DISTRIBUTION CHANNEL OF DHAKA TOBACCO INDUSTRY ONAKIJ CORPORATION LIMITED.

Chapter-1: Introduction

1.1 Introduction:

Bangladesh is a developing country with a huge population and the Tobacco sector

plays a vital role in the contribution of our economy. Tobacco sector is considering

one of the largest business sectors of our country. The tobacco sector includes

cigarette and Zorda (chewable tobacco) sectors, which are called Tobacco sector

(PTS).

Akij Group is the most renounced private limited company in Bangladesh. It lunches

their business as Akij bidi in 1940. After that by adopting good marketing strategies

and polices it has now almost 26 sister concerns in Bangladesh. Almost all of the

sector of the business it spread its wings .It is a fast growing group of companies.

After meeting the local demands it regularly export their product in foreign

countries. It has a great contribution to bring lot of foreign currency and to solve the

unemployment problem of our country.

1.2 Origin of the Report

This report is based on an internship program. Akij Corporation Ltd arranges

internship program to gather practical knowledge about marketing activities

followed by ACL for University students to find out the realistic view of their

achieved theoretical knowledge from conducting their Bachelor degree (BBA). I have

choose the distribution channel followed by this company, as my report topic.

Hence I am placed in the head office of Akij chamber from 1 st November to 31st

January.

1.3 Objectives of the report .There is a great competition in tobacco industries. Major production companies in

Bangladesh usually establish their own distribution network for the marketing of

their products with a view to generate maximum sale revenue. Some of the

companies however, use separate distribution companies for that purpose. The

paper has studied that how a distribution network is developed and what are the

general functions of the distribution channel. A special emphasis has been given to

study the distribution system used for one of the pioneer tobacco company of the

country. The study will also look for the future prospect of the company. The report

also covers the following areas:

To know about the industry (ACL) and its distribution mechanism.

To generate the overall ideas if system, nature and operation of

distribution sector of Akij Corporation Ltd.

How the information and product flows are take place.

To find out the major channels of distribution and identify the strong and

the weak points.

To know the functions performed by the various intermediaries to

distribute the product to the end user.

1.4 Rationale of the Report

Business studies department of Northern University, Bangladesh arranges such an

internship program in order to fulfill its degree requirement at the last stage of BBA

and this report is a part of my internship program, which is conducted in Akij

Corporate Limited. I do belief that this report will help me in many ways in future. I

choose the topic because of industry is very large and competitive in Bangladesh and

the Customers purchase cigarette by maintaining the brand, perceived value and

satisfaction.

By implementing effective strategies to make the customers purchase more stick is

going to be a profitable strategy and this kind of profitable policy results in more

new customers, more business with existing customers, fewer lost customers, more

insulation from price competition. For this reason, manufacturers need to give more

perceived value to satisfy customer and attract customer to prefer their brand

Failure to implement this kind of strategy by considering perceived value, brand

preference and customer satisfaction as independent variables and repurchase

intention as dependent variable.

1.5 Methodology

For any research methodology is very important. Without adopting proper methods

it is difficult to conduct a successful research. The optimum outcome of the research

depends largely upon the adopting of the proper methods suitable to the research

topic in the field of investigation.

I order to carry out this study; two sources of data and information have been used:

a) Primary data

The primary sources are as below :

1. Direct observation of daily operation.

2. Discussion with top level management.

3. Questioning the concerned persons (officers and employees).

b) Secondary data

The secondary sources are as below:

1. The annual report of Akij Corporation Limited.

2. Company website.

3. Newspaper advertising and publications.

4. Brochures, billboards etc.

5. Hard copy of different promotional activities sheets, training report etc.

6. Different reference books of the library.

1.6 Scope of the study

The scope of this paper is limited to the organizational structure , background

, and objectives , functions and performance of the tobacco industries as a

whole . The scope is also limited to different areas individual performance of

ACL.

1.7 Study approach

Internship plays a vital role for the students of Bachelor of Business

Administration for the well fare of practical knowledge about business. We

the student of BBA needs to have a vast experience about the business

concern containing around us and to make a good communication in

between text knowledge and practical experience. For that reason we have

choose an organization to find out the relationship among the theoretical and

practical experience. From that point ACL gives me a great opportunity to

implement my theoretical knowledge into practical experience beside this it

helps me a lot to increase my skills and attitudes.

1.8 Limitations of the Study

Limitations, I had to face on preparing the report are portrayed as below:

Limitation of time one of major drawbacks.

Sometimes participant ware unwilling to answer and it was difficult to

convince them to answer all the questions.

In-available information related to the Term Paper

Improper knowledge on technological know how.

Language proficiency

Company policy about the secrecy of the information

Chapter: 2.00Chapter: 2.00 Company ProfileCompany Profile

2.1. Introduction of the organization

History of Akij Group Stretches beck to later to later part of the forties. In its infancy,

the Group started in humble way jute trading which was known as the golden fiber

of the country, earning highest amount of foreign exchange.

Akij Group’s ceaseless efforts with dynamic management and support and support

from our numerous clients have led our group in diversifying its business activities. In

the second phase, the Group went into manufacturing handmade cigarettes

popularly known as bidis. This sector gave a real boost to the revenue earning of the

Group as well as making a substantial contribution to government exchequer. With

the passage of time, the Group undertook new ventures and presently there are 15

units of industries under its umbrella like cigarettes, handmade cigarettes, printing &

packaging, textiles, hand board, pharmaceutical, leather processing and real-estate

business are in operation, catering jobs for more that 46,680 people in various

categories.

Akij Group is also involved in socio-cultural activates. The group has been operating a

sizeable orphanage free of charge in district town. The Group has also acquired a

modern mother & children hospital previously owned by save the children (UK). Ad-

Din Trust is operating the hospital as non-profitable concern. 2.2. Insights of Akij

Group.

