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close this bookExport Marketing for a Small Handicraft Business (Oxfam, 1996, 192 p.)
close this folder3 Markets and their characteristics
View the document3.1 The perception of value
View the document3.2 Competition
View the document3.3 Market structures
View the document3.4 The costs of distribution
View the documentSummary

3.2 Competition

In this marketing process, an exporter's offer stands alongside offers by others, with which it is in competition. Successful marketing means creating a marketing mix which is better than one's competitors. Competition can apply to all aspects of the mix: a better-designed product, a cheaper price, more effective promotion, a more receptive market place. Many handicraft exporters already know that different aspects of competitiveness appeal to different markets. In general, if selling 'downmarket', it might be worth sacrificing quality in order to achieve a cheaper price than others. Conversely, in a market particularly appreciative of high quality, it might not matter that your price is higher than your competitor, if your product is superior in finish.

Inexperienced exporters tend to focus wrongly on price as the single factor in competitiveness. In fact, it is the best value which customers seek, and in determining value they take into consideration the whole marketing mix. If this were not the case, how would anybody sell basketware from anywhere but South-East Asia, which generally has the cheapest baskets? Other countries are able to compete, not on price, but on quality and distinctiveness of design, because many customers accord value to those factors. Producers find great difficulty in appreciating how distinctive their products may be in another country, and hence what value they might have.

Promotion is another vital aspect of the marketing process. Having competitive products is not enough if you cannot bring them effectively to the customer's attention. For many would-be handicraft exporters, this is a critical weakness. They would be wise to spend more on promotion, even at the expense of price increases to cover the costs of it. Price is, after all, the easiest aspect of the marketing mix for competitors to attack. Much less easy for them to beat is your quality of production or promotion. It is certainly true that many exporters succeed with not very competitive product ranges because they promote them very effectively. Competition is intense in the handicraft trade. It comes not only from similar products elsewhere-direct competition-but also from other products which may serve the same purpose-indirect competition.

Direct competition is the easier to confront because it is more easily understood. If you are an exporter of painted papier moxes from Kashmir, it is fairly clear that you are in competition with other exporters of the same items. But you are also in competition with exporters of painted boxes from other countries, such as Thailand and Haiti. These may be made from wood or bamboo, but the finished product is very similar. A great difficulty facing exporters is how to know what other products similar to theirs are available to the customers to whom they are trying to sell. This is a strong reason in favour of making a visit to a country to which you want to export.

Products are generally valued according to the purpose for which they are made. Purpose is not to be confused with function; the purpose may be to produce something purely decorative. Objects which are not particularly functional, but have special decorative qualities, might have a very high value. The purpose of a painted Rapier mox may be said to be both functional-to contain things, and decorativeto look attractive. Its value derives from both considerations. It is worth more than an undecorated box of a similar size or than a similar piece of painted papier mhich is not a box. Of the two purposes, it is possible to have a clearer idea about the value of its function than the value of its decoration. A box of a certain size may have an approximate value in a particular market; customers might be looking for the cheapest box which is available to perform that function. It is much more difficult to estimate how much decorative qualities are worth. Clearly, an exceptionally beautifully decorated box, perhaps painted with gold leaf, is worth more than a routinely decorated one. The value of decoration ultimately depends on the price particular customers in a market place are willing to pay for it, and it is much more difficult to assess what that might be without experience.

It follows that competition is always strongest where products are valued primarily according to their function. If you offer a simple undecorated box, there will almost certainly be many other similar boxes on the market. The competition to a decorated box is less strong because the box has been differentiated from others available in the market place and has gained an additional value directly related to its decorative qualities.

Competition with handicrafts comes not only from similar products from other countries, but also directly and indirectly from industry. Direct competition occurs when manual techniques are replaced by mechanical ones: hand-looms by power-looms for example. The production of a piece of cloth by machine at a lower cost reduces the value of the similar piece made by hand. Industry also competes indirectly with handicrafts by the production of items serving a similar purpose. Many traditional crafts all over the world are being displaced by the introduction of new products made by machine. The plastic bucket which performs the same function as the ceramic pot reduces the value of the pot to less than that of the bucket, which has the additionally valued quality of being light to carry. Cheap plastic and rubber sandals have put traditional cobblers out of business, because many customers in the markets in which the shoes are sold do not accord a higher value to hand-stitched leather sandals, which cost more to produce.

The only weapon available to handicraft producers to fight industrial competition is the enhancement of value through decoration. Oxfam Trading is able to sell, for example, lampshades and picture-frames made by hand. They are more expensive than ones sold in other shops, made by machine, but they sell because our customers accord value to their decoration. It is industry's capacity to respond to people's functional requirements by producing more cheaply which obliges handicraft production increasingly to emphasise decorative qualities. It is here that distinctiveness can be created, and additional value gained. The artisan who produces purely functional items with little or no decoration will be struggling to earn a living wage.

It is because the value of handicrafts lies to a considerable degree in their decorative qualities that market research is of limited usefulness. Research can most effectively survey competition to products where value is related almost exclusively to function. Exporters of leather bags would gain little help from a survey of the British market for bags. All it would reveal is that there are many types of bags-leather, fabric, plastic and others-at all prices.

Indirect competition hits much more widely than exporters usually assume, because everything is in competition for the money which a customer is disposed to spend. Sometimes customers are quite specific in their requirements. For example, if they want to buy a cushion cover, they will not spend the money on anything else. At other times, customers are much less definite in their requirements. They may be looking for an item of clothing, but not sure whether to buy a jacket, a jumper, or a pair of shoes. Or they might want something to decorate a wall. It could be a woven tapestry, a wooden carving, a painting, or even a large basket. So a tapestry might be in competition with a basket for the same amount of money.

This sort of customer behaviour is much more pronounced when buying gifts for other people. Very often, at Christmas time for example, shoppers set out with a certain sum of money, and a list of people, but no clear ideas as to what to buy for whom. The patterns of customer behaviour at consumer level are always mirrored in the trade by the professional buyers. When Oxfam Trading is putting its range of products together, we know that we want a certain quantity of specific products-some clothing, furnishings, rugs, etc. However, we are flexible about the precise quantity and type of each; and also about what other types of products we shall include. Our final selection depends on which products we think offer the best value. If we see four good jumpers, we might buy them. If we see only two, we might buy two more items of brassware or stone carvings as well.

Competition extends very widely. Perhaps the only comfort is that not even the most detailed and expensive research will reveal it all to you. Experience and understanding are the best guides: to know not only which of your products sell well, but why. The only practical advice can be to concentrate on what you are good at, and not to lose business to competitors by a shortfall in your own marketing mix which you could very well have overcome.