Table of Contents

INTRODUCTION .................................................................................................................................. 2
TASK 1 ................................................................................................................................................... 3
THE CONCEPT OF MARKETING....................................................................................................... 3
CURRENT AND FUTURE TRENDS OF MARKETING .................................................................... 6
ROLES AND RESSPONSIBILITES OF A MARKETING MANAGER ............................................. 6
ROLES AND RESSPONSIBILITES OF THE MARKETING DEPARTMENT .................................. 7
HOW MARKETING DEPARTMENT IS INTEGRATED WITH OTHER DEPARTMENTS ............ 9
THE IMPORTANCE OF MARKETING FOR BUSINESS ................................................................ 10
SIGNIFICANCE OF HAVING EFFECTIVE INTERRELATIONSHIPS BETWEEN DIFFERENT
FUNCTIONAL DEPARTMENTS ....................................................................................................... 10
TASK 2 ................................................................................................................................................. 11
MARKETING PLAN FOR KHADDI .................................................................................................. 16
VISION STATEMENT OF KHADDI ................................................................................................. 16
MISSION STATEMENT OF KHADDI............................................................................................... 16
CONCLSUTION .................................................................................................................................. 30
REFRENCES ........................................................................................................................................ 31
 INTRODUCTION
Marketing is a very broad and important aspect of any business as it covers the communication
between the buyer and seller so it is important for us to understand its essentials one very important
aspect which this report will mainly focus on is planning in marketing as there are various tactics and
strategies in marketing itself knowing what tactics and strategies to use according to the situation is
the key to success.

Now before we analysed the differences between Khaddi and Daraz in the presentation the differences
will be explored further and the impact of the differences will also be studied as well so we have
decided to continue the analysis in the report and end up making a marketing plan Khaddi only
 TASK 1

THE CONCEPT OF MARKETING

The marketing concept is the strategy that firms implement to satisfy customer’s needs, increase sales,
maximize profit and beat the competition. There are five marketing concepts that organizations adopt
and execute.

PRODUCTION CONCEPT

The idea of production concept – “Consumers will favor products that are available and highly
affordable”. This concept is one of the oldest Marketing management orientations that guide sellers.

Companies adopting this orientation run a major risk of focusing too narrowly on their own operations
and losing sight of the real objective.

Most times; the production concept can lead to marketing myopia. Management focuses on improving
production and distribution efficiency.

PRODUCT CONCEPT

The product concept holds that the consumers will favor products that offer the most in quality,
performance and innovative features.

Here; under this concept,

Marketing strategies are focused on making continuous product improvements.

Product quality and improvement are important parts of marketing strategies, sometimes the only part.
Targeting only on the company’s products could also lead to marketing myopia.
SELLING CONCEPT

The selling concept holds the idea- “consumers will not buy enough of the firm’s products unless it
undertakes a large-scale selling and promotion effort”.

Here the management focuses on creating sales transactions rather than on building long-term,
profitable customer relationships

MARKETING CONCEPT

The marketing concept holds- “achieving organizational goals depends on knowing the needs and
wants of target markets and delivering the desired satisfactions better than competitors do”.

Here marketing management takes a “customer first” approach.

Under the marketing concept, customer focus and value are the routes to achieve sales and profits.

SOCIETAL MARKETING CONCEPT

Societal marketing concept questions whether the pure marketing concept overlooks possible conflicts
between consumer short-run wants and consumer long-run welfare.

The societal marketing concept holds “marketing strategy should deliver value to customers in a way
that maintains or improves both the consumer’s and society’s well-being”.

It calls for sustainable marketing, socially and environmentally responsible marketing that meets the
present needs of consumers and businesses while also preserving or enhancing the ability of future
generations to meet their needs.
CURRENT AND FUTURE TRENDS OF MARKETING
TRENDS OF MARKETING PRESENT

The marketing present in today’s society is a combination of previous trends that have been improved
upon, such as TV ads and print, with new strategies focused on inbound practices. Some of the most
common marketing tactics utilized today are:

 Social Media Marketing

 Retargeting Campaigns
 Text Message Advertisements
 Targeted Emails
 Internet Video Advertisements

TRENDS OF MARKETING FUTURE

Though no one truly knows what new exciting marketing trends are waiting just around the corner,
based on what we have seen work in the past we can get a general idea of what to expect so that we
are prepared. We can conclude that as technology becomes increasingly available to the general
public, that people are more receptive to marketing tactics when the material is formatted directly for
them. In an age where nearly everything is customized for the user, marketing should be no different.
This trend is already prevalent in inbound marketing efforts where a targeted audience is established
and then a strategy is formulated specifically for that group of individuals. I would imagine that this
trend would continue to grow as technology and easy access to products and services increases.
Additionally, it’s safe to say that many of the rudimentary marketing practices could fizzle out. Items
such as AM/FM radio advertisements, cable TV advertisements, and telemarketing will continue to
decrease in effectiveness as forum alternatives continue to become commonplace

ROLES AND RESSPONSIBILITES OF A MARKETING MANAGER

Marketing managers or officers are focused mainly on the practical application and management of an
organization’s marketing operations. For marketing managers to be efficient and effective in
performing their functions, they should have excellent communication and analytical skills. In small
organizations, the marketing manager is in charge of the organization's entire marketing activities and
therefore handles formulating, directing and coordinating marketing activities so as to influence
customers to choose the organization's products over those of competitors

Marketing Manager Conducts Market Research

A marketing manager carries out market research to gain a clear understanding of what an
organization’s customers really want. Marketing research enables these managers to identify new
market opportunities, helping the organization create a market niche for its products or services.
Market research also involves studying the organization's competitors so as to develop superior
products and employ efficient marketing techniques. Companies conduct market research using
questionnaires, face-to-face interviews or analyzing the buying habits of consumers.
Developing the Marketing Strategy

Marketing managers are responsible for developing marketing strategies for their organizations. These
strategies outline clearly how an organization will promote its products and services to its target
market with an aim of increasing its sales volumes and maintaining a competitive edge over its
competitors.

