A case of PaperMarket

Permeate is a scrapbook and stationery lifestyle retail chain in Singapore. Founded in 2009, it has established itself as the paper-crafting store that provides elegant solutions to scrapbook needs, luxury stationery and other paper-craft ideas. Currently, it has three outlets operating island wide with its flagship store located in Raffles City. Permeate is a limited-service retailer, and aims to provide customers with inspiration through its products and services.

For the artistic and creative population, Permeate aims to be the leading retailer of exclusive paper- rafting merchandise, stationery and creative services. It aims to provide fresh inspiration and help customers discover the fun of paper crafting, and Joy in hand- making unique and thoughtful gifts. In this report, we seek to provide insight the factors that helped Permeate achieve its objectives, evaluate these factors and subsequently provide recommendations to improve its current position and achieve greater success. To analyses the customers of Permeate, we have looked at the customer behavior and the customer relationship with Permeate.

Customer Behavior

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Parakeet's customers undertake variety-seeking buying behavior, which is characterized by low consumer involvement but significant perceived brand differences.

Parakeet's closest competitors are Made With Love and Maple Trousers, as they offer similar products and services. However, Permeate still as definite brand differences as it offers more than scrapbook products and services - it also offers other paper-crafting services such as home decor and handicraft products. As such, it has a wider consumer base than its competitors and thus has significant brand differences from its competitors. Consumer involvement is relatively low as the products are relatively inexpensive and purchased frequently.

Customer Relationship

Analysis Using the matrix, we have classified the scrapbook enthusiasts as Parakeet's True Friends, because the products and services fit their lifestyle choices. Occasional (such as birthdays and anniversaries) and seasonal (festivals) buyers and casual art hobbyists are classified as Butterflies, because even though Parakeet's products A case of Permeate By parka for any other purposes.

Marketing Strategy

In this section, we will break down the marketing strategies that Permeate has adopted to achieve its marketing objectives.

Targeting Strategy: Niche and Individual Marketing

Permeate provides the market with artistic solutions, and it employs niche marketing, targeting the niche segment of paper-craft in the artistic arena. Having lose partner ties with Lane's Pettier, Permeate has considerable knowledge of consumer needs in this niche area of paper-crafting and caters to this group by offering exclusively imported and designer paper-craft materials. In-house designers are also present to provide tips and conduct lessons, helping it to targets services to these consumers it can serve best and most profitably. This is affirmed in the interview conducted.

Differentiation Approach

Product Differentiation

Permeate offers a unique range of products that are uncommon in retail chains such as Art Friend or Popular. An example would include a wider selection of premium quality printed color paper, flower decorations of all shapes and sizes found in Permeate. It also has more variety of products than its upscale competitors, such as Maple Trousers and Made With Love, as it offers other products such as home decor materials on top of scrapbook materials.

Further distinguishing its product from its competitors, Permeate offers exclusive brand names such as Martha Stewart Crafts and Laura Ashley Perfectas, and constantly refreshes its products to ensure appeal.

Services Differentiation

A major source of Parakeet's competitive advantage and unique selling proposition comes from the premium services that it offers on top of quality paper craft materials. With professional handicraft artists in stores to assist customers, Permeate offers a personal touch as part of its excellent service.

Together with offering full-fledged certified classes in collaboration with sister company Lane's Pettier and its flagship Scrapbook Design University, it adds value to the customer experience.

People Differentiation

To better match the products and services that Permeate offers, it hires qualified sign instructors and service staff that offer both a helping and imaginative hand that aids in the artistic endeavourers of customers. Permeate hires people who have a passion for service and provides relevant training in the products and the understanding of customer's needs.

Value Proposition

Permeate employs a More-for-More positioning strategy. It offers an attractive variety of handicraft and scrap-booking materials, and also quality personalized services. Permeate offers "only the best" in its product category for devoted artists who seek quality by importing the finest paper and craft materials sourced from round the world. Held in collaboration with Scrapbook Design University, Parakeet's certified lessons are conducted by dedicated instructors with a high level of professionalism and course structure. With its upscale products and services, Permeate sells a creative and fun brand experience to consumers on top of handicraft materials and art lessons. Consequently, it charges a higher price.

Marketing Mix

Product Level

The products and services provided by Permeate can be characterized in 3 levels. It offers the core customer value of a creative and inspirational experience, the actual reduce of exclusive paper-crafting materials, and the augmented product of value- added services such as personalized customization and paper-craft classes with in- house designers.