Founder Chairman: Marhum Sk. Akij UddinThe Group started its venture in 1950

SL Name of the Company

Product Year of the Establishment

No of Employee

01. Dhaka Tobacco

Industries Ltd.

Cigarettes1

9

6

6

2

6

4

8

02. Akij Printing &

Packages Ltd.

Printing &

Packaging

factory

1

9

7

4

3

9

8

03. Dhaka Tobacco Industries Leaf Processing Factory.

Tobacco Leaf Processing Plant 1

981

498

04. Akij Corporation

Ltd.

Trading House 1

9

8

3

7

2

9

4

05. Akij Match factory

Ltd.

Match1

9

9

2

3

1

2

06. Akij Jute Mills Ltd. Jute Yarn &

Twine1

9

9

4

2

2

3

7

07. Akij Cement

Company Ltd.

Cement1

9

9

5

1

2

0

08. Akij Textile Mills

Ltd.

Cotton Yarn1

9

9

5

1

6

0

0

09. Akij

Pharmaceuticals

Ltd.

Medicine1

9

9

6

2

0

0

0

10. Akij Particle Board

Mills Ltd.

Particle &

Hardboard1

9

9

6

6

0

3

11. Akij Jarda Factory

Ltd.

Flavoured

Chewing

Tobacco

2

0

0

1

6

4

12. Akij Food &

beverage Ltd.

Food &

beverage

2

0

0

4

3

0

0

2.2.1. Sister concerns of Akij Group at a glance:

Akij Printing & Packages Ltd.

APPL is one of the biggest printing & packages in Bangladesh. The most modern and

sophisticated technology of APPL have ensured our high quality printing and

packaging including the best quality wide format digital printing system in

Bangladesh. Situated in Tongi and Navaran, two factories provide almost all the

packaging required by the group. Besides this, they also provide packaging for other

companies. The paper needs to be slit and

trimmed before printing. Goebel Optima 2000 are multiple slitters; they are able to

work with paper, board and film. There are various types of printing machines. The

Heidelberg Speed master CD102 does four color offset printing. It is capable of

printing 45,000 impressions per shift. There is a Gravure 7 color printing machine

capable of printing 150 m per minute. Some of the ‘stations’ may be shut off to

enable images of smaller numbers of color to be printed with this machine. The

printed media are then cut to the appropriate sizes by easily programmable

machines. These then go through the folding and gluing process. There are wet and

dry laminating machines for waterproof packaging. These factories are engaged in

advertising and not only printing posters. A state of the art new printing machine is

able to print front-lit, back-lit and other types of signs on a variety of media.

Akij Food & Beverage Ltd.

Akij Food & Beverage Ltd. has been established at a beautiful site Krishnapura,

Dhamrai of Dhaka. It has come with the best food & beverage in Bangladesh. There

are various types of drink. Mojo is the brand name of cola, Lemu is the brand name

of Lemon and Speed is the brand name of energy drink. Immediately after the

introduction of the brand it became very popular among its consumer because of the

high quality and intensive distribution in every nook and corner of the country.

Checky Monkey is the brand name of banana chips produced from this factory. It

also is becoming popular chips in Bangladesh. Most of our Raw materials come from

various foreign countries. The quality is very strictly controlled. At every stage, non

standard products are rejected.

Akij Cement Company Ltd.

AKIJ Cement has established a foot hole in the cement market. Encouraged by

consumer’s response and confidence AKIJ Cement is in the process of expanding its

capacity by many folds. Once completed however, this factory will be quite

incomparable. From unloading the raw materials at the jetty to loading the finished

product onto boats, all the stages are to be automated and computer controlled.

Two fix swing cranes will unload the clinker and gypsum and put them on a belt

conveyer to be put into storage. These are then loaded into the ‘bins’ and measured

by two belt scales before entry to the ball mill grinder. This allows the ratio of clinker

and gypsum to be controlled. From there the ground cement goes to the vortex

separators by the means of a bucket elevator and chain conveyer. The vortex

separator separates coarse and fine cement by using high pressure. The fine cement

is the finished product whereas the coarse cement needs to be ground again. The

fine cement is stored in silos and intricately controlled conditions. This cement goes

to the packing machine by a screw conveyer and from there to the jetty by a belt

conveyer. The factory is equipped with air filters in order to minimize pollution and

recycle any cement that is suspended in the air. The entire production process is

computer controlled and there are sensors to monitor various factors at regular

intervals. The level of automation reduces dependence on staff and risk of human

error. The software controlling the machines allows engineers to view progress on a

computer stimulated model of the factory. It also reports problems and permits fine

control of every stage. The laboratory is not only involved in quality control but also

on improving the cement to being the best brand available. As well as equipment to

determine chemical properties of the product, there is apparatus to measure

physical factors both before and after the cement has set.

Akij Textile Mills Ltd.

Akij Textile Mills Limited (ATML) is a sister concern of Akij Group. Since 1998 Akij

Textile has been operating its business by supplying excellent quality Yarn primarily

in the export market. The yarns produced by ATML are sold to the export oriented

knit & woven garments industry. ATML’s production capacity is around 50 tons per

day - 25 tons combed & carded from Ring Spinning, 20 tons from Schlafhorst

Autocoro & 5 tons from BD Rotors. The mill can produce all yarn counts from Ne 6/1

to Ne 100/1. The counts mostly being produced are Ne 20/1 to Ne 40/1 combed &

carded 100% cotton yarn from Ring Spinning, Ne 6/1 to Ne 26/1 from Schlafhorst

Autocoro machine and Ne 7/1 to Ne 16/1 from BD Rotors. The blow rooms are

equipped with Vision Shields - foreign fiber (contamination) detectors. From the

process of bale breaking to the packaging of yarn, everything is done with

automation & state -of - the -art- technology. Quality is of utmost significance and is

therefore very carefully controlled. Beside other routine equipment to measure

various properties of the cotton, sliver and yarn, the lab is equipped with a H.V.1

spectrum. It is used to check the suitability of the cotton from each bale and

according to the results; the bale would either be accepted or rejected. The software

in the machine is able to select the bales which do not meet the set standards and

compile a list of them automatically. The Uster T4 is used to test sliver, roving and

yarn. It measures thickness variation per kilometer. Frequent samples are taken and

tested meticulously. The level of computerization of the machines on the factory

floor also mean that their performance can be monitored from the lab.

