Key Contact G. J. C Peris / W. R. I. Q Fernando
Company Lanka Pets Aquatics
Address No 40/3, Peris Watta, Ekala, Ja-Ela, Sri Lanka.
Telephone +94 112 071 349
Mobile +94 776 901 676
Marketing Plan – Lanka Pets Aquatics
The prime objective of this report is to seek aid to find more buyers for Lanka Pets Aquatics.Though the company has commenced business with the mission of being the market leader in the country dedicated to supplying the entire range of fish and accessories to export markets, recent company performance shows incurring of losses and Furthermore, poor number of exports which is way below the company’s full capacity together with the losses leads towards one major problem which is the challenge to find adequate buyers. As a startup business, the company is challenged with several issues such as finding adequate buyers, use of new technology in the processes, receiving necessary training and development etc. This report is written to find remedies for the above-mentioned issues.
The global ornamental fish industry is a growing industry with many competitors. Sri Lanka owns 5% of the total market and this 5% consist of over 90 exporters. The country’s main export markets are Asian countries. As a growing industry with significant potential, it brings in a considerable amount of foreign income to the country. As a significant entity in the market which is amongst the top 10 exporters in the country, Lanka Pets Aquatics is faced with a major problem to find more buyers from the EU markets. However, lack of opportunities to find adequate buyers has been a challenge to the company. Other challenges to be mentioned are adequate training and development and technological adoption. If the company can get the opportunity to access a pool of buyers through effective trade fairs such as Interzoo, which will help the company accomplish its performance goals. Accordingly, appropriate objectives are set to be met at the end of a five-year development plan. It is believed that if necessary aid is granted to Lanka Pets Aquatics by the EDB, the company will be able to perform better in the future.
Lanka Pets Aquatics is a small scale ornamental fish exporter established in 2009 in Ja-Ela by two partners, G. J. C Peris and W. R. I. Q Fernando. The company was built with admission to build strong relationships with the company’s valuable customers in order to achieve the commercial targets of both the parties by exchanging knowledge & support. The ultimate objective or the vision of Lanka Pets Aquatics is to be the market leader in Sri Lanka by 2012 while enhancing the supply of entire range of fish and accessories to the industry. Lanka Pets Aquatics ‘export portfolio consists of more than 450 varieties which could be mainly classified as marine fish, fresh water, blackish water and aquatic plants. The company exports approximately around 100,000 fish per annum which is around 2500 boxes mainly to the US, Canada, EU and Asian countries. Below figure depicts the export product portfolio of Lanka Pets Aquatics.
Below figure 02 depicts the main countries where these water, plants and fish are being exported by Lanka Pets Aquatics. As per the figure 02, majority of the products are exported to Canada and the US. When combined, this amounts to 52% of the total production. 44% of the products are exported to Asian markets and only 4% is being exported to EU.
Ornamental fish industry in Sri Lanka has a long history and has started with small scale outlets in homes in cities. Ornamental fish export industry in Sri Lanka was initiated in 1930’s and the industry was totally based on export of wild collected fish, particularly freshwater species. There was little number of exporters in Sri Lanka. The first commercial aquarium was started in 1952 in Colombo. This industry was commercialized by few medium scale and large scale farmers about 50 years ago and it has now developed into a lucrative industry affording profit and employment to many. The export aquarium trade expanded gradually from the 1950s as 3 more exporters began to operate from Colombo. As air transport got more popular and less costly, live aquarium fish for export took to the skies. Commercial level ornamental fish exports started in 1980’s. Sri Lanka presently earns about 8.7 million US$ from the aquarium trade and export ornamental fishes to over 40 countries (EDB, 2007). In Sri Lanka, there are about 20 large scale companies engage in exporting ornamental fish in to various countries, throughout the world (EDB 2007). Aquarium fish industry in Sri Lanka initiated around Colombo which is the commercial capital as a result of establishment of zoological garden in Dehiwala. The industry established at such a scale that it continued to grow and finally it developed to an export market. As a result of overcrowding, high labor cost and lack of land for overgrowing system, the large scale growers started to move out to rural areas of the dry zone in the country. Presently the out growing systems are distributed in western, north central, north western and central provinces of Sri Lanka. Exporters assist the contract growers by supplying fish fry, feed, chemicals and basic technology for growing aquarium fish and to buy back system when the fish ready for export market.
Ornamental fish industry in Sri Lanka presently earns substantial foreign exchange (Rs. 972 million, in 2008) (EDB. 2009). However, this level of achievement can be considered as modest compared with the opportunities available in a rapidly growing global market of over US 3 billion for ornamental fish and related accessories in which the local share is negligible. Therefore, this industry can be expected to contribute far greater advantage to Sri Lanka’s economy than at present, by harnessing the vast and varied resources available in the country. Sri Lanka has a tropical climate, in many areas of this country suitable for aquarium industry. Aquarium fish industry can be categorized into four groups based on medium as follows;
- Tropical marine species
- Tropical freshwater species
- Brackish water species
- Cold water species
There are 111 freshwater fish species in Sri Lanka. This includes 21 exotic species which have been introduced either by intension or accident during the last century. There are 44 endemic fishes record in Sri Lanka (IUCN, 2007). As far as the ornamental fish trade is concerned, 35 popular species are exported in the market. Ten species dominate the global freshwater ornamental fish trade. Neon tetra (Paracheirodoninnesi) and guppy (Poecilia ret/cu/ala) accounts 60% of the export trade. Marine ornamental fishes contribute 20% and brackish water fishes contribute about 05% of the export trade. In Sri Lanka exported freshwater live fish are either bred and cultured in captivity and collected from wild. Most of prohibited endemic fish species which have high demand in the world ornamental fish trade are collected from wild. Live freshwater animals include finfish and some crustaceans while marine exports include both finfish and invertebrate species.
