MARKET STRATEGY
Content
The Marketing Strategy of Two Wheeler Products in Bangladesh
The Marketing Strategy of Two Wheeler Products in Bangladesh
Submitted ToShakil Huda Professor IBA University of Dhaka
Submitted ByAsifur Rahman (Roll- 17) Sadman Prodhan (Roll-47) Batch- MBA 48D
Date of Submission- 8th June 2013
Institute of Business Administration University of Dhaka
Letter of Transmittal
8th June 2013
Mr. Shakil Huda Professor IBA University of Dhaka
Sir, Here is the report on “The Marketing Strategy of Two Wheeler Products in Bangladesh” that you asked us to prepare.
We tried to follow the guidelines that you provided us throughout the semester, in preparing the report. Working with such an interesting report given us the opportunity to achieve knowledge and experience about the marketing strategy and processes of different two wheeler companies operating in Bangladesh. This task was quite challenging and we thoroughly enjoyed working on preparing this report.
We would be extremely delighted and honored if you accept the report and recognize the hard work and devotion we have put on preparing this report. We truly appreciate this assignment, and should you need any assistance, please call on us.
Sincerely,
Asifur Rahman Roll- 17 Batch- 48D
Sadman Prodhan Roll- 47 Batch- 48D
Table of Contents
Executive Summary.................................................................................................................... 5 Literature Review ....................................................................................................................... 6 Overview of the two wheeler companies .............................................................................. 7 Market share of two wheeler brands .................................................................................... 9 Introduction ............................................................................................................................. 10 Objectives................................................................................................................................. 11 Overall Objective: ................................................................................................................. 11 Specific objective:................................................................................................................. 11 Methodology............................................................................................................................ 11 Primary Data:........................................................................................................................ 11 Secondary Data: ................................................................................................................... 11 Scopes of the Study.................................................................................................................. 12 Limitation of the Study ............................................................................................................ 12 Marketing Division: A Key to Success ...................................................................................... 13 Segmenting, Targeting, and Positioning .................................................................................. 14 Differentiation Tools ................................................................................................................ 16 Application of Four P’s ............................................................................................................. 17 Product and Pricing: ............................................................................................................. 17 Promotion: ........................................................................................................................... 18 Place: .................................................................................................................................... 18 Porter’s five force analysis ....................................................................................................... 19 Threat of intense segment rivalry: ....................................................................................... 19 Threat of new entrants ........................................................................................................ 19 Threat of substitute products: ............................................................................................. 19 Threat of bargaining power of buyer: .................................................................................. 20 Threat of bargaining power of suppliers:............................................................................. 20 Social activities by the automobile companies........................................................................ 20 Marketing Control in Process................................................................................................... 21 Conclusion ................................................................................................................................ 22 Recommendations ................................................................................................................... 23 Bibliography ............................................................................................................................. 24 Appendix .................................................................................................................................. 25
Executive Summary
This report deals with the two wheeler industry in Bangladesh. More specifically, who are the major players in two wheeler industry and what are the marketing strategies they are adopting, how consumers recognize and rate different two wheelers in competitive scenario. The project named “The Marketing Strategy of Two Wheeler Products in Bangladesh” is undertaken to analyze how dealers utilizing the four p`s (product, place, price and promotion) of marketing mix and what are all current trends is going on in two wheeler automobile industry. In addition, Porter’s five force analysis for the industry has been done give a perspective on the intrinsic long run attractiveness of the market. Main aspects of the project are to analyze the different products and services offered. A conclusion has been drawn based on the analysis done and some recommendations for the overall improvement of the industry have been given.
Literature Review
Automobile industry is one of the largest industries in global market. Being the leader in product and process technologies in the manufacturing sector, it has been recognized as one of the drivers of economic growth. During the last decade, well directed efforts have been made to provide a new look to the automobile policy for realizing the sector's full potential for the economy. Aggressive marketing by the auto finance companies have also played a significant role in boosting automobile demand, especially from the population in the middle income group. A Nations economy is well known from its transport system. For instant and rapid growth in economy, a well-developed and well-networked transportation system is essential. As Bangladesh’s transport network is developing at a fast pace, Bangladesh automobile Industry, specially the two wheeler industry is growing too. Also, the Automobile industry has strong backward and forward linkages and hence provides employment to a large section of the population. Thus the role of Automobile Industry is very essential in Bangladesh economy. In Bangladesh extensive road network has been made in the rural areas as part of the infrastructural development. Motorcycle is used as transportation which has increased the opportunity of motorcycle business in Bangladesh. About 100 companies which includes from dealers to manufacturers are operating their marketing activities in Bangladesh and they follow their own marketing strategies to capture the market share. There are several companies in Bangladesh competing for the top spot in market share of motorcycle industry. Among other motor cycle companies, Uttara motors ltd, Atlas BD, TVS auto BD Ltd., Runner Automobiles Limited, Singer Bangladesh Ltd. and Walton are the frontrunners.
Overview of the two wheeler companies
Uttara motors ltd has been one of the market leaders in the motorcycle industry. Uttara Motors Limited is the flag bearer of the Uttara Group of Companies, engaged in the sales and marketing of different brands of automobiles throughout the country through its sales & service network. They are sufficiently equipped to meet any challenge in the new century. The company’s wide network of distributors (Dealer Network) is capable and organized to deal with any challenge. They have behind them a long experience of 38 years of success in the domestic market. They have Modern & Dynamic management in every step of the company structure which consists of team work of a complementing group of experienced directors and a dedicated staff & executives. They are the distributor of various international brands like: • • • • • Bajaj Auto Limited, India ISUZU Motors Limited, Japan Suzuki Motors Corporation, Japan Maruti Suzuki India Limited Pak Suzuki Motors Co. Limited, Pakistan
The company was established in 1966 under private management by the then West Pakistani entrepreneur. It was nationalized and placed under the management of Bangladesh Steel & Engineering Corporation (BSEC) in 1972 and converted into a Public Limited Company in 1987 when 49% of its share was sold to general public and 51% is retained with BSEC. Among their products are CBZ, Hunk, Passion pro, CD deluxe, Splender etc.
