interior decoration anand

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MARKETING OF INTERIOR DECORATOR AND INFRASTRUCTURE

DEVELOPMENT IN 91-STUDIO INTERIORS PVT.LTD.

INTERNSHIP REPORT

Submitted by

Mr. R.ANAND

Reg. No. 098001135001

in partial fulfillment for the award of the degree

of

MASTER OF BUSINESS ADMINISTRATION

DEPARTMENT OF MANAGEMENT STUDIES

KALAIGNAR KARUNANIDHI INSTITUTE OF TECHNOLOGY

COIMBATORE641 402.

AUGUST 2010


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KALAIGNAR KARUNANIDHI INSTITUTE OF TECHNOLOGY

DEPARTMENT OF MANAGEMENT STUDIES

PROJECT WORK

AUGUST 2010

This is to certify that the project entitled

MARKETING OF INTERIOR DECORATOR AND INFRASTRUCTURE

DEVELOPMENT IN 91-STUDIO INTERIORS PVT.LTD.

is the bonafide record of project work done by

Mr.R.ANAND

Reg.No. 098001135001

of

MASTER OF BUSINESS ADMINISTRATION

2010 - 2011

___________ _______________________

Project Guide Head of the Department

Submitted for the Project Viva-Voce examination held on _________

----------------------------- --------------------------

Internal Examiner 1 Internal Examiner 2


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DECLARATION

I affirm that the project work titled MARKETING OF INTERIOR

DECORATOR AND INFRASTRUCTURE DEVELOPMENT IN 91-STUDIO

INTERIORS PVT.LTD. being submitted in partial fulfillment for the award of

MASTER OF BUSINESSADMINISTRATION in MARKETING &HUMAN

RESOURCE is the original work carried out by me. It has not formed the part of

any other project work submitted for award of any degree or diploma, either in this

or any other University.

R.ANAND

Reg.No. 098001135001

I certify that the declaration made above by the candidate is true

Signature of the Guide,


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ACKNOWLEDGEMENT

The success of any project is the co-operative effort of the people around an

individual. For all efforts, behind this successful project, I am highly intended to the following

personalities without whom this project would ever be completed. I find no words to express my

gratitude towards those who were constantly involved with me throughout development process.

I wish to express my sincere thanks and deep sense of gratitude to

Dr.P.ANBALAGAN, DIRECTOR, KALAIGNAR KARUNANIDHI INSTITUTE OF

TECHNOLOGY for providing the necessary facilities to carry out this project work successfully.

I wish to express my sincere thanks and deep sense of gratitude to

Dr.N.MALMURUGAN, PRINCIPAL, KALAIGNAR KARUNANIDHI INSTITUTE OF

TECHNOLOGY for providing the necessary facilities to carry out this project work successfully.

I am thankful to Prof.P.KRISHNA RAO, Director, Department of Management

Studies, KALAIGNAR KARUNANIDHI INSTITUTE OF TECHNOLOGY and the faculty

members in the department for having helped in this report I am appreciative to my project guide

P.REVATHI giving me good supervision and support during my training period .


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CONTENTS

S.NO

DESCRIPTION

PAGE NO.

1. INTRODUCTION 12. OBJECTIVES OF STUDY 4

3. OVERVIEW OF THE ORGANIZATION

Brief History

Nature of the organization

Business Volume

Product Line

6

7

8

10

17

4. ORGANIZATIONAL STRUCTURE

Main offices

18

28

5. STRUCTURE OF MARKETING DEPARTMENT 29

6. FUNCTION OF MARKETING DEPARTMENT

Marketing strategy

Pricing strategies

32

34

39

7. Success and failure of different products of the

organization in the market along with reasons

Major competitors of the organization

Future prospects of the organization

44

51

58

8. CONCLUSION 63

9. BIBLOGRAPHY 64


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INTERIOR DECORATION

1.INTRODUCTION

Interior decoration is the art of personalizing and transforming interiors to create a beautiful

interior. Interior decoration is used in homes, institutions and commercial spaces as well. To

study interior decoration is quite extensive, requiring many hours of study and hands-on

experience under an expert teacher, there are some basics to help an aspiring professional decide

if this is the right career. These basics will also be helpful to the notice to start in the right

direction for doing personal home interior decoration.

PURPOSE:

Room Use

1. What will the room be used for? Start with the basics in each room you intend to decorate.

Consider what basic furniture will be kept and what will be replaced. Create a room map on

graph paper and cut out furniture pieces, moving them around to find their best location.

Color

2. The interior decorators best friend is the color wheel. There are three terms to determine how

colors affect a room's dcor. First, complementary colors are colors opposite on the color

wheel. The colors will deepen and strengthen each other. Second, triad colors uses three

colors based on a triangle across the color wheel. The colors play off of each other without

matching. Third, analogous colors are three colors next to each other on the color wheel.Monochromatic means hues all within the same color.


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Choosing a Style

3. Furniture you decide to keep in a room when decoration may decide the style of the area. If

you are choosing a new style, there are basic categories with many subcategories. For

example under a country decoration style, there are sub categories of Shaker style, Amish

style, cottage style, shabby chic and English country style. Basic styles include

modern/contemporary, formal, country, traditional and casual.

Line of the Room

4. Choosing the direction of the lines you emphasize in a room sets its mood. Vertical lines are

balancing and formal while horizontal lines are more casual and restful, diagonal lines lead a

person's eye as they come in the room, while curved lines put softness and femininity into the

room.

Texture

5. Texture gives added dimension and interest to a room. Rougher textures work better with

more casual styles, while smoother textures work with formal or modern looks. However,

you should use varying textures within a room without going from one extreme to the other.


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History of Interior Decoration

1. Interior design dates back to ancient times, as people have decorated as long as they have had

houses. The first signs of purposeful interior design were evidenced in the lavishly decorated.

also carefully arranged their rooms based on the function of the room and the time of year. In

the summer they used rooms that took advantage and different rooms in the winter that gave

extra protection from the cold.

2. During the wealthy people became interested in the arts and began to commission artists to

work in their homes. Function, form and decadence were the major themes in the palaces of

the wealthy.

Industrial Revolution

3. The dawn of industry made interior decoration available to the multitudes. Cheaper home

goods and decoration items such as wallpaper, household paint and fabrics caused middle-

income families to be more interested in interior design.

Modern Times

4. Interior decoration today is available to people of every income rate and level of skill.

Decoration shows on television teach people how do decorate on their own and interior

decorators cater to middle income and the rich. Modern decoration styles encompass parts of

all of the previous decoration periods.
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2. OBJECTIVES OF STUDY

Communication, transparency and cultural alignment are some of the key attributes that

need to be well laid out while designing the organization structure. Other areas like talent

retention, and clearly defined goals and vision are also dealt with.

Based on varied interactions with important stakeholders, we map challenges and

constraints across the set-up and analyze its intensity across the system, to be able to come up

with best solutions. We provide suggestion and recommendations for top level restructuring,

improving specific business processes and organizational change.