Akij Particle Board Mills Ltd

Akij Particle & Hard Board Mills Ltd. has come with the best particle board in

Bangladesh. It started business in the year 2001 & already she has created a place in

the market for improved quality. The factory is situated at Torraghat in Manikgonj

District on the bank of the river Kaliganga.

Akij Particle Board is a Timber substitute three-layer board made of wood chips. The

objective is to produce and supply international standard Particle board to meet the

demand of Architect, Interior Designers & Furniture Manufacturers in the country.

With the guidance of Honorable M.D. Sheikh Akij Uddin, Akij Particle & Hard Board

Mills Ltd. will maintain quality and better service to satisfy her valued customers and

users. Due to the high levels of humidity in Bangladesh, wood is not a long lasting

building material unless it is of the best quality and is excellently treated. However,

good quality wood is very expensive and often acquired through the illegal

eradication of forests which has led to many species becoming scarce. The rate at

which objects made of wood need to be replaced is greater than the rate at which

most trees grow. Particle boards are longer lasting, less expensive and greener

alternative of wood. A lot of the scrap wood produced by various factories in the

group is recycled to be particle boards. The wood is put into the Kolckaner drum

chipper to be made into small pieces and then into the Maier flaker. By this time, the

wood is reduced to very small chips. A hammer-mill is used to crush these chips and

then a pair of coupled driers dry them. A refiner is used to make the chips even finer

and a screener separates the various sizes of chips. Coarse and fine chips are put into

separate silos. These are separately weighed by two batch-weighers and put into the

glue blender where they are mixed with glue, paraffin wax and hardener. Each is

blended separately and the fine and coarse chips receive different amounts of the

chemicals. These blended chips then go to the former and come out of its three

outlets. The first and third one is for the fine chips and the second for coarse chips.

As a result a three layered, reinforced particle board is produced with fine particles

on the external layers and a layer of coarse chips inside. There is an online moisture

meter in the forming machine. An automatic weighing scale is involved in the quality

control of the boards which are 4feet x 12feet.The thickness currently in production

are 19mm and 12 mm. From the forming machine, the boards go to the

Diffenbachger autopress and then to edge trimming, sanding and master sanding.

Some of the boards are also veneered with woods such as teak.

Akij Zarda (Chewing Tobacco) Factory Limited:

Akij Zarda Factory Ltd. is producing 4 different types of Zarda to full fill the needs of

different consumers in diversified taste. Different types of Zarda produced by AZFL

are as follows: 1) Special Patti (99): Pack Size - a) 50gm b) 25gm c) 12.5gm, 2) Golden

Patti (Surovi) (55): Pack Size - a) 50gm b) 25gm c) 12.5gm, 3) Akiz Zorda (Beli) (44):

Pack Size - a) 50gm b) 25gm c) 12.5gm and 4) Vhiza Patti (33): Pack Size - a) 25gm b)

10gm.

Akij Jute Mills Ltd.

AKIJ JUTE MILLS LTD. a unit of Akij Group is a 100% export oriented Jute yarn

Industry catering to the need to carpet manufacturers and other end users of jute

yarn all over the world. Apart from being a member of a leading industrial group of

Bangladesh, the mill is run by a team of qualified and highly experienced

professionals whose principle objective is customer satisfaction. In respect of

production the mill is one of the largest in Bangladesh producing about 20,000

Metric Tons of Jute yarn annually. The mill is creating jobs to over 3,000 people most

of them are destitute females of the locality.

Organization Specialty:

1. Hydrocarbon free/Vegetable oil treated Jute yarn on demand.

2. We use the world's finest hard district Jute in our batch.

3. We maintain strict shipment schedule.

4. We do not compromise when it comes to quality and we may most humbly claim

that we are the cleanest Jute mill in the world.

Akij Match Factory Ltd.

Akij Match Factory Ltd. has been established in the year 1992 at a beautiful site near

Muktarpur Ghat on the bank of river Sitalakshaya. It is a fully automatic match

factory which produces 100% Carborized high quality safety matches. Dolphin is the

brand name of the matches produced from this factory. Immediately after the

introduction of the brand it became very popular among its consumer because of the

high quality and intensive distribution in every nook and corner of the country.

Most of the raw material comes from various parts of Bangladesh by river. The river

Shityalakhkha flows next to the factory and facilitates transportation greatly. Some

of the wood used to make match sticks comes from Pakistan. A cutter with a circular

saw cuts the logs into 15” portions. The bark is taken off the portions and these are

then put through the peeling machine which peel layers of wood off the log. These

layers are chopped into the rough shape and size of match sticks. As these sticks are

usually quite moist, they are dried. Carborization and treatment with other

chemicals such as Boric acid occurs at this point. This is to ensure that the match

sticks don’t break when ignited and that their quality is preserved even in highly

humid conditions. The chemically treated sticks are polished in two stages to give

them uniform proportions.

The quality is very strictly controlled. At every stage, non standard products (wood

layers or sticks) are rejected. However, these are not wasted. The sticks, wood layers

and any other scrap wood goes to be recycled in AKIJ Particle and Hardboard Mills.

The faults in the rejected matches are dealt with and these are packed manually.

