that People are more likely buy products where they get products in low price. And there is opportunity in retail leather market to have leather retail business with low business strategy. Michael E Porter Business strategy professor from Harvard Business School has written in his article How Competitive Forces change strategy The buyers are likely to shop for a favorable price and purchase their products 1.5.2 Empirical Analysis of Determinants of Retailer Pricing Strategy Author Venkatesh Shanker and Ruth N Boltan has given their point of view for An Empirical Analysis of Determinants of Retailer Pricing Strategy where they investigated the other determinants of pricing strategy for retail business and how price coordination and relative price and chain factors in retailer pricing . And these outputs are derived from a simultaneous equation model and how it is underlying dimensions of retailers pricing strategies and that are influenced by some pricing dimensions and following are the These four pricing dimensions are statistically related First Competitors price and deal frequency), Second Storability and necessity ,Third Chain positioning and size , Fourth Store size and assortment ,Fifth Brand preference and advertising and Sixth Price and deal elasticity These findings are very useful to retailers profiling alternative pricing strategies. Author Scott Alen has put some light on the point that How much should product and service be charged? How product positioning should be placed and is pricing going to be key part of that positioning? The product positioning has to be consistent with positioning because people really want to get in return same or above what they pay for. Pricing is also aferct demand because of that you have to do basic research so need to make simple questionnaire and asking them At what price they would like to buy that product and service ? even this sole practitioner will give basic curve that says that at X price, Y percentage people will buy. Author Deloitte has emphasized main challenge of retail business is setting up an accurate base price for a product. Price is important to draw the customer and generate the sale margin Market basket analysis should be done and we can identify an optimal base price using measurement tool like Price elasticity. This can be done by doing compare a series of price points and determining a price which generates the good gross sales margin. The past data of the product should be assessed to come up with the best base price for the market. Retailers will be prevented stock shortages and minimized unplanned clearance markdowns by selecting the optimal price This method or strategy will ensure price image remains fix and consistent to the customer and it will enable retailers to increase sales and inventory turns. Existing leather 1.6 Area of concern: It is necessary to set Price of Product while entering existing market. First step will be decide the price and look into the availability of leather products in different mediums. According to my analysis of counting Leather shops from different categories. Currently 26 retail local leather shops which is different from Branded leather shops, 63 branded shops and approximately local online shops are 15. Singapore is very small country so market of any product gets saturated and there are direct competitors who are selling all types of leather products It will be challenge for new entrant to enter in existing market, stay in the market and plan for growth of the business. 1.8 Research Problem: This market research is the function which connects the consumer and customer in the public. Market research result is used to get an idea of identity and information is used to identify and decide opportunities and problems in the market for evaluating and refining marketing situation also observing market behavior and performance. This will improve the understanding of the marketing in and out Market Research emphasis the data collection process and analyze the results and after that collected findings should be used for their implications. It is related with problem solving methods and the technique for getting idea to how to solve the problems. To understand the unpredictable consumer buying behavior and analyze this problem and make attempt to offset this. People sometimes have perception high quality means high price. Require to segregate the pricing strategy to avoid the product price perception. Product selection is required according to the demand of Singaporeans like Mens Accessories, Women Accessories, Shoes and Leather Jackets etc and according to the demand of Singapore people. To understand the Competitors Pricing strategy analysis for their products and then different products with different price range. This research should be niche to find the competitors pricing strategy 1.7 Objective of the Study: Price of any product or service is always play very important role and this need to explore the opportunities for entering new retail store in existing leather market of Singapore by applying pricing strategy. Research of the competitors products price and how pricing impact on Consumer buying decision. To determine demographic segment of the existing leather products consumers and how each segment behave differently Verify the preferred pricing for all leather products according to consumer point of view Identifying the price of leather