MARKETING OPERATIONS STRATEGY ASSESSMENT

(MARKETING FINDINGS & RECOMMENDATION)

OF

LOGO

PAPER & BOX HANDICRAFTS

234 San Juan Street
Manila City

TEAM:
Joy B. Sarmiento
Anna C. Cruz
Bobby L. Echon
DR. LEMUEL L. MAGRACIA - Coach

2016
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MARKETING AUDIT - PAPER & BOX Handicrafts

Nowadays, Filipinos are conscious on business engagements in handicraft-making since
countries and organizations worldwide are becoming concerned on ecological and
natural environments. The Environmental Sustainability issues opened opportunities to
entrepreneurs and communities in making handicraft business as means of livelihood.
Different products now requires handcrafted boxes & packaging and is now being
exported heavily to United States, Hong Kong, Australia, Singapore, Japan, and recently,
European Union member countries. Paper materials and other recyclable materials
enjoy the peak of demands in the market in terms of packaging & value-added items.
It has been known to the international market that the Philippines is the second largest
world producer of handicrafts which contributes vastly to the countrys foreign exchange
earnings and local employments. The countrys handicraft industry already gained
respect of the aforementioned countries even if the price competition is tough w/ the
low-end products offered by China.
Changes over the years in the countrys handicraft industry are blatant since innovations
on designs and demands on quality are being measured. Philippine craftsmen or
artisans continuously overcome new designs in combination with indigenous materials.
Like in the case of creative hand-made boxes which evolved into attractive colored,
glossy-laminated packaging. However, the industry players still see a lot of rooms for
development particularly in rural areas where capital and market information are limited.
The subject company, PAPER & BOX Handicraft is a producer of handmade paper boxes.
The products are categorized under this industry based on the United Nations
Educational, Scientific & Cultural Organization Information Technology Communitys
(UNESCO/ITC) definition that the products which are produced either by hand or with
the help of tools are considered handicrafts. PAPER & BOX specializes in the assembly
of Chipboard in whatever shape or form with colourful & stylish paper wraps.
Though in the absence of long & short-term objectives, the single proprietorship
business is moved by a Vision to be a leading manufacturer of paper mach boxes in the
country and Mission commitments based on product quality, provision of livelihood,
customer service, & improved skills through research & development, and appropriate
trainings.

PRODUCT
PAPER & BOX Handicraft started as a manufacturer of Christmas Decors that has been
distributed to bookstores nationwide.
Because of its seasonality, the company
diversified in a related product line (boxes) as an appropriate strategy for its strong

competitive position. The concept of synergy that two businesses or product lines will
generate more profits together is considered better since the point of commonality is
similar in terms of technology, customer usage, distribution, marketing and production
skills, & product similarity. Line extensions being offered by PAPER & BOX in packages
like ceramic & glass materials provides additional value in extra earnings.

BRAND MANAGEMENT
Retail Boxes, Customized Boxes, Hot Stamping, & Ribbon printing were added to the list
of product portfolio. Products offered come in different sizes, forms, packaging, &
options. Admittedly, though the officers-in-change (Owners children) recognized the
important role of products in generating sales and profits and in the creation of growth
opportunities, branding was not considered in their product lines. Generally, companies
marketing objectives are to achieve the highest overall performance from the portfolio
of products and this requires successful Brand Management that involves: new product
identity introductions; effective targeting; and positioning which are not yet present
since PAPER & BOX doesnt employ Marketing Professionals or Sales People. Brand
management of the portfolio is an on-going challenge that involves people across all
business functions. Products of PAPER & BOX are being offered by product line. Itll be
better to embark on product line branding so therell be a representation of product
categories & for proper identification/focus.
Sales generated through the familys sales efforts are satisfactory based on their
production people & facilities capacity, but a written Marketing Plan & Strategies are still
recommendatory to support their forecasting, inventories, expansion plan, additional
funding from financial providers, machinery procurement & capitalization. This could be
one of the reasons why the company cant accept high-volume of orders since they are
limited to their production capabilities & lack of situational analyses as one of the
requirements of a Marketing Plan.

