VALUE CHAIN
Chintanam - Kasturi, and Shantam - Rose.
Incense Sticks:
The market for incense sticks is very vast and the
demand for these incense sticks is high even in the
far-flung rural areas. The incense industry is driven by
factors other than commerce like tradition,
superstition and religion.
India has a leadership position in the incense sticks
market and fulfills more than half of the world's
incense sticks requirements. Export earnings have
crossed 220 crore mark while the domestic market is
expected to be well over a thousand crores Every
year more than 60 billion sticks are produced and the
market is growing at a rate of 7% per year.
The incense stick market faces a sudden upsurge in
demand during the festive season. Demand from both
domestic and international sectors peaks up during
festivals like Dassera and Diwali. Some of the popular
fragrances that have captured the imagination of
consumers both in India and abroad include
Archanam - Mogra, Yagyam - Havan, Yogam -
Dhoop, Poojanam - Saffron, Dhyanam - Sandal,
Today, the incense industry has not only become a
major revenue earner for the Government it has also
become a prominent source of employment for
women in rural areas. Presently, the incense industry
in India is a cottage industry and the market is largely
unorganized. Only twenty percent of the market is
occupied by organized players while the rest is
controlled by small operators. The government needs
to pay urgent attention to this industry if it wants the
industry to retain its leadership position in the
industry.
The incense stick industry has also promoted social
entrepreneurship in the rural and semi urban areas as
more and more people have acquired the confidence
to start their own businesses. Some reputed Indian
corporate have taken the lead in promoting this trend
by training rural women in bamboo cutting, incense
rolling, raw incense sorting, perfuming and packaging
of incense sticks. The entry of corporate has helped in
mechanization at each step of the manufacturing Different plants have different oil content and they
process. Earlier rural women used to cut bamboo with differ in their sales also. For example, according to
an axe leading to injuries. This process has been the National Institute for Chemical Pharmaceutical
done away with the introduction of bamboo cutting Research and Development, Romania, world
machines. production of coriander oil in 2003 was estimated at
£6 million and the essential oil content of dried
Though mechanization was brought into this industry
coriander is 0.15% to 1.7%. In contrast, market for
by, the early 1990's experience has shown that
lavender oil was estimated at £5 million and the
industrially manufactured incense sticks cannot match
essential oil content of the two types of lavender
the fragrance produced by handmade incense sticks.
varies between 0.55% and 1.5%.
This is because handmade incense sticks are made
from medicinal aromatic herbs and fragrance oils There is major emphasis laid on the cultivation aspect
extracted from aromatic flowers.The net result of this as the subsequent yield of essential oils depends
being that the incense stick industry has become a entirely on the quality of cultivation. According to a
major source of employment to women in the rural report of the NRDC published in the early years of this
areas. decade, the cost of cultivation of herbs in developing
countries per hectare comes to around US$ 500 to
Aromatherapy oils:
1,000. In comparison, revenue per hectare is
The economics working behind essential oils has estimated at around $3,000 to 6,000. This
three components. First, the cultivation of herbs and demonstrates how beneficial the essential oils
plants used to extract essential oils; second, the business can prove. These oils have rates varying
actual process of extraction of the oils; and, third, the from Rs 200 to Rs 2.25 lakh for a kilogram.
marketing and actual sale of these oils.
According to a study conducted by the global market
research firm Frost and Sullivan in 2006, the rise in
consumer demand for natural food products, coupled
with the associated need for flavoring compounds
from natural sources, have provided a major boost to
the essential oils and oleoresins market. Frost and
Sullivan estimated that the market size of Europe and
the US for essential oils would grow to 666 million by
2009, with the actual volume consumed by the two in
2009 being 105,800 tons.
According to the United Nation’s COMTRADE
database, global imports of essential oils stood at $2
billion in 2005. As listed by them, the top ten import
markets in 2005 were the USA ($391 million), France
($199 million), the UK ($175 million), Japan ($152
million), Germany ($117 million), Switzerland ($103
million), Ireland ($75 million), China ($65 million),
Singapore ($61 million) and Spain ($61 million). The
fastest-growing markets, based on import spending
between 2000 and 2005 include Vietnam (14% per
annum), Poland (35%), Nigeria (16%), Turkey (25%),
South Africa (14%), Indonesia (14%), Saudi Arabia
(14%), India (19%), Spain (13%), Singapore (35%),
Switzerland (14%), and Japan (13%).
While India is a major exporter of many essential oils;
it also imports from several countries. Figures from
the Nahva Seva Port, Mumbai between December
2008 and March 2009 show India to have imported a
number of essential oils from countries like the US,
Brazil, the UK, China and Indonesia. It imported
aromatic chemicals worth over Rs 6 crore from the
US during this period through this port alone. At the
same time, India also exported essential oils to
several countries, including to the US, the UK, China,
Argentina and other European countries.
Packaging:
The current wave of economic development in India is
being seen from all over the world. As infrastructure,
manufacturing, agriculture, and services grow at high
rates the packaging industry is also showing great
variety and depth in its growth. India’s packaging
industry may achieve an annual turnover as high as
US$ 5 billion in the current financial year with a
growth rate nearly 25 per cent in significant segments.
Leading companies in the Indian packaging industry
show a compound annual growth rate of 30 per cent
and the Indian Rupee is strengthening against the US
dollar at annual rate of 4 to 5 per cent. Even then, the
US$ 5 billion figure would represent about one per
cent of the current global packaging industry.
In 2001, the packaging industry worldwide generated
an annual estimated turnover of US$ 417 billion. The
major regions that made up this total include Europe,
US$ 129 billion; North America, $116 billion; and
Japan, US$ 81 billion. India’s consumer packaging
accounted for just US$ 2.3 billion in that year, that is
about half of one per cent of the global packaging
volume.
ANALYSIS Segmentation