products where consumer think that products are expensive and cheap Verify competitors price offerings 2. Methodology 2.1 Data Collection: The primary data has been collected from the 81 people who have contributed in Survey questionnaire form created for doing analysis on my research topic. Data collection is done with gender wise and according to the monthly income range and age to get a better idea from different view of consumer by knowing their demographic angle. Competitors data collection based on the price offering of competitors to the consumer and the type of stores like, Shopping Mall, Retail shop or business from home . Sample size was 81 for survey questionnaire of consumer and Competitors data collection sample size is 24 2.2 Data Analysis: Perceptual Analysis is used to see leather product Handbags, Wallets, Jackets, Computer bag, Mobile case, shoes and belts preference according to the gender wise. Female preference for leather products and Male preference for leather products. SPSS tool has been used for performing for cluster analysis to know the combination of leather products and frequency analysis to get details of frequency of using leather products. Excel is also used for getting difference between expensive price compare to preferred price and getting the details of variation of Expensive, preferred and cheap price. 2.2.1 Demographic analysis Demographic analysis has been used to segregate data with different available basic parameters of consumers. Age, Gender, Monthly Income, Nationality, Using leather products and frequency of purchasing leather products 2.2.2 Perceptual Analysis Perceptual analysis has been used to see the different variables position. There are 7 types of leather products Handbags, Wallets, Jackets, Computer bag, Mobile case, Shoes and belts. Analysis is based on according to different age group and gender. 2.2.3 Frequency Analysis Frequency analysis has been used to see frequency of preferred variable and differentiate variables preference. This analysis has helped to find out buying influenced factors Price, Quality, Brand and country of origin. 2.2.4 Cluster Analysis Cluster Analysis has been used to see possible cluster from available all leather products. Available products for this analysis Handbags, Wallets, Jackets, Computer bags , Mobile case, shoes and belts. 2.2.5 Price Segmentation analysis Price Segmentation analysis has been used to see variance among acceptance category given in primary data by consumer. There are 3 categories available Expensive, Preferred and Cheap. After this check the difference between Expensive to preferred to see which price will be suitable for consumer 3. Results and Interpretation 3.1. Demographic Analysis Result 3.1.1 Age Result Finding and Interpretation: There are 5 categories of age range Sample size is 81, 55% from 81 response is from age range 25-35 and second highest is from age range 35-45 3.1.2 Nationality Result findings and Interpretation First analysis of Nationality of all 81 responses shows that there are 4 categories in which first highest one is Indian having 51.9% and second one is Singaporean 35.8% , 8.6% Malay and 3.7% of others. This research according to this findings is more based on Indian and Singaporean. 1.3 Gender Result findings and Interpretation This demographic analysis is showing that in 81 responses Male are having 61.7 % and female are having 38.3% that means preference of leather products of male is more prominent research compare to female 3.1.4 Income Range- Singapore Dollar Result findings and Interpretation This demographic analysis is very important to know the monthly income range of taken 81 responses for this research as it is based on pricing. 27% is 10001 to 12500 and second one is 12501 to 15000 and 3.1.5 At present Using in Leather Products Result findings and interpretations This analysis is showing that 88.9% is already using leather products means they are already associated with their choice of leather goods and their price so following analysis is useful to get impact of their products choice of purchased leather product and what exactly they are looking for it. 11.1% are not using leather product and the following analysis will tell us about their preference which makes them to buy leather product 3.1.6 Leather Product Purchasing Frequency Result findings One time in a year is captured first place 22.22% from 81 responses and second place there are two categories one is 2 times in year and another is 1 time in a year . I interpret that Yearly frequency has captured more % then monthly because leather product are not essential product. Interpretations 3.1.7 Preferred Store type for Leather products shopping Result findings This analysis is saying that 51.9% from 81 responses prefer to buy from Retail local shop in compare to Mall or online. I interpret that people like to buy from retail shop compare to Mall Branded shop or online shopping. 