As depicted in the below figure 03, though Sri Lanka amounts to only 5% of the market share, year on year export quantities keeps on increasing which suggest that the country has immense potential to grow.
Additional Income Generation
Many people engage in several employments. But they are possible to combine with the industry by using their rest of time for earning additional income.
Many people are engaged in this industry as a self-employment. Employment opportunities have greatly increased and as a result, many youngsters now making a living by collecting marine and inland water fish, invertebrates from the wild for export and local market.
In Sri Lanka more lands are abundant. Lands which cannot be used for agriculture or other purpose could be utilized for ornamental fish farming.
Foreign Income Generation
This industry has become an important foreign income generation in Sri Lanka by earning about 8.7 million IJS$ annually.
Most of the areas in Sri Lanka are suitable for ornamental fish farming as there is good quality water and favorable climate.
This industry can be initiated with minimum investment and after they can develop gradually.
Minimum Environmental Pollution
Ornamental fish farming can be done with minimum environmental pollution unlike other aquaculture industries.
Ornamental fish farming can be done with minimum space.
Breeding and Culture Technologies
Because of the institutional involvement in giving scientific and technological knowledge, breeding and culture technologies are available for many high demand species among the fish farmers.
Minimizing the Risks of Human
Ornamental fish keeping known to helps to minimize the risk of human heart diseases as well as aesthetic purposes.
Ornamental fish breeding, nursing and growing technologies are available with commercial growers and the government institutes namely National Institute of Fisheries and Nautical Engineering (NIFNE). National Aquatic Resources Research and Development Agency (NARA) and National Aquaculture Development Authority (NAQDA) and the aquarium fish market is presently controlled by few exporters. Earlier in this industry small scale growers had to depend on technology and market on commercial growers and exporters. Now the technology is available with above mentioned government institute and farmers have to depend on the export of fish on the exporters. As a Buddhist country it is very easy to popularize this industry among the people who has low income due to the fact that the fish culture in this sector is solely for the ornamental purpose not for the consumption. One of the reasons for the unpopularity of food fish industry in Sri Lanka is due to the fact that the people are not willing to culture fish for consumption. Therefore, with minimum effort, ornamental fish culture industry can be popularized among the people than the food fish culture industry. As far as the aquaculture industries in Sri Lanka concern, there are 2 major industries namely, shrimp farming and ornamental fish culture industries. Since Sri Lanka has vast water and land resources.
Technology plays a significant role in the industry as much as it plays in other industries. Today, technology is used in the ornamental fish industry to produce high quality fish breeds through hybridization and in transportation which have been identified as the main requirements to develop the industry. However, lack of adoption to latest technologies has put the exporters in a challenging situation which affects their potential export capacity.
The National Aquatic Resources Research and Development Agency (NARA) is the principal national institution charged with the responsibility of carrying out and co-coordinating research development and management activities on the subject of aquatic resources in Sri Lanka. Compared to other industries in the country funds received by the NARA for R&D purposes is relatively low. Furthermore, unlike in other countries, Sri Lanka’s R&D activities related to the industry doesn’t take place much often. Thus, the exporters don’t get the opportunity to receive latest information or any other industry related trends in a timely manner which is challenging.
A conservative estimate of the annual wholesale value of the world trade in ornamental fish puts it at more than US$ 1 billion. Some 1.5 billion fish are traded yearly with a retail value of at least US$ 6 billion. The entire industry, including accessories, is said to be worth about US$ 14 billion. Some 30-35 species of fish dominate the market: for example, in the USA, 30 species accounts for 60% of imports with two species (the guppy and neon tetra) alone comprising 40% of the total. The ornamental fish market can be divided into four sectors: tropical freshwater species (which, at 80-90%, is the largest sector), tropical marine and brackish water species. Cold (fresh) water species (mainly gold fish and koi), and cold (marine and brackish) water species. Altogether, about 1500 species are traded with about 750 coming from freshwater. About 90% of the species are from aquaculture while about 10% are collected from the wild. The total wholesale value of the global ornamental fish trade is US $ 01 billion and the retail value of’ global ornamental fish industry has been estimated at around US$ 3 billion per annum. The entire industry including accessories and fish feed has been estimated to US $ 14 billion.