Customer Relationship Management

The marketing manager performs the function of championing customer relationship management in
the organization. The marketing manager collects this information from the organization's customer
database to help create a customer satisfaction survey. Marketing managers then share this
information with other employees to ensure they offer excellent customer service to their clients in
order to build lasting relationships.

Employee Management

Marketing managers are in charge of the marketing department and therefore are responsible for
employees within their department. They assign duties and set targets for departmental staff. It is also
the function of marketing managers to perform periodic performance evaluations of the staff working
for them.

Identifying New Business Opportunities

Marketing managers analyse market trends with an aim of identifying unexploited or new markets for
the organization's products and services. Through studying the purchasing patterns of consumers, they
can identify the peak and off-peak demand periods for their products. By employing sales forecasting,
they can estimate future performance of the organization's products. Also through market analysis and
forecasting, they can develop strategies to ensure the organization remains competitive.

ROLES AND RESSPONSIBILITES OF THE MARKETING

DEPARTMENT
The marketing department has overall responsibility for growing revenue, increasing market share and
contributing to company growth and profitability. In a small business, the marketing department may
just be one person, or it may include a marketing director or manager plus marketing executives
responsible for functions such as advertising, publications or events

SETTING MARKETING STRATEGY

The senior member of the marketing department takes responsibility for setting marketing strategy in
line with overall company strategy and objectives. The strategy may be to increase share in a specific
market sector, for example, to enter a new sector, or to open a new channel of distribution, such as the
Internet, to reach a wider geographical market. The marketing department reaches agreement on
strategy with the board or senior management team before planning campaigns in detail.

IMPORTANCE OF MARKET RESEARCH

Market research is a key responsibility for the marketing department. Research helps the company
identify market opportunities and gain a better understanding of customer needs. It also helps them
understand competitors’ strengths and weaknesses so they can take action to protect business with
existing customers or win business from weaker competitors.

The department can carry out its own research by studying industry reports, market data on websites,
or by contacting customers and prospects to survey their needs and attitudes. Alternatively, they can
brief a market research firm to carry out the research.

INTERNAL OR EXTERNAL PRODUCT DEVELOPMENT

The marketing department works with internal or external product development teams to develop new
products or improve existing ones. The department analyzes sales of existing products and identifies
gaps in the product range where there may be opportunities for the company. Marketing employees
provide development teams with information on customer needs and preferences to help them identify
the features or improvements to incorporate in new products. Later in the product development
process, the marketing department sets prices and prepares plans to launch the product.

COMMUNICATIONS AND PROMOTIONAL MATERIALS

Marketing departments plan campaigns and develop communications material to promote products
and services to customers and prospects. Depending on their available budgets, they may plan
advertising campaigns, develop e-mail marketing programs, create promotional content for the
company website, write press releases or product publications, such as product leaflets, company
brochures, product data sheets or customer newsletters. They may write and design the promotional
material if they have skills within the department or they may appoint advertising agencies or design
firms to produce the work.

SALES TEAM SUPPORT

Cooperation between the sales and marketing departments can improve sales performance and speed
up business growth. The marketing department can provide sales teams with high-quality leads by
running advertisements that include a reply mechanism, such as a coupon or telephone number, or by
encouraging visitors to the company website to register their details in return for a free newsletter or
special report. Marketing also prepares presentations for the sales team and supplies them with stocks
of promotional material to give to customers and prospects.

EXHIBITIONS, SEMINARS AND EVENTS

In some companies, marketing departments are responsible for organizing events, such as exhibitions,
seminars, sales conferences or customer hospitality events. They plan the logistics of the event,
booking exhibition booths or meeting facilities, for example, and provide event material, such as
displays, presentations or hand-outs. They also promote external events to customers and prospects to
ensure successful attendance.
HOW MARKETING DEPARTMENT IS INTEGRATED WITH OTHER
DEPARTMENTS
OPERATIONS MANAGEMENT/PRODUCTION

The marketing department will need to work closely with the production department to ensure that:

Adequate research and development is planned to satisfy current and future customer needs

The item can be manufactured to the quality and design specifications laid down by the consumer

The volume of orders generated by marketing can be met within the time schedule required for
delivery

It is likely that the marketing department will set deadlines that may stretch the capabilities of the
production department. Marketers will wish to get products to market as soon as possible to ensure
competitive advantage, whereas production will want to test and develop products fully to ensure that
they do not have to repair or replace defective items and that they meet health and safety
requirements.