The bulk of the matches are packed by rotary packers and these go directly to the

market

2.2.2. Some significant achievement of Akij Group:

Government Award for Export:

For outstanding performance in export, the company achieved “The National Export

Trophy-2001 (Gold)” for Navy Special Filter Cigarette export. In 2005-2006 fiscal year

the company export 65,52,80,000 sticks of Navy Special Filter cigarette. “The

National Export Trophy (Silver)” for hand made cigarette (popularly known as bidi)

export as well as a pioneer employment provider with employment strength of

60,000 staff and officer in different categories. In 2005-2006 income year DTIL pay

1020,66,00,000 taka as tax to the government which is second highest tax paying

company in our country.

2.3. Background of Dhaka Tobacco Industry:

Dhaka Tobacco Industries came to the fold of Akij Group in late seventies when

Government has decided to disinvest and hand over the Factory to private sector

from the nationalized sector.

The Factory is located at Morkun near Tongi and lot of investment into MEN &

Machineries has turned the Factory in to a Modern cigarette producing unit. Dhaka

Tobacco industries establish on 1966. It employs about 2,648 people who work in a

congenial atmosphere to deliver right quality to satisfy the million of Smokers’ taste

and needs.

Currently, Dhaka Tobacco industries produce twelve brands of cigarettes.

These are:

Castle (Full Flavor), Castle (Light), Navy, Legend White, Real, Sheikh (White), Sheikh

(FF), Five Star, K-2, Red & White & Surma . Approximately one billion cigarettes are

produced per month by the company’s factory in Tongi, Gazipur. One hundred

million of the Navy brand are exported quality and are sold in Dubai.

In storage, the tobacco is kept in air-conditioned and moisture controlled rooms

where its perfection can be maintained for up to two years.

The bales of processed tobacco are sliced in uniform sizes and ground. This is stored

in the blending silos in specific ratios. The tobacco (lamina) is moistened, cut and

dried. Some of the excess stem produced in National Leaf is also used. It is fed into a

conditioner using auto feed. Then, it is cooled and stored in silos to be processed

further when necessary. A stem roller is used to flatten the stem so that it is ready to

be cut first by the cutter and then by a mill cutter. It is moistened using steam in low

pressure and dried to attain the desired level of humidity. At this point the lamina

and stem come together in the mixing cylinder where chemicals are added. There

are different silos for each blend and the cut tobacco is stored in these. Four Rotary

feeders are involved in transporting this to the secondary manufacturing

department.

A Molin’s Plug making machine makes filters. The filter making machine is capable of

making plugs of different length and dia. There are cigarette making machines of

various brands and speeds. Recently, the company has invested in Molmac Mark 9

machines. They are equipped with a system to remove ferrous material and stems

from the tobacco supplied to the machine. In addition, there is an automatic system

of weight and density control to maintain uniformity.

Focke Hinge Lid Packers are used for packing cigarettes. Quality Test Module is used

to test the circumference of cigarettes and filters using a laser mike head, the total

ventilation with closed ventilation zone and the pressure drop in cigarettes is a

completely encapsulated condition. The percentage of moisture, nicotine and sugar

in various blends is found using the Infralab TM Gauge. A Tobacco Oven determines

the total oven volatile content of tobacco and stems. There are a variety of other

installations to measure both physical and chemical properties, with the most

impressive being a latest smoking machine.

The machines run around the clock except on Friday when most of the maintenance

work is done. The well disciplined environment and efficiency of this factory has

caused man multinational companies to offer us deal to manufacture their product

in order to supply the subcontinent.

Export Markets (27 Countries) of DTI:

Asia: 1. Iran 2. Saudi-Arabia 3. Qatar 4. Kuwait 5. Bahrain 6. Yemen 7. Malaysia 8. Dubai 9. Hong-Kong 10. Singapore 11. Taiwan 12. India 13. China

Europe: 14. Germany 15. Spain 16. Belgium 17. Turkey 18. Rumania 19. Italy 20. Switzerland 21. Holland 22. Scotland 23. France 24. U.K.

America- 25. U.S.A. 26. Portugal

Australia: 27. Australia.

2.3.1.The role of Akij Corporation Limited

A sister concern of Akij Group, Akij Corporation Limited is the most organized

distribution company in the country. Akij Group is country’s one of the leading

business conglomerates. Initially Akij Corporation Limited was known as Amin

Enterprise and started its operation in 1992. In June 1997 Amin Enterprise was

renamed as Aminuddin Enterprise Limited and in 2001 Aminuddin Enterprise Limited

was again renamed as Akij Corporation Limited. Akij Corporation Limited is

responsible for the marketing and distribution of three industries of Akij Group

namely Dhaka Tobacco Industries, Akij Match Factory Limited and Akij Zarda

(chewing tobacco) Factory.

2.3.2. Mission and vision of Dhaka Tobacco Industry.

Mission of D.T.I.L. :

Double the net revenue by 2008:

By the year 2008, the company plans to increase its net revenue two fold. With that

target in mind, within the span of the next 5 years, the revenue must rise at an

accelerating rate, requiring a growth in revenue in a continuous and consistent basis.

The point to be noted here is that the target is to increase the revenue rather than

the profit. This is because DTI is a responsible company and wants to generate profit

for all its stakeholders and create and maintain an win-win situation for all.

Growing our share of the total tobacco market:

The share of the market captured by people consuming biri has grown alarmingly.

DTI plans to improve the peoples’ smoking habits and to upgrade their tastes from

the filter less biri to the cigarettes. This is also coherent with the first objective of the

mission, as more people will start smoking DTI brands instead of biri, more the

revenue will increase.

Dominating key denitrified:

The total brand combination of the company is divided into four major product

segments, high, medium, low medium & low segment. DTI has no product in the

premier segment. But it is jointly made contract with Marlboro international to come

with a new product in premier segment. Already dominating the medium and lower

segment of the market. But it is facing steep completion in the low segment. DTI

wishes to dominate all the key identified segments and they are planning accordingly

under all existing scenario, the company doesn’t have any brands competing in the

very low segment.

The vision of D.T.I.L. :

The vision of this company is to continuously increase the quality of its product and

set a world class standard.