As depicted in below figure 04, Asia contributes to more than 56% of the world supply and Sri Lanka contributes only about 5% of this supply. However, Sri Lanka is earning annually about 5 million US$ and in 2004 the earnings reached 7.4 million USS. There are 350 registered ornamental fish farmers. 3000 unregistered ornamental fish farmers, 30 permanent exporters and 10 to 15 temporary exporters in Sri Lanka. The main problems of the development of this sector in Sri Lanka are lack of high quality high demand brood stock for breeding purposes, lack of knowledge on endemic and exotic fish breeding and larval survival, lack of suitable live feed and formulated feed for larval stages, poor farm management and marketing.
As depicted in the figure 05 below, the number of fish exporting countries expand on a YOY basis which suggest potential to grow and in the same time increased competition.
Furthermore, below figure 06 depicts a rapid growth in the income generated over the past years which suggest that the industry has certainly got the potential to further grow in years to come.
As per the below figure 06, Asia is considered the number 01 importer of Ornamental fish. The second largest exporter is the EU.
Below figure depicts the export figures of Lanka Pets Aquatics over the past three years’ time. A clear increment of exports could be seen in 2015. However, the volumes have projected a drastic drop during 2016 incurring losses to the company.
Furthermore, reduced amount of exports have eventually affected the profits of Lanka Pets Aquatics. Below figure graphically depicts how sudden increase in expenses have led to lose of profits.
Currently, Sri Lanka owns 5% in the global ornamental fish industry. This 5% of market share is owned by approximately 90 organizations which are registered under the EDB. However, Lanka Pets Aquatics has been able to secure its position in the local market amongst the top 10 suppliers.
As depicted in above figure 8 and 9, it is clear that 2016 has not been a healthy year for Lanka Pets as the company has not been able to make any profits. The main obvious reason is reduced number of exports. According to the figure 08, the export numbers in 2016 has dropped by 9% compared to 2015. Furthermore, the company has a capacity to export 500 boxes per month. However, in 2016, the average amount of boxes which were exported monthly amounts to 192 which suggest that Lanka Pets Aquatics has been not performing up to its fullest capacity. 62% of underperformance has resulted in generating losses in 2016 for the company. When further investigating the matter, it was noted that one of the main reasons for the underperformance was due to the inability to find importers.
As a relatively new and a growing company in the industry, growth is imperative for Lanka Pets Aquatics especially when the company has the capacity to produce nearly three times as much as 2016.Due to geographical distances it is most of the time hard to reach a pool of importers. In order to address this challenge, there are a number of trade fairs conducted across the globe creating a platform for buyers and sellers to meet. One such fair is Interco. It is the world’s leading exhibition of supplies for dogs, cats, rodents, horses and birds and aquaria. Interco drives innovation in the industry. The exhibition takes place every two years. According to Interzoo.com, 94% of the exhibitors in 2016 show have reached their most important target groups and had made business connections. Furthermore, international guests amounted to 70% especially from the EU countries. If a large pool of buyers could be met, it would aid Lanka Pets Aquatics to further improve its production and grow the business in 2018.
Additionally, further growth in areas such as technological assistance, training and development also can immensely help the company accelerate its performance in time to come.
After implementing this business plan, Lanka Pet will be able to achieve following marketing objectives.
- Increase sales by 10% by the completion of 3rd month of the implementation
It is one of the main objectives of Lanka Pet to increase its sales at a significant level by implementing with existing marketing strategies. The business expects to increase the profitability by two main ways; reduce price levels and attract customers to the products and improve quality and uniqueness of the products; so new customers will be attracted to the products automatically.
- Increase profitability by 3% by the completion of 3rd month of the implementation
With the intended sales increase and cost reduction objectives Lanka Pet will be able to increase its net profitability by 3% after the first three month of the implementation.
- Capture 10% of the total market share available for international business,
The Lanka Pet expects to increase its sales and profitability by primarily increasing market share after implementation.
- Reduce promotional costs by 50% by implementing completely internet based marketing and promotional advertising after one year
By knowing the fact that Lanka Pet can reduce its promotional costs. Hence the management expects to reduce 50% of its overall implementation cost as one of its key marketing objective.
According to (Strauss, Ansary, & Frost, 2003), e-marketing strategy can be defined as ‘Deployment of organizational resources in order to capitalize technologies targeting at reaching specified objectives that eventually improve performance and generate sustainable competitive advantages’. Therefore, marketing strategy to be adapted by Lanka Pet can be illustrated as,
E-Marketing Strategy = Marketing Strategy + Information Technology
Accordingly, the key marketing strategies for Lanka Pet can be pointed out as follows.
In order to make potential customers aware about the Lanka Pet, content marketing approach will provide a superior support. Content marketing is all about creating blogs, photos, videos or any other contents on websites to attract target audience. As Lanka Pet intends to sell its international level via online the marketing personnel can add information on each of the product type that they sell over the internet with attractive pictures and videos. Whenever the international seekers log-on to the company’s website it will attract them and create a requirement for that product. This will be one of the low cost and effective strategies to let people know about the products and services that a particular business entity delivers.
This is another widely applicable e-marketing strategy. In this method marketers will collect e-mail addresses from the target audience firstly and then e-mail product characteristics, promotional information, available discounts etc. to those mail lists. Since e-mails are considered as one of the convenient approach to spread information about a particular content this would be an applicable marketing strategy for Lanka Pet. Further, this is a low cost and speedy approach compared to the other approaches.