Our organization design services include:

Understanding objectives of change and the environment in which it will take place

Understanding activities like business processes, interface between the company and vendors,

volume of activities and levels of resources

Advising development of This service helps customers tackle key challenges faced and perceived

by organizations at various levels. The results, post our analysis and study are presented in a

matrix form thereby focusing on the impact on organization.

In totality, a top-down approach is adopted by taking into consideration all challenges that could

be faced and thereby putting forth strategies beforehand to tackle and create a fail proof design.

This robust methodology comprises of the following steps:

Detailed discussion with stakeholders thereby identifying the goals and vision for the project

Identifying key challenges faced and opportunities to be explored

Recognizing key parameters for designing the organization structure

Benchmarking the structure with industry best practices

The concept of interior design is seen all throughout history, and its influence can be

appreciated in many cultures of the world. The idea of interior design allows for creativity to be

expressed in the interior spaces; however, when the idea originated is subject to speculation. We

are told ancient Egyptians unknowingly fostered the birth of this concept by building elaborate


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columns, intricate tombs, and exotic furniture. Perhaps this was the eve of a new day when one

could openly display their ideologies through the concept ofinterior decoration. In these times,

decoration was only seen in the palaces of the wealthy and royal, as many of the artistic elements

used were not cost effective for the working middle class.


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3. OVERVIEW OF THE ORGANIZATION

Company Summary

91-studio Interiors is a start-up business that will offer comprehensive interior design

services for home and office. This business will assist those that want to have guidance and

council in developing a basic design concept of their project, to the person that desires someone

to take it from concept to complete implementation.91-studio Interiors will offer the ability for

clients to purchase new and antique furniture, art work, decorator fabric, and home

accessories. The website www.kitkichaninteriors.com will be used as another way to

communicate the services available and provide a portfolio of the work accomplished. The

business will begin as a home-based business and is expected to remain in this structure through

at least the first three years.

Company Ownership

91-studio Interiors, located in Coimbatore, Tamilnadu is registered in the State of

Tamilnadu as a sole proprietorship owned and operated by Maruchallam Interiors.

Company Locations and Facilities

91-studio Interiors is operated from a home office located in Coimbatore, tamilnadu . A

room is dedicated to support a work area, a client contact work center, and display samples of

design concepts, products, and past work.
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3.1Brief History

91-studio Interiors is a start-up business in the year 1998, company specializing in the

interior design services for home and office. Maruchallam has grown in stature and today

command a strong presence in the industry. Maruchallam is, in fact, the largest selling brand in

India with over 20000 installations and counting.

Year of Establishment : 1998

Nature of Business : Manufacturer, Wholesaler

Major Markets : Indian Subcontinent,

Interior decoration is the art of personalizing and transforming interiors to create a beautiful

interior.. The areas of application include:

Individual residential and apartment buildings

Restaurants and canteens

Guest houses, lodges, hotels and hostels

Hospitals and nursing homes

Pharmaceutical, chemical and fertilizer industries

Textile industry

Food processing industry

Food processing industry

ISI Approved & Certified International Systems - ISO 9001


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3.2Nature of the organization

Interior designers draw upon many disciplines to enhance the function, safety, and

aesthetics of interior spaces. Their main concerns are with how different colors, textures,

furniture, lighting, and space work together to meet the needs of a building's occupants.

Designers plan interior spaces of almost every type of building, including offices, airport

terminals, theaters, shopping malls, restaurants, hotels, schools, hospitals, and private residences.

Good design can boost office productivity, increase sales, attract a more affluent clientele,

provide a more relaxing hospital stay, or increase a building's market value.

Traditionally, most interior designers focused on decorationchoosing a style and color

palette and then selecting appropriate furniture, floor and window coverings, artwork, and

lighting. However, an increasing number of designers are becoming involved in architectural

detailing, such as crown molding and built-in bookshelves, and in planning layouts of buildings

undergoing renovation, including helping to determine the location of windows, stairways,

escalators, and walkways.

Interior designers must be able to read blueprints, understand building and fire codes, and

know how to make space accessible to people who are disabled. Designers frequently collaborate

with architects, electricians, and building contractors to ensure that designs are safe and meet

construction requirements.

Whatever space they are working on, almost all designers follow the same process. Thefirst step, known as programming, is to determine the client's needs and wishes. The designer

usually meets face-to-face with the client to find out how the space will be used and to get an

idea of the client's preferences and budget. For example, the designer might inquire about a

family's cooking habits if the family is remodeling a kitchen or ask about a store or restaurant's

target customer to pick an appropriate motif. The designer also will visit the space to take

inventory of existing furniture and equipment and identify positive attributes of the space and

potential problems.

After collecting this information, the designer formulates a design plan and estimates

costs. Today, designs often are created with the use of computer-aided design (CAD) software,

which provides more detail and easier corrections than sketches made by hand. Upon completing

the design plan, the designer will present it to the client and make revisions based on the client's

input.


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When the design concept is finalized, the designer will begin specifying the materials,

finishes, and furnishings required, such as furniture, lighting, flooring, wall covering, and

artwork. Depending on the complexity of the project, the designer also might submit drawings

for approval by a construction inspector to ensure that the design meets building codes. If a

project requires structural work, the designer works with an architect or engineer for that part of

the project. Most designs also require the hiring of contractors to do technical work, such as

lighting, plumbing, and electrical wiring. Often designers choose contractors and write work

contracts.

Finally, the designer develops a timeline for the project, coordinates contractor work

schedules, and makes sure work is completed on time. The designer oversees the installation of

the design elements, and after the project is complete, the designer, together with the client, pay

follow-up visits to the building site to ensure that the client is satisfied. If the client is not

satisfied, the designer makes corrections.


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3.3Business Volume

If you make your living as an interior designer or decorator the current economy has got to be

hurting your business. When the economy is slow, many people who might otherwise hire an

interior designer or decorator are forced to move such a non-essential service to the bottom of

their priority list. If you havent felt the pinch yet, brace yourself as your business could take a

drastic nose-dive during an economic recession. Nobody really needs interior design services,

especially in have-not times.

Theres also the fact that so many of your days are spent on the business-side of design;

negotiating with contractors, waiting for deliveries to arrive, billing, gathering quotes, and so on.

This is all time that doesnt directly generate revenue for your interior design or decoration

business, and when client billings are already meager, this can really hurt your financial

situation.

Maybe youre one of the many trained interior decorators who have ended up working in retail

for a 100% commission. If the economy gets worse and youre working purely on commission,

where does that leave you? Even in good times, if you work for 100% commission you might as

well be your own boss and have the freedom to market yourself to new clients rather than being

tied to anyone store.

When I decided to take the reigns of my life back and do something that would allow me to

profit from my creativity, I considered a career in interior design. I struggled with that option

countless times across a 20 year period when I was unsatisfied in my work. I researched, and

even interviewed, many interior design schools in my former life but for some reason I never

took the step to enroll. I decided with my BA, MBA and a couple decades of experience in

business, being in a classroom for two to four years with kids 20 years my junior was not

Something I wanted to do.

Never mind tuition costs and the tremendous loss of income while youre a student. Then who

knows how many years of working experience as a designer or decorator would be needed after

graduation to really start earning money. I wanted to unleash my creativity and love for


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decoration, but I definitely needed to start making money as soon as possible. So, I started my

Own home staging company.