Established in 2007, TVS Auto Bangladesh Ltd is a joint venture company between the Rian Motors (a concern of Sony-Rangs Group) of Bangladesh and TVS & Sons of India. It has been assembling and marketing TVS Brand Two-wheeler and Threewheeler. It is the first ever joint-venture company in two-wheeler industry in Bangladesh. TVS has planned to raise its market share in Bangladesh within the next few years. The company expects Bangladesh’s two-wheeler market to boom in coming years.
Runner Automobiles Ltd was established in the year 2000. The Company is registered in Joint Stock Company of Bangladesh under Companies Act.1993 as a Private Limited Company. The company deals with a wide range of motorcycles. The company's sales are organized by an efficient network through its dealers in different parts of the country. Mr. Hafizur Rahman Khan, the Chairman, a well-experienced personality having long twenty-four years of successful motorcycle marketing background, heads the Company. Mr. Mozammel Hossain, the vice chairman, a successful marketing expert having long experience in motorcycle marketing, is heading the company Sales. Other senior professionals/experts in departments like Production, Sales, Service, Administration, Accounts and Commercial run the company. Runner Automobiles Ltd. known for Dayang brands of motorcycle, imports motorcycles in CBU and CKD condition from China and India and after assembly of the motorcycles markets throughout Bangladesh by dealers network. All dealers are given a sales target and their achievements are closely monitored. On achieving targets, the dealers are offered with excellent incentives including trip abroad.
Walton, a brand of R.B Group of Industries is a conglomerate based in Dhaka, Bangladesh. It comprises numerous subsidiaries and affiliated businesses, most of them united under the Walton brand. The subsidiaries include Walton Motors, Walton Mobile and Walton Electronics. Walton produces electronics, motor vehicles, and telecommunications products. Walton motors produces various kinds of motorcycles which are putting up stiff competition for the bikes exported from foreign countries. The price of their motorcycles is low to other motorcycles like Hero Honda, Bajaj, Yamaha, and Honda which are currently leading the market. At present Walton has various product lines of motorcycle like Fusion, Prizm, Xplore etc.
Market share of two wheeler brands
Others 19% TVS 12%
Bajaj 30%
Dayang 17%
Hero Honda 22%
Introduction
Two wheeler products or motorcycles are one of the leading and fastest growing vehicle industries in Bangladesh. Bangladesh is a high density country. Total population of the country is near about 160 Million. Among total population approximately 80 percent people live in the rural areas and depend on agriculture. As part of infrastructural development in the country, an extensive road-network has been developed in the rural areas creating opportunities for trade and commerce. Motorcycle is one of the modes of transportation whose use has been increased at a significant level in the last decade. To fulfill the demand of the customers several companies now are marketing motorcycles. Majority of the two wheeler market depends on the import of motorcycles from India, China and Korea. There are about 100 automobile companies that are operating their marketing activities in Bangladesh. Among them 10- 12 companies are enjoying majority of the market share. These companies are following marketing strategies of their own to capture the market share. Market share of these companies is gained and expanded by following the four P's (Product, Price, Place and Promotion) literally. The implementation of these four P's is studied for conceptualizing the marketing program of these companies.
Among motor cycle companies we study the following companies. • • • • • • Uttara motors limited Atlas BD TVS auto BD Limited Runner Automobiles Limited Singer Bangladesh Limited Walton Bangladesh Limited
Objectives
Marketing strategies have a significant role for gaining success in business. In motorcycle marketing in Bangladesh different strategies of marketing are followed by different companies.
Overall Objective:
The broad objective of the study is to conceptualize the marketing strategy of various two wheeler companies operating in Bangladesh.
Specific objective:
1. To provide a brief idea about the two wheeler market of Bangladesh 2. To understand the marketing strategies of motorcycle companies
Methodology
Primary Data:
This is a literature based paper and therefore to conduct this study, data collection from customer through questionnaire were avoided. But a number of executives and managers from different motorcycle companies were interviewed for detailed information.
Secondary Data:
The study includes cross-sectional data of six different motorcycle companies operating in Bangladesh. The source of secondary data are text books, brochures, booklets, printed material, articles, study reports, catalogs and annual reports of motorcycle companies. Also the website of the companies and many articles in internet was the data source of this report.
Scopes of the Study
The study is focused on the recent trends of motorcycle market of Bangladesh. This study will explain the aspects and strategies of motorcycle industry of Bangladesh. So it would be very useful for different users. The purposes this study will serve such as• • • • • • Provide a brief idea about market structure to the onlooker Provide a cross-sectional view of marketing strategy of motorbike industry Help a new entrant of this industry to understand the market trend Provide the existing company a firsthand overview of their standings Help the marketer to make proper amendments and correction to their strategy Will provide “Food for Thought” to new researcher
Basically anyone studying the report will get firsthand information about two wheeler markets which he can use in developing the market itself.
Limitation of the Study
During the preparation of this report we had to face a few problems. These disrupted the preparation of the report. They are discussed below. • • • • • • Data collection from executives/managers were very difficult as they were reluctant to disclose their marketing strategies and policies There are very few research papers and articles on Bangladeshi market to study The websites of the companies are less informative Unavailability of previous research work in Bangladesh Getting appointment and sufficient help from the employer of the companies was difficult due to their limited working hour The research was limited by time and cost
Marketing Division: A Key to Success
The secret of success of motorcycle marketing depends on marketing division's activities. This division includes• • • • • • Sales and marketing Service Sales training Marketing Information System (MIS) Field administration Commercial departments
To generate sales of motorcycles in order to achieve target sales, sales-department maintains strong relationship with the dealers, as companies believe in relationship marketing. Marketing executives and senior executives of sales conduct extensive all over Bangladesh and keep all the market information up-to-date. To promote brand and company image, sales department is involved in various promotional activities. To fulfill the customers' needs, service department ensures the service including spare parts replacement to all customers within 24 to 48 hours. Throughout the year mobile service teams, which are formed with well experienced and professional engineers and mechanics, are providing service in different areas of the country with company's own transport and technical hands as per service calendar. The mobile service team ensures warranty for 2 to 3 years for the engine and one year for other components and arrange on the spot replacement of parts. There are sales training department in these companies. Sales forces who are engaged in motorcycle marketing must be well skilled and knowledgeable. To make the sales people well skilled, they have to go to through an extensive training. During this training, they have to know about their customers, their products and have to gather a vast knowledge about selling skill. Sales training department is responsible to make fresh graduates/masters eligible for this post. MIS department plays a vital role in the marketing division. This department collects data from the field regarding market share, competitor’s activities, sales of products and necessary marketing information. They analyze the data and provide necessary information about present, past and future marketing strategy of these companies. Field administration
department is responsible to maintain all types of administrative activities of field forces. Commercial department plays a pivotal role for these companies to import the product and components in the right time through maintaining all rules and regulations that are prevailing in this connection.
