German Stationary Market Analysis and Pricing Strategy

This assignment provides an in-depth analysis of the German stationary market, highlighting its rapid growth due to rising demand, customized products by specialist retailers, and diversification. However, it also notes that consumers perceive Donald Duque's product prices as very high, leading to dissatisfaction. As a result, the assignment recommends that Donald Duque re-evaluate his pricing policy to make it more consumer-friendly and competitive in the market.

ANALYZING INFORMATION

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
TASK 2............................................................................................................................................2
TASK 3............................................................................................................................................3
(A). Total sales.............................................................................................................................3
(B). Mixed pie chart.....................................................................................................................3
(C)................................................................................................................................................4
(D). Sales forecast through scatter diagram.................................................................................4
TASK 4............................................................................................................................................5
TASK 5............................................................................................................................................6
(A). Pros and Cons table..............................................................................................................6
(B). List of laws...........................................................................................................................7
TASK 6............................................................................................................................................8
TASK 7............................................................................................................................................8
(A)................................................................................................................................................8
(B)................................................................................................................................................9
TASK 8............................................................................................................................................9
REFERENCES..............................................................................................................................11
APPENDIX....................................................................................................................................12
Appendix 1.................................................................................................................................12
Appendix 2.................................................................................................................................13

INTRODUCTION
In today’s time, managers need to draw important inferences through examining business
records and performance such as sales reports, cost related data, stock, profitability and others.
Currently, Germanys is a well-positioned market in stationery sector, as per the Trade
Association for Office Supply and Writing Material, the industry generates an annual turnover of
€14.8m or more. The current study specifically targets Germany’s stationery market, current
trade and market. Donald Duque owns small stationery business in Northern France, it is a
wholesaler which does not offer stationery item directly to the public and target small shops,
schools and offices. Thus, the report examine and evaluation of company’s sales database and
other important information.
TASK 1
Germany stationery sector generates around €14.8bn income per annum. In the country,
each individual spend around €35.2 on purchasing stationery material and writing. Among all the
European nations, Germany stood at second position in stationery spending (Conlumino, 2015).
More than 70% of the stationary brands of the country experienced a good growth in the sales, as
per Association of German Stationery Brands, in 2015, industry’s total turnover rose by 3.5%
due to increase in domestic demand by 2.5% and abroad by 5%.
Figure 1 Germany stationery market production and year-on-year growth
(Source: MGCC Perspective - German Chamber of Commerce and Industry, 2016)
1 | P a g e

According to the official statistics, currently there are 2200 wholesalers operating in the
sector, out of which, 50% companies net turnover is below €500,000 including those firms who
involved in B2B market and offering office supplies, paper and writing instruments directly to
the commercial clients. Over the period, due to merger and exit strategies, number of wholesalers
came down, still, they are still progressing and gain increasing popularity (MGCC Perspective -
German Chamber of Commerce and Industry, 2016). The key reason behind this is widening
scope of the B2B market such as school premises, shops, schools, governmental agencies and
others. Besides this, there are 5500 specialist retailers with a total net turnover of €250,000
through offering premium quality items, easily recognizable due to standard labels. In the sector,
creativity boost demand especially for drawing and painting material with an exceptional growth.
TASK 2
Switserland
Germany
Austria
France
Slovenia
Italy
Slovakia
Hungary
Spain
Poland
Croatia
Czech Republic
€0 €5 €10 €15 €20 €25 €30 €35 €40
35.5
35.2
35
28.3
20.4
18.6
9.8
9.6
8.9
8.5
7.9
7.6
Consumer annual spending on writing and
drawing material
Annual spending
Spending level
Country name
Figure 2 Annual spending of an individual on stationery products
As per the diagram, it is clear that after Switzerland, Germany comes at second position
in the terms of consumer spending at a per capita annual expense of €35.2 on writing and
drawing material. However, thereafter, Austria stand at third position with per capital spending
of €35 while, France stood at 4th position with per capita expense of €28.3. It indicates that,
2 | P a g e