2.4. Objective of D.T.I.L:

2.4.1 Business Objectives:

1) Deliver best results in the local market in terms of :

Profitability = Market Share

Customer Service = Product Quality

2) Build strong consumer –led culture throughout the organization.

3) Drive the successful development of a strong portfolio of brands to satisfy

local consumer needs.

Strong brands serving profitable consumer segments:

Local product development to satisfy local test preference

1) Achieve excellence in Trade Marketing and Distribution to build strong,

profitable consumer relationships.

2) Drive supply chain excellence both in-market and to supply other operating

companies.

3) Proactively identify new business opportunities.

4) Build strong relationship with local government regulations etc.

5) Develop the best people for Akij Corporation Ltd.

6) Continuously improve performance, including development and adoption of

best practices wherever possible.

7) Continuously train and develop management staff.

2.4.2. Social and Community Objectives:

1) Give continuous supporu and continue active participation in country wide

forestations program.

2) Give supports and get actively involved in ‘Vegetable Seed Multiplication

project’ and ‘Grow Your Own Vegetables’ project.

3) Support philanthropic organizations like Sandhani, Red Cross, and Center for

Rehabilitation of Paralyzes ( CRP) other social groups

4) Promote national art , culture and sports.

5) Continue to improve the standard of socio-economic factors such as child

labor , farmers’ living standard and capacity building.

6) Provide practical community support in the field of tertiary education and

disaster aid.

7) Become a responsible corporate citizen by paying regular excise duty and

other taxes.

2.5. Strategic Imperatives :

Developing strategies is at the forefront of the company’s thinking. There are

areas in which company needs to be excellent. The company must :

1) Develop a focused, segmented and differentiated brand portfolio.

2) Establish an excellent trade marketing and distribution capability in end

markets.

3) Minimize supply chain costs within the constrains of its marketing objectives.

4) Establish leading positions in markets whire it is not already strong.

5) Be known as responsible company in the industry seen as controversial.

6) Ensure its people are first class.

2.6. Strategies:

2.6.1. Corporate level strategy :

1) Set priorities for investment in brands and markets.

2) Ensure the development of international brands.

3) Play proactive role against the anti smoking movements through the

country.

4) Set research and product development priorities for new and existing

products and processes.

5) Establish a global strategy including sourcing polices and plans.

6) Ensure the development and communication of worldwide positions on

customer and regulatory affairs.

7) Be responsible for acquisition, mergers, and business development

policies.

8) To pursue the government to alter the excise structure and rates in the

low price segments in order to enable the profitable manufacture and sale of

such brands.

9) Develop and communicate strategies and programs to defend

consumers’ freedom to smoke.

2.6.2. Business Level Strategies:

1) Further develop strategies and best practices with respect to trade

marketing.

2) Ensure that the organization derives maximum benefits from economic

of scale

3) Direct and effective and leveraged procurement policies.

4) Monitor and market performance.

5) Establish guidelines for a well-defined system of financial control.

6) Promote management excellence by means of training and development

programs.

7) Provide essential support services to end markets where necessary.

8) To improve the total brand offering of the company’s international

brands, by joint ventures or mergers like the Mallboro brands .

9) To increase its market share in the medium priced segments.

2.6.3. Functional Strategy:

1) Use of marketing information tools for effective utilization of marketing

expenditure through better training and evaluation of marketing strategy.

2) Introduction of common center (both management and non management

people) that lies under the same group.

3) Large investment in the Secondary Production Unit, in new high-speed

making and packing machines to further improves product quality.

4) Provide advice to farmers about crop production ( Tobacco Leaf ) and other

related aspects in order to integrate it in the supply chain function from leaf

growing and material procurement to waste disposal.

5) Arrange regular meetings of all the key manufacturing , engineering and

other key floor managers to update and meet the product demand designed

by the marketing department.

2.6.4. Operation Strategy:

1) Use of installation bio-filer plant to abate the intensity of odor around the

Dhaka factory.

2) Regular maintenance of high tech machines and equipment’s at the factory.

3) Introduce sufficient software on the desktop of every manager and introduce

electronic communication between all Trade Marketing & Distribution

offices.

4) Introduction of HoReCa ( Hotel Restaurant and Café ) channel in the

distribution chain for efficiently servicing customers at key points of the

company .

5) Acquisition of new software package to manage financial and manufacturing

processes.

6) Introduction of Zero- accident in the factory floors .

7) Extension of computerization and network facilities to shipping godawn to

facilitate quick response to market demand.

8) Introduction of Distributors Information System at each distributors premise

and Warehouse Information system each TM & D office.

9) Company-wide launching of integrated computer system software called

TETRA CS/3 ( Client Server , version 3 ) to help managers of all levels to utilize

company resources efficiently .

10) Regular verification of physical existence of all the company assets and thus

ensuring custodianship.

11) 2.7. Brand Portfolio of Dhaka Tobacco Industry.

High Segment: a) Castle Full Flavor b) Castle Lights Presently DTI enjoys more than 10% market share in this segment.

a) Castle Full Flavor b) Castle Lights

Medium Segment: a) Navy Special Filter.

Presently DTI are contributing 48% market share in this

segment.

2.7.1. Price-wise segmentation of the product:

Sl No

Brand Name

1000 Sticks

Retailer Price

01

Castle Lig

1000

1800

ht .00

02

Castle FF

1000

1800.00

03

Navy SF(SS)

1000

1240.00

04

Navy SF(HL)

1000

1240.00

05

Navy SF( SC)

1000

1230.00

06

Real

1000

624.00

07

Sheikh White

1000

624.00

08

Sheikh FF

1000

624.

00

09

Five Star

1000

525.00

10

Red and White

1000

525.00

11

K-2

1000

525.00

12

Surman

1000

525.00

Competitors Price13

B & H

1000

3697.50

14

Gold Leaf

1000

2297.50

15

Pall Mall

1000

1797.