Segmenting, Targeting, and Positioning
Market segmentation involves dividing a market into smaller groups of buyers with distinct needs, characteristics or behaviors who might require separate products or marketing mix. In Bangladesh, for motorcycle marketing automobile companies are segmenting their market based on all four types of segmenting variables. Market is segmented on the basis of• • • • Geographic Segments Demographic Segments Psychographic Segments Behavioral Data Segmentation
Segmentation
Geographic Segments • • • Demographic Segments
Segmentation Criteria
Rural Area Urban Area Sub-Urban Area
According to Age base• • • • • • • • Teen Aged (15-19 years) Adults (20-45 years) Baby Boomers (46-65 years) Retired (above 65 years)
According to LifestyleStudents Professionals Business persons Retired
According to Gender• • Psychographic Segments • • • Behavioral Segments • • • Male Female Lifestyle Personality Social Class Social Class Usage Rate User Status
A target market consists of a set of buyers who share common needs or characteristics that the company decides to serve. For targeting market; mostly undifferentiated (Mass) marketing strategy is followed here. In some cases several companies also follow the differentiated (segmented) marketing strategy. Among these segmentation processes companies are using demographic segments most frequently and most effectively. A product's position is the way the product is defined by consumers on important attributes - the place the product occupies in consumers' minds relative to competing products. Positioning of automobile products to the customers' mind is very difficult because same generic products are marketed by a large number of companies. Companies are trying to create competitive advantages to make the position in the customers mind. The main criteria that attracts the customer are• • • • • Initial cost and fuel economy are highest priority. Low maintenance costs are desired. Small entrepreneurs and farmers conduct their business carrying loads. Very limited usage for sports bike. Bangladeshi people prefer the two wheelers because of their small manageable size, low maintenance, and pricing and easy loan repayments.
Differentiation Tools
Differentiation is the act of designing a set of meaningful differences to distinguish the company's offering from competitors' offerings. differentiate the market through differential tools. Automobile companies
In motorcycle market product differentiation is very difficult because the products are durable but more or less homogeneous. Yet companies offer some differentiations of products like• • • • Design Features Performance After Sales Service
They are trying to ensure better services to the customers. They provide services to the customers which will be different from the competitors in some extent. Providing services are replacement of damaged product, broken spare-parts and ensuring quick supply through own distribution channel. Companies are providing after-salesservices for bonding and strengthening the Customer Relationship. For this purpose they use experienced technical team which is generally headed by a General Manger. They foster various mobile service teams operating in different part of Bangladesh. Every team follows a yearly service calendar. Service mobile teams ensure warranty. Warranty replacements are made within 48 hours. Every automobile company, operating in Bangladesh, has a central workshop to ensure the after-sales-service to the customers. Companies are offering personnel
differentiation from their competitors to attract their customers. They are recruiting competent and responsible personnel. As a result, they have qualified management and they are providing training facilities to the personnel in modern and well communication system. Every company has a well-equipped distribution channel by which it can serve its customers through velocity. Performance of an automobile company highly depends on its distribution channel. The companies are trying to take the competitive advantages through fruitful distribution channel.
Application of Four P’s
In the competitive situation among the automobile companies in Bangladesh appropriate application of 4p's is the most significant. These P’s are• • • • Price Product Place Promotion
Product and Pricing:
Price is extremely important in marketing competition. Competitors can easily measure and observe price and respond quickly to price changes. Product, promotion and distribution cost in the marketing mix directly affect the price. Price is an important factor that directly related to its market share and profit margin. To attract a large number of customers quickly and to win a large market share, new motorcycle companies follow the market penetration pricing strategy. According to this strategy the companies set a low initial price to penetrate into the market quickly and deeply with high quality. After a certain period this product goes to maturity phase and establish as a brand in the market. Then the companies raise their price to adjust with the competitors' price. When the products are well accepted by the customers and if the product quality rise, some companies follow the psychological pricing. Under this strategy marketing management believes that customers usually perceive high priced products as having higher quality. Some companies have a good corporate image in the automobile market. These companies do not follow penetration strategy. In pricing motorcycle they set a competitive price directly with the help of corporate image.
Promotion:
Promotion is communicating information between seller and potential buyer or others in the channel to influence attitudes and behavior. For expanding the motorcycle market automobile companies conduct their promotional activities through advertising, incentive packages, yearly calendar and participation in exhibition and dealer conference. For the advertising purpose these companies provide signboard for dealer showroom. Advertisement on billboard and overheads is also sponsored by these companies. As advertising media newspaper and magazine are used to inform, perused and remind the customers about the product by these marketers. Signboard, billboard and overheads are also used as the outdoor advertising media. Incentive package, yearly calendar, participation in exhibition and dealer conference is used as the sales promotion tools here. Companies offer a very attractive incentive package to their dealers. Yearly and pocket calendars play a vital role as specialty advertising. To motivate and help the salespersons' participation in exhibition by automobile companies is very much significant. Arranging very colorful and charming dealer conference is helpful to expand the market of motorcycle.