FINANCE DEPARTMENT

The marketing department will need to work closely with the finance department to ensure that:

There is an adequate budget to meet the needs for research, promotion and distribution

The finance department have a whole organisation brief to ensure that all the business operates within
its financial capabilities. They will want all departments to work within their allocated budgets. Like
all departments, marketing may wish to overspend if profitable marketing opportunities emerge over
the year. The marketing department is likely to concentrate on sales volume and building market
share, while the finance department may be more focused on cash flow, covering costs and paying
back investment as quickly as possible.

HUMAN RESOURCE MANAGEMENT

The marketing department will need to work closely with the HRM to ensure that appropriate skills
and staffing levels are in place to:

 Research and develop new product ideas

 Meet production targets
 Create an ambitious and competent sales team

The HRM department will have many recruitment and training demands from across the organisation.
It will have to balance its obligations to marketing with those to other departments.
THE IMPORTANCE OF MARKETING FOR BUSINESS
Many business owners haven’t discovered the importance of a marketing strategy. In fact, having a
marketing strategy is so useful that you can think of it as having a road map (or a cheat sheet). It will
guide you in just about every business decision that you make.

But what exactly does a marketing strategy entail?

In short, your marketing strategy will highlight the path you’re taking to achieve your specific
objectives and goals.

This may sound simple, and it is. But it’s not always easy to ask the hard questions that come with
creating a marketing strategy.

And this is the main reason why many businesses don’t recognize the importance of a marketing
strategy.

CONSEQUENCES OF NO MARKETING

Why do most small businesses fail? Why do 50% of companies fail after 5 years?

Remember that common saying? Failing to plan is planning to fail.

If you fail to recognize the importance of a marketing strategy and don’t fully integrate digital
marketing into your marketing plan, then these will be the consequences:

 losing out to competitors

 losing market share to existing and start up competitors
 gaining and retaining fewer customers
 missing out on opportunities for better targeting and optimization

Lack of planning often leads to suboptimal execution. This means that competitors will pose more of
a threat, filling in the gaps of the lacklustre service you off

SIGNIFICANCE OF HAVING EFFECTIVE INTERRELATIONSHIPS

BETWEEN DIFFERENT FUNCTIONAL DEPARTMENTS
Communication is one of the organizational functions that helps a company to stay efficient and
productive. One of the more important forms of organizational communication is inter-departmental
communication, the Institute for Public Relations notes. The importance of communication between
different departments in an organization becomes most evident when that communication breaks
down. Implementing policies to strengthen inter-departmental communication help to underscore its
importance and maintain an efficient flow of information.

BUILDING TRUST BETWEEN TEAMS

Accurate and efficient communication between departments builds trust within the organization.
When departments trust each other to deliver accurate information, this eliminates the extra fact-
checking step that can slow down productivity. Departments should ensure that the information they
are giving to other departments in the organization is reliable to help improve operational efficiency.

BETTER CUSTOMER SERVICE

When inter-departmental communication is poor, customer service can suffer. For example, if a client
continues to receive a bill for an invoice that was already paid because the accounts receivable
department is not communicating properly with accounts payable, then there is the risk of losing
repeat business. To retain clients and insure the flow of repeat business, you need to maintain a high
level of customer service. When the departments in your company are efficiently sharing information,
then clients can be properly attended to, and customer service improves.

INCREASED EFFICIENCY OF COMMUNICATION

If your sales department loses business because the manufacturing group was unaware of an increase
in product demand, then your company suffers a loss of revenue. The accurate exchange of
information between departments improves the ability to meet sales projections, to get product to
distribution points and to have contracts and documents reviewed by the proper people.

Information exchange allows for a productive exchange between engineering and marketing about the
release of a new product and gets information on prospective employment candidates to the human
resources department. Improving communication between departments improves the efficiency of the
overall operation of your organization.

AVOIDING CONFLICT AND FINGER POINTING

A breakdown in communication at any point in the organization can result in conflict. If the shipping
department does not get notification of an important shipment in time to make next day delivery, then
that can cause a conflict among several departments in the organization. Finger-pointing and arguing
accompany a breakdown in inter-departmental communication. When departments engage in conflict,
the productivity of your entire organization is affected.

OPPORTUNITIES FOR PROFESSIONAL ADVANCEMENT

Effective communicators get noticed. Make it your mission to enhance communications within your
organization, with a special focus on making sure your department is actively communicating to other
company departments. A worker or manager who can contribute the advantages of good
communication – efficiency, trust and service – and avoid the pitfalls of unnecessary conflicts and
finger-pointing is an employee whose work will be noticed by department heads.