PRODUCT PLANNING & DEVELOPMENT

The Product Life Cycle Analysis & Strategy of the PAPER & BOX is based upon the
direction of sales. The production is already considered year-round to anticipate bulk of
the orders and deliveries starting from September onwards. Right now, the products
are considered at the peak (growth) phase. Decline phase is anticipated through the
introduction of their new line of business which is on Printing, merged on the packaging
& craft lines.
To extend the peak phase of the product life cycle, PAPER & BOX develops new designs
every 6 months but mostly rely on the customized concepts & demands of their clients.

An approach to design development is essential in balancing tradition and knowledge of

the marketplace. Though part of their commitments in their Mission is to continuously
improve on products and skills through research & development & appropriate trainings,
the company limits the said through their own creativity. Trainings & research
endeavours are not prioritized since it will impede its limited funding. According to the
proprietor, bulk of the earnings only goes to taxes since the industry is labor intensive.
Sales Forecast is recommendatory to support pricing, production requirements, and cost
of goods being sold.

PRICE
List of Prices is provided in retail items since the designs and specifications are already
determined (please see attached price list). However, Prices of items under Corporate &
Custom-made lines varies on the designs and specifications requested by the clients.
PAPER & BOX Management claims that their prices in the market are the lowest (aside
from the China-made products) and considered as competitive.
Aside from the Government policies, the dictates of Buyers on payment date & Suppliers
collection dues are critical in analysing the external situation leading to proper pricing.
Majority of the sales are coming from corporate accounts like with the National
Bookstore. Payments are collected in corporate dealings in 4 to 6 months while
Suppliers require payments on raw materials in 30 days. Price does not vary on terms
since there is no actual study or analysis being done. Subsequently, the Management
claims that the bulk of their earnings go to labor expenses & taxes plus the
considerations of fund management, annual forecasting is necessary.

PROMOTION

ADVERTISEMENT
Promotion of products of PAPER & BOX involves maintenance of its social media account
via facebook. Formerly, the company maintains its own websites to promote their
products but decided to terminate it due to the high maintenance cost. The social
media account is free and has the potential of reaching many prospective clients.
However, upon looking at the other players inside the competition, all of them still
maintains their own websites to promote their products and to cater for inquiries &
customer service.
The company doesnt use any form of media except for the social media account
mentioned except for the print ads being initiated by National Bookstore on its calendar
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give-aways. Photo albums online via facebook are available.

company provides colored catalogues of its product lines.

Upon request, the

PAPER & BOX doesnt maintain memberships to business organizations and support
groups that can be sources of potential information to reach new markets & promote
products to different clients. Philippine Chamber of Handicraft Industries, Inc.; the local
Philippine Chamber of Commerce & Industry; Rota International; and the likes aid
proprietors in business development, promotion, and trainings. This approach is a good
area for recommendation.

SALES PROMOTION
PAPER & BOX joins promotional activities being conducted by the Department of Trading
& Industry. This approach in terms of expenditures is much greater than spending on
advertising, and as large as sales force expenditures but this communication technique
offers advantages to target buyers, respond to special occasion, and create special
incentive for purchase.

PERSONAL SELLING & SALES FORCE MANAGEMENT

Verbal Communication between the members of the family & one or more prospective
purchasers to influence a sale is done at the office vicinity since there is no specific
person that handles it. Marketing and Sales are only done by the family members. The
volume of sales is coming from its regular customers and referrals. Comparably, the
players in the same industry maintain their own salespeople so they can interact with
buyers to answer questions and overcome objections. They can also target buyers and
have access to market and competitor knowledge, provide basis of sales forecast and
feedbacks. If the concern of the company is the sales people compensation, it is more
rationale to consider the sales volume these people can provide. Compensation can also
be given through commission or in any other form. This should also be considered by
PAPER & BOX.

PLACE

CHANNELS OF DISTRIBUTION
Bulk of the orders is served through National Bookstore (NB). Technically, NB is not
only a client but also a channel to reach the end-consumers. Sometimes, independent
merchandisers or intermediaries approach the company for some corporate dealings.
Though putting shelf spaces in the malls are being considered in the future, the

management prefers to conduct sales & distribution on their own to address price issues
& financial concerns.
The main product is considered as value-added good and is used by corporate clients
and buyers-on-occasion as packaging. The companies using the customized boxes are
also considered as a channel of distribution. Other channels like retailers & dealers are
not utilized currently.

