Celebration Candles: Confronting Growth Challenges*

Celebration Candles: Confronting Growth Challenges

Pooja Tiwari (Pooja), a 29-year-old home maker, attended a workshop on candle making. As a hobby, she started making candles at home. She started experimenting with various colors, fragrance and designs of candles. Soon she made dozens of designer scented wax candles at home, and started gifting these candles to friends and relatives on various occasions. She further acquired expertise in making different varieties of them such as aroma candles, floating candles, decorative candles, etc. Her newly acquired skill was praised by her friends and relatives and few suggested her to convert this hobby into a business venture.

The idea of starting business started mounting in Pooja’s mind. After all she was a management graduate and did not want to confine herself to the boundaries of house! She felt by being an entrepreneur she can decide the scope and expanse of her work depending on the family priorities. She also understood that for being successful in the business only making good candles is not sufficient, but marketing them was equally important. She was also not sure about what would be the returns of this business.

However to push start the venture she decided to take a first step by participating in one of the famous exhibition in Pune. She shared her stall with one lady who was selling home décor items. There were more than 300 stalls in the exhibition, and the foot fall was good. Only Pooja’s stall was selling decorative aroma candles and the response was amazing. At the end of the 5th day of the exhibition, she calculated inflow and outflow of the cash, her venture has got a fantastic response. She has invested INR35000/- including cost of material and stall but the total sale was of INR55000/-

Celebrations Candles – The Inception Phase

Overwhelmed with the success at first stroke, Pooja positively started thinking of the business. She understood the importance of branding and decided to  brand her candles as ‘Celebration Candles’. Celebration Candles was registered under the Shop Act License. To create brand awareness, Celebration Candles was registered on information websites like Indiamart & Just Dial.....

The Growth Phase

Celebration Candles had developed good network in the market within one year only through participating in various exhibitions. Pooja had started taking designer candle orders. She had registered her business in leading B2B website Indiamart. She was getting orders in very small quantity outside Pune. Sometimes she used to get the good enquiry outside country but because she was not having export license she was not able to fulfill the query. After 6 months, she discontinued the services of Indiamart......

Maturity & Downfall of Celebration Candles

From 2012, suddenly because of the change in macroeconomic factors, the business got hampered. Prices of raw material increased with the rise in petrol prices which in turn increased the price of wax from INR80 per kg to INR120 per kg. The gas cylinder price also rose from INR420 to INR750.

Chinese candles were grabbing the market because of their economies of scales production. Chinese battery candles emerged as a substitute for handmade candles. Though business was running, profit margin was decreasing. Clients like event decorators and restaurants began to opt for battery operated candles. China’s economies of scale production of candles affected Indian manufacturers..............

Assignment Questions

I. Conduct SWOT analysis of Celebration Candles.

II. Understand and analyze the growth strategies for Celebration Candles.

III. Discuss the strategies for capturing domestic and international market.

IV..............

Exhibits

Exhibit I: Overview of Candle Business

Exhibit II: Candle Making Market in India

Exhibit III: Candle Manufacturing Process

Exhibit IV: Marketing Mix of Celebration Candles

Exhibit V: Celebration Candles’ Target Market

Exhibit VI :Competitive Advantage of Celebration Candles

Exhibit VII: Marketing Strategies of Celebration Candles

Exhibit VIII: Pricing Strategy of Celebration Candles

Exhibit IX : Distribution channel of Celebration Candles

Exhibit X: Human Resource Plan of Celebration Candles

Exhibit XI: Raw material Requirement of Celebration Candles

Exhibit XII: Segmentation of Celebration Candles

Celebration Candles: Confronting Growth Challenges

Synopsis

Pooja Tiwari (Pooja), a homemaker, attended candle making workshop and started making candles as a hobby and used to gift them to her near and dear on various occasions. After getting good response from her family and friends, she started a business and registered the company by the name ‘Celebration Candles’. Celebration Candles offers wide variety of candles for various purposes like corporate gifting, event decors, interior decoration for home and hotels, meditation centers and many others. The product portfolio includes gold and silver radiant candle infused with floral essence, essential oils and soothing fragrance decorated with dots, seeds, shells and sequins. Best quality wax was used for manufacturing the candles. By participating in various exhibitions in Mumbai, Pune and Nagpur, Celebration Candles has developed a good network in local market. Having improved on packaging and getting registered on Indiamart, Just Dial and various other wholesalers’ websites, Celebration Candles became a recognized name in the Candle business and the distribution was further expanded to Goa, Nagpur, Mumbai and Hyderabad.

However, rise in threat of substitutes from China, increase in the cost of raw materials and rise in competition is leading to uncertain future for Celebration Candles. The losses are accumulating due to rising expenses and increasing competition.

Pooja is getting worried about the future of her venture and is struggling to find ways to make it profitable. She is wondering what marketing strategies can be applied so as to increase the business. Occasionally, she is in a dilemma as to whether she should even continue with the venture or diversify it or just shut it down.

This case intends to discuss the challenges faced by entrepreneurs in SME sector due to increasing competition, dumping of cheap electrical substitutes by China and rising raw material costs. The case further discusses about the important steps to be taken while establishing a business so as to ensure the success.

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