As soon as my business was launched, the money was coming in. Within my second year

as a home stager I was making up to 10,000 per month. Compare that to the median annual

salary of 36,150 a year for an Interior Designer according to Salary.com this year. Im very

happy I Trusted my instincts!

If youre an interior designer or decorator and you arent making enough money, consider adding

Home Staging to your service mix or switching to a more profitable career as a Home Stager

altogether.

Here a few ways a home staging business can be more profitable than an interior design

business:

As a home stager you get the opportunity to work with different types of people than you

would as an interior designer. Generally, only very high income individuals hire interior

designers, which limits your target market. Home stagers work mostly with clients in the middle

to upper income level which gives you a much larger percentage of the population to market to,

And increases the number of projects available for you to work on.

Home stagers enjoy a higher volume of projects than interior designers because each one is so

short in nature. One interior design project might take months to complete (especially when you

factor in the wait times to have upholstery done, or furniture delivered), but the average home

staging project takes only a few hours or days. Theres no way I could have decorated hundreds

of homes within a couple of years as a new interior designer, the way I did as a new home stager.

With such quick projects, a home stager is able to complete (and get paid for) a significantly

higher number of projects per year than an interior designer who often has client work on hold

through no fault of their own.
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When the economy is slow, people eliminate the non-essentials. Interior design or decoration

isnt really high on the essential items list especially when choices need to be made about what

to give up, and theres no real deadline to redecorate or renovate a room. In uncertain times,

interior design moves way down on the priority list, while home staging move up. No matter

how slow the economy is or how much the real estate market has declined, there will always be

people who absolutely have to sell and move by a certain date. Divorce, job relocation, job loss,

mounting debts, a death in the family or a birth often get people to put their house on the market

even if it isnt the best time to sell. When a homeowner is desperate to sell their house, a home

stager will often be involved since the seller stands to make a handsome profit from their

services. When people have less time, less money or less equity in their house, they need a home

stager so they can get whatever they can out of the sale of their home! As a home stager, your

creativity and talent for decoration will serve you well in slow economic times and slow real

estate markets.

I especially love the amount of creative freedom I get as a home stager. Because my

clients know Im decoration their home to sell and not for them to live in, I am able to execute

my creative vision without their interference or taking their taste into consideration. I cant

imagine wasting hours sitting with a client who cant decide which color they want for their

bathroom, or which fabric to pick for their drapes. My clients dont care what I choose as long as

their house will sell quicker because of it. Besides that, my home staging business is extremely

profitable which every entrepreneur wants.

If your interior design business isnt doing as well as you hoped, its not too late to make

a change towards living a more creatively fulfilling career that is also more profitable. Do some

research into the home staging field. Its a career that is virtually recession-proof.


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Monthly Operating Expenses

For the first six months, both partners will not take a salary out of the company. After this

period, they will each split a 35% share of the net profits each month.

1. Office Rental 90,000 monthly

2. Telephone 750 monthly

3. Office Equipment 50,000 (for book value only; owner invested)

4. Software 25,000 (for book value only; owner invested)

5. Postage 500

6. Special Tools 26,000 (for book value only; owner invested)

7. Advertising 60,000

8. Company VanGas, Repair and Maintain 5000 monthly

Company VanBoth owners transferred ownership of their vans to the business. Both

are free and clear of any debt and are valued at 1,20,000 & 1,60,000 according to the local

bank book.

We will develop strategic alliances with local builders, realtors and home improvement

firms. This will allow us to have a several lines of revenue into our company.

Here is a breakdown of the revenue sources we will have.

1. Retail Clientswalkin or phone quotes

2. Realtorfor their clients' homes

3. Home Improvement Companies

4. Commercial builders of office and home complexes

5. Home builders associations

6. Furniture stores

7. Paint and wall paper stores

8. Flower shops

9. Architects and developers
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10.We will also develop a weekly advice column in the local newspaper and try to set up a

talktype show on the local cable 10 channels. This channel is free to use as long as the

information provided is key to the public's interest.

Pricing Structure

Fee structures vary widely, depending on the designer, complexity of the project,

geographical location and a host of other factors. Some of the ways interior designer's charges

for their services include:

Fixed fee (or flat fee)The designer identifies a specific sum to cover costs, exclusive of

reimbursement for expenses. One total fee applies to the complete range of services, from

conceptual development through layouts, specifications and final installation.

Hourly feeSome designers charge based on the actual time spent on a project or

specific service, with fees ranging from 550 to 1500 per hour, based on the required

detail and other professionals who may need to be consulted.

Percentage feeCompensation is computed as a percentage of construction/project costs.

Cost plusA designer purchases materials, furnishings and services (e.g., carpentry,

drapery workrooms, picture framing, etc.) at cost and sells to the client at the designer's

cost plus a specified percentage agreed to by the client. The service charge is often put at2030 percent.

RetailOthers charge their clients the retail price of furnishings, furniture and all other

goods they get wholesale, keeping the difference as designer's fee and services. Retail

establishments offering design services commonly use this method. With this method,

clients get the designers services at a price no greater than he or she would have paid for

the products at retail.

Per square footOften used for large commercial properties, the charge is based on the

area of the project.

Our staff designers require a retainer fee before the start of a design project. A retainer is

an amount of money paid by the client to the designer and applied to the balance due at the

termination of the project.
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Income Potential

What is unique about the interior design business is that you never do the same job twice.

It will be hard to place a specific price on individual projects. What you will earn from a job that

requires redecoration of an entire room from the carpet, wallpaper to upholstery will be different

from a job that requires you to put up drapes to ten windows.

According to Industry statistics, on the Design Business, an interior designer earns an

average of 883 per job. If you are working at four jobs per month, you can expect monthly

sales of 40,415 per month. Yearly income for designers can expect to earn about 5,20,980,

for great designers with solid track record, this will be the take home pay of our designer staff,

and our % will be 1.5 times this per designer or 79,470 per year per each staff member.

Our goal is to have 5 designers on staff; this will make our first year gross profit of

397,350 and gross revenue of 662,250.

The goal over time will be to increase the number of clients per designer per month. This

will result in increase revenues. This will happen once we get better known for our services.
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Training, Other Qualifications, and Advancement

The reason we put this in our business plan is to always be reminded of the fact that our

staff and our training will be the key to our success in the designers business. We will continue

to follow the guide we listed below, as well make amendments to it as we require.

Creativity is crucial in all design occupations. People in this field must have a strong

sense of the aesthetican eye for color and detail, a sense of balance and proportion, and an

appreciation for beauty. Sketching ability is helpful for most designers, but it is especially

important for fashion designers. A good portfolioa collection of examples of a person's best

workis often the deciding factor in getting a job. Except for floral design, formal preparation

in design is necessary.

Educational requirements for entrylevel positions vary. Some design occupations,

notably industrial design, require a bachelor's degree. Interior designers normally need a college

education, in part because few clientsespecially commercial clientsare willing to entrust

responsibility for designing living and working space to a designer with no formal credentials.


