CASE NOTE :

LAZULI SARAE : DEVELOPING MARKETING STRATEGY

In 2013, Ivan Kurniawan, Director of Indonesian Batik On Denim company Lazuli

Sarae, discussed their business progress in his office with his team including Maretta Astri
Nirmanda (Co-founder & Creative Director of Lazuli Sarae):

As Startup business, our mission has been creating a new creative business to
enrich Indonesias textile collection. We also have been become a unique brand which
combining western culture, Denim, with local value of Indonesia, Batik which made
us very unique compare to other Batik Company.

Since 2010 Lazuli Sarae has launched several collections: Azul Fever, Vanished
Indigo, Akulturapolis and the story of Aosan. All of our collection have their own
unique story that reflect in our design clothing. In short, over the past three years,
weve been able to deliver our uniqueness creating a company that has the strongest
product uniqueness in fashion industry especially in batik industry.

Ivan noted that from 2010 to 2013, the company have 9 distribution sales chanel;
Lazulisarae.com, Pendopo, Alun-alun Indonesia, Sarinah, Rakuten Belanja Online, Zalora
and Hijup.com including on progress distribution sales chanel, Saqinah.com. The sales had
reached an all time-high in special event such as exhibition and also in Lebaran Season.

As creative director, Maretta had succesfully pushed the teams creativity to improve
their batik design as the result they had the strong uniqueness in their product. During the
past three years they also achieved many local award such as 2nd place for Creative Business
Plan in 2010, Nominator for INACRAFT Award in 2011, 3rd place for Honda Youth StartUp
Icon in 2011, Shell Business StartUp Award in 2011, The Most Potential Entrepreneur
Wanita Wirausaha Mandiri in 2012 and many more.

With such positive accomplishment Lazuli Sarae still a StartUp company so they also
faced several problems that they have to overcome. Lazuli Sarae wants develop their business
considering the competition in fashion industry is very intense so they have to improve their
performance in order to survive. The Director and his team wants to increase the companys
sales and disscussing what are the effective marketing strategy that cost saving and what
distribution channel that effective to improve their sales for Lazuli Sarae?

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Fashion Industry in Indonesia

Indonesia is rich in culture with their respective advantages and philosophical values
that are so strong for generations. On the basis of these facts, has created a series of
fashionable area that is able to compete on the market. In the hands of designers, these
dresses are designed in a modern way with traditional touches.

Kebaya, Songket, Batik, and Endek can be used as raw material that can compete with
materials from the foreign? It could be an advantage for each party which is the designers,
fashion players, and more. As well as a fashion show event in which the fashion show, the
Indonesian designers are very enthusiastic in showing their work. The fashion show is a stage
of development of the art of fashion the fashion world in Indonesia. This activity presents the
development of fashion, business, education and the latest from the fashion and textile
industry, especially in Indonesia. Its activities include exhibitions, seminars and fashion
shows. Usually the fashion exhibition will show the fabric products, textiles and accessories
are fashionable and quality. Fashion show designers in Indonesia, featuring a collection of
evening gowns, fashion and ethnic clothing Indonesian Muslims. The designers who will
display the design results in a particular event has its own purpose, namely to persuade the
men and women interested in fashion to want the design results. In a fashion shows, they
could show the original materials such as knitted Indonesian Songket which modified to be
an excellent dress. It could be also with Kebaya that can be made to be a beautiful dress.

1. The three components of the event, has become a new phenomenon in the
development of mode. One goal is the development of Indonesian fashion strive to
increase the synergy between the government, employers and industrialists in
Indonesian garment in determining the direction and plan the future direction of
Indonesia in the international world in anticipation of the collection of failure modes
towards the future market.
2. Development of fashion is very quick in turnaround time. The potential development
of fashion industry in Indonesia is very large, although it is not easy because the
fashion industry is very tight competition, so the culprit must compete to attract
buyers disseminate information as much as possible.
3. One way is to provide concepts and understanding of the products produced by the
fashion industry to the consumer. It is a problem in the fashion industry today is the
human resources working in the field of fashion still little. As well as the lack of