20

16

Capstan

1000

1797.50

17

Scissors

1000

1247.50

18

Star Filter HL

1000

1247.50

19

Star Filter SS

1000

1247.50

20

Senate

1000

620.00

21

Top 10

1000

624.00

22

S. K white

1000

624.0

023

Maries

1000

624.00

24

Asia

1000

600.00

25

Nasir Gold

1000

525.00

26

Sumoon

1000

525.00

27

Super Gold

1000

525.00

28

Willson

1000

540.00

30

Dolphin

1000

114.00

31

Vorosha

1000

120.

00

1) Premier Segment : More than 3 tk2) High Segment : 2 Taka 3) Medium Segment : 1.50 Taka4) Lower Medium Segment : 1.00 Taka 5) Lower Segment : Less than 1.00 Taka.

2.7.2 Nature of the product:

Akij Corporation limited is the sole distributor of Dhaka Tobacco Industries,

Akij match factory limited, Akij Jarda Factory Limited and Akij Biri Factory

Limited. Cigarette and Bidi is the staple product of the corporation. Cigarette

is a perishable product, which must be consumed within twenty-one days.

After this period it will be non-qualified as perfect consumer goods because

during this period it will fall down.

Regarding this fact effective distribution system will play here a vital role of

market the feeble product. Besides Bidi and cigarette, Zarda is also a

perishable product of this corporation. Here direct distribution for

manufacture is fruitful, because with in few days it reaches to the final

consumers.

Another product of the company is the match (Dolphin) which is in a high

competitive market situation in our country, though it is the market leader

product in this industry. It lacks 32% of its total market demand i.e. Hear 68%

of its total market demand is fulfill. Most of the final product of this company

will have a potential export market. In the mean time cigarette (Navy) has

earned a of 20 core taka per month especially in Dubai and other middle-east

countries.

2.8. Distribution Channels of Akij Corporation ltd.

Distribution Channel

2.9. ACL Marketing Set-Up

Marketing Setup: Region : 8Area : 22Territory : 167Zone : 502Sales Representative: 3200Driver / Dan Puller: 2889

2.10. Inventory management:

Factory

Sole Depot # 16

Company’s Own Sales Depot # 118 Distributor # 59

Retailer / Whole Seller # 5,00,000

Consumer

Region # 8

Area # 22

Territory # 167

Zone # 502

Driver / V.P

Regionl Manager

Area Manager Zone in- Charger

Sales Representative # 3200

Driver / Van Puller # 2889

Inventory management is very crucial for any product oriented organization.

Akij collects raw materials from both domestic and foreign countries .As they

maintain a daily basis production system so the inventory management is

very important for Akij Corporation Limited.

2.10.1. Inventory planning

ACL believes that a well-planned inventory system could win a high-level

customer satisfaction through smooth and prompt delivery to valued

customers. Basically the inventory plan is developed using the following

information.

Existing stock at the warehouses and depots .

Storage capacity of the warehouse and depots .

Brand wise daily product movement .

Sales projection for the coming month .

Lower the Lead-time (duration between the placement of a production-

requisition and storing of finished products in the depots)

Each Brand Officer is responsible for there respective brands .Mainly they

introduce different types of promotional activities to increase the sales .

2.10.2. Order Management

Field level sales forces collect orders from the Retailers, Wholesalers or

Dealers. Then the concern sales personnel send a formal sales order to the

central coordination unit through fax. Central coordination unit prepares the

Delivery order after verifying the payment mode, party outstanding etc. And

finally the Delivery order is sent to the concern depots for executing the

order. The goods are distributed as quickly as possible. In this case, Depot in-

charge prepares three copies of sales-invoice and delivery Chelan: one copy

for customer, another fro accounts and the third one is for Book-copy.

2.10.3. Logistic Management

Availability of Logistics Support:

Different types of transport are available for logistics supports like truck (2

tons ) microbuses and covered van ( 1.5 tons ) Logistics support for the

Dhanmondi & Lalbag Territory is as below.

Truck

Pick-up

(5 tons)

Covered

Van

Pick-up (

2 tons )

Baby Van

Pick-up (

1.5

tons )

Tri van

Pick-up (

1 tons )

Total

2.10.3.1 List of company Transports:

Apart from these, local public transport is used for urgent and normal delivery of

product outside the branch network. ACL attempts to build up a good trade relation

so in case of any emergency a private transport agency and with continental courier

services; a private courier service enterprise delivers products on urgent basis.

Other than the transport, the company has all modem communication and office

equipments i.e telephone, fax, email, computer, etc. to facilitate the distribution

activities. Nonetheless, all other physical infrastructure is three for smooth operation

of the distribution system.

2.10.3.2 Management of logistics Support:

The Deputy Manager of Distribution manager’s logistics support for the smooth

distribution and delivery of product. For efficient management, Deputy Manger

plans the route map. Generally a route is a collection of 70-80 shops preferably;

route map is planned on the basis of the quantity of product to be delivered. But,

within the city route map is planned on the basis of area, so that it covers all possible

points within the limited time frame i.e. single day. ACL does not maintain any route-

mapping card. In case of institutional Delivery ACL maintains a Delivery schedule

they adopt a monthly delivery schedule, which is basically a plan to collect orders

and delivers goods prepared by sales staff. To attain cost effectiveness and efficiency

in distribution system ACL strictly follows the schedule.

2.10.3.3 Delivery of Products:

ACL entertains urgent demand from the Branch Depots as well as the retailer’s level

for any amount or quantity. In case of urgent need, of a small quantity is also met

but using the public transport to minimize delivery cost. Normally, within the city,

urgent delivery takes less than a day sometimes within 5-6 hours, but outside the

city 24 hours is the maximum time of delivery of products from receiving through

telephone. But in the company’s Manuals it is said that the Delivered Products

should reach the party within 24 hours.