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3.4 Product Line

Products and Services

91-studio Interiors focuses on providing interior design consulting. This iscomplemented by specially purchased furniture, art pieces, decorator fabric, and accessories for

the home and office. The sales process will begin with interior design consulting services, and

then progress on to offer specially selected components to complement the design theme.

Products available through 91-studio Interiors include:

Furniture available through special purchase arrangements with Thomasville, Drexel

Heritage, and Henredon and local craftsman. A line of drapery hardware called purchased through Dept. of the Interior Decorator Fabrics

in Eugene, Oregon found.

Accessory and art pieces available through wholesale shows.

Hunter Douglas window treatment products including a variety of hard window coverings.

Antiques acquired for specific client needs through an arrangement with a local antique

buyer and through direct purchases through other sources.

Product and Service Description

Our primary points of differentiation offer these qualities:

A unique client experience from a trained and professional interior designer that is qualified

and capable of meeting the needs of discerning clients with high expectations.

Access to a wide and unique selection of new and antique furniture, accessories, and

special-order decorator fabrics.

Personal assistance from a complementary product offering, including hard-covering

window treatment, hardware, and home accessories that fit the look and objectives of each

project.


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4.ORGANIZATIONAL STRUCTURE

Executive Summary

91-studio Interiors is a proposed venture that will offer comprehensive interior design

services for homes and offices in the 91-studio Interiors also will provide access to products to

complement the design consulting services including furniture, both new and antique, decorator

fabric, and home and office accessories. This venture offers the personalized services the target

market desires and can afford in a way that is unique from concept to implementation.

Recent market research indicates a specific and growing need in the area for the interior

design consulting services and products 91-studio Interiors offers the market it will serve. The

market strategy will be based on a cost effective approach to reach this clearly defined target

market. Although the population of Boulder is under 100,000, the market has a significant

quantity of relatively wealthy households that are conscious of the appearance and feel of their

home and offices.

The approach to promote 91-studio Interiors with be through establishing relationships

with key people in the community and then through referral activities once a significant client

base is established. 91-studio Interiors will focus on developing solid and loyal client

relationships offering design solutions based on the client's taste, budget, use, and goals for the

space. The additional selection, accessibility of product, design services, and value-based

pricing will differentiate 91-studio Interiors from the other options in the area.

Total revenues in the first year are projected to exceed 46,000 with a loss. The venture

will show increasing profits in year two and three, with revenues projected to increase to almost

80,000. This interior design business plan outlines the concept and implementation and details

regarding the first three years of this venture.


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Objectives

1. Realize an average of 3,870 of sales each business month for the first year 5,720 for the

second, and 6,600 for the third year.

2. Generate a minimum of 45% of revenues from product sales versus consulting billing.

3. Establish a commercial revenue client base accounting for 10% of total revenues.

Mission

91-studio Interiors is an interior design service for discerning, quality-conscious clients

that seek assistance in their design choices for their primary residences, vacation homes, and

businesses. This experience offers personal attention through the design process and also

provides design resources and products to its clients through special purchases of furniture,

fabric, and accessories. The total experience is provided in a way to inform, inspire, and

assist people through the process of transforming their home or business environment to

become a unique and personalized expression of themselves and add to their enjoyment of that

interior space.
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Keys to Success

The primary keys to success for 91-studio Interiors will be based on the following

factors:

Provide the highest quality interior design consulting experience possible.

Sell specially selected products to these clients to further meet their interior design needs.

Communicate with our client base through the website and personalized communication

techniques.

Retain clients to generate repeat purchases and initiate referrals.

Market Analysis Summary

91-studio Interiors has a defined target market client that will be the basis of building this

business. This client is identical for both the residence and office spaces, but the target market

is identical based on her different roles for each of those spaces.

Effective marketing combined with an optimal product offering is critical to the 91-studio

Interiors' success and future profitability. The owner possesses solid information about

the market and knows a great deal about the common attributes of those that are expected to

be prized and loyal clients. This information will be leveraged to better understand who 91-studio Interiors will serve, their specific needs, and how to better communicate with them.


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Market Segmentation

The profile of the 91-studio Interior client consists of the following geographic,

demographic, psychographic, and behavior factors:

Geographics

The geographic market is the affluent sector within the Boulder, Colorado area with a

population of 94,673. (Based on the 2000 Census data.)

A 20-mile geographic area is in need of the products and services offered and do not intend

to pursue the market at this time.

The total target market population is estimated at 24,000 based on the following

demographics.

Demographics

Female, married and have attended college.

Have children, but they are not necessarily at home.

A combined household annual income greater than 100,000.
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Age range of 35 to 55 years, with a median age of 42.

Owns their home, townhouse and/or condominium valued at over 425,000.

They and/or their spouse work in a professional setting and may have interior design

requirements for their office space as well as their homes.

Belong to one or more business, service, and/or athletic organization including:

o Boulder Country Club.

o Junior League of Boulder.

o American Business Women's Association.

o American Auxiliary of University Women.

o Doctor's Wives Auxiliary.

Competitive Comparison

Our competition is primarily from other interior designers. Looking at a broader picture,

there is also competition from the "do-it-yourself" resource providers that have retail stores and

websites that include the following:

The list of competitors for home accessory competition includes Pier 1 and local

competitors that provide an entire list of other furniture, accessory and gift stores.

Web sales of furniture, fabric and other interior design-oriented products has expandeddramatically and in many cases is easily available.

Psychographics

The appearance of her home is a priority.

Entertaining and showing her home is important.

She perceives herself as creative, tasteful and able, but seeks validation and support

regarding her decoration ideas and choices.

She reads one or more of the following magazines:

o Martha Stewart Living.

o Country Living.

o Home.

o House Beautiful.


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o Country Home.

o Metropolitan Home.

o Traditional Homes.

o Victoria.

o Elle Decor.

If she does seek out television as an information source for home decoration that is most

likely to be "Martha Stewart" and, on a lesser basis, "Interior Motives."

Behaviors

She takes pride in having an active role in decoration their home.

Her home is a form of communicating "who she is" to others.

Comparison positioning and stature within social groups are made on an ongoing basis, but

rarely discussed.

91-studio Interiors is providing its clients the opportunity to create a home environment

to express who they are. They seek design assistance and have the resources to accomplish their

goals. They desire their home to be personal, unique, and tasteful as it communicates a message

about what is important to them. 91-studio Interiors will seek to fulfill the following benefits that

are important to our clients.