For a business firm that has a presence in online and which seeks online target market ‘social media’ is the ideal marketing strategy today. People live in the society nowadays used to live with social media heavily; hence social media marketing as become an increasingly important factor across the globe. Lanka Pet can extend its online presence into Face book, Twitter, Instagram and too many other social media sites. This will enable customers to share their experiences regarding the product, its qualities, service delivery, timeliness, and qualities of the delivery personnel or anything else related to the products here. Hence, it works as a word-of-mouth recommendation for the others.
It is a widely applicable concept in online marketing. It enables the other websites to advertise the products, as a return the company gives them a percentage of sales revenue to value their efforts. In here a common URL will be applicable for each product unit and also the marketers are given the opportunity to search people everywhere.
Sri Lanka exports marine, freshwater, brackish water fish species and marine invertebrates. Marine fish and invertebrates are collected by experienced scuba divers from the waters around the island while freshwater are bred in captivity by a large number of small and medium scale producers who are dedicated to maintaining the highest standards of quality.
Freshwater aquarium fish comprise the more colorful and striking species of guppies, swordtails, platys, barbs, tetras, angels, gourmandize and catfish. Out of these freshwater species exported from Sri Lanka, about 60-70% consists of famous fancy guppies – highly recognized in international markets due to the strength and diversity of the particular fish species when compared to other exporting nations. To ensure the fish are in good health, a certificate issued by the Department of Animal Quarantine on health accompanies each and every shipment. There are about 40 regular exporting companies in Sri Lanka. Major buyers for Sri Lankan ornamental fish are the USA, Japan and the European Union.
A conducive climate and the availability of coral reefs, sand bars, and lagoons around the country as well as inland water bodies such as streams, rivers and reservoirs provide the ideal ground for breeding of marine, brackish water and freshwater species in Sri Lanka. This is the very reason why Sri Lankan ornamental fish are in high demand and are exported all over the world.
The growth rate of Sri Lanka’s aquarium fish industry is a healthy 4.7% with our share of 2.7% of the US$ 412 million world market. In time to come, the aquarium fish industry in Sri Lanka will look to expand their foothold by breeding high value marine ornamental fish including exciting new varieties and rare species endemic to the tropical island.
Global exports of ornamental fish since 2000 rose steadily from US$177.7 million to a peak of US$364.9 million in 2011, then declining slightly to US$347.5 million in 2014. A close look at the top ten regions supplying 78.6% to the export market in 2014 showed that Asian countries accounted for US$197.7 million in exports, more than 57% share of the trade. This was more than 9.87% compared to the previous year (Figure 2). Europe accounted for 27.6% of the total exports of ornamental fish valued at US$95.8 million. At US$25.9 million, South America shared 7.5% of the total exports while North American exports were to the tune of US$13.8 million, sharing 3.98% of the global supply. This was followed by African countries with US$7.6 million (2.2%), Oceania (US$ 4.9 million) and the Middle East (US$1.76 million)
By country in 2014, Singapore, with exports valued at US$69.32 million, was the ornamental fish capital of the world, contributing close to 20% of the total supply. Till today it remains the main trading hub in Asia, with more than 30% of the fish exported having been sourced from other countries. Japan (US$41.34 million) was in second place, holding a stable share in the market due to its niche on Koi carp. The third position was occupied by the Czech Republic with supplies worth US$32.0 million, followed by Thailand (US$23.31 million), Malaysia (US$22.62 million), Indonesia (US$21.54 million), Israel (US$19.04 million), Brazil (US$18.52 million), Sri Lanka (US$13.1 million), and Colombia (US$12.3 million).
During the fifteen year period from 2000 to 2014, the import value for ornamental fish rose from US$ 247.9 million in 2000 to an all-time high of US$402.1 million in 2008. Thereafter, there was a declining trend until 2013 (US$287.2), and then a slight rise (+4.1%) to US$299 million in 2014.
In 2014, the USA was the single largest importer of ornamental fish, with 14.3% (US$42.9 million) of total imports. This was followed by the UK with US$29.5 million or 9.87% of total imports. The other major importing countries during the review period were Germany (US$23.4 million) Singapore (US$21.3 million), Japan (US$19.5 million), China/Hong Kong (US$19.3 million), France (US$16.7 million), the Netherlands (US$13.3 million), Italy (US$9.7 million), Malaysia (US$9.1 million),Canada (US$ 8.6 million) and Belgium (US$ 8.3 million) in that order (Figure 5). These 12 countries together shared over 74% of the global imports. Singapore, Germany (Frankfurt) Hong Kong, Malaysia and the Netherlands (Amsterdam) were (and still are) the important trading hubs, re-exporting a major portion of their imports.
As mentioned, the world’s largest single market for ornamental fish is the USA, where keeping fish in aquaria is probably the second most popular hobby in the country. Imports went up in value from US$60 million in 2000 to as high as US$74.1 million in 2006, down to US$36.8 million in 2013, and then up by 16.5% to US$42.9 million in 2014.