TASK 2

MARKETING MIX FOR KHADI

PRODUCT CLOTHES FOR WOMEN AND CHILDREN

KHADDIS, APPAREL IN BOTH PRINTED AND
 HAND-WOVEN FABRICS
PRICE High as it ranges from Rs. 2300 to Rs. 4000
PLACE Stores Outlets and Website operates 46 stores,
in 17 cities across Pakistan and 17 stores across
UK and the GCC expanded over a retail space
worth 350,000 square feet which is the largest
by far of any Khaddi brand – offering a rich
customer experience unique to Khaadi
PROMOTION occasionally and seasonally, it offers the deals
and discount offers on different sections of
clothing including unstitched, ready to wear
pret, casuals, formals, kids clothing and
accessories as well. Most of the sale is offered at
the end of the season to end up seasonal stock
like Winter | Summer | Spring | Autumn | Fall
clearance sale. Azadi sale is the event when
Khaadi offers sale so, the customers feel the
happiness Independence day and shop as what
they want to do from Khaadi.
The opening of new outlets comes with
promotional offers such as the opening discount.
Discounted code and vouchers also distributed
among the customers during new store opening
and so on. Currently, Khaadi is offering sale up to
50% OFF on selected items and starting from
November 24 in which the selected items are
offering on sale. Furthermore, at Khaadi official
website/online shopping store, the section of the
sale is placed where the discounts on products
are offering during the year
PEOPLE Khaadi is the employer of choice for designers,
and is fast gaining popularity as an employer of
choice for everyone because of its facilities,
culture, and growth opportunities. The benefits
we offer to our employees are unmatched, and
above all, we cherish our employees and invest
in their development.
A transparent organization which seeks to
amplify the talents and resources of its teams,
Khaadi completely believes in performance
culture, using feedback and open dialogue to
amplify employee performance
Khaadi provides an amazing platform for women
who are passionately career-oriented and don’t
want to compromise on family life. We provide
facilities such as on-site day-care, and
conveyance services to help us achieve this.
Female employees also enjoy the benefit of
shorter working days, and take off an hour early
PHYSICAL EVIDENCE The experience of customers with the brand is
phenomenal as the recent success of the brand
 reflects it but recently the brand did came under
media fire due to wrong price tagging scandal in
which customers were shown fake prices just to
lure them into buying and then charging double
price to them
PROCESS R&D is integral to Khaadi's operations. The
design department creates a design on paper
and then sends it to the R&D, asking for a
garment to be made in a particular fabric. The
R&D makes the same pattern, cuts it, and makes
the garment, places it on punching equipment,
makes the embroidery, puts it together and then
shows it to the design studio. There is also a style
department in-house that works on the style and
patterns and provides them to the R&D

MARKETIGN MIX FOR DARAZ

PRODUCT The primary product in the Daraz group is

their E-commerce portal – Daraz.com. This
portal has the distinction of being the
world’s largest business to business portal.
Where Amazon and other E-commerce
portals sell business to consumer, Daraz
captured the business to business market
and is currently the leader
PRICE Is variable and no range can be specified Like any
other portal, Daraz has a very lenient pricing and
its commission are very low to allow
businessmen to do their own business. This is
the reason that Daraz has reached such great
heights so fast. Due to the low cost nature of
Chinese products, it can be said that Daraz has
penetrative pricing.
PLACE

Overall, Daraz claims that it can export to 240

countries from its international business to
business portal – Daraz.com. At the same time,
the portal is increasing its actual presence across
the world.
PROMOTION Daraz is known to heavily promote its E-
commerce portal digitally. Naturally, as most of
the services are digital, across the world digital
ads are shown. Within Pakistan, Daraz promotes
the portal above the line as well as below the
line. It uses Hoardings, digital advertising and
sales promotions to advertise below the line.
And in Above the line, it uses television, print as
well as radio.
PEOPLE Operates in an ecosystem where all participants
consumers, merchants, third-party service
providers and others have an opportunity to
prosper
Their success and rapid growth is built on the
spirit of entrepreneurship, innovation, and an
unwavering focus on meeting the needs of our
customers.
They also believe that a strong sense of shared
values enables us to maintain a common
company culture and community, no matter how
large we grow.
PHYSICAL EVIDENCE The overall experience is great as the company
was success full in giving tough time to other
websites like OLX and was able to get the
attention of Ali Baba.com one its major
competitors
As Today, the company has a market cap among
the global top 10, has surpassed Walmart in
global sales, and has expanded into all the major
markets in the world.
From its inception, in 1999, Daraz experienced
great growth on its e-commerce platform

PROCESS The process is IT supported entirely and little

research and development is taking place but
the customer feedback holds a lot of signifigance
in that process

The business model of Daraz is different from

other players like eBay and Amazon. It focused
more on trade between businesses. Unlike the
usual business-to-consumer approach, Daraz
focuses on being a platform for suppliers to sell
products in bulk at wholesale prices to small or
medium-sized businesses worldwide, who then
resell them for a profit in their domestic
markets.

Although Daraz focuses on business to business

trade it also supports other trade through e-
commerce web portals. Taobao is for consumers
to trade, whereas Tmall is for the upcoming
middle class of Pakistan to purchase branded
products. There are many other subsidiaries
through which Daraz makes money.
 DIFFRENCES IN MAKRETING MIX

PRODUCTS: - Khaddi has a clear product line of clothes for women and children Khaddis, apparel
in both printed and hand-woven fabrics whereas Daraz group has a E-commerce portal –
Daraz.com. This portal has the distinction of being the world’s largest business to business portal.
Where Amazon and other E-commerce portals sell business to consumer, Daraz captured the business
to business market and is currently the leader

PRICE: -khaddi has a high price of products whereas Daraz has variable and no range can be
specified Like any other portal, as Daraz has a very lenient pricing and its commission are very low to
allow businessmen to do their own business. This is the reason that Daraz has reached such great
heights so fast. Due to the low cost nature of Chinese products, it can be said that Daraz has
penetrative pricing.

