Product Level Planning

Table of Contents Executive Summary 2 Market analysis 3 SWOT Analysis 4-7 Objectives 7 Marketing Strategy 8 Action Program 9 Financial Projection 10 Feedback & Control 10 Conclusion 11 References 11 Executive Summery Cement Industry is highly important segment of Bangladesh’s Industrial sector & Plays a vital role in socio-economic development.Although cement industry of Bangladesh has witnessed its ups & down in recent past but in last decade it has recovered & now it’s a self-sufficient industry of Bangladesh not only fulfilling domestic needs of Bangladesh also exporting a huge amount of cement to other countries, bringing foreign reserves & help in up lifting Bangladesh’s GDP. Bangladesh is currently operating at their maximum capacity due to the boom in commercial & industrial construction within Bangladesh.In this report I have selected ‘Anchor' cement, Olympic Cement Ltd (OCL) of ‘Khansons Group’ simply called gray cement & we will descr ibe how they do product planning for that? Khansons Group has extended its industrial arena by putting-up a clinker grinding cement plant named as ‘Olympic Cement Ltd'. The plant is located at Rupatoli, Barisal all in a row along with its textile industries. The finished product (cement) has been branded as ‘Anchor' & the same has become popular in the local market. This cement project commenced its initial production at 800 tpd and gradually increased the production to the level of 1,600 tpd.Olympic Cement Ltd (OCL) is one & only cement factory which has targeted to meet the entire demand of cement in Southern Bengal. As a result, OCL has concentrated its sales on a soaring trend by increasing production volume. OCL is maintaining the reputation of its quality product and aiming at the extended project in days to come. Current Market Situation Overall Market Situation Bangladesh cement industry is the 40th largest market in the world. There are 70+ cement factories in B angladesh and daily production capacity is 16. 687 Million MT.In January 2012, Bangladesh’s Export Promotion Bureau released data confirming that cement exports had witnessed a 21% increase in the first seven months of the current fiscal year (July 2011 – January 2012). The boost in the cement sector is because of the rising construction activity in the country & increasing development expenditure by the govt. Due to this the sales of cement sector will also rise every year. Product Situation Since Cement is a specialized product, requiring sophisticated infrastructure & production location, so, Most of the cement industries in Bangladesh are located near/within a river side that are rich in clay.Iron & mineral capacity so ‘Anchor’ cement is situated near to the bank of river ‘Kirton Khola’. Anchor cement installed capacity is 1,600 tpd at present with the turnover of 50 crore in a year. Competitive Situation: In competitive situation we will describe all the competitors of Anchor Cement producing gray cement. There are 70 + firms in the market along with Anchor Cement. All these companies are using different marketing tactics to grape as much market share as possible but they are acting like a cartel under the tree of APCMA.They are producing same quality of cement with all most same price and features that’s why competition in the market is very tough for local as well as foreign market. All are using same bulk & penetration strategies to cover major portion of the market. Some are using cost leadership strategy but due to cartel act behavior they are not getting the target results that they want to achieve. Currently Crown cement is the market leader while Anchor cement is a niche in the national market but it is the leader in the local market of Barisal & southern part of Bangladesh. Distribution Situation:Anchor Cement Company uses different channels of distributions to transfer the gray cement from company t o the different part of Bangladesh. †¢ACC > Whole Sellers > Retailor> Customer †¢ACC > Retailors> Customer †¢ACC > Customer †¢ACC > Regional Offices > w/s Retailors Macro-Environmental Situation Macro environmental factors directly or indirectly effect the production of the company & its market. Macro- Environmental factors are the factors that are not in the control of the company. These factors are†¦.. 1. Political 2. Law & order situation 3. Cultural values 4. Technological change . Demographic trends 6. Economic Condition 7. Inflation Opportunity & Issue Analysis After completing the market analysis now we will do analysis of opportunities & issues for the ACC. Opportunity is a chance of progress or advancement that is available in the market & the company has to avail it for the progress and profitability while issues are the weakness or threat for the company to avoid or settled down. For this purpose we have to do SWOT analysis of ACC. Strength of ACC Strengths are the internal positive factors of advantage that a company possesses. Following is the strength of ACC. Installed Capacity: Installed capacity of company is 16. 687 Million MT daily & they are producing 6007. 32 MT per annum so they can exceed the production easily by proper implementing their marketing mix strategies & it will directly increase profits of the company. oRaw Material: Anchor Cement Company is situated near the bank of the river kirtonkhola. So they can easily avail the huge reserve of raw materials with a very low cost as compare to other competitors’ as their cost of material is high. oHigh Quality of ACC: Quality of ACC is much better than the standard set by Bangladesh & importers.Quality of production is better than most of the competitors in the market. oCheap Labor: They are using cheap labor market of Bangladesh which is strength of them & due to this their price is low as compare to other compotators. oGood Govt. Policies: Local & federal govts. Policies are supportive & favorable to the cement sector. They are getting many benefits in term of electricity etc from BD govt. So over all ACC is enjoying good environment created by Government. Weakness of ACC Weaknesses are the internal negative factors of a company that should be avoided or to be controlled.Following are the negative factors of ACC. oNot Utilization of Full Capacity: ACC is not utilizing its full capacity of production of gray cement. They can produce more per annum so not utilizing their full capacity is also their disadvantage which they should convert it into opportunity. oFuel & Electricity Charges: ACC cost comprises more than 50% costs of fuel & electricity. So they should minimize these expenses as much as they can. It can really help them in uplifting their market share & growth & profit as well. They can convert their system or can generate their own electricity by investing in this sector. Management: ACC major boards of directors are from th e same family which is also a negative factor of them. So they should introduce competent personnel’s in the company for the growth. oFreight Charges: Freight or transportation charges to other parts of the country are also a problem for them which should be settled down as soon as possible. They should minimize their expenses to avail greater markets present in other parts of Bangladesh. Opportunities