Personalized products Decorative scrapbooks Paper-crafting tools Flower Embellishment Novelty gift items Fresh cuts and samplings Paper-crafting supplies Home d©cord supplies Unique Gift Boxes Rubber and clear stamps General art supplies Greeting Cards and Wrappings Ink Pads, glitter glues Tool kits Permeate offers a contained product mix width of 5 different product lines. It has an extensive product mix length with a wide variety of products and considerable depth with different versions for each product.

Permeate has a high product mix consistency where almost all items have similar end-uses of paper-crafting.

Services

Other than a wide product offering, Permeate also provides services such as creative classes certified by Scrapbook Design University, home decor services, and their flagship CREE Studios in stores. Their CREE Studios are managed by resident signers, which offers customers on-the-spot craft classes, wireless photo printing services and custom paper-craft kitting services.

Thus, they engage in service marketing by differentiating and developing a greater offer than competitors. In line with their more-for-more value proposition and to address the characteristic of service variability, they have engaged in interactive marketing. This is done by quality buyer-seller interaction through creative and personalized advice on paper- crafting.

Product Life Cycle

Permeate is currently in the Growth stage, expanding to its current 3 outlets in 4 years with rising profits and a growing number of competitors such as Made With Love and Smuggle.

Though awareness of its brand is on the rise, its main customers are early adopters and paper-craft enthusiasts who like the exclusive products, services and the creative experience offered.

Price

Permeate uses customer value-based pricing strategies in the form of value-added pricing, and this supports its more-for-more value proposition and marketing objectives. Value is added through its superior products and personalized services, which provides a unique creative experience for its customers.

This differentiates heir offers and thus Justifies higher value-added prices that escape price competition without losing market share. Furthermore, consumers associate higher prices with higher quality, and such a psychological pricing strategy serves as an important signal to the premium quality of Parakeet's exclusive products.

Place

Permeate is a specialty store by definition. It employs product specialization by carrying narrow product lines with deep assortments within those lines Permeate also focuses on specific products and segments based on cryptographic and behavioral factors.

A critical factor to retailer's success is their location. Permeate select locations that are accessible to the target market, and areas that are consistent with the retailers positioning. Permeate has established more stores compared to their competitors to gain a larger share of the market, by placing them in town & heartland areas. Although Permeate does not segment the market based on age groups as mentioned in the interview with its branch manager, it is aware of the high concentration of students in the Clementine area.

Thus, the retail outlet in Clementine Mall offers a greater concentration of products that cater more toward the needs of these students. . 4 Promotion

Advertisements

Parakeet's advertisements are primarily communicated via the internet through their website and blobs. Their advertising objective focuses mainly on informative advertising. Via their website, consumers are able to find out information on new workshops, and the various methods to use the paper-craft products sold.

Sales Promotions

The consumer promotional tools used by Permeate include patronage rewards, coupons and price packs. Patronage rewards are offered for their PIP members and NUNS students, who enjoy discounted prices with every purchaser. Coupons and vouchers for scrapbook classes are issued through Group, in an attempt to boost the demand for their classes. Price packs and promotions for chosen items are regularly offered each month at all of their retail stores to increase sales.

Direct Marketing

Permeate practices direct marketing through online marketing. Permeate remains a brick-and-mortar company, and practices online marketing mainly to educate and inform the public of their products and services.

They do not sell their their corporate website and also through online social networks. Permeate also established their own web communities through social networking sites such as Faceable and Twitter in an attempt to provide an avenue for their customers to socialize and exchange views and information.

Evaluation

We have used SWOT analysis to evaluate Parakeet's marketing strategies and marketing mix.

Strengths

• Good product assortment

Permeate is able to cater to the needs of the consumers by understanding its customers. Realizing the increased need of consumers for self-expression and creativity, Permeate has successfully met this need with its wide range of reduces that caters to even minute or personalized details. Survey results have also indicated that the majority of customers are attracted by the exclusive and personalized products which Permeate has in its product offering. Hence, it can be substantiated that the good product assortment is a viable strength as it attracts customers to its business.

• High Service Quality

Employees of Permeate understand the essence of the business which relies on interactive marketing.

This is illustrated by the employees being proactive in suggesting suitable customizations to customers regarding purchases, and also wrought our customer survey results, in which 83% of respondents rated quality service as very good or excellent. This clearly shows customers are satisfied with the service provided by Permeate. Good quality of service increases the customer perceived value of the product which would then influence the buying decisions of customers, and through this, Permeate has been able to capture maximum value from each customer.