LOCATION, INVENTORY, & TRANSPORTATION

Roughly, 70% of sales are from NB as their distributor. The coverage of products
distribution is already nationwide. Materials for assemble and inventories for delivery
are kept inside the companys vicinity in Manila City. The physical distribution of
products is done through the usual transportation system via land. The main hurdle in
the transportation is the traffic congestions especially when bulk of deliveries are done
in peak season. Other regions delivery is served by the clients on their own expense.

PACKAGING
Boxes are utilized to keep the merchandize in perfect form up to its destination. In
some cases, laminated films or plastics, brown-smooth paper wrappers are being used
to ensure its safety & protection from movement damages.

POSITIONING
Positioning deals with who the customers are and the selection of specific areas of
marketing concentration in terms of products, market, & geographic locations. In the
case of the company, the positioning objective is to match the organizations capabilities
with the customer value requirements for the target market. There is no specific
positioning strategy being applied by the company except for the concept of the
objective. It is therefore a good recommendation for the organization to have a simple
approach to realize its positioning objective as its strategy to integrate the marketing
program components into a coordinated set of initiatives.
PEOPLE

MARKETING SUPPORT
The backyard business of PAPER & BOX already supports over 70 employees supporting
the need of their Marketing activities. The number is composed of housewives and outof-school youth who once were bystanders in the community. 20 are considered
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regulars and are enjoying the law-required compensation and benefits. Most of them
are contractual and are being paid in a piece-rate system. According to Management,
this approach is the most applicable to sustain the growth of their business since the
industry is labor intensive. In comparison, urban-based artisan employed significantly in
numbers of both men and women on a full-time basis, while rural-based artisans tend to
work part-time at home. This has both positive and negative potential consequences.
On the positive side, handicraft employment can supplement agricultural labour and
unemployment.

MARKETING MANAGEMENT & ADMINISTRATION

The company doesnt have a long term & short term objectives list. Expectedly, the
company also does not have a written Marketing Plan, Strategies, & Efforts. Expenses
on supplies, labor and taxes are difficult to foresee in the absence of a Sales Forecast.
This is not made possible since the Management prefers to do the Marketing efforts &
activities on their own as a family. The company lacks Marketing & Sales People that
could be a potential source of forecasts, feedbacks, new sales, & market information.
Admittedly, the owner lacks management specialty and does almost all activities in
manual. The warehouse & production capacities often affect its operational productivity
plus the threat of floods in the area that might affect the condition of their stocks at
hand.

POTENTIAL AREA FOR MARKETING EFFORTS

In the comparative study done by the group (please see table #1), shows that the
marketing activity of the majority players in the competition focuses not only in local
operations but also in export market. This indicates a strong potential for PAPER & BOX.
Based on their capabilities in terms of the number of people and product lines offered,
the company can play in the export market.
As the export market in handicrafts represents the highest earnings potential for
handicraft manufacturers, knowledge of the marketplace is crucial. This can be aided
through the help of the Philippine Chamber of Commerce & Industry & Philippine
Chamber of Handicraft Industries, Inc., on the accessibility of market opportunities and
any subsidized marketing programmes. The international market can be difficult since
the demand for a product can disappear rapidly. Therefore, new applications, methods,
approaches and markets must be continually sought by the organization.

SWOT ANALYSIS
I.

INTERNAL FACTORS

STRENGTHS:

Large, diversified & potential market;

There is a large product variety & range is available;
It has a strong, diversified & supportive retail infrastructure like w/ NB;
Diversified product range that service different market;
Cheap labour rates that result to competitive price;
Low capital investment supported by government agencies like DTI;
Customizable production;
Low barriers of new entry;
Easy creation & development of production areas (backyard);
Industry provides potential sources of employment;
Products are high value added, & handicrafts have various applications;
Potential source of foreign revenue because of higher export activities;
Free social media account;
Majority of Sales come from National Bookstore;
Few local Competitors;
Lesser Bureaucracy due to family operations; &
Creativity of the artisans or people.