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 public understanding about the world of fashion. While the fashion industry is still
occupied home or small industry. The absence of a place at the center of all activities
of the fashion industry that acts as a bridge between the fashion industry, designers,
garment industry, manufacturers of materials, distribution channels and consumers.
Therefore we need an appropriate container as a place to study, promote and
encourage the public to know and use the products of the work of art in everyday life
properly and well established.
4. Container or where such activities could be a Fitness Mode that address the
components in full mode. Seeing places and events which mode is currently still in a
state pickup. Yet there is a Fashion Center at the center of the activities of the overall
fashion, ranging from the production, promotion, information, education to
commercial activities. Currently, all these activities are still separated from each
other. So the existence of a Fashion Center is expected to be able to facilitate the
activities of the fashion world as a whole in a single unit. This mode is made possible
center is able to create a close relationship between designers, producers, consumers,
businesses, governments, educational institutions, as well as elements related to a
serious plunge in the fashion industry. In recent years the development of fashion in
Indonesia is growing rapidly. One of them like Femina Group as a media for decades
is consistently supporting the activities in the field of fashion, has organized the
Festival Mode Indonesia 2007 on 7 and 8 September 2007 at Blitz Megaplex, Grand
Indonesia Indonesia.Pergelaran Fashion Festival aims to develop the fashion in
Indonesian fashion indonesia.semoga the better.

Ministry of Cooperatives and SME data indicate that the product feysen provide a
considerable contribution of the creative industries sector from time to time. In 2010, for
example, accounted for 72 billion dollars the USA, or 55% of total exports of creative
industries. This sector also absorb quite a lot of work, ranging from the designer (about 500
people today), designers, and fashion artists who are members of several associations that
focus on product orientation private, ready to wear, export and Moslem outfits.

Creative industry itself is growing quite rapidly in the last five years, from about Rp
257 trillion in 2006 to Rp 486 trillion in 2010, contributing 7.7% from 7.4% the previous
year. Creative industries sector exports also increased from 85 billion dollars USA in 2006 to
131 billion USD in 2010.

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 Growth was not separated from the growing number of fashion business units, from
1,336,141 units in 2006, into 1,559,993 units in 2010, up 16.59%.

Batik products contribute the largest second largest by 20-30 per cent of gross
domestic product (GDP) in the sub-sector of the creative economy. Evidently, batik products
produced have great opportunities for foreign interests.

Lazuli Sarae

(General Company Information)

Lazuli Sarae, Batik on Denim is a product that combines traditional and modern
culture with the process of batik on denim material to produce new variants (denim with
motif). The results in the form of fashion and accessories products today such as jeans,
jackets, shoes, bags and so on.

Lazuli is derived from the word "Lazhward", which is taken from a place in Persia,
where the discovery of semi-precious stones (precious stone) which means Lapis Lazuli
Lapis Lazuli blue as the color, the meaning of which is identical with denim.

Sarae taken from Sunda-which means great / awesome - it means the product is good
worn or carried.

The company is headquartered in Jl. Plesiran 10 Bandung, West Java is owned by:

Ivan Kurniawan (Founder)

Maretta A. Nirmanda (Founder)
Gilang M. Iqbal
Nuzuli Hada

Lazuli Sarae itself was established in 2010. Lazuli Sarae itself has some achievement
in fashion world. It shown below:

Second Place Creative Business Plan Contest at a competition held in a series in

Pekan Produk Kreatif Indonesia (PPKI).

One of the winners in the category Shell LiveWire Start up Business (2011)

Third Place in the Honda Youth Icon Start-ups in Bandung (2011)

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 Included in the 100 youth, Women, and Netizens influential magazine in Indonesia
Marketeers.

The winner of Femina Female Entrepreneur in category of the Most Potential

Entrepreneur (2012).

A Brief History of Lazuli Sarae

Lazuli Sarae brings a very strong local principles. Creativity and young people, two
things seem to have become an integral and inseparable. Reta, women from Bandung prove it
by opening a clothing line, Lazuli Sarae. At first glance, if only to hear his name, a clothing
line that is more likely to use this product in denim for a local product. But apparently, when
asked by the Lord of the products, Lazuli Sarae taken from Sundanese.

"For the selection we deliberately choose a name that sounds like a brand name
outside. This is so that we are encouraged to make this into a brand goes global. But even so,
the actual local Lazuli Sarae brings a very strong principles. 'Lazuli' is derived from the word
'lazhward', from Persian meaning 'blue'. While 'sarae' is Sundanese word meaning good but
meaningful plural, 'Reta explained.