for ACC Opportunities are chances for progress or advancement that is available in the market and the company has to avail it for the progress and profitability.These are positive external factors. Following are the opportunities available for ACC. oGovernment Development Expenditure: Govt: is spending huge amount on development projects like roads, schools, hospitals, dams & infrastructure etc. ACC can avail these opportunities by responding on time to these projects. oConstruction of Big projects: Recently there are many big projects are going on Bangladesh like construction of Jamuna future park, many high rise buildings etc, also in nationwide & in Barisal.ACC should explore all these opportunities to increase its market share. oDemand of Bangladeshi Cement: Recently Bangladeshi cement demand is increasing day by day in foreign markets so ACC can improve its foreign market share. This will be very favorable & profitable for them. Threats for ACC Threats are the negative factors that are available in the external environments. These are unhidden threats that are waiting for & company should be ready or prepared to tickle down all these threats for their existence & survival. Following are the threats available for ACC. High Energy Prices: Energy prices are constantly increasing in Bangladesh & worldwide which is directly affecting the profitability of ACC because major portion of cost consists of fuel & energy expenses so they should find out alternative source of energy to minimize the cost of goods. oHigh level of Taxes & Custom duty: High level of c ost & custom duty are affecting its profitability. So govt. should take constructive steps for the development of the industries. oCompetitors: There are 70+ firms in cement industry which make the competition very tough.Each firm is striving to get as much share as they can and they are using different tactics to excel their sales. So, ACC should take proper steps for its growth while taking into consideration all the Competitors. oPolitical Instability: It is also a main threat for ACC because it brings changes in laws & regulation accordingly. Objectives After analyzing all the factors now we will set the objectives or targets we can say, for ACC that is going to be achieved in the next financial year of the company. Our objectives should be ? Specific ?Measurable ?Achievable ?Realistic ?Time bound There are 2 kinds of objectives which are: Financial Objectives †¢Marketing Objectives Financial Objectives: Financial objectives are related with the financial performance of the company or simply objectives that relate to finance. Following are the financial objectives that we can set for ACC for 2013. ?Profit after taxes should be 60 crore ?Cash flow should be 10% high Marketing Objectives Financial objectives should be convertible to marketing objectives. Marketing objectives are related to market or overall industry. Following are the marketing objectives of ACC. Sales should be 50% high Exports should be 40% Average price should be up to 450 pgSales of 5,00,000 tons should be achieved in 2013 Expand the number of dealers Market share should be up to 5% Marketing Strategies Strategies are the game plan or road map to achieve the objectives set by the company by utilizing its resources. Following are the marketing strategies that should be used: oNew Markets New markets in outside & inside of the country should be achieved. oDistribution outlets Distribution outlets or big distributors must be located in all the targeted markets. oAdvertisement 2% budget should be allocated for advertisement campaign on bill boards & certain media channel. Low pricing strategy Low pricing strategy should be adopted as compared to competitors. oAlliance Alliances should be made with distributors & realtors in important markets & preference should be given to them. oSales force Sale force or sales agents should also be hired in remote areas with 5-8% commission. oMarket Research 10% Budget should be allocated to market research to know competitors, customer behavior & new markets. oLower cost of goods strategy Cost of the cement should be low down to earn maximum profit Action Programs Marketing strategies should be supported with action programs or day to day plans.Each strategy should be broken down in to small programs or action that can easily be implemented. It tells us that which marketing strategy is to be completed by whom, when how & what will be the cost of that? ?Sales department have to do 25 crore sales after every 4 months. ?Production department have to produce 0. 25 million tons after every 4 months. ?Purchase department should purchase furnace oil & raw materials 5% less as compared to previous year. ?Management should reduce unproductive expenses @10% as compared to last year. ?Other incomes should be increased up to 10 crore as compared to last year. Marketing department should achieve their target within given budget on the basis of six months. Financial Projections †¢Following are the overall projection for year 2013. In millionsIncrease Sales500060% Cgs (Cost of goods sold)(3200)36% Gross Profit120080% Other Expenses18010% Other Income2040% Profit Before Taxes800 Taxes200 Net Profit60020% Feedback & Control In the last stage of product level planning we will consider does the company actually achieved its objectives or not. In this step we will compare the actual results with the standards set out there in the planning stage.According to the above results & figures ACC has achieved all the targets & g oals efficiently & effectively. They have properly implemented the planning as compared to previous year so they have achieved the level of performance what they want. Even more fruitful results have been achieved. Usually, Anchor Cement Company carries out three types of controlling strategies which are as under.. oAnnual Plan Control ACC usually do audit or check up at the end of year that whether that have achived their annual goals/objectives or not regarding sales, profits, market share & growth etc.They want to know the gap between actual & standard, if found any & then will fix it down in the upcoming period. If they have performed much better then they watch out the reasons behind that to implement forever in the organization. oAudit Control Internal Audit is carried out by the internal auditors. External Audit is carried out by external auditors. oStrategic Control Strategic Control is the step of the last section. In strategic control usually they evaluate whether the Anch or Cement Company marketing strategy is appropriate to the market condition or not.If not they do Changes in it to make implementable in the market. They change their strategy according to the market situation that changes so rapidly. Conclusion From the above analysis we can easily conclude that how a company usually does their product or marketing planning. I pick Anchor Cement Company collect data from different sources (mainly from web) & then make the palling for them accordingly. All the above discussion gives us a bird’s eye view regarding a good product planning that a marketer can do. References http://www. khansonsgroup. com www. scribd. com Marketing Management- Philip Kotler, 11th edition