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Market Analysis

Year 1 Year 2 Year 3 Year 4 Year 5

Potential Customers Growth CAGR

Country Club Women 12% 34,400 38,528 43,151 48,329 54,128 12.00%

Boomers in Transition 9% 12,000 13,080 14,257 15,540 16,939 9.00%

Professional

Youngsters8% 8,000 8,640 9,331 10,077 10,883 8.00%

Home Builders 5% 8,000 8,400 8,820 9,261 9,724 5.00%

Other 0% 0 0 0 0 0 0.00%

Total 10.09% 62,400 68,648 75,559 83,207 91,674 10.09%

Target Market Segment Strategy

Our marketing strategy will create awareness, interest, and appeal from our target market

for what 91-studio Interiors offers its clients. The target markets are separated into four

segments; "Country Club Women," "Boomers in Transition," "Professional Youngsters," and

"Home Builders." The primary marketing opportunity is selling to these well defined and

accessible target market segments that focuses on investing discretionary income in these areas:

Country Club Women - The most dominant segment of the four is comprised of women

in the age range of 35 to 50. They are married, have a household income greater than 100,000,

own at least one home or condominium, and are socially active at and away from home. They are

members of the Boulder Country Club, Junior League of Boulder, Boomers in Transition - This

group, typically ranging in age from 50 to 65, is going through a positive and planned life

transition. They are changing homes (either building or moving) or remodeling due to empty


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nest syndrome, retirement plans, general downsizing desires, or to just get closer to the golf

course. Their surprisingly high level of discretionary income is first spent on travel, with

decoration their home a close second. This is what makes this segment so attractive. The

woman of the couple is the decision maker, and often does not always include the husband in the

selection or purchase process.

Professional Youngsters - Couples between the ages of 25 and 35 establishing their first

"adult" household fall into this group. They both work, earn in excess of 80,000 annually, and

now want to invest in their home. They seek to enjoy their home and communicate a

"successful" image and message to their contemporaries. They buy big when they have received

a promotion, a bonus, or an inheritance.

Home Builders - People in the home building process, typically ranging in age from 40 to

55, are prime candidates for 91-studio Interiors. This applies to both primary residences and

vacations and secondary homes.

Market Needs

91-studio Interiors will provide its clients the opportunity to create a home environment

to express who they are. They have the choice to actively participate in the design, look, and feel

of their home. They desire their home to be personal, unique, and tasteful as well as

communicate a message about what is important to them. 91-studio Interiors seek to fulfill the

following benefits that we know are important to our clients.

Service Business Analysis

The industry continues to be competitive with a "commodity" concern with "designers"

of all skill and background levels available throughout the market.

Potential Competitors: There are many other interior designers in the Boulder area and

these competitors range from those that provide simple-focused services, such as draperies

only, to a more full-service interior design approach similar to 91-studio Interiors.


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Power of Suppliers: Moderately high in most anyone that has a business license can have

access to wholesale purchase of furniture, fabrics and accessories.

Power of Buyers: Very low as buyers work within the financial terms and product

availability offered through the suppliers that specify the terms and conditions.

Substitute Products: High as many people refer to themselves as interior designers

regardless of background, training, or certification. Substitute products are also high in the

area of window treatment as hard covering solutions have become available and

increasingly affordable. This includes blinds, shutters, and other "manufactured"

treatments. Substitute products are not as prevalent in the area of antiques and art pieces.

Rivalry: Moderately low with the "territorial" structure that the industry experiences and

moderately low exit barriers. The easy entry is accompanied with an easy exit and people

get out when it is not working.

With the slow, but steady, growth of the past few years, the industry is now experiencing

a "cautious optimism" regarding the future. Growth and expansion activities for most areas of the

interior design industry appear to be carefully considered. Many in the industry continues to

decide what to do and buy as the economy has experienced a slowdown and increased

uncertainty from the more economically confident 2000'n.

Distributing a Service

Our primary method of distribution will be on a direct sales basis for each individual

client.

Competition and Buying Patterns

Competition in the area is strong, with designers ranging from the home-based, no formal

training individuals to the more formalized store front, Association of Interior Designers (ASID)

certified designers that have close relationships with prestigious architects. In most cases, clients

make the provider decision on the basis of three criteria in this order with these percent

influences indicated after each:


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1. Referrals and relationship with other professionals, particularly architects (55%).

2. Personality and "expected relationship" with the designer (25% ).

3. Past work (15%).

4. ASID certification (5%).

Understanding the influence of these factors on the prospective client will be key in the

marketing strategy.

Main Competitors

Current local competition includes the following:

Interior Designers: There are 37 interior designers listed in the Boulder Yellow Pages (Year2000-2001 issue) that offer fabric as a part of their services. Interior designers make profit

off mark-up of fabric in addition to their hourly services charges. Their costs per yard are

typically higher since they do not benefit from retail or volume discounts. Therefore, their

costs to their client is often two to four times higher than the price per yard from 91-studio

Interiors.

House of Fabrics: Nationwide recognition and buying power of numerous types of dated

fabric with strong product availability. This store has experienced financial difficulty in

recent years and has closed several locations throughout the country.

Warehouse Fabrics: Locally owned, offering low-cost products with a wide selection of

discontinued fabrics and only a limited number of "current" fabrics. This warehouse concept

offers marginal client service with what many "upper end" clients consider to be an

"undesirable" shopping environment.

Website Providers: Fabric sales over the Web are limited at this time, and this will be a

source of competition for the future to watch. Currently, there is no measurable impact on

our market through competitive websites.


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4.1 Main offices

Coimbatore-Head Office

Madurai

Salem

Trichy


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5. STRUCTURE OF MARKETING DEPARTMENT

Marketing Management is a business discipline which is focused on the practical

application of marketing techniques and the management of a firm's marketing resources and

activities. Rapidly emerging forces of globalization have compelled firms to market beyond the

borders of their home country making international marketing highly significant and an integral

part of a firm's marketing strategy.

Marketing managers are often responsible for influencing the level, timing, and

composition of customer demand accepted definition of the term. In part, this is because the role

of a marketing manager can vary significantly based on a business' size, corporate culture, and

industry context. For example, in a large consumer products company, the marketing manager

may act as the overall general manager of his or her assigned product to create an effective, cost-

efficient marketing management strategy; firms must possess a detailed, objective understanding

of their own business and the market in which they operate. In analyzing these issues, the


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discipline of marketing management often overlaps with the related discipline of strategic

planning.

Structure

Traditionally, marketing analysis was structured into three areas: customer analysis,

company analysis, and Competitor analysis (so-called "3Cs" analysis). More recently, it has

become fashionable in some marketing circles to divide these further into certain five "Cs":

Customer analysis, Company analysis, Collaborator analysis, Competitor analysis, and analysis

of the industry Context.

In economics, market structure (also known as the number of firms producing identical

products.)

Monopolistic competition, also called competitive market, where there are a small

number of dependent firms which each have a very large proportion of the market share

and products from different companies are different.

Oligopoly, in which a market is dominated by a large number of firms which own more

than 40% of the market share.

Oligopoly, a market, where many sellers can be present but meet only a few buyers.

Monopoly, where there is only one provider of a product or service.

Natural monopoly, a monopoly in which economies of scale cause efficiency to increase

continuously with the size of the firm. A firm is a natural monopoly if it is able to serve

the entire market demand at a lower cost than any combination of two or more smaller,

more specialized firms.

Monophony, when there is only one buyer in a market.

Department analysis is to develop a schematic diagram for market segmentation,

breaking down the market into various constituent groups of customers, which are called

customer segments or market segmentations. Marketing managers work to develop detailed

profiles of each segment, focusing on any number of variables that may differ among the
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segments: demographic, psychographic, geographic, behavioral, needs-benefit, and other factors

may all be examined. Marketers also attempt to track these segments' perceptions of the various

products in the market using tools such as perceptual mapping.