Place:
The motorcycle distribution mainly depends on the dealers and distributor within the country. The major dealers interact directly with the companies' sales executives for purchasing the motorcycle. Then they distribute motorcycles amongst wholesalers who in turn sell those to retailer. However, in this market it is very difficult to demarcate between wholesalers and retailers as most of the wholesalers also do retailing very often as per demand. That means in this market wholesalers are also retailers in the same time. In the marketing channel, companies select the distributors based on demand position, sales-volume consideration and dealer's sales capacity.
Companies are having defined classification of the dealer depending upon his location, area of operation, profile of business, sales volume, degree of exclusivity etc. In accordance to the classification, dealer will get the benefit with respect to price (discounting structure) and delivery. A crucial balancing is also required amongst the dealer in terms of pricing so that big dealers cannot sale the product at a lower price to a small dealer in another location and in the process disturbing the
whole networking concept. This phenomenon may be described with an example considering its importance in maintaining the channel.
Two types of marketing channel of motorcycle marketing
Marketing Channel of Motorcycle (Traditional) • • • • • Manufacturer (sales Executive) Dealer Wholesaler Retailer Customer
Marketing Channel of Motorcycle (Exceptional) • • • • Manufacturer (sales Executive) Dealer Retailer Customer
Porter’s five force analysis
Threat of intense segment rivalry:
The industry rivalry is extremely high with any product being matched in a few months by competitor. This instinct of the industry is primarily driven by the technical capabilities acquired over years of gestation under the technical collaboration with international players.
Threat of new entrants
Here the threat of new entrants depends on the economies of scale of the cost of production and customer switching costs, access to industry distribution channels.
Threat of substitute products:
There is no perfect substitute to this industry. Cars, which again are a mode of transport, do never directly compete or come in consideration while selecting a twowheeler, cycles do never even compete with the low entry level moped for even this choice comes at a comparatively higher economic potential.
Threat of bargaining power of buyer:
Buyers in automobile market have more choice to choose from and the increasing competition is driving the bargaining power of customers uphill. With more models to choose from in almost all categories, the market forces have empowered the buyers to a large extent.
Threat of bargaining power of suppliers:
Suppliers of auto components are fragmented and are extremely critical for this industry since most of the component work is outsourced. Proper supply chain management is a costly yet critical need.
Social activities by the automobile companies
For creating and upholding the image of the company and its product social activities, parts of the public relation activities play a pivotal role. Public Relations involve a variety of programs designed to promote or protect a company's image or its individual products. Automobile companies are involved in different social activities such as giving stipend to poor-meritorious students and distributing relief among the peoples affected by natural calamity.
Marketing Control in Process
Marketing control is the evaluation of the marketing strategy and taking corrective actions. In Bangladesh automobile companies follow four steps of marketing control process which is as follows: • • • • Set Goals Measure Performance Performance Evaluation Corrective Action
• •
What Companies Want to Achieve?
What is happening?
What to do about it?
Why is it happening?
In every month companies set their sales target to achieve. If the companies fail to achieve its target in a month, the target is revised in the next month. This controlling system helps the companies to take corrective actions instant to achieve the objectives.
Conclusion
Every company has their own marketing strategy. Companies have their own skilled sales force controlled by the head of marketing to increase sales. Companies that can make the effective application of four P's will gain a greater market share and survive in the long run. They position their products in the customers' mind by creating competitive advantages through price, quality, design etc. Market differentiation is done by the companies through features, design, performance, conformance, price, skilled-knowledgeable and competent personnel, and advertising in various media. For expanding their market share they apply the tools as offering incentive packages, exhibition, and dealer conferences. In near future motorcycle companies operating in Bangladesh perhaps will be able to export their products in overseas market if they continue their application of marketing strategies effectively and smoothly.
Recommendations
• • • Since the companies believe in relationship marketing, they should maintain a good relation with the customers to increase sales. Companies should be more aggressive in advertisement, especially in electronics media. Companies should differentiate the products from the competitors. Innovation should be emphasized because of the presence of various generic products of motorcycle. • • • Companies must take up-dated and latest technologies for gaining competitive advantages and following innovation. After-sales-service ought to be quality service; extended guarantee period and repair-time should be minimized. Companies should also take necessary steps so that the products are checked before they reach to the hands of the customers. Once the defective products reach the hands of the customers it will hamper companies' image even with guarantee period and repair time must be minimized. • • Companies must be careful in selecting dealers for making the distribution channel smooth and strong. Companies should get feedback regularly from the marketing team and adjust their plans accordingly.
Bibliography
Websites • • • • http://www.atlas.gov.bd/
http://www.runnerbd.com/ral/ http://www.singerbd.com/ http://waltonbd.com/
Books • • Kotler Philip, Keller K. L., Marketing Management, 14th Edition, 2012 Kotler Philip and Armstrong Gary, Principles of Marketing,12th
Edition,2010
Appendix QUESTIONNAIRE FOR THE SURVEY OF MOTORBIKES.
1. Name __________________________________________________ 2. Address (Location only) __________________________________________________
3. Age
18 – 22 years [ ] 28 – 32 years [ ]
23 – 27 years [ ] above 32 years [ ]
4. Do you use a bike for transportation? Yes [ ] No [ ]
5. If No, Do you have any plan to buy it in next 6 months? Yes [ ] No [ ]
6.
If Yes, Name and Company of the Bike. ________________________________________________________.
7. Which Bike do you like most? ________________________________________________________.
8. Rank the Motorbike manufacturing company. 1. Hero Honda 2. Yamaha 3. Bajaj 4. TVS 5. Walton [ ] [ ] [ ] [ ] [ ]
9. W hich of the followings influenced you to purchase a bike? [ ] TV Commercials [ ] Printed Commercial [ ] Recommendation/opinion from someone you know [ ] Previous experience of driving a bike [ ] Your own perception about the bike
10. Give remark to your preferred Bike Company.
Good Excellent
[ ] [ ]
Very Good Outstanding
[ ] [ ]
11. Any new facilities or any improvement that you want. ___________________________________________________________________ ___________________________________________________________________.