3.2 Clustering of leather products Result findings. There are 7 clusters for leather products shoes, belts, wallets, Computer bags, Mobile case, Handbags and Jackets. Belts and shoes is one good cluster and another one is computer bag and Mobile case. Interpretations: Belts and shoes are having very good relation in buyers point of view if anyone likes shoes so in same manner he will like belts also . Seller can sell them as a package and same for the Computer bags and Mobile case 3.3 Perceptual Analysis 3.3.1 .Male Preference of Products with different Age Range Result findings This analysis is based on leather products preference according to their age group Male only. There are 6 categories Teen : 45yrs and 1- handbags, 2- wallets, 3- Jackets, 4- Computer bags, 5- Mobile Case, 6- Shoes and 7- Belts Interpretations: Male Adults and Male Teen they both like 4 Computer bags more and Male Young Adult prefer more shoes then other products and Aged like Wallets and Mid Aged male like Jackets and mobile case 3.3.2 Female Preference of Products with different Age Range Result findings This analysis is based on leather products preference according to their age group Male only. There are 6 categories Teen : 45yrs and 1- handbags, 2- wallets, 3- Jackets, 4- Computer bags, 5- Mobile Case, 6- Shoes and 7- Belts Interpretations Female teens like no 2 Wallets, female young Adults like belts compare to other leather products and female aged like Jackets, mid aged adult and adult like Handbags and shoes but Female mid aged adult like more Handbags and shoes compare to Adult female 3.4 Leather products preferred price 3.4.1 Handbags preferred/expensive/cheap Difference between Expensive and preferred price range Result findings and interpretaion In the above 2 charts X axis is Number of response and Y axis is the mean of selected Price range. This analysis is done to check the variation of 81 people responses regarding their preferred price for Handbags, expensive price according to people and cheap price and difference between the people preferred and expensive pricing. People preferred price range are bit low or sometime as same as expensive price and from this we can interpretate that people will like to buy handbags if it is bit expensive 3.4.2 Wallets preferred/expensive/cheap Difference Between Expensive and Prefered Result findings and interpretation In the above 2 charts X axis is Number of response and Y axis is the mean of selected Price range. This analysis is done to check the variation of 81 people responses regarding their preferred price for Wallets, expensive price according to people and cheap price and difference between the people preferred and expensive pricing. According to this analysis output People preferred price range are low from expensive price so we can interpret that people will like to buy Wallets in their preferred price and do not like to pay more 3.4.3 Jacket preferred/expensive/cheap Difference Result findings and interpretations In the above 2 charts X axis is Number of response and Y axis is the mean of selected Price range. This analysis is done to check the variation of 81 people responses regarding their preferred price for Jackets, expensive price according to people and cheap price and difference between the people preferred and expensive pricing. According to this analysis output People preferred price range are low from expensive price so we can interpret that people will like to buy Jackets in their preferred price and do not like to pay more 3.4.4 Computer Bag preferred/expensive/cheap Difference Result findings and interpretation In the above 2 charts X axis is Number of response and Y axis is the mean of selected Price range. This analysis is done to check the variation of 81 people responses regarding their preferred price for Computer bags , expensive price according to people and cheap price and difference between the people preferred and expensive pricing. People preferred price range are bit low or sometime as same as expensive price and from this we can interpret that people will like to buy Computer bags if it is bit expensive but still they are very few in compare to all 81 responses. 3.4.5 Mobile Case preferred/expensive/cheap Difference Result findings and interpretation In the above 2 charts X axis is Number of response and Y axis is the mean of selected Price range. This analysis is done to check the variation of 81 people responses regarding their preferred price for Mobile case, expensive price according to people and cheap price and difference between the people preferred and expensive pricing. People preferred price range are visibly low compare to expensive price and from this we can interpret that people will like to buy Mobile case if it is provided in their preferred price range 3.4.6 Shoes preferred/expensive/cheap Difference Result findings and interpretation In the above 2 charts X axis is Number of response and Y axis is the mean of selected Price range. This analysis is done to check the variation of 81 people responses regarding their preferred price for Shoes, expensive price according to people and cheap price and difference between the people preferred and expensive pricing. According to this analysis output People preferred price range are low from expensive price so we can interpret that people will like to buy Shoes in their preferred price and do not like to pay more 3.4.7 Belts preferred/expensive/cheap Difference Result findings and interpretation In the above 2 charts X axis is Number of response and Y axis is the mean of selected Price range. This analysis is done to check the variation of 81 people responses regarding their preferred price for Belts, expensive price according to people and cheap price and difference between the people preferred and expensive pricing. People preferred price range are bit low or sometime as same as