In company analysis, marketers focus on understanding the company's cost structure and

cost position relative to competitors, as well as working to identify a firm's core competencies

and other competitively distinct company resources. Marketing managers may also work with

the accounting department to analyze the profits the firm is generating from various product lines

and customer accounts. The company may also conduct periodic brand audits to assess the

strength of its brands and sources of brand equity.

The firm's collaborators may also be profiled, which may include various suppliers,

distributors and other channel partners, joint venture partners, and others. An analysis of

complementary products may also be performed if such products exist.

Marketing management employs various tools from economics and competitive strategy

to analyze the industry context in which the firm operates.

These include Porters five forces, analysis of strategic groups of competitors, value chain

analysis and others. Depending on the industry, the regulatory context may also be important to

examine in detail.

In Competitor analysis, marketers build detailed profiles of each competitor in the

market, focusing especially on their relative competitive strengths and weaknesses using SWOT

analysis. Marketing managers will examine each competitor's cost structure, sources of profits,

resources and competencies, competitive positioning and product differentiation, degree of

vertical integration, historical responses to industry developments, and other factors.

Marketing management often finds it necessary to invest in research to collect the data

required to perform accurate marketing analysis.
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6. FUNCTION OF MARKETING DEPARTMENT

Marketing is defined as the process of determining the needs and wants of Consumers

and being able to deliver products that satisfy those needs and wants. Marketing includes all of

the activities necessary to move a product from the producer to the consumer. Think of

marketing as a bridge from the producer to the consumer

Marketing starts with market research, a learning process in which marketers get to know

everything they can about the needs and wants of consumers, and it ends when somebody buys

something. Many companies feel that services provided to customers after the purchase also are

an important part of marketing. All of these enterprises -- production, advertising, transportation,

processing, packaging, and selling -- are included in the marketing process.

THE NINE FUNCTIONS OF MARKETING

In order for the marketing bridge to work correctly -- providing consumers with

opportunities to purchase the products and services they need -- the marketing process must

accomplish nine important functions.

The functions are:

Buying - people have the opportunity to buy products that they want.

Selling - producers function within a free market to sell products to consumers.

Financing - banks and other financial institutions provide money for the production

and marketing of products.

Storage - products must be stored and protect end until they are needed. This function

is especially important for perishable products such as fruits and vegetables.


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Transportation -products must be physically relocated to the locations where Consumers can

buy them. This is a very important function. Transportation includes rail road, ship, airplane,

truck, and telecommunications for non-tangible products such as market information.

Processing - processing involves turning a raw product, like wheat; into something the consumer

can use

Risk-Taking - insurance companies provide coverage to protect producers and marketers from

loss due to fire, theft, or natural disasters.

Market Information - information from around the world about market conditions,

weather, price movements, and political changes, can affect the marketing process. Market

information is provided by all forms of telecommunication, such as television, the internet, and

phone.

Grading and Standardizing - Many products are graded in order to conform to

Previously determined standards of quality


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6.1 Marketing strategy

Marketing Strategy

Our marketing strategy is based on becoming the resource of choice for people lookingfor decorator fabrics, do-it-yourself, and buy-it-yourself resources to create a look in their home.

Our marketing strategy is based on superior performance in the following areas:

Product selection.

Product quality.

Customer service.

Our marketing strategy will create awareness, interest, and appeal from our target marketfor what Interior Views offers our customers.

Mission

Interior Views LLC is a store for discerning, quality-conscious buyers of decorator

fabrics and complementary home accessories and furniture. The store celebrates the home

through the color and texture of fabric. The experience informs, inspires, and shows people how

to transform their home into a unique and personalized expression of themselves. Interior Views

seeks to encourage people to imagine what can be, and help make their vision a reality.

Marketing Objectives

1. Maintain a gross margin of 45% each month.

2. Generate an average of 1,000 of sales each business day each month.

3. Experience a 5,000 increase in quarterly sales with each newsletter.

4. Realize an annual growth rate of approximately 25% in the year 2000.

Financial Objectives

1. A growth rate in sales of 12% for the year 2000, to total in excess of 341,200 in total

revenues.

2. An average sales per business day (305 days per year) in excess of 1,000.
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3. Reduce the existing credit line by a minimum of 26,400.

Target Markets

The target markets are separated into four segments; "Country Club Women," "Boomersin Transition," "Professional Youngsters" and "Home Builders." The primary marketing

opportunity is selling to these well defined and accessible target market segments that focuses on

investing discretionary income in these areas:

Home Builders -- People in the building process, typically ranging in age from 40 to 60, are

prime candidates for Interior Views.

Positioning

For the person creating a personalized and unique impression of her home, Interior Views

is the best local source for selection and price points of the fabric, customer-oriented design

services, and a variety of other home accessory and furniture products. Customers will be

impressed with, and return for, the great in-stock selection, value-oriented pricing, and excellent

customer service. Unlike Joanns, Warehouse Fabric, or catalogs, Interior Views is a pleasant

and tasteful resource that encourages everyone in the process of decoration their home. Unlike

employing an interior decorator, Interior Views allows the individual to participate in their

design choices to the extent they choose, and realize greater value for the dollars they invest.

Strategies

The single objective is to position Interior Views as the premier source for home

decorator fabrics in the Greater Boise area, commanding a majority of the market share within

three years. The marketing strategy will seek to first create customer awareness regarding the

products and services offered, develop that customer base, establish connections with targeted

markets and work toward building customer loyalty and referrals.


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Interior Views' four main marketing strategies are:

1. Incr eased awareness and image.

2. Leveraging existing customer base.

3.

Cross selling.

4. New home construction promotion.

Strategy

INCREASED AWARENESS and IMAGE - Informing those not yet aware of what Interior

Views offers.

Strategy

LEVERAGING EXISTING CUSTOMER BASE - Our best sales in the future will come from

our current customer base.

Strategy

CROSS SELLING - Increasing the average dollar amount per transaction.

Strategy

NEW HOME CONSTRUCTION PROMOTION - Connecting with people involved in the

building process.

Marketing Mix

In brief, our marketing mix is comprised of these approaches to pricing, distribution,

advertising and promotion, and customer service.

Pricing -- A keystone pricing formula plus 3.00 will be applied for most fabrics. The goal is to

have price points within 5% of the list price of Calico Corners' retail prices. This insurescompetitive pricing and strong margins.

Distribution -- All product is distributed through the retail store. The store does receive phone

orders from established customers and we will be developing a website.


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Customer Service -- Excellent, personalized, fun, one-of-a-kind customer service is essential.

This is perhaps the only attribute that cannot be duplicated by any competitor.

Product Marketing

Our products enable our customers to experience support, gather ideas and options, and

accomplish their decoration goals. They will be able to create a look that is truly unique to their

home. They will not be able to do this in the same way through any other resource.

Price

Product pricing is based on offering high value to our customers compared to most price

points in the market. Value is determined based on the best quality available, convenience, andtimeliness in acquiring the product. We will consistently be below the price points offered

through interior designers and consistently above prices offered through the warehouse/seconds

retail stores, but we will offer better quality and selection.