Thanks
Surveyed by: ……………………… Checked by: ………………………
The Marketing Strategy of Two Wheeler Products in Bangladesh
Submitted ToShakil Huda Professor IBA University of Dhaka
Submitted ByAsifur Rahman (Roll- 17) Sadman Prodhan (Roll-47) Batch- MBA 48D
Date of Submission- 8th June 2013
Institute of Business Administration University of Dhaka
Letter of Transmittal
8th June 2013
Mr. Shakil Huda Professor IBA University of Dhaka
Sir, Here is the report on “The Marketing Strategy of Two Wheeler Products in Bangladesh” that you asked us to prepare.
We tried to follow the guidelines that you provided us throughout the semester, in preparing the report. Working with such an interesting report given us the opportunity to achieve knowledge and experience about the marketing strategy and processes of different two wheeler companies operating in Bangladesh. This task was quite challenging and we thoroughly enjoyed working on preparing this report.
We would be extremely delighted and honored if you accept the report and recognize the hard work and devotion we have put on preparing this report. We truly appreciate this assignment, and should you need any assistance, please call on us.
Sincerely,
Asifur Rahman Roll- 17 Batch- 48D
Sadman Prodhan Roll- 47 Batch- 48D
Table of Contents
Executive Summary.................................................................................................................... 5 Literature Review ....................................................................................................................... 6 Overview of the two wheeler companies .............................................................................. 7 Market share of two wheeler brands .................................................................................... 9 Introduction ............................................................................................................................. 10 Objectives................................................................................................................................. 11 Overall Objective: ................................................................................................................. 11 Specific objective:................................................................................................................. 11 Methodology............................................................................................................................ 11 Primary Data:........................................................................................................................ 11 Secondary Data: ................................................................................................................... 11 Scopes of the Study.................................................................................................................. 12 Limitation of the Study ............................................................................................................ 12 Marketing Division: A Key to Success ...................................................................................... 13 Segmenting, Targeting, and Positioning .................................................................................. 14 Differentiation Tools ................................................................................................................ 16 Application of Four P’s ............................................................................................................. 17 Product and Pricing: ............................................................................................................. 17 Promotion: ........................................................................................................................... 18 Place: .................................................................................................................................... 18 Porter’s five force analysis ....................................................................................................... 19 Threat of intense segment rivalry: ....................................................................................... 19 Threat of new entrants ........................................................................................................ 19 Threat of substitute products: ............................................................................................. 19 Threat of bargaining power of buyer: .................................................................................. 20 Threat of bargaining power of suppliers:............................................................................. 20 Social activities by the automobile companies........................................................................ 20 Marketing Control in Process................................................................................................... 21 Conclusion ................................................................................................................................ 22 Recommendations ................................................................................................................... 23 Bibliography ............................................................................................................................. 24 Appendix .................................................................................................................................. 25
Executive Summary
This report deals with the two wheeler industry in Bangladesh. More specifically, who are the major players in two wheeler industry and what are the marketing strategies they are adopting, how consumers recognize and rate different two wheelers in competitive scenario. The project named “The Marketing Strategy of Two Wheeler Products in Bangladesh” is undertaken to analyze how dealers utilizing the four p`s (product, place, price and promotion) of marketing mix and what are all current trends is going on in two wheeler automobile industry. In addition, Porter’s five force analysis for the industry has been done give a perspective on the intrinsic long run attractiveness of the market. Main aspects of the project are to analyze the different products and services offered. A conclusion has been drawn based on the analysis done and some recommendations for the overall improvement of the industry have been given.
Literature Review
Automobile industry is one of the largest industries in global market. Being the leader in product and process technologies in the manufacturing sector, it has been recognized as one of the drivers of economic growth. During the last decade, well directed efforts have been made to provide a new look to the automobile policy for realizing the sector's full potential for the economy. Aggressive marketing by the auto finance companies have also played a significant role in boosting automobile demand, especially from the population in the middle income group. A Nations economy is well known from its transport system. For instant and rapid growth in economy, a well-developed and well-networked transportation system is essential. As Bangladesh’s transport network is developing at a fast pace, Bangladesh automobile Industry, specially the two wheeler industry is growing too. Also, the Automobile industry has strong backward and forward linkages and hence provides employment to a large section of the population. Thus the role of Automobile Industry is very essential in Bangladesh economy. In Bangladesh extensive road network has been made in the rural areas as part of the infrastructural development. Motorcycle is used as transportation which has increased the opportunity of motorcycle business in Bangladesh. About 100 companies which includes from dealers to manufacturers are operating their marketing activities in Bangladesh and they follow their own marketing strategies to capture the market share. There are several companies in Bangladesh competing for the top spot in market share of motorcycle industry. Among other motor cycle companies, Uttara motors ltd, Atlas BD, TVS auto BD Ltd., Runner Automobiles Limited, Singer Bangladesh Ltd. and Walton are the frontrunners.
Overview of the two wheeler companies
Uttara motors ltd has been one of the market leaders in the motorcycle industry. Uttara Motors Limited is the flag bearer of the Uttara Group of Companies, engaged in the sales and marketing of different brands of automobiles throughout the country through its sales & service network. They are sufficiently equipped to meet any challenge in the new century. The company’s wide network of distributors (Dealer Network) is capable and organized to deal with any challenge. They have behind them a long experience of 38 years of success in the domestic market. They have Modern & Dynamic management in every step of the company structure which consists of team work of a complementing group of experienced directors and a dedicated staff & executives. They are the distributor of various international brands like: • • • • • Bajaj Auto Limited, India ISUZU Motors Limited, Japan Suzuki Motors Corporation, Japan Maruti Suzuki India Limited Pak Suzuki Motors Co. Limited, Pakistan
The company was established in 1966 under private management by the then West Pakistani entrepreneur. It was nationalized and placed under the management of Bangladesh Steel & Engineering Corporation (BSEC) in 1972 and converted into a Public Limited Company in 1987 when 49% of its share was sold to general public and 51% is retained with BSEC. Among their products are CBZ, Hunk, Passion pro, CD deluxe, Splender etc.