In 2014, the main imports consisted of fish of freshwater origin (today, there is a growing interest especially among young hobbyists, in maintaining reef aquaria with marine fish). In the year under review, the suppliers of ornamental fish to the US market included Singapore, Indonesia, Thailand, Hong Kong and the Philippines, with other important Asian sources being Malaysia and Japan. Fish from Colombia, Peru, and Brazil also catered to this market.
The value of imports of ornamental fish into Japan showed a decline from US$32.9 million in 2000 to US$18.2 in 2012, and gradually picking up in succeeding years. In 2014, the top ten suppliers to the Japanese market were Indonesia, Singapore, Brazil, Philippines, Colombia, Peru, USA, Thailand, Hong Kong and Sri Lanka while China and Malaysia were the main suppliers of goldfish. Imports totaled US$19.5 million, showing a marginal increase compared to 2013 (Figure 7). The decline in imports was mainly due to the recession that the country was experiencing during that period, and since 2003, Japan is no longer the largest single market for ornamental fish. Fig. 7: Import performance of the Japanese market, 2000-2014 (in US$ million) with increasing prohibitions on keeping pets such as cats and dogs in high rise apartments. Aquariums have become an important feature of the home décor. To date, the most popular species remains guppy, constituting more than 28% of the market. Other preferred fishes are tetras, tiger barb, discus, angelfish, gourami, platy, swordtail, zebra danio etc.
Europe is the largest global trade bloc, with the UK remaining the largest European importer of ornamental fish from outside the EU. Imports into Europe rose from US$111.8 million in 2000 to US$223.7 million in 2008, but then falling to US$141.9 million in 2013 and an all-time low of US$95.8 million in 2014. Freshwater species accounted for more than 84% of imports by value, the rest being marine fish, invertebrates and live rocks. In 2014, EU member countries imported ornamental fish from 59 non-EU countries and regions around the world. There were 44 different countries supplying marine fish and 39 supplying freshwater fish.
Today, the largest source of ornamental fish into the EU continues to be Singapore, sharing more than 30% of total imports by volume and over 70% by value. The remaining nine top freshwater fish suppliers to the EU are Israel, Japan, Indonesia, Thailand, Sri Lanka, Colombia, China, Vietnam and Malaysia. Other suppliers of freshwater fish include Hong Kong, Brazil, Peru, USA, Taiwan, Nigeria, Tanzania, India, Burundi, and the Democratic Republic of Congo. Indonesia, USA, the Philippines, Sri Lanka and Maldives are the main suppliers of marine ornamental fish to EU markets. Imports and re-exports of ornamental fish, which are not required to pass through border inspection posts (BIPs), take place between EU member states. In view of its close proximity, the Czech Rep is the most important European supplier to the regional markets.
Overall, there has been a major shift in the position of Asian suppliers. In the year under review, Thailand was the third largest supplier after Singapore and Japan, pushing down Malaysia (once the second largest global exporter) and Indonesia to fourth and fifth position respectively. In the past decade since the mid-2000s, it has been noticed that farming of freshwater ornamentals has gradually increased in countries that are close to consumers. These include the Czech Republic, Israel, Belgium, and the Netherlands, which have started cultivating fish for European consumers, taking advantage of their close proximity to the major European markets. Meanwhile, countries such as the Philippines, Morocco and the Pacific countries have emerged as major suppliers of marine ornamentals. Ornamental fish trade has always been linked to the state of the national economy. This is clearly seen in the import scenario in Europe, Japan, the Republic of Korea, and Norway.
Problems in supply, traceability, and sustainable management along the supply chain, disease, innovation as well as transportation practices, destructive fishing methods, and introduction of exotic species are some of the most important issues with regard to improving access to markets and enhancing value. With regard to supply, increasingly erratic climatic conditions and seasonal weather patterns prevailing in Asia and South America result in some species not being available during certain periods of the year. Supply problems can also be related to over-exploitation of a species or a particular population of a species, destructive fishing methods, and mortality caused by poor handling and quarantine procedures, and other manmade factors. This raises the issue of sustainability where there is a need for a healthy balance between the wishes of fish keepers, the economic interests of the business sector and the future of the species.
Marketing mix is a strategic marketing tool, which is used by the organizations to produce value for the customer base that the company serves. Marketing mix primarily consist with 4Ps; i.e. Product, Price, Place and Promotion. According to Shapiro (2001), an effective marketing mix needs to add a joined value to the customers, it should discourse organizations’ strengths and compensate weaknesses while generating distinguishing competitive advantages. The application of 4Ps strategies for the Lanka Pet that operates in the international food industry can be illustrated as follows. Other than these traditional 4Ps, extended 3 Ps are added to the marketing mix in the service industry as process, people and physical evidence.
- Process is the ways of providing anticipated services to the customers. Main aim of Lanka Pet is to maintain the service distributing process in a premium manner. The process of delivering services under the new ways is bit different from the traditional service delivering process. Main focus has to be placed to the timeliness of the service delivering process.