PLACE: -Khaddi has Stores Outlets and Website operates 46 stores, in 17 cities across Pakistan and
17 stores across UK and the GCC expanded over a retail space worth 350,000 square feet which is the
largest by far of any Khaddi brand – offering a rich customer experience unique to Khaadi

On the other hand Daraz has far and wide reached across the world. It recently entered US with an
IPO and is also building its teams in various countries of Asia. One of the major advantages of Daraz
is that it hails from Pakistan, where bulk manufacturing is done. There are exporters ready to do
business and there are importers ready in other countries who want to import things. Thus, it is a win-
win situation for both.

As on date, Daraz.com is the only portal having international presence whereas all other portals of
Daraz group are concentrated on Pakistan only. However, most of them are market leaders with
Taobao being the market leader for consumer to consumer platform, Autonavi being the market leader
for maps and similarly Tmall having a high market share for sale of global brands.

HOW DIFFERENT MARKETING TACTICS HAVE BEEN SUCESSFULLY USED

KHADDI

Khaddi used its creativity in designing which attracted a lot of customers who seek creativity and
there high quality justified there high price which the customer is willing to pay because the customer
knows that high price will ensure that he or she is purchasing a high quality product and the place for
purchase actually gives the customer the opportunity to try out the products for purchase and
physically view them leading to customer satisfaction.

DARAZ
Daraz has a vision of targeting a large number of customers for purchases in bulk which brings in
customers with low buying power and brings them in large numbers which increases revenue then we
focus on the pricing which is so variable that anyone can purchase something which is a boon for
people in low buying power areas and the website serves as an excellent place because it has little or
no expense and can reach customers globally as well

MARKETING PLAN FOR KHADDI

VISION STATEMENT OF KHADDI

To transform the Company into a modern and dynamic yarn, cloth and processed cloth and finished
product manufacturing Company that is fully equipped to play a meaningful role on sustainable basis
in the economy of Pakistan. To transform the Company into a modern and dynamic power generating
Company that is fully equipped to play a meaningful role on sustainable basis in the economy of
Pakistan.

MISSION STATEMENT OF KHADDI

To provide quality products to customers and explore new markets to promote/expand sales of the
Company through good governance and foster a sound and dynamic team, so as to achieve optimum
prices of products of the Company for sustainable and equitable growth and prosperity of the
Company.
 CORPORATE OBJECTIVES

 ROI of at least 15%

 Increase sales annually by 15%
 Open at least 2 more stores in the UAE
 Break-Even within one year
 Increase budget on sales promotion - 20%, 5%

CURRENT POSITION OF THE COMPANY

SWOT ANALYSIS
 PESTLE ANALYSIS

POLITICAL

KHADDIS INVESTMENT SUPPORT FUND.

(TISF) will be established for incentivizing investments in specific areas including modernization of
machinery and technology, removing infrastructural bottlenecks, enhancing skills, better marketing
and use of information and communication technology (ICT). Through this fund following initiatives
will be undertaken:

TECHNOLOGY UP-GRADATION FUND (TUF):

To facilitate new investments and up gradation of technology Government will contribute part of the
investment financing or part of the investment cost through the TUF. Under this scheme, for capital
intensive projects, government will pick-up 50% of interest cost of new investment in plant and
machinery with a maximum of 5%. For small investments, government will contribute up to 20% of
capital cost as a grant. For this purpose, Government has kept a budget of Rs.1.6 billion in the current
financial year for this scheme. This will increase to Rs. 17 billion by 2014

SKILLS DEVELOPMENT:

 A comprehensive training plan will be developed to upgrade the overall pool of skills in the
Khaddis value chain in close consultation with the industry and will be implemented during
the next five years.
 Facilities will be provided for audits to enhance productivity and efficient processing.
 Government will also support acquisition of foreign expertise in enhancing local productivity
and supervisory skills and for this purpose Government has exempted foreign experts from
income tax.
 Government will allocate Rs. 1 billion during the current year for skill development
initiatives.
 Infrastructure Development
 Based on the experience from Khaddis city and garments cities models,
 Government plans to set up more such industrial estates to ensure availability of all industrial
amenities at reasonable cost.
 Clusters will be developed where small investors can set up their facilities.
 The clusters will be provided with laboratories, product development centers, research
centers, common sheds etc.

STANDARDIZATION

A legal framework will be developed to specify standards and testing requirements, prescribe
disclosure requirements and other matters relating to the practices and methods relevant to the sector.
This has become necessary in view of compliance standards imposed by major importing countries.

•Zero Rating of Exports:

Government recognizes the principle that exports should not be taxed. Efforts will be made to identify
all direct and indirect levies that add to the cost of doing business without appropriate compensation
so that remedial measures can be adopted.

•Rationalization of Tariff Structure

The principle of cascading will be implemented while ensuring adequate protection to the local
industry and removing anomalies.

•Removing Regulatory Bottlenecks:

An extensive exercise will be undertaken covering all sub-sectors, to identify rules, regulations,
procedures, levies and other regulatory constraints that hamper the development of the sector. Based
on this exercise, appropriate measures will be adopted to simplify or remove such irritants.

•Market Access:

Government will be expending concerted efforts to secure due access for Pakistan in some of the key
destinations of our exports. Preferential access as well as FTAs in such markets will be the focus of
such efforts.