expensive price and from this we can interpret that people will like to buy Belts if it is given in their preferred price range 3.5 Influence factors of Buying 3.5.1 Price-Buying Influence Factor Result findings Result findings are 55.6% responses is said that Price is Most important factor for them for buying leather product and 21% is said that price is very important factor and for 9.9% it is less important, 6.2% it is very less important and 7.4 it not at all important factor for buying and leather products Interpretations More than 50% of responses are saying that Price is Most important factor for them to buy any leather product and 21% are saying Price is very important factor so cumulative 72% out of 100% is saying Price is important factor 3.5.2 Quality-Buying Influence Factor Result findings Result findings are 44.4% responses is said that Quality is Most important factor for them for buying leather product and 25.9 % is said that Quality is very important factor and for 3.7% it is less important, 11.1% it is very less important and 14.4% it not at all important factor for buying and leather products Interpretations More than 44.4% of responses are saying that Quality is Most important factor for them to buy any leather product and 25.9% are saying Quality is very important factor so cumulative 70% out of 100% is saying Quality is important factor 3.5.3 Brand-Buying Influence Factor Result findings Result findings are 3.7% responses is said that Brand is Most important factor for them for buying leather product and 29.6% is said that Brand is very important factor and for 48.1% it is less important, 11.1% it is very less important and 7.4 it not at all important factor for buying and leather products Interpretations More than 48.1 % of responses are saying that Brand is less important factor for them to buy any leather product, 11.1% are saying Brand is very less important factor and 7.4% is saying it is not at all important so cumulative 67% out of 100% is saying Brand is not much important factor for them for buying leather products 5.4 Country Origin-Buying Influence Factor Result findings Result findings are 11.1% responses is said that Country of origin is Most important factor for them for buying leather product and 18.52% is said that Country of origin is very important factor and for 18.52% it is less important, 25.93% it is very less important and 25.93% it not at all important factor for buying and leather products Interpretations More than 18.52 % of responses are saying that Country of origin is less important factor for them to buy any leather product, 25.93% are saying Country of origin is very less important factor and 25.93% is saying it is not at all important so cumulative 70% out of 100% is saying Country of origin is not much important factor for them for buying leather products 6.Competitive Analysis 6.1 Types of Stores Research Findings and Interpretations Sample size is 24 stores and 45.8% from 24 is Retail shop and 37.5 from shopping mall and 16.7% Biz from home . Analysis is for all these 3 store types is to know about the pricing offering for leather products 6.2 Handbags Price Range Handbags- Biz from Home Handbags- Shopping Mall Handbags- Retail Store Result findings and Interpretation Store Type Biz from home 27% selling handbags at $1 to $150 price range and 73% at $151 to $300 and Store type Shopping Mall 70% selling handbags at $151 to $300 and 30% $301 to $450 and Store Type Retail 45% selling handbags at $1 to $150 price range and 55% at $151 to $300. According to these findings I interpret that retail store are selling balance price range products and Shopping mall starting range is bit high compare to retail store and biz from home 6.3 Wallets Price Range Wallets-Biz from Home Wallets- Shopping Mall Wallets- Retail Store Result findings and Interpretation Store Type Biz from home 75% selling Wallets at $1 to $100 price range and 25% at $101 to $200 and Store type Shopping Mall 70% selling wallets at $201 to $300 and 30% $301 and above and Store Type Retail 35% selling wallets at $1 to $100 price range and 65% at $101 to $200. According to these findings I interpret that retail store biz from home are selling at low price range products and Shopping mall starting range is bit high compare to retail store and biz from home 6.3 Jackets Price Range Jackets-Biz from Home Jackets- Shopping Mall Jackets- Retail Store Result findings and Interpretation Store Type Biz from home 50% selling Jackets at $1 to $150 price range and 50% at $151 to $300 and Store type Shopping Mall 55% selling Jackets at $151 to $300 and 45% $301 to $450 and Store Type Retail 20% selling Jackets at $1 to $150 price range and 80% at $151 to $300. According to these findings I interpret that Biz from home store type are selling balance price range products 6.4 Computer bags Price Range Computer Bag-Biz from Home Computer bags- Shopping Mall Compbags- Retail Store Result findings and Interpretation Store Type Biz from home 75% selling Computer bags at $1 to $200 price range and 25% at $201 to $400 and Store type Shopping Mall 30% selling Computer bags at $201 to $400 and 70% $401 to $600 and Store Type Retail 25% selling Computer bags at $1 to $200 price range and 75% at $201 to $400. According to these findings I interpret that retail store are selling balance price range products and Shopping mall starting range is bit high compare to