- The next type of ‘P’ is ‘People’ that includes mostly customers and employees involve in the process of Lanka Pet. Employees have considerable influence over the customer satisfaction; hence they need to be appropriately trained and succeeded. Politeness, ability to cope with people from different backgrounds and cultures, negotiation and communication skills (may be ability to speak multiple languages) would be key requirements for the people working in Lanka Pet.
- The last criterion is ‘Physical Evidence’ which includes the perceptibility of the business activities of Lanka Pet. Therefore, it is vital for the company to maintain their environment pleasant and clear. Therefore, management of Lanka Pet always has to create awareness and stimulate customer requests in a way
Price can simply be recognized as the value placed on a particular product or service (Kotler and Armstrong, 2014). The price constituent of a marketing mix contains charges, rates, toll or premium. Mainly there are four types of pricing strategies available; where the applicability of each for Lanka Pet can be illustrated as follows.
|Pricing Strategy||Applicability to the Lanka Pet|
|Economy||This is appropriate in the situations where quality of the products or service levels delivered is low and the price is also low. Since Lanka Pet intends to provide high quality product items to its customers this strategy will not be applicable for the situation under consideration|
|Skimming||This is also applicable in the situations where the quality is low but the price is high, thus not applicable to the Lanka Pet situation|
|Penetration||In this pricing strategy, the quality is high, but the price is low. However, Lanka Pet has to deal with higher cost involve in importing food items the services cannot be priced at a lower rate.|
|Premium||Under this strategy, both quality and price are high. This is the most suitable pricing strategy for the Lanka Pet as they have to develop a loyal customer base, which are willing to pay high price for the unique products and quality services that they deliver. Therefore, the customers psychologically perceive that higher prices will indicate higher quality and credibility.|
|Promotional Mix Element||Applications to the Lanka Pet|
|Advertising||Advertising is a paid communication approach designed for the purpose of encouraging receivers to take a particular action in the future. However, newspapers, magazines, television ads would not be applicable advertising approaches for the Lanka Pet as it operates in the online business and expecting to reduce promotional costs as much as possible.|
|Public Relations||Public relations can be explained as planned and sustained effort to empower mutual understanding and preserve goodwill among organizations and the public. Lanka Pet manages public relations through closer communication relationships that they have built-up with the society.|
|Personal Selling||Contacting potential customers by arriving door to door and communicating them about the products / services and their associate features is personal selling. This strategy under promotional mix is not suitable for a business like Lanka Pet as it focuses on specific market.|
|Sales Promotions||These are the actions that attempt to encourage customers to make purchase decisions of a particular product / brand. Sales promotions have a significant influence on the sales. Lanka Pet can plan deals with range of sales promotional activities such as reward programs, discount vouchers etc., loyalty card programs etc.|
|Resources and Staffing|
|Staff requirements||Managing Director – The Owner of the Business – 1|
Marketing & Business Development Officer – 1
Customer Service Representative 1
Stores In-Charge – 1
Packing & Delivery Coordinators – 2
Exceptional Communication Skills
General Knowledge about the field
Knowledge on marketing strategies
|Other resource requirements||Recruit temporary staff based on the requirement|
Provide complete training facilities
Facilitate the necessities of the sales team
|Communicating||Weekly sales meetings|
Sales events meetings
Month end progress reports
|Monitoring||Reporting the progress of each sales representatives|
Regular progress meetings
Performance based incentives
|Feedback||Performance Evaluation Reports|
Lanka Pet will be identified as a smaller scale business, having only six numbers of persons (with the owner of the company). It was proved through national statistics that the majority (i.e. 97%) of the companies in Sri Lanka employs less than 20 employees (Hikina Whakatutuki, 2017). Accordingly, Lanka Pet is also expected to be a successful business venture, even though the employees and business scale is smaller.
Recruitment is generally about selecting and employing the right person, to the right job at the right time. Recruitment for Lanka Pet is initially projected for five persons only (except the Managing Director), since the company will be a small-scale company at the initiation (as depicted in table 13). The job roles of the selected five persons and their job requirements will analyze through job descriptions and job specifications (respectively). Generally, the required competencies for the staff are mentioned in above table 13. After ascertaining these requirements, other factors that affect for the recruitment will be considered, among which, especially the employment cost, employment rules in Sri Lanka market conditions of employees in competitive businesses and substitutes businesses, the urgency of recruiting will be considered. As per the urgency, the first employees to recruit include Customer Service Representative (1 person), and Packing & Delivery Coordinators (2 persons). Afterwards, by assessing better personal competencies, the Marketing & Business Development Officer and the Stores In-Charge will be selected.
In order to recruit aforementioned persons, the recruitment methods of Simple Word of Mouth, Personal Relationships, Internet Job-Posting and Open Advertisements will be used. However, it is projected that the best method for Lanka Pet Personal Relationships. The applications that will receive through above recruitment methods will carefully assess, and personal interviews will be conducted, along with a referral check, in order to select the most appropriate human resources. For the selection of Customer Service Representative (1 person), and Packing & Delivery Coordinators (2 persons) for Lanka Pet, a higher priority will be given for competencies such as inter-personal relations, accuracy of work completion, timeliness etc, while for the Marketing & Business Development Officer and the Stores In-Charge, the past working experiences will be prioritized. Later on, some part time employees will be hired by considering peak periods, while giving priority to University students who seek part time employment opportunities.