WEAKNESSES:

Unawareness about international requirements for export market;

No memberships with support organizations like: Chamber of Commerce,
Philippine Chamber of Handicraft Industries Inc., Rota;
Less interest of young people in the craft industry;
Lack of skilled & creative artisans in the Labour;
Still confined in the local operations;
Lack of promotion of products;
Limited production facilities to augment the order demands;
No marketing & sales people except for family members;
Prices are not fixed on some products;
No owned websites to support sales;
No product bundling, only concentrates on per unit, & line extensions;
No sales forecast;
Manual production & ageing regular people;
No export yet since the company doesnt have the production capacity & knowhow to engage;
No written long & short term Corporate Objectives, Marketing Plan & Strategies;
&
Unable to provide better compensation & benefits package.

II.

EXTERNAL FACTORS

OPPORTUNITIES:

Rising demand for exporting handicraft products in developed countries such as

USA, Canada, Britain, France, Germany, Italy, etc.;
Developing fashion industry requires handicrafts products;
Development of sectors like retail that offers great requirements of handicraft
products for their packaging;
Development of domestic and international tourism sectors;
E-commerce & Internet are emerging with promising distribution channels to sell
the products;
DTI Regional Trade fairs & Christmas Bazaars; &
Environmental Sustainability awareness among countries is setting the standards
in packaging.

THREATS

Forces that drive industry competition:

Threat of new entrant is high. Hallmark became aggressive to offer products of

the same lines as PAPER & BOX offers. China-made crafts are made available by
different suppliers locally which offer lower & competitive prices.

Threat of substitute products is high. PAPER & BOX recognizes that its main
products offered are already in the maturity stage. New innovative products
may be launched in the market.

Bargaining power of Buyers is high. Since majority of the sales is coming from
NB & similar organization, the prices varies on their dictates because they are the
ones maintaining the direct relationship with the end consumers. PAPER & BOX
doesnt have the capability to monitor the end-consumer behaviours. The
clients schedules the collection in 4 to 6 months after the actual delivery of
merchandize.

Bargaining power of suppliers is low since the country is rich in natural resources
& plenty of suppliers are available but the normal term for payment is 30 days.

Rivalry among competing firms is high.

Office/Manufacturing site is prone to natural calamities like flood.

Table # 2
EVALUATION ON MARKETING
AREAS OF CONCERN

IMPROVEMENT
NECESSARY

IMPROVEMENT
DESIRABLE

REASONABLE

SATISFACTORY

Market Share
Sales Forecast
Product Planning &
Devt.
Channel of Distribution
Sales Force
Management
Customer Relations
After Sales Service
Packaging
Advertising & Promotion
Pricing
Export Activities
Marketing Strategy
Marketing & Sales
People
Support People
Raw Materials Supplier

An evaluation survey (table 2) was also conducted to support the need for
information and to strengthen the results of the site visit, interviews,
assessment, and craft the best recommendations.

RECOMMENDATIONS
The Marketing path of PAPER & BOX Handicrafts has a lot of rooms for development.
The team believes that the potentials of the company can be maximized though the
following:
1) Create Long & Short-term Corporate Objectives to support the Companys Vision
& Mission.
2) Written Marketing Plan & Strategies is needed to support the firms forecasting,
inventories, expansion plan, additional funding from financial providers,
machinery procurement & capitalization.

3) Annual Sales Forecast as basis for projecting the supplies, labor and taxes. Sales
Forecast can also support realistic pricing, production requirements, and cost of
goods being sold.
4) Comparative Study revealed vast opportunities in the export industry where
PAPER & BOX also indicated strong potential and capability. Based on the
number of people & product lines offered, the company should explore the
possibilities of business engaging in the export market. However, membership to
PCCI, PCHI, & other groups is necessary to gain clientele information, training, &
current trends.
5) Trainings of people & research & development should be given priority to remain
knowledgeable on current trends.
6) Embark on Product line Branding so therell be a representation of product
categories & for proper identification, evaluation, & focus.
7) Tap other social media sites to gain product exposures for free like in Twitter,
OLX, Sulit.com, & AyosDito.
8) Create Marketing & Sales force to directly interact with buyers, and to have
access to market, competitor knowledge, provide basis of sales forecast and
feedbacks.

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