Venture that was founded in 2011 was originally just a business concept that won a
competition. However, because of Reta and his colleagues are already planning to open their
own business since they were still in college then the new business did not hesitate intangible
concepts they embodied into a real business. "My colleagues and I have been thinking of
opening my own business since I was in college. Before Lazuli Sarae we've been involved in
an event organizer simple and even had thought also for the culinary business. Why did we
realize Lazuli Sarae? The motivation is simple: the moment is right, there is support from a
business mentor, and also is in the field of business we control, "Reta told.

"First step I took was to establish a business plan until at least the first year." For an
initial capital business opened Lazuli Sarae, Reta and colleagues also take advantage of the
competition to win the prize results Lazuli Sarae start. To switch from a professional to
become an entrepreneur is certainly not an easy thing for Reta and his friends. "First step I
took was to establish a business plan until at least the first year. Then after that me and my
friends set the right time to withdraw (resign) from each company. This is a decision that is
quite complicated at first, let alone external factors, such as family and friends. But at that
time we were confident in our decision, "said Reta recalled some early point.

5
 Most Lazuli Sarae products, ranging from clothing and accessories, using denim
materials. And an outline of this product is the motif on top denim made with the latest
fashion models. "Batik motifs used was not specific on certain areas in Indonesia. I am more
inclined to use homemade batik because its principle, batik Indonesia Lazuli Sarae should
represent the present. So our motif is a representation of how the Indonesian youth of today
see their environment and expressed it in batik. In addition, I and my colleague, Gilang,
happen to have sufficient background knowledge in the processing of batik. I think batik is
one variant of Indonesian textiles are very well known in the domestic and global markets.
Therefore, we think batik is a good starting point to start." Reta explained.

"Batik is one of Indonesian textiles variants are very well known in the domestic and
global markets. "Using the batik denim on any product, Lazalui Sarae diverse acclaim from
the market." First launched, the market reception of our products also varied. Anybody seen
as Lazuli Sarae as exciting and fresh products, there is also a look at the 'destroyer' tradition."
Reta said.

Products are issued 2 times fashion latest collection in this one, can be obtained
through online and also at the outlet. In Jakarta, Lazuli Sarae cooperate with consignments
stores, such as the Indonesian Square, Central Park, Jakarta Hall, Mall Alam Sutra,
Tangerang, and also at Sarinah Thamrin and Housing Village Sarinah, Jakarta. Great
achievement, instead, for a new business 1 year old.

Marketing Strategy

Marketing and advertising of Lazuli Sarae through many network communities and
fashion events in Jakarta and Bandung. By using the power of social medias such as
Facebook and Twitter, the news and products catalogue can be easily found on the net.
People can also buy the things via the web. Lazuli Sarae are also actively involved in many
fashion events such as Inacraft, Jakarta Week Fashions and many more events.

Theory of Marketing

The terms marketing strategy and strategic market planning are often used
interchangeably, which sometimes leads to confusion. We will use the term marketing
strategy to mean the overall strategy of an organisation in relation to a particular market. In
this learning guide we will explore the process of analysis and decision making which

6
organisations go through as they define and implement their approach to that market.
Marketing plans will form part of this process, in particular when it comes to implementation.
Key aspects of the process are that it is cyclical, ie subject to constant review and reiteration;
that it is dynamic, subject to changes in the environment (including customers and
competition); and that it should be shared within the organisation, rather than being the sole
preserve of the marketing department, if it is to be wholeheartedly adopted and implemented
by the whole organisation.
Two interrelated trends in marketing approaches have changed the emphasis of
marketing strategy in recent years. These are relationship marketing and customer
economics. The increased use of sophisticated database information in marketing has helped
further the adoption of these two approaches and indeed both require such information in
order to be successfully implemented. If you are specifically interested in relationship
marketing, there is a further learning guide specifically on this topic.
This overview will introduce a framework for the steps to be followed in a
comprehensive marketing strategy process, the information and analysis required at each
stage and the decisions to be taken at each stage. There are of course other possible
frameworks and approaches which would be equally acceptable, provided all the key steps
are included.