The selected human resources will be hired and appointed according to employment rules in Sri Lanka and they will be offered with appointment letters after their confirmation of the employment. The agreed working days, remuneration, leaves, job roles, duties & responsibilities and all other special working terms will be mentioned there in the appointment letter.
On the other hand, the Managing Director will carry out all Human Resources Management, Finance Management, Imports Management, Legal Compliances and other general administrative functions.
The decision making process of Lanka Pet is depicted below in figure 23.
|Managing Director (The Owner) (1)|
|Marketing & Business Development Officer (1)||Customer Service Representative (1)||Stores In-Charge (1)|
|Packing & Delivery Coordinators (2)|
It denotes decentralized nature, yet the chain of command is not much high, due to the lesser number of human resource requirement. Therefore, it is projected that information will efficiently and productively move among all the members, which will facilitate faster creation of business intelligence. The employees will be offered with higher level of autonomy under their rob role and job scope. However, the significant business decisions will require proceeding with the approval of the owner. Due to the higher autonomy and decentralization, it is projected that customer preferences and behaviors will be easily and swiftly identified and addressed with the most suitable food products.
The remuneration for the human resources will be paid weekly, i.e. every Wednesday for the prior week. The working days of Lanka Pet will be Monday to Saturday in weekdays, starting from 6 am to 7 pm of the day. These 13 hours will include one and a half hour for resting, which will also considered for the calculation of pay. Every Sunday will be the leave day for all the employees. However, in order to schedule the deliveries and answer the customer queries, the Managing Director himself will be employed in Sundays for the initial business years, and later on the functions will make more decentralized and specialized. The lowest possible payment per worker in Sri Lanka and the maximum in per hour. The particular payment for each employee will be decided according to their capacities, skills, experience and duties & responsibilities.
Most importantly, the remuneration package will include, not only the basic pay, but some other commission and allowances, which will be variable payments, and welfare allowances. The composition of remuneration package for Lanka Pet is depicted below in figure 24.
The above remuneration package will design by carefully considering the four equities of pay (i.e. input equity, internal equity, external equity and primary equity), in order to retain the employees in the competitive market. It is apparent that, as a small scale company, it will be difficult and highly costly for Lanka Pet to recruit and replace employees time to time. Therefore, the retention of employees will be considered as imperative and the remuneration package will design accordingly. Carefully pay surveys and legal documents referrals will be done before finalizing the remuneration package for each employee.
Even though Lanka Pet will employ a lesser number of employees in a certain extent of decentralized manner, carefully supervision will be essential to ensure the smooth business processing. The employee supervision will link to a systematic performance management system that will take place in the business. This performance management system will recognize, assess, control, and improve employee performances of the business (Opatha, 2015).
Mainly, the performance evaluation criteria will link to the marketing objectives (which are mentioned under above 7.1) of the business, general business goals such as being the leader in the market, achieving higher customer and other stakeholder sentimental rates etc. In addition, time to time business goals will also create and link with the performance management system. A 360 degree approach will apply for performance evaluation, by allowing customers, superiors, subordinates, suppliers and own-selves to assess each other, which will conduct annually. It will aim at measuring employees’ traits (i.e. their personal qualities and characteristics), behaviors (which will include their innovativeness, attendance, waste management, organizational citizenship behavior, planning & organizing qualities etc), and the business results they generate (in terms of the contribution to the achievement of set goals and business profits). The results of this performance evaluation will link to the annual bonuses.
Apart from that, monthly performance reviews will also conduct to measure the alignment of individual performances with business objectives. It will be a Management by Objectives (MBO) performance evaluation method. The Managing Director will conduct individual performance reviews as well as group performance reviews, in order to make corrective actions where necessary. These reviews will conduct as different discussions and meetings as mentioned in above under communicating, monitoring and feedback meetings. Moreover, in order to ensure better performance procedures, daily and weekly supervision charts will maintain, where employees’ targets and job duties will continuously monitor.
Training & Development are another crucial HR functions, from which, training will gain a significant concentration of Lanka Pet. Training will encompass the activities that will carry out for sharpening the job related knowledge and expertise of the employees . In the context of Lanka Pet, on-the-job training will conduct, in order to improve the skills and practices of human resources. Mainly the on-the-job trainings will be essential for the Customer Representative Officer and Packing & Delivering Coordinators. Once they are hired, the initial month’s period will be considered as a training period, yet they will consider as permanent employees.