Established in 2007, TVS Auto Bangladesh Ltd is a joint venture company between the Rian Motors (a concern of Sony-Rangs Group) of Bangladesh and TVS & Sons of India. It has been assembling and marketing TVS Brand Two-wheeler and Threewheeler. It is the first ever joint-venture company in two-wheeler industry in Bangladesh. TVS has planned to raise its market share in Bangladesh within the next few years. The company expects Bangladesh’s two-wheeler market to boom in coming years.
Runner Automobiles Ltd was established in the year 2000. The Company is registered in Joint Stock Company of Bangladesh under Companies Act.1993 as a Private Limited Company. The company deals with a wide range of motorcycles. The company's sales are organized by an efficient network through its dealers in different parts of the country. Mr. Hafizur Rahman Khan, the Chairman, a well-experienced personality having long twenty-four years of successful motorcycle marketing background, heads the Company. Mr. Mozammel Hossain, the vice chairman, a successful marketing expert having long experience in motorcycle marketing, is heading the company Sales. Other senior professionals/experts in departments like Production, Sales, Service, Administration, Accounts and Commercial run the company. Runner Automobiles Ltd. known for Dayang brands of motorcycle, imports motorcycles in CBU and CKD condition from China and India and after assembly of the motorcycles markets throughout Bangladesh by dealers network. All dealers are given a sales target and their achievements are closely monitored. On achieving targets, the dealers are offered with excellent incentives including trip abroad.
Walton, a brand of R.B Group of Industries is a conglomerate based in Dhaka, Bangladesh. It comprises numerous subsidiaries and affiliated businesses, most of them united under the Walton brand. The subsidiaries include Walton Motors, Walton Mobile and Walton Electronics. Walton produces electronics, motor vehicles, and telecommunications products. Walton motors produces various kinds of motorcycles which are putting up stiff competition for the bikes exported from foreign countries. The price of their motorcycles is low to other motorcycles like Hero Honda, Bajaj, Yamaha, and Honda which are currently leading the market. At present Walton has various product lines of motorcycle like Fusion, Prizm, Xplore etc.
Market share of two wheeler brands
Others 19% TVS 12%
Bajaj 30%
Dayang 17%
Hero Honda 22%
Introduction
Two wheeler products or motorcycles are one of the leading and fastest growing vehicle industries in Bangladesh. Bangladesh is a high density country. Total population of the country is near about 160 Million. Among total population approximately 80 percent people live in the rural areas and depend on agriculture. As part of infrastructural development in the country, an extensive road-network has been developed in the rural areas creating opportunities for trade and commerce. Motorcycle is one of the modes of transportation whose use has been increased at a significant level in the last decade. To fulfill the demand of the customers several companies now are marketing motorcycles. Majority of the two wheeler market depends on the import of motorcycles from India, China and Korea. There are about 100 automobile companies that are operating their marketing activities in Bangladesh. Among them 10- 12 companies are enjoying majority of the market share. These companies are following marketing strategies of their own to capture the market share. Market share of these companies is gained and expanded by following the four P's (Product, Price, Place and Promotion) literally. The implementation of these four P's is studied for conceptualizing the marketing program of these companies.
Among motor cycle companies we study the following companies. • • • • • • Uttara motors limited Atlas BD TVS auto BD Limited Runner Automobiles Limited Singer Bangladesh Limited Walton Bangladesh Limited
Objectives
Marketing strategies have a significant role for gaining success in business. In motorcycle marketing in Bangladesh different strategies of marketing are followed by different companies.
Overall Objective:
The broad objective of the study is to conceptualize the marketing strategy of various two wheeler companies operating in Bangladesh.
Specific objective:
1. To provide a brief idea about the two wheeler market of Bangladesh 2. To understand the marketing strategies of motorcycle companies
Methodology
Primary Data:
This is a literature based paper and therefore to conduct this study, data collection from customer through questionnaire were avoided. But a number of executives and managers from different motorcycle companies were interviewed for detailed information.
Secondary Data:
The study includes cross-sectional data of six different motorcycle companies operating in Bangladesh. The source of secondary data are text books, brochures, booklets, printed material, articles, study reports, catalogs and annual reports of motorcycle companies. Also the website of the companies and many articles in internet was the data source of this report.
Scopes of the Study
The study is focused on the recent trends of motorcycle market of Bangladesh. This study will explain the aspects and strategies of motorcycle industry of Bangladesh. So it would be very useful for different users. The purposes this study will serve such as• • • • • • Provide a brief idea about market structure to the onlooker Provide a cross-sectional view of marketing strategy of motorbike industry Help a new entrant of this industry to understand the market trend Provide the existing company a firsthand overview of their standings Help the marketer to make proper amendments and correction to their strategy Will provide “Food for Thought” to new researcher
Basically anyone studying the report will get firsthand information about two wheeler markets which he can use in developing the market itself.
Limitation of the Study
During the preparation of this report we had to face a few problems. These disrupted the preparation of the report. They are discussed below. • • • • • • Data collection from executives/managers were very difficult as they were reluctant to disclose their marketing strategies and policies There are very few research papers and articles on Bangladeshi market to study The websites of the companies are less informative Unavailability of previous research work in Bangladesh Getting appointment and sufficient help from the employer of the companies was difficult due to their limited working hour The research was limited by time and cost
Marketing Division: A Key to Success
The secret of success of motorcycle marketing depends on marketing division's activities. This division includes• • • • • • Sales and marketing Service Sales training Marketing Information System (MIS) Field administration Commercial departments
To generate sales of motorcycles in order to achieve target sales, sales-department maintains strong relationship with the dealers, as companies believe in relationship marketing. Marketing executives and senior executives of sales conduct extensive all over Bangladesh and keep all the market information up-to-date. To promote brand and company image, sales department is involved in various promotional activities. To fulfill the customers' needs, service department ensures the service including spare parts replacement to all customers within 24 to 48 hours. Throughout the year mobile service teams, which are formed with well experienced and professional engineers and mechanics, are providing service in different areas of the country with company's own transport and technical hands as per service calendar. The mobile service team ensures warranty for 2 to 3 years for the engine and one year for other components and arrange on the spot replacement of parts. There are sales training department in these companies. Sales forces who are engaged in motorcycle marketing must be well skilled and knowledgeable. To make the sales people well skilled, they have to go to through an extensive training. During this training, they have to know about their customers, their products and have to gather a vast knowledge about selling skill. Sales training department is responsible to make fresh graduates/masters eligible for this post. MIS department plays a vital role in the marketing division. This department collects data from the field regarding market share, competitor’s activities, sales of products and necessary marketing information. They analyze the data and provide necessary information about present, past and future marketing strategy of these companies. Field administration
department is responsible to maintain all types of administrative activities of field forces. Commercial department plays a pivotal role for these companies to import the product and components in the right time through maintaining all rules and regulations that are prevailing in this connection.