2.11. Organ Gram of Akij Corporation limited (Marketing)

Head office

Director of Marketing

Area Manager

General Manager

AdministrationDepartment. / HRD

AdministrationOfficer

Sl

No

Name of the

Employee

Dhaka Tobacco

Industry (ACL)

01 Md. Mahbub Zamal

Director, Marketing

02 Md. Shahinur Rahman,

General ManagerSales & Marketing

03 Moyeedur Reza Choudhury,

Assistant ManagerMedium Segment.

04 Subrata Saha..

Assistant Manager.Sales info & Distribution

05 Sanjoy Paul Assistant ManagerMarketing Research

06 Md. Akteruzzaman

Senior Brand officerHigh Segment

07 Mohammad Moshiur Rahaman

Senior Brand Officer Low segment.

08 Syed Ashrafuzzaman

Administrative officer

09 Sk. Md. Abdul Malek

Marketing Research officer

10 Abu ahmed Miah

Jr. Officer- Marketing

Brand Deportment(Brand Executive)

Research Department (Research Executive)

Brand Officer

Brand Officer

Research Officer

ResearchOfficer Regional Manager Regional in Charge

Sales Officer Depot Officer

Driver Van Puller Store Keeper

Outlet

Territory Officer

Zone In charge S.R.

Research11 Sushanta Paul jr. officer

Marketing Research

The governing body of this organization is very much tall that means the span

of control is high. Although the management body is very tall but it maintains

an efficient chain of command. Each and every member of this chain has to

perform his duty on time because the fault of any employ might hamper the

whole process of the structure. Though the hierarchical position differs from

M.D., Director, and G.M. They work on the same level. Under the General

Manager there are mainly two wings one is brand department and the other

one is the research department. Under brand department there are mainly

four brand officer. The regional manager works under the brand officer.

Under regional manager there works Territory office, Zone in charge, SR. In

the bottom of this line of this structure we could see that the structure is very

much flat.

2.12. Competitors Brand:

3. Pall Mall 4. Gold Leaf

5. Star 6. Scissors

Chapter-3Situation Analysis (Industry, Micro & Macro Environment) 3.1. Industry Analysis

3.1.1. Threats of New Entry:

A matured industry likes Tobacco along with huge linked diversification posses a

second throughout for the new entrant into the business. Though DTI jumped to the

above-generalized conclusion but it required an extensive look for better

understanding. For the new firms to enter this industry required analysis of industry

life cycle collection of industry information macro-environment.

3.1.2. Pressure of Substitute:

By placing a ceiling on prices it can charge, substitute product or services limit the

potential of an industry. Unless it can upgrade the quality of the product or

differentiate of somehow (As via marketing), the industry will suffer in earnings and

possibly in growth. Substitutes not only limit profits in normal times, they also

reduce the bonanza an industry can reap in boom times. Substitute product the

deserve the most attention strategically are those that (1) are subject to trends

improving their price-performance trade-off with industry’s project, or (2) are

produced by industries earning high profits. Substitutes often com rapidly into play if

some development increases competition in their industries and causes price

reduction or performance improvement. A pressure form substitute product literally

means competition from a different industry. A new concept of anti-smoking product

to some extent creates pressures form substitution. That is still comes from the

same industry. Chewing Tobacco and brittle leaf are major treats as a substitute

product.

3.1.3. Bargaining power of Buyers:

The higher the number of buyers the bargaining power of them. As the retailer and

the end consumer are the buyer of DTI Products and enjoying the flavor and brands

so DTI is enjoying an upper hand. From industry perspective, we can comment that

though the large number of buyers enjoyed differentiated products even than their

bargaining power was relatively lower in the industry. Moreover, to experience the

intensity let us observe the selling pattern and demand for the company’s product. It

is a hard true for a retailer to include DTI brands in their items. Nevertheless, there

are enormous of loyal consumer for almost every brand mainly in Medium High,

Medium, and Low Medium & Lower Segment.

3.1.4. Bargaining Power of Suppliers:

The section tries to establish about the position of the suppliers who act within the

industry and take active part in operation.

Concentration of Suppliers:

If we consider from promotional component and raw material point of view then we

can say that DTIL enjoys by pushing the suppliers to comply with the quality

required. For financing as a huge portion required for its operation , DTIL was

financed by retain earning portion of the company and by some local multinational

banks. It appeared that mainly shareholders and parent company was investing DTIL.

We can say that the large number of stakeholder made their bargaining power low.

3.1.5. Availability of Substitute Product:

Substitute products are the same in concept but come from different industry. As

mentioned earlier the issue of no substitution, made bargaining power of suppliers

low.

Importance of the Buyers Industry to the Suppliers Product to the BuyersBusiness:

It is apparent the suppliers of raw materials of DTIL’s various divisions had very vital

role to play in operation. Despite of the volume which creates higher bargaining

power of suppliers in terms of importance suppliers were in pressure to provide

quality component. If the suppliers failed to attain consistency they will be listed

down to its rating or even discard and rewrite. DTIL asked its suppliers to ‘makes it to

print but rather make it right and make it the same every time’.

Differentiation and Switching Cost Associated with the Supplier’s Product :

DTIL acquired quality raw materials from its suppliers to ensure the quality of its final

products. Therefore, we can say that DTIL would not switch to other supplies of the

relationship and ;oozing the power to order as specification.

3.2. Macro-Environment Analysis:

The external environment plays a critical role in shaping the destinies of the entire

industry as well as individual firms. Each company must adjust it strategies to reflect

the environment in which it operates. The environment influences strategy in

different ways. This section focuses on the international macro- environmental

forces,i.e PEST ( Political-legal, Economical, Social and Technological) that affected

BATB in doing business. In general the appropriate dissect of the macro forces are to

turns the threats into opportunities as well as formulate strategies, which will help

organizations for further growth.

This section focuses on the International macro-Environmental Factory; i.e PEST that

affected BATB in doing business.