stationary market become a vital sector for the German economy, in which, major supermarkets
and hypermarkets are contributing success. Moreover, with mass market demand, premium
product retailers and growth of e-commerce enable industry to hold 17% market share. Specialist
retailers who provide customized goods to the consumers and diversifying their operations as
their product portfolio includes parcel and postal services, newspaper, concert ticks and articles
had totally changed the concept of traditional stores. The industry expects a year on year growth
of 3.5%.
TASK 3
(A). Total sales
See Appendix 1
Total sales = Sum of sales of all the seven products in a given year
Increase in sales = Current year sales – Previous period sales
YOY (Year on Year) growth: (Current year sales/previous year sales)-1
(B). Mixed pie chart
14%
16%
10%
14%
13%
16%
17%
11%
16%
10%
15%12%
17%
20%
Sales performance by product
category in 2015 and 2016
Printer cartridges
General office supplies
low-cost printers
office furniture
shredders
paper-based supplies
writing/drawing materials
Figure 3 Mixed pie chart for sales by product for 2015 and 2016
As per the results, it is found that in 2016, Donald Duque’s sales from printer cartridges
and shredders came down 14% to 11% and from 13% to 12%. However, general office suppliers
3 | P a g e

and low cost printers sales contribution to total turnover remains constant to 16% and 10%. In
contrast to this, all the other products i.e. furniture, paper-based supplies and writing and drawing
material increased to 15%, 17% and 20% in 2016. It clearly presents that there is a high demand
prevailing in the market for writing and drawing material used mainly for innovation and
creativity purpose (Haughton and Kelly, 2015).
(C).
Scatter diagram presents clearly the relationship between two different factors or
elements (Newbold, Carlson and Thorne, 2012). With the help of creating a scatter diagram,
Donald Duque can examine that how sales respond over the period whether it rise up or down.
2014 2015 2016
155000
160000
165000
170000
175000
180000
185000
f(x) = 7500 x − 14940500
R² = 0.986842105263158
Scatter diagram
Sales
Linear (Sales)
Year
Total sales ( In €)
Figure 4 Scatter diagram
The scatter graph indicates positive association between total sales and year at a
correlation coefficient of 0.99 which indicates strong association and reflect that with the change
in period, company generate increased revenue through its stationary wholesale in B2B market
due to increased demand, more importantly, drawing and painting products in schools, corporate
offices and others (Cramér, 2016).
(D). Sales forecast through scatter diagram
Sales forecast: Trend equation is a useful tool to predict future sales volume (Levine,
Krehbiel and Berenson, 2013). With reference to Donald Duque, it is forecasting here as follows:
Trend line: 7500x + 157,000
4 | P a g e

2017: 7500(year) + 157.000
= 7500(4) + 157,000
= 187,000
2018: 7500(year) + 157,000
= 7500(5) + 157,000
= 194,500
TASK 4
Currently, Donald Duque carry out their operational activities via telephonic orders,
negotiation, hard copy invoices, orders and others. Therefore, in the digitalized era, it is looking
for expanding their business through moving to online presence, e-commerce, still, company is
concerned about whether it should expand or not. Thus, in order to determine its pros and cons
table is constructing here as follows:
Should Donald Duque expand business online?
Pros Score/
10
Cons Score/
10
With the help of internet saturation rates,
it can maximize its presence
internationally. Thus, it increase
visibility
10 In order to expand business online,
Donald Duque need to incur cost on
website development, hiring
technical and digitalized staff
members and others.
10
It helps to increase customer base by
targeting small shops, offices, schools all
around the globe (Rodrigues, Maccari,
and Lenzi, 2012).
10 It is a time-taking process, because
developing website and gaining
popularity all over the world take
some time.
9
E-commerce will enable business to
move into B2C marketing also, where
consumers or individual can easily place
9 Lack of resources like fund and
skilled labor is a key concern.
6
5 | P a g e