Segmenting, Targeting, and Positioning
Market segmentation involves dividing a market into smaller groups of buyers with distinct needs, characteristics or behaviors who might require separate products or marketing mix. In Bangladesh, for motorcycle marketing automobile companies are segmenting their market based on all four types of segmenting variables. Market is segmented on the basis of• • • • Geographic Segments Demographic Segments Psychographic Segments Behavioral Data Segmentation
Segmentation
Geographic Segments • • • Demographic Segments
Segmentation Criteria
Rural Area Urban Area Sub-Urban Area
According to Age base• • • • • • • • Teen Aged (15-19 years) Adults (20-45 years) Baby Boomers (46-65 years) Retired (above 65 years)
According to LifestyleStudents Professionals Business persons Retired
According to Gender• • Psychographic Segments • • • Behavioral Segments • • • Male Female Lifestyle Personality Social Class Social Class Usage Rate User Status
A target market consists of a set of buyers who share common needs or characteristics that the company decides to serve. For targeting market; mostly undifferentiated (Mass) marketing strategy is followed here. In some cases several companies also follow the differentiated (segmented) marketing strategy. Among these segmentation processes companies are using demographic segments most frequently and most effectively. A product's position is the way the product is defined by consumers on important attributes - the place the product occupies in consumers' minds relative to competing products. Positioning of automobile products to the customers' mind is very difficult because same generic products are marketed by a large number of companies. Companies are trying to create competitive advantages to make the position in the customers mind. The main criteria that attracts the customer are• • • • • Initial cost and fuel economy are highest priority. Low maintenance costs are desired. Small entrepreneurs and farmers conduct their business carrying loads. Very limited usage for sports bike. Bangladeshi people prefer the two wheelers because of their small manageable size, low maintenance, and pricing and easy loan repayments.
Differentiation Tools
Differentiation is the act of designing a set of meaningful differences to distinguish the company's offering from competitors' offerings. differentiate the market through differential tools. Automobile companies
In motorcycle market product differentiation is very difficult because the products are durable but more or less homogeneous. Yet companies offer some differentiations of products like• • • • Design Features Performance After Sales Service
They are trying to ensure better services to the customers. They provide services to the customers which will be different from the competitors in some extent. Providing services are replacement of damaged product, broken spare-parts and ensuring quick supply through own distribution channel. Companies are providing after-salesservices for bonding and strengthening the Customer Relationship. For this purpose they use experienced technical team which is generally headed by a General Manger. They foster various mobile service teams operating in different part of Bangladesh. Every team follows a yearly service calendar. Service mobile teams ensure warranty. Warranty replacements are made within 48 hours. Every automobile company, operating in Bangladesh, has a central workshop to ensure the after-sales-service to the customers. Companies are offering personnel
differentiation from their competitors to attract their customers. They are recruiting competent and responsible personnel. As a result, they have qualified management and they are providing training facilities to the personnel in modern and well communication system. Every company has a well-equipped distribution channel by which it can serve its customers through velocity. Performance of an automobile company highly depends on its distribution channel. The companies are trying to take the competitive advantages through fruitful distribution channel.
Application of Four P’s
In the competitive situation among the automobile companies in Bangladesh appropriate application of 4p's is the most significant. These P’s are• • • • Price Product Place Promotion
Product and Pricing:
Price is extremely important in marketing competition. Competitors can easily measure and observe price and respond quickly to price changes. Product, promotion and distribution cost in the marketing mix directly affect the price. Price is an important factor that directly related to its market share and profit margin. To attract a large number of customers quickly and to win a large market share, new motorcycle companies follow the market penetration pricing strategy. According to this strategy the companies set a low initial price to penetrate into the market quickly and deeply with high quality. After a certain period this product goes to maturity phase and establish as a brand in the market. Then the companies raise their price to adjust with the competitors' price. When the products are well accepted by the customers and if the product quality rise, some companies follow the psychological pricing. Under this strategy marketing management believes that customers usually perceive high priced products as having higher quality. Some companies have a good corporate image in the automobile market. These companies do not follow penetration strategy. In pricing motorcycle they set a competitive price directly with the help of corporate image.
Promotion:
Promotion is communicating information between seller and potential buyer or others in the channel to influence attitudes and behavior. For expanding the motorcycle market automobile companies conduct their promotional activities through advertising, incentive packages, yearly calendar and participation in exhibition and dealer conference. For the advertising purpose these companies provide signboard for dealer showroom. Advertisement on billboard and overheads is also sponsored by these companies. As advertising media newspaper and magazine are used to inform, perused and remind the customers about the product by these marketers. Signboard, billboard and overheads are also used as the outdoor advertising media. Incentive package, yearly calendar, participation in exhibition and dealer conference is used as the sales promotion tools here. Companies offer a very attractive incentive package to their dealers. Yearly and pocket calendars play a vital role as specialty advertising. To motivate and help the salespersons' participation in exhibition by automobile companies is very much significant. Arranging very colorful and charming dealer conference is helpful to expand the market of motorcycle.