Weaknesses

• Inadequate Marketing Communications Mix

Our survey results have indicated that customers consider Parakeet's products as too expensive. This indicates that the more-for-more value proposition has not been communicated to the public, and we have attributed this to the inadequate promotion mix of Permeate, especially in their online marketing channels. Communication objectives have not been achieved as target audience are stagnating at the buyer-readiness stage of preference but are not convinced by its products to purchase them. From our survey, it was observed that more than half the respondents first discovered Permeate by 'happening to pass by the shop'. None of the respondents discovered Permeate through online platforms, even though Permeate has already implemented the use of these platforms such as Faceable, Twitter and their own company website. Made With Love has 548 followers on Twitter, whereas Permeate only has 190, which highlights a huge disparity in their success of online marketing efforts. Hence, we have concluded that Permeate is lacking in their promotion mix, especially in the areas of online marketing.

• Unprofitable Product Line

According to the survey, a majority of customers identify Hardware, which consists of common stationary supplies and art tool kits, as the least attractive product line cause these products are offered elsewhere at a much lower price. This product line negatively affects the company's profit by incurring ordering costs and inventory

• Technological Environment

Based on our environmental analysis, an opportunity identified would be the rising connectivity that Singapore has and the advent of online marketing that can reach out to the increasingly tech-sway and wired population.

Youths and working adults spend substantial time online and increasingly trust opinions and recommendations of products and service online as a guide in their purchases.

• Attracting Butterflies

Permeate adopts a niche marketing strategy, which may be too narrow. Thus, an opportunity would be the currently untapped market of 'butterflies' in the form of casual art enthusiasts or paper-craft hobbyists. This can result in a potential increase in the targeted market size and a greater customer base for Permeate.

Threats

We have identified a few competitors Permeate currently faces, such as Made with Love, Art Friends, and Smuggle. Also, due to the lucrative nature of the industry as well as the low barriers to entry, similar shops can enter the industry and put up a strong challenge to Permeate. Recommendations Using the Anions Matrix, we recommend that Permeate should utilize market penetration growth strategies and complement this strategy with the SOOT framework of eliminating weaknesses, improving strength and capturing opportunities.

Our recommendations would look towards increasing the frequency of purchase, and sell to non-buyers in the existing market using existing Permeate products.

Overcome Weakness to Capture New Opportunities

Having established an online marketing presence through its websites and social networks, Permeate should develop these platforms as current platforms are ender-utilized and inadequate. By eliminating weaknesses, Permeate could capitalize on the technological opportunities presented by the macro-environment and move consumers along the buyer-readiness stages.

• Online Catalogues

To build awareness and knowledge of its array of products, Permeate can offer an online catalogue showcasing its exclusive paper-craft products, as it allows easy access to potential customers. This will also facilitate consumer generated marketing, as satisfied customers can 'share' products that they like through social networking sites such as Faceable and Twitter.

• Online Sales Channels

This would complement the online catalogues, and it provides a convenient channel for customers to make purchases.

To make up for the absence of its personal touch from its retail staff, Permeate can offer a 'Speak to a Creative Assistant' feature to guide customers through their online purchases. By providing an easier mode of purchase, it is an appealing option that can move convinced customers on to the purchase stage.

• Online Paper-crafting Guides

In order to provide more customer value, Permeate could provide online paper- crafting guides and tips for paper-craft enthusiasts or aspiring customers. Products convenience.

Another value-added feature could be the recommendation of related or complementary products that matches well with the basket of customer's current selections or past purchases. This is modeled after the acclaimed service provided by Amazon. Com that makes individualized recommendations. Paper-crafting guides would also allow Permeate to practice other forms of pricing strategies, such as product bundle pricing for these related products to provide additional customer value. By showcasing how Permeate products can be made into attractive gifts following easy-to-follow steps, customers would be moved on to the conviction stage.

There are certain cost considerations for these recommendations such as the delivery costs for the online purchases. However, these costs can be mitigated by charging a reasonable delivery fee for purchases under a certain amount, to be determined by the operations department within Permeate. Furthermore, the benefits of moving consumers along the buyer-readiness stages and increased sales through a greater online presence would outweigh these costs; hence we believe that this recommendation is feasible.