Promotion

The most successful advertising and promotion has been through the following:

Newspaper Advertisements - Boise Herald.

Television Advertisements - "Martha Stewart" and "Interior Motives" television shows.


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Quarterly Newsletter and Postcard - A direct mail, 4-page newsletter distributed to the

customer mailing list generated from people completing the "register" sign up in the

store. The mailing list now totals more than 4,300 people.

In Store Classes - "How to" classes, most of which are free, have been successful

because of the traffic and sales they generate after the class. Typically 90 minutes in

length and most held on Saturday, these are the most popular classes:

o "Pillow Talk" - Pillow fabrication.

o "Speaking of Slip Covers" - Slip cover presentation and discussion.

o "Shades of the Season" - Window treatment options with fabric.


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6.2Pricing strategies

Competition-based pricing

Setting the price based upon prices of the similar competitor products.

Competitive pricing is based on three types of competitive product:

Products have lasting distinctiveness from competitor's product. Here we can assume

o The product has low price elasticity.

o The product has low cross elasticity.

o The demand of the product will rise.

Products have perishable distinctiveness from competitor's product, assuming the product

features are medium distinctiveness.

Products have little distinctiveness from competitor's product. assuming that:

o The product has high price elasticity.

o The product has some cross elasticity.

o No expectation that demand of the product will rise.

Cost-plus pricing

Cost-plus pricing is the simplest pricing method. The firm calculates the cost of

producing the product and adds on a percentage (profit) to that price to give the selling price.

This method although simple has two flaws; it takes no account of demand and there is no way

of determining if potential customers will purchase the product at the calculated price.

This appears in 2 forms, Full cost pricing which takes into consideration both variable

and fixed costs and adds a % markup. The other is Direct cost pricing which is variable costs

plus a % markup, the latter is only used in periods of high competition as this method usually

leads to a loss in the long run.
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Limit pricing

A limit price is the price set by a monopolist to discourage economic entry into a market,

and is illegal in many countries. The limit price is the price that the entrant would face upon

entering as long as the incumbent firm did not decrease output. The limit price is often lower

than the average cost of production or just low enough to make entering not profitable. The

quantity produced by the incumbent firm to act as a deterrent to entry is usually larger than

would be optimal for a monopolist, but might still produce higher economic profits than would

be earned under perfect competition. The problem with limit pricing as strategic behavior is that

once the entrant has entered the market, the quantity used as a threat to deter entry is no longer

the incumbent firm's best response. This means that for limit pricing to be an effective deterrent

to entry, the threat must in some way be made credible. A way to achieve this is for theincumbent firm to constrain itself to produce a certain quantity whether entry occurs or not. An

example of this would be if the firm signed a union contract to employ a certain (high) level of

labor for a long period of time.

Market-oriented pricing

Setting a price based upon analysis and research compiled from the targeted market.

Penetration pricing

The price is deliberately set at low level to gain customer's interest and establishing a

foot-hold in the market.

Price discrimination

Setting a different price for the same product in different segments to the market. For

example, this can be for different ages or for different opening times, such as cinema tickets.


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Premium pricing

Premium pricing is the practice of keeping the price of a product or service artificially

high in order to encourage favorable perceptions among buyers, based solely on the price. The

practice is intended to exploit the (not necessarily justifiable) tendency for buyers to assume that

expensive items enjoy an exceptional reputation or represent exceptional quality and distinction.

Predatory pricing

Aggressive pricing intended to drive out competitors from a market. It is illegal in some

places.

Contribution margin-based pricing

Contribution margin-based pricing maximizes the profit derived from an individual

product, based on the difference between the product's price and variable costs (the product's

contribution margin per unit), and on ones assumptions regarding the relationship between the

products price and the number of units that can be sold at that price. The product's contribution

to total firm profit (i.e., to operating income) is maximized when a price is chosen that

maximizes the following: (contribution margin per unit)X(number of units sold).

Psychological pricing

Pricing designed to have a positive psychological impact. For example, selling a product

at 3.95 or 3.99, rather than 4.

Dynamic pricing

A flexible pricing mechanism made possible by advances in information technology, and

employed mostly by Internet based companies. By responding to market fluctuations or large

amounts of data gathered from customers - ranging from where they live to what they buy to

how much they have spent on past purchases - dynamic pricing allows online companies to

adjust the prices of identical goods to correspond to a customers willingness to pay. The airline

industry is often cited as a dynamic pricing success story. In fact, it employs the technique so


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artfully that most of the passengers on any given airplane have paid different ticket prices for the

same flight.

Price leadership

An observation made of oligopic business behavior in which one company, usually the

dominant competitor among several, leads the way in determining prices, the others soon

following.

Target pricing

Pricing method whereby the selling price of a product is calculated to produce a

particular rate of return on investment for a specific volume of production. The target pricingmethod is used most often by public utilities, like electric and gas companies, and companies

whose capital investment is high, like automobile manufacturers.

Target pricing is not useful for companies whose capital investment is low because,

according to this formula, the selling price will be understated. Also the target pricing method is

not keyed to the demand for the product, and if the entire volume is not sold, a company might

sustain an overall budgetary loss on the product.

Absorption pricing

Method of pricing in which all costs are recovered. The price of the product includes the

variable cost of each item plus a proportionate amount of the fixed costs. A form of cost plus

pricing

High-low pricing

Method of pricing for and organization where the goods or services offered by the

organization are regularly priced high in market comparison, but through promotions,

advertisements, and or coupons, lower prices are offered. The lower promotional prices are

targeted to bring customers to the organization where the customer is offered the promotional

product as well as the regular higher priced products.
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Marginal-cost pricing

In business, the practice of setting the price of a product to equal the extra cost of

producing an extra unit of output. By this policy, a producer charges, for each product unit sold,

only the addition to total cost resulting from materials and direct labor. Businesses often set

prices close to marginal cost during periods of poor sales. If, for example, an item has a marginal

cost of 1.00 and a normal selling price is 2.00, the firm selling the item might wish to lower

the price to 1.10 if demand has waned. The business would choose this approach because the

incremental profit of 10 cents from the transaction is better than no sale at all


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7.Success and failure of different products of the organization in the market

along with reasons

Innovation is a change in the thought process for doing something or "new stuff that is

made useful". It may refer to an incremental emergent or radical and revolutionary changes inthinking, products, processes, or organizations. Following Schumpeter (1998), contributors to the

scholarly literature on innovation typically distinguish between invention, an idea made

manifest, and innovation, ideas applied successfully in practice.In economics the change must

increase value, customer value, or producer value. The goal of innovation is positive change, to

make someone or something better. Innovation leading to increased productivity is the

fundamental source of increasing wealth in an economy.

Innovation is an important topic in the study of economics,business, entrepreneurship,

design, technology, sociology, and engineering. Colloquially, the word "innovation" is often

synonymous with the output of the process. However, economists tend to focus on the process

itself, from the origination of an idea to its transformation into something useful, to its

implementation; and on the system within which the process of innovation unfolds. Since

innovation is also considered a major driver of the economy, especially when it leads to new

product categories or increasing productivity, the factors that lead to innovation are also

considered to be critical to policy makers. In particular, followers ofinnovation economics stress

using public policy to spur innovation and growth.