Over clearly communicated to them before starting the JIT process. Afterwards, the existing knowledge and expertise level will be assessed and their preparation will be evaluated for the job and the training. Next, the Managing Director will explain all the required duties to be done and their level of autonomy, authority and accountability. Later, the employees will allow proceeding with the duties and their performances will follow-up for ensuring the expected performances. At the end of the training period, it is expected that their capacities and skills will match to the job demands. Since the Marketing & Business Development Manager and Stores In-Charge will be experienced persons, it is assumed that they will require no training, yet they will be provided with an awareness of job duties and responsibilities. Later, with the expansion of the business, it is expected to conduct annual development programs and recognition ceremonies as well.
|Loan by Bank||70%||3,150,000|
|Chinese Investor Loan Payment Schedule|
|For The Year 31st December||Y1||Y2||Y3||Y4||Y5||Y6||Y7||Y8||Y9||Y10|
|Balance Brought Forward||–||1,575,000||3,150,000||2,887,500||2,362,500||1,837,500||1,312,500||787,500||262,500||–|
|Loan Obtained during the year||1,575,000||1,575,000||–||–||–||–||–||–||–||–|
|Balance Carried Forward||1,575,000||3,150,000||2,887,500||2,362,500||1,837,500||1,312,500||787,500||262,500||–||–|
|For the year 31st March||Year 1||Year 2||Year 3||Year 4||Year 5||Year 6||Year 7||Year 8||Year 9||Year 10|
|Net Operating Profit before Finance Cost||(16,337)||(85,950)||(267,241)||503,656||737,251||696,016||873,743||826,891||970,860||1,043,868|
|Add back depreciation||380,410||380,410||385,662||352,689||309,278||324,813||315,522||317,541|
|changes in working capital||(43,472)||(61,542)||(19,756)||6,019||27,810||23,054||725||(1,076)|
|Net Cash Flow before Financing||(703,196)||(3,625,912)||69,697||801,515||1,065,993||1,002,937||1,005,322||905,028||1,227,243||1,297,777|
|Loan from Chinese Investor||1,575,000||1,575,000||–||–||–||–||–||–||–||–|
|Loan from Inter- Company||–||–||500,000||–||–||–||–||–||–||–|
|Repayment of Inter Company Loan||–||–||–||–||(125,000)||(125,000)||(125,000)||(125,000)||–||–|
|Payment of Inter-Company Loan Interest||–||–||(10,000)||(30,000)||(30,000)||(22,500)||(15,000)||(7,500)||–||–|
|Net Cash Flows||2,221,805||(2,050,912)||173,384||87,702||258,681||234,624||276,010||214,715||960,150||1,297,777|
|Cumulative Balance B/F||–||2,221,805||170,892||344,276||431,979||690,659||925,284||1,201,293||1,416,009||2,376,158|
|Cumulative Balance C/F||2,221,805||170,892||344,276||431,979||690,659||925,284||1,201,293||1,416,009||2,376,158||3,673,935|
|For the year ended 31st March||Year 1||Year 2||Year 3||Year 4||Year 5||Year 6||Year 7||Year 8||Year 9||Year 10|
|Net Income after Tax||–||–||1,045,757||2,229,089||2,652,629||2,796,277||2,955,762||3,123,221||3,309,327||3,483,677|
|Total Cost of Production||–||–||356,251||714,521||846,875||886,544||930,871||977,415||1,029,382||1,077,599|
|Other operating Expenses||16,337||85,950||394,907||347,419||382,833||546,047||417,101||503,277||456,217||476,177|
|Marketing & Distribution||–||43,688||67,742||73,120||76,721||80,557||84,586||88,878||93,255|
|Net Operating Profit/ Loss before Finance cost||(16,337)||(85,950)||(267,242)||503,656||737,251||696,016||967,732||970,349||1,143,331||1,229,286|
|Net Profit/Loss Before Tax||(16,337)||(85,950)||(401,054)||314,844||579,939||577,704||888,420||930,036||1,138,738||1,229,286|
|Net Profit/Loss after Tax||(16,337)||(85,950)||(401,054)||314,844||579,939||577,704||794,430||786,579||966,266||1,043,868|
|Profit / Loss for the year||(16,337)||(85,950)||(401,054)||314,844||579,939||577,704||794,430||786,579||966,266||1,043,868|
|Charged to Reserve||–||–||(19,875)||(42,018)||(74,328)||(103,575)||(108,599)||(113,854)||(119,727)||(125,113)|
|Utilization of Reserve||–||–||21,009||37,164||51,788||205,509||146,779||59,863||62,557|
|Charged to Reserve||–||–||19,875||42,018||74,328||103,575||108,599||113,854||119,727||125,113|
|Utilization of Reserve||–||–||–||(21,009)||(37,164)||(51,788)||(205,509)||(146,779)||(59,863)||(62,557)|
Though the ornamental fish industry in Sri Lanka accounts only for 5% in the global market, the income generated through exports of ornamental fish immensely help to uplift the country’s economy through increased export income. As the global ornamental fish industry is at a phase of continuous growth, focusing on growing the business will aid both Lanka Pets Aquatics and the country. Especially since the company is incurring losses while it has potential to grow, further expanding the business into EU countries will help overcome the crisis. However, one of the main barriers to tap the market is the inability to find adequate buyers from the EU countries. In this instance, presence of related trade fairs such as Interzoo can help Lanka Pets Aquatics reach its precise target audience. Furthermore, through support needed to expand the number of buyers, Lanka Pets Aquatics will also be able to work in its fullest capacity while thriving to further grow as a business while helping to expand the local industry. Projected financials for the upcoming 5 years prove the immense possibilities available for Lanka Pets Aquatics to further develop as a company.