Using Strengths to Capture New Opportunities

Having a strong product offering of exclusive paper-crafting materials, Permeate an capitalist on this strength to attract the currently untapped market of 'butterflies'. We recommend that Permeate conduct mini exhibitions to showcase its products. Mini exhibitions of finished handmade scrapbooks and handicraft artworks can be organized to raise awareness and knowledge of Permeate products so as to attract 'butterflies'.

With an attractive display, exhibitions reduce screening and hence minimize selective attention by potential customers. In-house designers will be on hand to introduce and explain the necessary materials and techniques needed to create the displayed items. Furthermore, this would minimize selective distortion on the consumer's part, as staff would be able to convey the core customer experience more convincingly and reduce the tendency of consumers forming their own experiences.

It also provides an avenue to attract convinced patrons to sign up for membership and paper-crafting classes, which could potentially convert butterflies into true friends in the long run. Permeate should hold these exhibitions in the shopping centers where its outlets are situated, or at places which have high human traffic and high number of youths, such as Escape or Sinecure. The major cost involved with this recommendation would be rental expenses for the space in shopping centers, and also increased salary costs due to the need for manpower at these exhibitions.

However, the benefits of the programmer will Justify this outlay as the promotional event allows Permeate to have interactive customer contact opportunities, compared to other promotion tools such as advertisements, enabling high quality service differentiation to move customers along the buyer-readiness stages. For example, displays of artwork could push patrons to the awareness stage to knowledge and liking stages, attracting more usual art enthusiasts and promote paper-crafting as a hobby. This widens the consumer base of Permeate.

High-quality service could also move consumers from the preference stage to the crucial conviction and purchase stages as they witness how Parakeet's exclusive products can indeed be intricately made into a thoughtful gift.

Overcome Weakness to Enhance Strength

Slowly phase out certain products such as common stationeries in their product line, classified as a 'dog under the BCC matrix. This is because competitors such as Retained and other mainstream bookstores such as Popular are able to offer the name range of products at cheaper prices than Permeate.

Hence, it should redirect its funds into promotional efforts that maximize profitability of their Creative Services, which is their 'cash cow. 8 Conclusion After analyzing the marketing strategies and marketing mix, it can be seen that Permeate has generally been doing well in the four years since its inception, evidenced by their steady expansion. Although Permeate has the potential to be the leading retailer of paper-craft solutions in Singapore, the weak promotion mix of the company could hinder efforts to reach this goal. Thus, it is critical that Permeate improve on this area of their marketing mix. There is a need to take advantage of the opportunities presented by the technological environment and to widen its consumer base. We strongly believe that the recommendations provided in the report address these issues thoroughly and that they represent effective, viable measures to improve the promotion mix of Permeate, helping it to fulfill its potential of being a leading retailer in the future.

Additionally, we requested for a short interview with the branch manager after enquiring about their classes from an in-house designer. Below is the transcript of the interview.

Us: Hi mama good afternoon! Thanks for granting us this short interview despite the crowd.

Janet: No problem guys, is there anything that I can help with?

Us: We would like to find out the target market of Permeate could you kindly tell us more about it?

Janet: Sure. Our sister company Lane's Pettier has been an established Scrapbooks specialty store catering and focusing on scrapbook services and lessons. With Permeate, we complement such services with exclusive products and offer more paper-craft and general art materials on top of scrapbook like home-decor stuff and additional tips and advices. Therefore, we cater to this group of paper-craft and art enthusiasts but of course we are not restricted by this as we welcome everyone who needs such materials such as students, etc.

Us: Okay, what about targeting by age?

Janet: Nope, I dun think we target specific age segment since paper-craft as a hobby can be appealing to people of all ages! But it is understandable that at this time most of the customers are students who need materials for their project and stuff.

Us: Is this outlet in Clementine strategically located to cater to the high concentration of students around this area? We notice this is Parakeet's first heartland mall.

Janet: Yes, because the west has a handful of universities, polytechnics and secondary schools, there is a greater population of people who are indulged in craft and design. The Clementine store offers products that cater to student needs as compared to our flagship Raffles City Store.

Us: Yes, just as we thought! Could you tell us more about Parakeet's products? How are they different from that of competitors?

Janet: As o can see in the store, we offer a wide range of premium products that are exclusively sourced. You cannot find them in general art stores like Retained. For more direct competitors such as Smuggle and Made With Love, it is hard to make sure make it updated and appealing. Our in-house designers and services also value-add to our products. We hope to give customers a touch of inspiration and creativity more than just paper, scissors, glue and stickers.

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