Inner Reflection currently operates in both domestic The products cater to a Niche market segment.
and international markets. 80% of all business activity
GEOGRAPHIC:
is through exports while, only 20% is through
domestic retail. Metros like Mumbai, Delhi, Chennai, Hyderabad,
Bangalore.
They have limited resources for production. With the
current production capacity, if they need to penetrate Tier II cities like Ahemdabad, Surat, Pune, Lucknow,
the domestic market, some of the export business will Indore, etc.
need to be sacrificed.
Places with high tourist attraction like Goa, Kerela,
The company sees great opportunity in the domestic etc.
market. Also supplying to the domestic market is
DEMOGRAPHIC:
more feasible and convenient for the company as it
greatly reduces the cost of the supply chain. Age – Mid 20’s & above

All products manufactured are eco-friendly and can Social class – Middle-middle & upper-middle class
be used to create a strong brand image.
PSYCHOGRAPHIC:
Based on all the information about the products the
Status seekers
following market segmentation and positioning
strategy has been designed for all the products. PSYCHOLOGICAL:

Needs-motivation – sense of self worth

Personality – Compliant, socially active, self-indulging

Attitude – Quality conscious, novelty seeker

Interests – home décor, environmental concerns

Positioning

Value for money, superior quality, eco-friendly

products.
SUGGESTIONS customers in the domestic market. Vast price
differences in th products would harm th brand
 They could develop a website, this would help
image. All the retailer should offer the products
in having direct access with buyers, suppliers
at similar products.
and customers.
 The factors like women dominated workforce
 They could develop a facebook page which
and eco-friendly materials should ne
would give their products and brands greater
highlighted as it would help to create a
visibility. Brand awareness could be increased.
favorable brand image.
 In order to create a strong and successful
brand image they should ensure that they pick
and identify the stores very carefully. The
image of the retailer should be coherent with
that of the brand.

 Since they have a limited production capacity,

there is greater flexibility. Hence, they could
undertake customized orders for bags, jeweler,
candles and hand-made paper stationery and
other products.

 While supplying to domestic retailers, price

discrimination should be avoided. There should
be standardization of price being offered to the
CONCLUSION

Inner Reflection is a company with great potential in terms of their products. ‘Go-Green’ is a lifestyle choice being
adopted by many of the consumers today. All their products are based the ideology ‘Natural Creative Expressions’.
With careful market selection and little marketing efforts they can successfully penetrate the Indian market.