7
 Components Of Marketing Strategy

Source: Doyle, P. et al. Japanese Marketing Strategies in the UK: A Comparative study, Journal of
International Business Studies Vol. 17(1) Spring 1986. Reprinted with permission from Butterworth
Heinemann.

Defining strategic marketing objectives

A market may be attractive for a number of reasons: because there are high profits to
be made in it; because it is growing; because it fits in well with or fills a gap in our existing
portfolio. It is useful at this stage to carry out some structured analysis using a framework
such as Michael Porter's Five Forces of Competition or SWOT analysis.

8
 Porter's "Five Forces Of Competition" Analysis

Porter, M.E. (1980) "Competitive Strategy" New York, The Free Press. Reprinted with
Permission
A good marketing strategy may be determined as much by those markets we choose
not to enter as by those we do. Targets will be expressed in terms of market share or
profitability, or possibly both. For example, in an early stage of the stage in the market life
cycle, an organisation may concentrate on building share at the expense of profitability, or at
a later stage may be content for share to remain static whilst profits are high.

Determining strategic focus

The more mature the market, the more fragmented it tends to be.

9
 Arnold, David (1992) The Handbook of Brand Management, Century Business. Reprinted
with permission from FT Management.

The product market life cycle

Total sales in a particular product market will tend to follow the curve shown in above
over a period of time. Each stage in the so called product market life cycle has different
characteristics in terms of customers, competition, and company priorities.
1. The introductory phase
Customers : Unfamiliar with or unaware of product category. Those who do buy
likely to be more experimentalist by nature. Sales low
Competition : Likely to be low
Company priorities : Encourage trial. Work with customers on product development to
improve aspects such as packaging or documentation, or to eliminate
"teething troubles"
2. The growth phase
Customers : Growing in numbers. Segments begin to appear. May be less price
sensitive as category benefits more widely known
Competition : Growing as new entrants appear.
Company priorities : Build share by concentrating on distribution, creating alliances where
appropriate to do this

10
3. Early maturity
Customers : Segmentation is now more distinct and customer loyalty established as
repeat purchases take place
Competition : Intense as players attempt to secure their share
Company priorities : Differentiate to attract and retain customers in specific target segments
4. Late maturity
Customers : Knowledgeable, may demand low prices and high service levels
Competition : Intense due to lack of market growth and difficulty of further
differentiation. May be price based
Company priorities : Attempt to lengthen life cycle by innovation, re-inventing product
category before decline stage
5. Decline
Customers : Late adopters, eg first time buyers of microwaves or VCRs
Competition : May come more from substitute products or services than direct
competition
Company priorities : Re-define market whilst milking profits in early part of decline stage.

Defining customer targets

Segmentation is a characteristic of the market, not something which marketeers
impose upon it. In seeking to gain a better understanding of different customers' perception of
value, marketeers may see certain customers with similar characteristics and perceptions as
belonging together as a distinct segment, but unless those similarities actually exist, the
segmentation and the target will be meaningless. Customers within one segment should be
similar to each other in ways which are important for how, when, what and why they buy,
and different from customers in other segments.
Once we have a clear view of market structure, we need to decide which segment or
segments to target. Certain elements will tend to make a segment attractive:
size.
growth.
profitability.
fit with company strengths.
relative weakness of competition.

11
Competitor analysis
There are a number of different possible levels of competition:
a) budget level. The customer is choosing between spending his/her budget in two
completely different ways, to meet completely different needs.
b) generic competition. The competitive product delivers the same benefit but in a different
way: instead of buying the local paper, the customer listens to local radio.
c) product category competition. Here the customer may choose between different product
categories within the same industry: the customer buys a national daily newspaper instead
of the local one, or reads the free local paper delivered through his door, instead going out
and buying one.
d) brand competition. This is the most direct form of competition: does the customer
buy one local title or the other? Organisation's will often be aware of direct brand
competition, but less knowledgeable about the encroaching threat of competition at a
lower level. The level at which the competitive threat is the strongest will obviously have
serious implications for the organisation's strategic priorities.
The Product Portfolio Matrix

Clearly, the BCG matrix can be used by an organisation to analyse its own or its
competitors' products. Both will be useful for the purpose of competitive positioning.