order and get instant delivery at home.
Crowded audience and traffic will assist
entity to boost their income level through
international revenue.
9 Staff may be reluctant to accept
changes in the business (Norzailan,
Othman and Ishizaki, 2016).
7
More consumer base, exceeding sales,
high international revenue will build
worldwide image and maximize its
competitive strength.
8 Currency fluctuation is a risk in
international market.
8
As in the volatile market, changes took
place at a faster rate, therefore,
international market helps or protect
companies from any loss due to changing
demographics by targeting more user
base.
7 Language barrier, because, every
country has different language,
therefore, local language needs to
translate into workable one.
6
Economies of scale also exist as with the
increase in production, per unit cost goes
down and profit rises.
9 Competition in the e-commerce can’t
be ignored.
7
Total pros 62 Total cons 53
Average pros 8.85 Average cons 7.57
1: Strongly disagree
10: Strongly agree
The results for pros has been scored at high to 8.85 whilst for cons, it is scored to 7.57
demonstrates that Donald Duque definitely go for online expansion.
TASK 5
(A). Pros and Cons table
Currently, Donald Duque is operating only in Northern France and never operated in
Germany or Belgium.
Should Donald Duque expand business to Germany and Belgium?
6 | P a g e

Pros Score
/10
Cons Score
/10
Widen geographical presence 10 Lack of resources 8
Increased consumer base 9 Infrastructure setting 9
Higher sales 9 Skilled workforce at high cost 7
High return (Kokemuller, 2015) 8 Competition with existing
wholesalers and specialized retailers
8
High consumer spending and demand 8 Price sensitive consumer base 5
Economies of scale 9 Compliance with legal requirement 7
Entry in new market build corporate
reputation
7 Unfavorable political landscape 6
Total pros 60 Total cons 50
Average pros 8.57 Average cons 7.14
Average pros 8.57> average cons 7.14: Accept expansion strategy
(B). List of laws
Quality management standards: As per this, Donald Duque need to provide premium and
superb quality of stationery items to the clients using quality standards, assurance and
management framework.
Environmental management: It needs to promote environmental performance by
following necessary standards such as energy management, efficiency, proper resource
utilization at minimal wastage and others.
Occupational health and safety: Donald Duque must maintain proper safety arrangements
for the workforce to provide them a safe workplace.
Information security: It is essential for all companies to keep their client and employees
details confidential, so that, only authorized people can access it.
Anti-discrimination: Worker can’t be treated unfavorable and unequally on any ground of
nationality, race, gender, age and other factors.
7 | P a g e

TASK 6
According to the given case, Donald believe that mean order value is €240 and as per the
sample survey of 50 accounts, mean and standard deviation value is found to €230 and €43.
Hypothesis testing is a useful way to check the validity of Donald belief performed as follows:
Null hypothesis: There is no significant difference between actual mean value and expected
mean order value.
Alternative hypothesis: There is significant different between actual mean value and expected
mean order value.
Test statistics: 5% significance level
Z-score = Mean difference between population and sample/standard deviation
= (€240-€230)/ €43
= 0.23
P-value in Normal statistics table: 0.09095 at cumulative value of 0.59095
Decision: P-value is above the sig level of 5% (0.05), therefore, null hypothesis accepted and
represents that there is no sig. difference between expected mean value of €240 and sample mean
value of €230 (Lee and Peters, 2015).
TASK 7
(A).
As per the case, every year, Duque emailed a questionnaire to number of consumers to
gather their responses, however, there are less than 5% users who completed and revert
questionnaire. Thus, in such case, first, company should use voluntary participation of the
employees, in which, they must receive their acceptance first and then involved in the sample
targeting regular consumers, thus, prior communication is necessary. Besides this, they can offer
some incentives to the respondents to encourage them to give their authentic responses and
thereby help firm to make better decisions (Field, 2013).
8 | P a g e