•Marketing Support:

Government will provide necessary support for branding, grading, labeling and such other activities
that would add value to the Khaddis chain.

•Export House Scheme:

To initiate a process of building big export houses, Government is planning to treat local sales of yarn
and fabrics to large exporter as deemed exports. For this purpose, small producers will get 1%
drawback on levies and unadjusted taxes on sales to the export houses. An amount of Rs. 2 billion has
been budgeted for the current year for this scheme.

•Drawback of local taxes:

There is a multitude of costs imposed on exporters that raise the cost of production and render our
exports uncompetitive. Additionally, outages of power and gas, cross subsidization in prices of
utilities and frequent closure of industry on account of law and order add further burden to our
industry. Exporters are also losing business or merely holding on to the existing businesses because
the buyers have stopped visiting Pakistan. For all these, and many more, factors it is very difficult for
our exporters to be able to compete with nations which face no such problems.

It is proposed to compensate our value-added Khaddis exports for a period of two years through
provision of drawback to offset the costs imposed on them directly and indirectly by a variety of
government agencies and disruptions caused by law and order problems. However, this support will
be linked partially to performance. For this purpose following drawback scheme is proposed:

 Processed Fabric 1% of the FOB value of exports

 Home Khaddis 2% of the FOB value of exports
 Garments 3% of the FOB value of exports
In addition, those who will achieve an increase of 15% in exports relative to last year will be given
1% additional draw-back

ECONOMIC

Tight Monetary Policy

The continuity of tight monetary policy causes an intensive increase in cost of production. Due to high
interest rate financing cost increases which cause a severe effect on production. The withholding tax
of 1% also affects the production badly. The high cost of doing business is because of intensive
increase in the rate of interest which has increased the problems of the industry. The government
should take immediate measures to remove slowdown in the Khaddi sector.

Removal of subsidy on Khaddi sector

The provisions of Finance Bill 2009-10 are not Khaddi industry friendly at all. Provisions like
reintroduction of 0.5% minimum tax on domestic sales, 1% withholding tax on import of Khaddi and
articles etc., are nothing but last strike on industry’s back. Reintroduction of minimum tax on
domestic sales would invite unavoidable liquidity problem, which is already reached to the alarming
level. The Khaddi industry was facing negative generation of funds due to unaffordable mark up rate.

Energy Crisis

•Electricity Crisis

As a consequence of load-shedding the Khaddi production capacity of various sub-sectors has been
reduced by up to 30 per cent. The load-shedding of electricity cause a rapid decrease in production
which also reduced the export order. The cost of production has also risen due to instant increase in
electricity tariff. Due to load shedding some mill owner uses alternative source of energy like
generator which increase their cost of production further. Due to such dramatic situation the capability
of competitiveness of this industry in international market is affected badly.

•Gas Shortage

Gas load-shedding continues in Punjab and KPK despite a significant increase in temperature. A
spokesman for the All Pakistan Khaddi Mills Association (APTMA) claimed that 60 to 70 per cent of
the industry had been affected and was unable to accept export orders coming in from around the
globe. He said the Khaddi industry had already endured over 45 days of gas disconnection over a
period of four months, causing extraordinary production losses and badly affecting capability of the
industry. In Punjab, he said, energy supply disruption only was causing an estimated loss of Rs1
billion per day. In the larger interest of the economy and exports, he suggested, the government
should “ensure utility companies provide smooth electricity and gas supply to the Khaddi industry

Effect of Inflation
Inflation rate is measured as the change in consumer price index (CPI).Inflation is basically a general
rise in the price level. It is decline in the real value of money. Inflation can have adverse effect on
economy. Pakistan is one of prey of inflation. It still faces high double digit inflation. The increase in
inflation causes the increase in the cost of production of Khaddi good which return in downsizing.
The double digit inflation causes reduction in exports of Khaddi .

Tariff Concession by EU

After 2010’s devastating floods, government of Pakistan had taken up the stance with European
Union for granting a special trade waiver to Pakistan thereby relaxing Tariff rate quotas for minimum
two years , which was accorded by WTO after the consensus shown by EU. Among 75 products given
concession include 20 Khaddi products, of which mostly are non value added items. Khaddi industry
considers this concession unproductive as , it does not seem to be that exciting when one takes into
account that the majority of their concessions apply to items that fall in the category of feeding cheap
raw materials to the European manufacturing, instead of promoting value addition in Pakistan. Also,
the strong growth items for us like bed linen, bulk of home Khaddis, towels, etc have either been
excluded or have been placed under the ceiling of tariff related quotas.

SOCIAL

Social responsibility in the Khaddi

Corporate Social Responsibility (CSR) is a worldwide-accepted development on how companies can

manage their business processes to produce an overall positive impact on society and environment.
Like the firms in other industries, Khaddis firms are also realizing their responsibility towards the
various parties associated with them and the environment. However, the ways by which different
organizations choose to fulfill their social responsibility might be different. The ways in which a
Khaddi firm can fulfill its responsibility towards various parties are similar to those of firms in other
industries, as is evident from the points mentioned below:

Towards employees

• By providing a competitive and challenging work environment to the employees.