12
 The Directional Policy Matrix

Adapted from Abell, Derek F. & Hammond, John S. (1979) Strategic Market Planning:
Problems and Analytical Approaches, p213. Reprinted with permission of Prentice Hall Inc.
The Directional Policy Matrix is also a two dimensional model but incorporates a
number of different elements into each dimension. It is therefore more complex and also
more subjective than the BCG model. It can be used to plot brands, products, geographical
areas or market segments and helps managers to think through their strategy for each element
in the company's portfolio (or to make assumptions about their competitors' likely strategy).
The size of each circle drawn on the matrix may represent size of turnover or, if known,
profit margin.
Differential advantage
Differential advantage, or competitive advantage, describes the ways in which one
organisation's offering is different from and better than another's. This gives the company an
advantage over its competition. Differential advantage may come from a variety of sources:
superior position, superior skills or superior resources.
Superior position, eg lower costs (perhaps due to location); incumbent position (eg
distribution network); relationships
Superior skills, eg specialised knowledge, technical expertise, organisational skills such as
flexibility
Superior resources, eg financial resources, geographical coverage, exclusive ingredients,
experienced people.

13
 Differential advantage is at the heart of a marketing strategy and should be based on
all of the preceding analysis. It can then be translated into a practical marketing plan covering
the four P's of the marketing mix.
Marketing mix
The "marketing mix" refers to the various elements of a company's offering in the
market place: the product or service itself, including its packaging; the price, including any
discounts or payment terms; the place, or distribution method; and the promotional mix by
which the offering is communicated to the market place.

Research & Development (Design)

Lazuli sarae produce many design for a year, but the design have been selected every
season or depend on demand. Lazuli sarae publish new design twice in a year.

14
Human Resources

IVAN KURNIAWAN RETTA SANG NUZULI H. GINTING

Co-Owner & Director Co-Owner & Creative Director Co-Owner & Marketing Director

PURI A. WIDHIASI ANUGRAH A. SUGIANTO EKA A. PUSPITA GILANG M. IQBAL

Finance and Administration Project Manager Assistant Designer Operational

HANI SETIANI NANDANG

General Assistant Tailor

15
Problem Definition

Like most newborn or growing business, Lazuli Sarae also experiencing major
problems which are similar. When we did an interview with the Lazuli Sarae, they described
things what become the barriers for this company.

For three years of Lazuli Saraes establishment, it can be said that the target market is
still biased. Lazuli is still trying all forms of distribution in order to determine which one is
the right target market. Too many marketing distribution chosen Lazuli pose new obstacles.
Marketing costs to swell. So Lazuli Sarae is in search for the right formula to get an effective
marketing strategy and efficiently with minimum marketing costs.

Besides the obstacles in marketing, Lazuli Sarae also having problems in finance. As
a new comer that could be considered in the business world, capital and assets Lazuli Sarae
was still minimal. Lazuli Sarae is still using private property as a capital (individual
financing), and has not made a loan to a financial institution. According to Nuzul, one
representative of the Lazuli Sarae, why the company has not made a loan to a financial
institution usually happens because the amount of credit that can be liquid does not fit the
needs of Lazuli Sarae and not by the percentage of a given interest rate.

Because of the barriers in finance, then it becomes crucial and also affect to other
units in the company. Productions capacity is not optimal due to insufficient capital for
production. So is the marketing function that is supposed to be a big cost for many things
such as promotion, distribution, etc. to support the increase in sales could not be done
optimally. The lack of funding experienced by Lazuli Sarae cause a domino effect for the
survival of the company.

Developing Strategy for Lazuli Sarae

Indonesias rich cultural diversity and heritage provide fertile ground for a thriving
creative industry. Long time cottage industries of art and crafts have the scope to become
internationally sought after commodities, illustrated by the sudden growth in Indonesias
contemporary art market. The government has been notably active in promoting Indonesias
creative talents and export potential. Under the Ministry of Trade, 2009 was designated as the
Year of the Creative Industry with the organisation of exhibitions throughout the country
and abroad to showcase local companies and products.