(B).
In CY 2016, only twenty consumers provided their complete response in questionnaire. It
is essential for the Donald Duque to examine the data and responses of the consumers to make
better plans. In the questionnaire, participants ranked out of 1-4, 1 being poor and 4 being
excellent. Average is a statistical central tendency measure, which provided summarized result or
mean rating whereas standard deviation shows that to what extent, all the participants responded
differently from each other (Keller, 2016).
See Appendix 2
ID
CUST_SER
V QUAL_P&S
SALES_STAF
F
PRICE_VALU
E
Average 3.5 3.15 3.45 1.95
St.Dev. 0.76 0.37 0.83 0.51
According to the results, majority of the participants ranked quality of product as a good
with an average rank of 3.15. It reflects that users believe that offered goods and services are of
average quality. However, customer service and sales staff had ranked amid between good and
excellent at 3.5 and 3.45 means that company had successfully meet their expectations.
However, standard deviation for both the factors is high to 0.76 and 0.83 which indicates that
some of the users consider consumer service and sales staff as excellent while other ranked it
good or fair (Black and et.al., 2013). Price value reported average rating of 1.95 below fair; it
means that pricing policy needs to be revise because consumer feels that product is costly at a
lower standard deviation of 0.51. Thus, pricing is the key area of concern and Donal Duque
reassess its pricing mechanism considering buyer’s willingness to pay, income level,
competitor’s rates and other factors so that it can encourage maximum people to purchase their
offerings.
TASK 8
From the findings of the report, it found that German Stationary Market is rapidly
growing because of rising demand, customized products by specialist retailers, diversification
and others. The report found position relationship between sales and period, which expects
further increase in sales value in the coming years. In despite of this, hypothesis testing did not
determined any significant difference between expected mean order value of €240 to that of
actual mean of €230. However, descriptive statistical results assessed that consumer perceive
9 | P a g e

Donald Duque’s product prices very high, therefore, they are not satisfied with it, thus, in order
to satisfy users, it need to re-evaluate its current pricing policy and make it according to the
consumer requirement with desired return.
10 | P a g e

REFERENCES
Books and Journals
Black, K and et.al., 2013. Australasian business statistics. John Wiley & Sons.
Cramér, H., 2016. Mathematical Methods of Statistics (PMS-9). Princeton university press.
Field, A., 2013. Discovering statistics using IBM SPSS statistics. Sage.
Haughton, J. and Kelly, A., 2015. Student Performance in an Introductory Business Statistics
Course: Does Delivery Mode Matter?. Journal of Education for Business. 90(1). pp.31-43.
Keller, G., 2016. Modern Business Statistics. McGraw-Hill/Irwin.
Lee, N. and Peters, M., 2015. Business Statistics Using EXCEL and SPSS. Sage.
Levine, D.M., Krehbiel, T.C. and Berenson, M.L., 2013. Business Statistics: International
Edition. Pearson Higher Ed.
Newbold, P., Carlson, W., and Thorne, B., 2012. Statistics for business and economics. Pearson.
Norzailan, Z., Othman, R. B. and Ishizaki, H., 2016. Strategic leadership competencies: what is
it and how to develop it?. Industrial and Commercial Training, 48(8).
Rodrigues, L., Maccari, E. A. and Lenzi, F. C., 2012. Innovation strategy for business to business
market penetration. International Business Research. 5(2). p.137.
Online
Conlumino, 2015. Books, News and Stationery Retailing in Germany-Market Summary and
Forecasts. [PDF]. Available through: <
http://www.ap1inc.com/progrefiles/Conlumino/RT0309SR%20-%20SP.pdf>.
Kokemuller, N., 2015. Advantage and disadvantage of expanding your business. [ONLINE].
Available through: http://smallbusiness.chron.com/advantages-disadvantages-expanding-
business-21684.html.
MGCC Perspective - German Chamber of Commerce and Industry. 2016. [PDF]. Available
through: <http://www.malaysia.ahk.de/fileadmin/ahk_malaysia/Perspectives/MGC047-
Mar.Apr16_iPAD.pdf>.
11 | P a g e

APPENDIX
Appendix 1
12 | P a g e

Appendix 2
13 | P a g e

14 | P a g e