• By having ethical recruitment, remuneration, promotion and other policies

• By providing opportunities to the employees to voice their opinion and complaints and have
an effective policy for the solution of these complaints.

• Ensuring a safe working environment for the employees.

• Having fair policies for the solution of employee disputes.

Towards shareholders

• By representing a fair picture of the company’s financial position and profit/loss to the
shareholders

• By paying them a fair rate of dividend

Towards the government

• By making payment of the due taxes and duties at the proper time

• By abiding by the laws and regulations of the area in which the firm operates.

• Contributing to the economy through exports.

• By providing the necessary information to the government as and when required

Towards customers

• By undertaking constant research and development and coming up with innovative and more
useful products from time to time

• By providing quality products to the customers at reasonable prices

Towards investors

• By giving the investors a true and fair picture of the financial condition of the business.

• By giving them due returns on the investment made by them.

Towards suppliers

• Making competitive payment to the suppliers for the products purchased from them

• Maintaining a good relationship with the suppliers.

Towards competitors

• Indulging in ethical and healthy competition

• Towards society

• Undertaking community development and area development programmes.

• Undertaking charity work for the underprivileged sections of the society.

• By creating job opportunities.

Towards environment

• Ensuring a pollution-free process of production

• Having an efficient system for the disposal of waste

• Making the product and the process of production as environment-friendly as possible.

• Adopting eco-friendly packaging

• Ensuring the purchase of environment-friendly supplies.

The concept of social responsibility is gaining popularity in today’s times. Companies are becoming
increasingly aware of their responsibilities towards the various stakeholders associated with them.
More and more companies are trying to work in a way so as to protect the interests of the employees,
customers, suppliers and other parties and the society at large. The concept of a business firm working
only with the motive of earning profit is gradually becoming out-dated.

Khaddi mills are committed to provide safe environment to their employees. In the spinning section,
where cotton is cleaned, mixed and separated in the blowing and mixing section. Those who work
here suffer from eye, throat, nose, ear and skin diseases. In the carding/winding section, cotton dust in
the air is inhaled through the mouth, nose and ears, causing various harmful diseases like asthma, T.B,
black cough and cancer, those employees suffers from such diseases are provided medical facilities.

Other benefits Khaddi Mills give to their employees are:

• Pension after retirement

• Gratuity

• Group insurance

• Workers participation fund

• EID bonus

Social issues in the Khaddi chain

The simplest outline of the different steps in the Khaddi chain is given in next figure. In each step of
this chain different social issues are relevant. Working condition related to health and safety issues are
very relevant in the Chinese Khaddi industry from the production of fiber until the garment
production.

TECHNOLOGICAL

•Pakistan’s Khaddi industry experts feel that Pakistan has fairly large size Khaddi industry and 60-
70% of machines need replacement for the economic and quality production of products for a highly
competitive market. But unfortunately it does not have any facility for manufacturing of Khaddi
machinery of balancing modernization and replacement (BMR) in the Khaddi mills.

•The lack of research & development (R&D) in the cotton sector of Pakistan has resulted in low
quality of cotton in comparison to rest of Asia. Because of the subsequent low profitability in cotton
crops, farmers are shifting to other cash crops, such as sugar cane. It is the lack of proper R&D that
has led to such a state. They further accuse cartels, especially the pesticide sector, for hindering proper
R&D. The pesticide sector stands to benefit from stunting local R&D as higher yield cotton is more
pesticide resistant.

•Moreover, critics argue that the Khaddi industry has obsolete equipment and machinery. The
inability to timely modernize the equipment and machinery has led to the decline of Pakistani Khaddi
competitiveness. Due to obsolete technology the cost of production is higher in Pakistan as compared
to other countries like India, Bangladesh & china.

•Pakistan Khaddi industry is facing problem of Low productivity due to its obsolete Khaddi
machineries. To overcome this problem and to stand in competition, Pakistan Khaddi Industry will
require high investments. There is a continuous trend of investing in spinning since many years.
Pakistan’s Khaddi industry estimates that around Rs1, 400 billion (US$32 billion) of investment was
required till 2010 in order to achieve the government's export target." Pakistan is facing externally as
well as internally problems which restricts the new investment. The unpredictable internal conditions
of Pakistan cause a rapid decrease in foreign investment that affected all industries but especially
Khaddi industry.

ENVIORNMENTAL

Extensive usage of these chemicals by the processing industry results in discharge of toxic elements
as effluents, which if not treated properly have the potential to cause significant environmental
degradation. Some industries to reduce the impact of these dyes and chemicals on the environment is
by reducing the amount released for treatment. Furthermore, conventional waste treatment often
causes only a transfer of waste from one phase to another. Treatment usually results in the generations
of solids, sometimes hazardous, which are buried in a landfill. Disposal of waste in a landfill can
result in groundwater contamination, gas formation and problems with odors. In other words, waste
treatment is not necessarily a cure. As regulations become more stringent, companies are forced
toward more technologically sophisticated treatment methods. This results in an increased cost for
waste management and at times forces companies to go out of business due to increase in cost of
production. More and more companies realize that reducing the waste at the source is necessary to
reduce the cost of treatment.