16
 Indonesias creative industries hold great potential and government initiatives are
building strong foundations for the sector. Immediate strengths lie in traditional areas of
production such as batik which is reflected in the fashion industry as well as furniture such as
rattan and teak.
Lazuli Sarae is the one of company engaged the creative industries in Indonesia. A
brand which combining contemporary western culture, denim, with local value of Indonesia,
batik. Made by applying traditional wax resist-dye technique called batik on the material of
denim to produce a new variant of textile.
Ivan as the Director of Lazuli Sarae realized that as a StartUp company they have to improve
their strategy in order to survive in this fashion industry. Specifically:
- What kind of marketing strategy that are cost saving and effective for the company ?
(Low Budget & High Impact)
- What distribution channel that effective to improve their sales for Lazuli Sarae?
- How to utilize existing capital to optimize sales?

How to stabilize the offline sales? Due to increased sales only at certain moments.

Ivan as the Director of Lazuli Sarae realized that as a StartUp company they have to improve
their strategy in order to survive in this fashion industry. Specifically:

- What kind of marketing strategy that are cost saving and effective for the company ?
(Low Budget & High Impact)
- What distribution channel that effective to improve their sales for Lazuli Sarae?

Don't underestimate the power of social media marketing. Build Facebook and
Twitter pages and use social media marketing services to help improve your credibility and
audience numbers.

Decide on the various distribution methods for your product or service. Learn what
options are available to you and which ones would be best for what you are offering. Your
decision regarding this matter will affect your sales strategy, as well as your business
finances.

17
18
LEARNING NOTE :

1. Synopsis
Lazuli Sarae is a StartUp company that have mission : creating a new creative business to enrich
Indonesias textile collection. They become a unique brand which combining western culture,
Denim, with local value of Indonesia, Batik which made us very unique compare to other Batik
Company. From 2010 to 2013, the company have 9 distribution sales chanel; Lazulisarae.com,
Pendopo, Alun-alun Indonesia, Sarinah, Rakuten Belanja Online, Zalora and Hijup.com including
on progress distribution sales chanel, Saqinah.com. The sales had reached an all time-high in
special event such as exhibition and also in Lebaran Season. Lazuli Sarae wants develop their
business considering the competition in fashion industry is very intense so they have to improve
their performance in order to survive. The company wants to increase sales and wants to develop
effective marketing strategy that cost saving and choosing distribution channel that effective to
improve their sales for Lazuli Sarae.

2. Related Courses
Business Strategy
Marketing Management

3. Related Concern or Topic

- Business Strategy : Environmental Scanning and Industry Analysis
- Business Strategy : Internal Scanning (Organizational Analysis)
- Business Strategy : Situational Analysis and business strategy (SWOT Analysis)
- Business Strategy : Functional Strategy (Marketing Strategy)
- Marketing Management : Marketing Mix

4. Suggested Analysis
- Five Forces Analysis (Mata Kuliah : Business Strategy)
- PESTEL Analysis (Mata Kuliah : Business Strategy)
- SWOT Analysis (Mata Kuliah : Business Strategy)
- Marketing Mix Analysis (Mata Kuliah : Marketing Management)

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5. Indicated Finding
Finding in 5 Forces Analysis:
Batik on Denim Industry is attractive business, because :
- Threat of new entrance is MEDIUM
- Rivalry among industry is LOW
- Bargaining power of buyer is MEDIUM
- Bargaining power of supplier is MEDIUM
- Threat of subtitutes product is HIGH

Finding in 5 PESTEL analysis :

- Indonesia has potential market because the growth of middle class
- Government supporting the creative industry development
- The users of social media are increase year by year

Finding in SWOT Analysis

Strength :
1. Has unique selling point of design (batik on denim)
2. Have youth style brand image
3. Strategic offline store
Weaknesses :
1. Differentiation of brand line has not been clearly separated
2. Less in promotion especially on social media
3. Limited in quantity for retail product
4. Lack of capital to fulfill demand
5. Limited speed of product development
6. Lack of brand awareness especially for Biondi (Lazulis 2nd brand)
Opportunity :
1. Growing business in fashion industry.
2. Government support creative industry, through event & entrepreneurship program, such as
GKN etc.
3. The users of social media are increase year by year
Threat :
1. New potential competitors in same industry (Batik on Denim)
2. Many competitor in fashion industry

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 By :

Sindikat 2 YP 47B

Aditia Sovia Pramudita

Adhitya Nugraha

Ratu Sonia Gardenia

Tamadara Hilman

Yulianita Rahayu

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