Place:
The motorcycle distribution mainly depends on the dealers and distributor within the country. The major dealers interact directly with the companies' sales executives for purchasing the motorcycle. Then they distribute motorcycles amongst wholesalers who in turn sell those to retailer. However, in this market it is very difficult to demarcate between wholesalers and retailers as most of the wholesalers also do retailing very often as per demand. That means in this market wholesalers are also retailers in the same time. In the marketing channel, companies select the distributors based on demand position, sales-volume consideration and dealer's sales capacity.
Companies are having defined classification of the dealer depending upon his location, area of operation, profile of business, sales volume, degree of exclusivity etc. In accordance to the classification, dealer will get the benefit with respect to price (discounting structure) and delivery. A crucial balancing is also required amongst the dealer in terms of pricing so that big dealers cannot sale the product at a lower price to a small dealer in another location and in the process disturbing the
whole networking concept. This phenomenon may be described with an example considering its importance in maintaining the channel.
Two types of marketing channel of motorcycle marketing
Marketing Channel of Motorcycle (Traditional) • • • • • Manufacturer (sales Executive) Dealer Wholesaler Retailer Customer
Marketing Channel of Motorcycle (Exceptional) • • • • Manufacturer (sales Executive) Dealer Retailer Customer
Porter’s five force analysis
Threat of intense segment rivalry:
The industry rivalry is extremely high with any product being matched in a few months by competitor. This instinct of the industry is primarily driven by the technical capabilities acquired over years of gestation under the technical collaboration with international players.
Threat of new entrants
Here the threat of new entrants depends on the economies of scale of the cost of production and customer switching costs, access to industry distribution channels.
Threat of substitute products:
There is no perfect substitute to this industry. Cars, which again are a mode of transport, do never directly compete or come in consideration while selecting a twowheeler, cycles do never even compete with the low entry level moped for even this choice comes at a comparatively higher economic potential.
Threat of bargaining power of buyer:
Buyers in automobile market have more choice to choose from and the increasing competition is driving the bargaining power of customers uphill. With more models to choose from in almost all categories, the market forces have empowered the buyers to a large extent.
Threat of bargaining power of suppliers:
Suppliers of auto components are fragmented and are extremely critical for this industry since most of the component work is outsourced. Proper supply chain management is a costly yet critical need.
Social activities by the automobile companies
For creating and upholding the image of the company and its product social activities, parts of the public relation activities play a pivotal role. Public Relations involve a variety of programs designed to promote or protect a company's image or its individual products. Automobile companies are involved in different social activities such as giving stipend to poor-meritorious students and distributing relief among the peoples affected by natural calamity.
Marketing Control in Process
Marketing control is the evaluation of the marketing strategy and taking corrective actions. In Bangladesh automobile companies follow four steps of marketing control process which is as follows: • • • • Set Goals Measure Performance Performance Evaluation Corrective Action
• •
What Companies Want to Achieve?
What is happening?
What to do about it?
Why is it happening?
In every month companies set their sales target to achieve. If the companies fail to achieve its target in a month, the target is revised in the next month. This controlling system helps the companies to take corrective actions instant to achieve the objectives.
Conclusion
Every company has their own marketing strategy. Companies have their own skilled sales force controlled by the head of marketing to increase sales. Companies that can make the effective application of four P's will gain a greater market share and survive in the long run. They position their products in the customers' mind by creating competitive advantages through price, quality, design etc. Market differentiation is done by the companies through features, design, performance, conformance, price, skilled-knowledgeable and competent personnel, and advertising in various media. For expanding their market share they apply the tools as offering incentive packages, exhibition, and dealer conferences. In near future motorcycle companies operating in Bangladesh perhaps will be able to export their products in overseas market if they continue their application of marketing strategies effectively and smoothly.
Recommendations
• • • Since the companies believe in relationship marketing, they should maintain a good relation with the customers to increase sales. Companies should be more aggressive in advertisement, especially in electronics media. Companies should differentiate the products from the competitors. Innovation should be emphasized because of the presence of various generic products of motorcycle. • • • Companies must take up-dated and latest technologies for gaining competitive advantages and following innovation. After-sales-service ought to be quality service; extended guarantee period and repair-time should be minimized. Companies should also take necessary steps so that the products are checked before they reach to the hands of the customers. Once the defective products reach the hands of the customers it will hamper companies' image even with guarantee period and repair time must be minimized. • • Companies must be careful in selecting dealers for making the distribution channel smooth and strong. Companies should get feedback regularly from the marketing team and adjust their plans accordingly.
Bibliography
Websites • • • • http://www.atlas.gov.bd/
http://www.runnerbd.com/ral/ http://www.singerbd.com/ http://waltonbd.com/
Books • • Kotler Philip, Keller K. L., Marketing Management, 14th Edition, 2012 Kotler Philip and Armstrong Gary, Principles of Marketing,12th
Edition,2010
Appendix QUESTIONNAIRE FOR THE SURVEY OF MOTORBIKES.
1. Name __________________________________________________ 2. Address (Location only) __________________________________________________
3. Age
18 – 22 years [ ] 28 – 32 years [ ]
23 – 27 years [ ] above 32 years [ ]
4. Do you use a bike for transportation? Yes [ ] No [ ]
5. If No, Do you have any plan to buy it in next 6 months? Yes [ ] No [ ]
6.
If Yes, Name and Company of the Bike. ________________________________________________________.
7. Which Bike do you like most? ________________________________________________________.
8. Rank the Motorbike manufacturing company. 1. Hero Honda 2. Yamaha 3. Bajaj 4. TVS 5. Walton [ ] [ ] [ ] [ ] [ ]
9. W hich of the followings influenced you to purchase a bike? [ ] TV Commercials [ ] Printed Commercial [ ] Recommendation/opinion from someone you know [ ] Previous experience of driving a bike [ ] Your own perception about the bike
10. Give remark to your preferred Bike Company.
Good Excellent
[ ] [ ]
Very Good Outstanding
[ ] [ ]
11. Any new facilities or any improvement that you want. ___________________________________________________________________ ___________________________________________________________________.
Thanks
Surveyed by: ……………………… Checked by: ………………………