Those who are directly responsible for application of the innovation are often called

pioneers in their field, whether they are individuals or organizations.
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Introduction

Theneutrality of this section is disputed. Please see the discussion on the talk page.

Please do not remove this message until the dispute is resolved. (May 2008)

In the organizational context, innovation may be linked to performance and growth

through improvements in efficiency, productivity, quality, competitive positioning, market share,

etc. All organizations can innovate, including for example hospitals, universities, and local

governments.

While innovation typically adds value, innovation may also have a negative or

destructive effect as new developments clear away or change old organizational forms and

practices. Organizations that do not innovate effectively may be destroyed by those that do.

Hence innovation typically involves risk. A key challenge in innovation is maintaining a balance

between process and product innovations where process innovations tend to involve a business

model which may develop shareholder satisfaction through improved efficiencies while product

innovations develop customer support however at the risk of costly R&D that can erode

shareholder return. Innovation can be described as the result of some amount of time and effort

into researching an idea, plus some larger amount of time and effort into developing this idea,

plus some very large amount of time and effort into commercializing this idea into a market

place with customers.

Innovation has been studied in a variety of contexts, including in relation to technology,

commerce, social systems, economic development, and policy construction. There are, therefore,

naturally a wide range of approaches to conceptualizing innovation in the scholarly literature.

Distinguishing from invention

Invention is the embodiment of something new. While both invention and innovation

have "uniqueness" implications, innovation also carries an undertone of profitability and market

performance expectation.
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An improvement on an existing form or embodiment, composition or processes might be an

invention, an innovation, both or neither if it is not substantial enough. According to certain

business literature , an idea, a change or an improvement is only an innovation when it is put to

use and effectively causes a social or commercial reorganization.

In business, innovation can be easily distinguished from invention. Invention is the conversion of

cash into ideas. Innovation is the conversion of ideas into cash. This is best described by

comparing Thomas Edison with Nikola Tesla. Thomas Edison was an innovator because he

made money from his ideas. Nikola Tesla was an inventor. Tesla spent money to create his

inventions but was unable to monetize them. Innovators produce, market and profit from their

innovations. Inventors may or may not profit from their work.

In organizations

A convenient definition of innovation from an organizational perspective is given by Lucke and

Katz (2003), who wrote:

"Innovation . . . is generally understood as the successful introduction of a new thing or method .

. . Innovation is the embodiment, combination, or synthesis of knowledge in original, relevant,

valued new products, processes, or services.

A content analysis on the term "innovation" carried out by Baregheh et al. (2009) within the

organizational context, defines innovation as:

"Innovation is the multi-stage process whereby organizations transform ideas into new/improved

products, service or processes, in order to advance, compete and differentiate themselves

successfully in their marketplace.

Innovation typically involves creativity, but is not identical to it: innovation involves acting on

the creative ideas to make some specific and tangible difference in the domain in which the

innovation occurs. For example, Amabile et al. (1996) propose:

"All innovation begins with creative ideas . . . We define innovation as the successful

implementation of creative ideas within an organization. In this view, creativity by individuals
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and teams is a starting point for innovation; the first is necessary but not sufficient condition for

the second".

For innovation to occur, something more than the generation of a creative idea or insight is

required: the insight must be put into action to make a genuine difference, resulting for example

in new or altered business processes within the organization, or changes in the products and

services provided.

"Innovation, like many business functions, is a management process that requires specific tools,

rules, and discipline."

From this point of view emphasis is moved from the introduction of specific novel and useful

ideas to the general organizational processes and procedures for generating, considering, and

acting on such insights leading to significant organizational improvements in terms of improved

or new business products, services, or internal processes.

Through these varieties of viewpoints, creativity is typically seen as the basis for innovation, and

innovation as the successful implementation of creative ideas within an organization.

It should be noted, however, that the term 'innovation' is used by many authors rather

interchangeably with the term 'creativity' when discussing individual and organizational creative

activity.

Economic conceptions

Joseph Schumpeter defined economic innovation in "Theorie der Wirtschaftlichen Entwicklung"

(1912). (The Theory of Economic Development, 1934, Harvard University Press, Boston.)

1.

The introduction of a new good that is one with which consumers are not yet familiaror of a new quality of a good.

2. The introduction of a new method of production, which need by no means be founded

upon a discovery scientifically new, and can also exist in a new way of handling a

commodity commercially.
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3. The opening of a new market, that is a market into which the particular branch of

manufacture of the country in question has not previously entered, whether or not this

market has existed before.

4. The conquest of a new source of supply of raw materials or half-manufactured goods,

again irrespective of whether this source already exists or whether it has first to be

created.

5. The carrying out of the new organization of any industry, like the creation of a monopoly

position (for example through trustification) or the breaking up of a monopoly position

Schumpeter's focus on innovation is reflected in Neo-Schumpeterian economics, developed by

such scholars as Christopher Freeman and Giovanni Dosi.

Innovation is also studied by economists in a variety of other contexts, for example in theories of

entrepreneurship or in Paul Romer's New Growth Theory. In network theory, innovation can be

seen as "a new element introduced in the network which changes, even if momentarily, the costs

of transactions between at least two actors, elements or nodes, in the network".

Market outcome

Market outcome from innovation can be studied from different lenses. The industrial

organizational approach of market characterization according to the degree of competitive

pressure and the consequent modelling of firm behavior often using sophisticated game theoretic

tools, while permitting mathematical modelling, has shifted the ground away from the usual

understanding of markets. The earlier visual framework in economics, of market demand and

supply along price and quantity dimensions, has given way to powerful mathematical models

which though intellectually satisfying has led policy makers and managers groping for more

intuitive and less theoretical analyses to which they can relate to at a practical level.

In the management (strategy) From an academic point of view, there is often a divorce between

industrial organisation theory and strategic management models. While many economists view

management models as being too simplistic, strategic management consultants perceive

academic economists as being too theoretical, and the analytical tools that they devise as too

complex for managers to understand.
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Innovation literature while rich in typologies and descriptions of innovation dynamics is mostly

technology focused. Most research on innovation has been devoted to the process (technological)

of innovation, or has otherwise taken a how to (innovate) approach.

Goals

This section does not cite any references or sources. Please help improve this article by

adding citations to reliable sources. Unsourced material may be challenged and removed.(May

2010) Programs of organizational innovation are typically tightly linked to organizational goals

and objectives, to the business plan, and to market competitive positioning. One driver for

innovation programs in corporations is to achieve growth objectives. As Davila et al. (2006)

note,

"Companies cannot grow through cost reduction and reengineering alone... Innovation isthe key element in providing aggressive top-line growth, and for increasing bottom-line

results"

In general, business organisations spend a significant amount of their turnover on

innovation, such as making changes to their established products, processes and services. The

amount of investment can vary from as low as a half a percent of turnover for organisations with

a low rate of change to anything over twenty percent of turnover for organisations with a high

rate of change.

The average in

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