Pollution prevention does not only reduce water pollution, but also minimizes the release of pollutants
to land and air. In the Pollution Prevention Act, the Congress defines a multimedia waste management
hierarchy. Source reduction stands at the top of the waste management hierarchy and is followed by
reuse and on-site recycling. Off-site recycling is not considered a pollution prevention measure. In
Pakistan almost all the mills are not specifically paying proper attention toward this.

 Loss reduction.
 Reduction of chemical, water and energy consumption, thereby resulting in savings,
sometimes even increased production.
 Reduced liability for waste produced.
 Improved compliance with regulations.

LEGAL

Income Tax Income Tax exemption certificate allowed for one year

The government has decided to allow Income Tax Exemption Certificate Under Section 50(4) and
50(5) valid for 12 months, previously after every three months, the Khaddi sector obtain the
exemption certificate.

Tax Ombudsman:

In the Finance Act, 1999, a high powered institution of Tax ombudsman was promised. The govt. go
for the appointment of Tax ombudsman to take care of the complaints and impediments being faced
by assesses. The government then made such appointments.

Tax should be Prospective and not Retrospective:

Tax payable should be prospective and not retrospective for all assesses, the government has accepted
this.

Supreme Court/High Court Judgement on Section 80-D being implemented:

Refund 80-D Allowable-Petitioner field returns for assessment year 1994-95 and 1995-96 - Benefit of
economic reforms and incentive claimed - Assessing officer allowed exemption to the profit and gains
but levied turnover tax - petitioner requested for waiver of charge and for refund of payment already
made. Refunds have been expedited. Tax Amnesty scheme's last date on our request have been
exempted.

(4)Wealth

Tax:

The government abolished to encourage investment Wealth Tax Act 1963.

(5)Sales Tax

Penalty for Delay in Payment:

Under Section 33 and 34 of the Sales Tax Act 1990, the world "shall" was inserted for imposing
penalty and additional tax. Therefore any kind of delay in payment will automatically carry additional
amount of Sales Tax by way of penalty/additional tax. We propose that the world "shall" may be
replaced with words "shall be liable" so that adjudicating officer may have the authority of waiving
penalty/additional tax in cases where delay is genuine and beyond human control. The government
accepted Sales Tax chain is being completed. Sales Tax Refunds have been expedited

(6) Monetary-State Bank of Pakistan

Amendments in Export Refinance Scheme :

Through the State Bank of Pakistan withdrew export financing on all types of yarn yet provided
financing to bleached and unbleached cloth at 10% mark-up instead of earlier 8%. All other categories
of cloth fabrics such as dyed and printed fabrics will be admissible for grant of export finance at 8%.
The facility was available until 30th June 2005.

Exchange Rate Policy:

The State Bank of Pakistan formulates a system of exchange rates whereby the country would not
lose its competitive advantages in any market.

The Finance Minister in his budget speech confirmed that State Bank of Pakistan would follow an
exchange rate policy that will maintain its competition in relation to market forces and inflationary
differentials between Pakistan and its major trading partners.

The State Bank of Pakistan has now allowed the rupee to float against the U.S. Dollar as it advised
Banks that the trading band of Rs. 52.10 - 52.30 for the green back stood withdrawn. This move by
SBP is to keep Pakistan exports, competitive to counter the persistent disadvantage from the weak
Indian rupee.

GOALS AND STRATEGIES

 Customers' expectations should be fulfilled.

 Responsibility to local and International community.
 Experiment with new ideas.
 Provide competent and ethical management.
 Constantly strive to reduce our costs.
 Business must make a sound profit.

EMERGING MARKETS

SELECTED MARKET FOR KHADDI

 PAKISTAN

Pakistan, as per AT Kearneys 2011 index, ranks to be the most attractive emerging market for apparel
retailers. The country has a CAGR of more than 20% during the past years, and the same trend is
expected to continue for the next five years. Apparel retail in Pakistan is now gaining a positive
momentum. Growing amount of disposable income of the Chinese population, developing sense of
fashion, and middle income segment which constitute a vast majority of Pakistans total population are
the causes accounting for the drastic growth of Pakistan.

BUDGET FOR TARGETED MARKET

 MARKETING MIX

PRODUCT

Clothes for women and children khaddis, apparel in both printed and hand-woven fabrics will be
introduced as products because we have experience of manufacturing these products over time and in
different markets as well

PRICE

Will be kept high as the quality of the products will be high so pricing the products high is justified as
quality is the main selling point of our products even in markets where the buying power of
consumers has always been low

PLACE

Various stores and outlets will be opened at various locations in the target market and the website will
be updated according to the geographical and other needs of that particular region and the processes
will be carried out occasionally and seasonally

PROMOTION
Occasionally and seasonally, we will offer the deals and discount offers on different sections of
clothing including unstitched, ready to wear pret, casuals, formals, kids clothing and accessories as
well. Most of the sale is offered at the end of the season to end up seasonal stock like winter summer
spring autumn fall clearance sale etc.

MONITORING AND CONTROLL

The marketing department will be responsible to measure the number of leads both offline and online
and will also take customer feedback regarding the products and services the department will have the
freedom to change the products and prices according to the customer needs and these changes must be
justified by favouring customer feedback

CONCLSUTION
The report has covered various details of marketing related efforts of both Khaddin and daraz but the
marketing plan was concerning Khaddi only because the assessment asked us to do so on the whole
this report is emphasising on the essentials of marketing
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