3.2.1. Influence of Political-Legal forces:

Prolonged political instability started from mid 80’s lasted over the nest decades. For

the particular industry the existing legal and political are very active in terms of

monitoring and implementing. As the days crosses the legal systems creates an

enormous pressure to operate the business. Continuous introducing of new taxes

pour out the turnover despite a massive societal co-operation. The growing concern

of foreign countries against the tobacco producers also contributed government to

take necessary actions. So we can apprehend the cream prosper of the business is

gradually becoming less lucrative. However, as a third world country, the

government of Bangladesh has already taken steps to protect the national interest

and health. Continuous imposition of taxes virtually de-motivates the consumer for

smoking. Due to this the demand for cigarettes is decreasing in last couple of years,

which in turn may reduce the tax collection for the government. The players are

being restricted to promote their system is accompanied of several lawsuit

provisions, which pose a substantial threat for the players.

3.2.2. Economic Forces:

The economic forces that were and might influence DTIL are as follows:

The ongoing recession as well as inflation is crippling the whole economy of the

country. The buying capacity of the consumer has dropped very sharply during mid

of the previous year and still going on. The situation was further intensified when

Government of Bangladesh has imposed additional VAT. Decline in the real

productivity along with inherent inflationary pressure reduce DTIL’s production and

earning due to less export. The currency devaluation claimed a high cost in

internationalizing the improved technology. The management expense has rise

dramatically due to inflation. Also recent cyclone, floods , unstable worlds economy

felt a backward condition of our whole economy.

3.2.3. Influence of Social Forces:

People expectation and social trends always company’s way of doing business. In

addition, this can have intensified the pressure to produce and compete. In early

1980’s competition in Tobacco was characterized by two powerful sources. The most

important is an increasing market fragmentation driven by swiftly changing customer

preferences. Consequently, companies were forced to concentrate on product

differentiation and new product development. Apart from their core dealings,

several programs upholding the quality of life. Life style and personality is a major

factor regarding to the respective brands. For that, DTIL claims its share in almost

every segment. The growing number of migrated people has created a high demand

pressure in the metropolitan cities. Internalizing and respecting all the changes DTIL

has maintained a competitive edge in public relation.

3.2.4. Influence of the Technological Force:

In the tobacco industry, technology plays a very crucial role and influences both

product and process system. BATB has taken a large number of initiatives designed

to help itself adjust to new reality of technology and to reach its seeming goal of

becoming the country’s lowest cost producer of high quality tobacco through the

aggressive application of technology. The internationalization of the new technology

not only created a competitive edge but also helped to achieve economics of scale

and error less production. Application of computer almost in every sector of

operation posse’s smooth flow of information that ultimately helps the management

to take emergent as well as deliberate strategy. Sophistication of technology

presented motivational factors to every important entity in service

Chapter-4Findings and Analysis4. Distribution Network and Supply Chain Analysis:

A supply chain consists of all parties involved, directly or indirectly, in fulfilling a

customer request. The supply chain includes not only the manufacturer and

suppliers, but also transporters, warehouses, retailers and even- customers

themselves. A supply chain is dynamic and involves the constant flow of information,

product, and funds between different stages. These supply chain stages include that

customer, retailer’s wholesalers/distributors, manufacturers and component/ raw

material supplier. Each stage in a supply chain is connected through the flow of

products, information, and funds. These flows often occur in both directions and

may be managed by one of the stages or an intermediary.

The objective of every supply chain should be to maximize the overall value

generated. The value a supply chain generates is the difference between what the

final product is worth to the customer and the costs the supply chain incurs in filling

the customer’s request. The higher the supply chain profitability, the more

successful is the supply chain. Supply chain success should be measured in terms of

supply chain profitability and not in terms of the profits at an individual stage.

Effective supply chain management involves the management of supply chain assets

and product, information and fund flows to maximize total supply chain profitability.

4.1. Using Middleman:

Mainly, producers give some of the selling job to middle man. Doing so means giving

up some over how and to whom the products are sold. But producers gain certain

advantages from using middlemen. These advantages are described below. Many

producers lack the financial resources to carry out direct marketing. Direct marketing

would require many producers to become the middlemen for the products of other

producers in order to achieve mass distribution economics. Each producer who can

afford to setup their own channel can often earn a greater return by increasing their

investment in their business. If a company earns a 20% of return on manufacturing &

foresees only 10% return on retailing, it will not want to do its own retailing.

The use of middlemen largely boils down to their greater efficiency in making goods

available to target markets. Through their contacts, experience, specialization and

scale of operation, middlemen usually offer the firm more than it can achieve on its

own. Figure show one way that using middlemen can provide economies. Part A

shows three producers using direct marketing to reach three customers. This system

requires nine different contacts. Part B shows three producers working one

distributor, who contacts three customers. This system requires only six contacts. In

this way, middlemen reduce the amount of work that must be done by both

producers and customers. Form the economic systems point of view, the role of

middlemen is to transform the assortment of products made by producers into the

assortment wanted by consumers. Product make narrow assortment of products in

small quantities. But customers want broad assortment of products is small

quantities. In the distribution channels, middlemen buy the large quantities of many

producers and break them down into the smaller quantities and broad assortments

wanted by customer. Thus, middlemen play an important role in matching supply

and demand.

4.2. Distribution Channel Function

Distribution channel moves goods and services from producer(s) to consumers. It overcomes the major time, place, and possession gaps that separate goods and services from those who would use the. Members of the marketing channel perform many key functions:

Information: Gathering and distribution marketing research and intelligence

information about factors and forces in the marketing environment need for

planning and aiding exchange.

Promotion: Developing and spreading persuasive communications about

offer.

Contact: Finding and communicating with prospective buyers.

Matching: Shaping and fitting the offer to the buyers needs including

activities such as manufacturing, grading assembling and packaging.

Negotiation: Reaching an agreement on price and other terms of the offer so

that ownership or possession can be transferred.

Physical distribution: Transport and storing goods.

Financing: acquiring and using funds to cover the costs of the channel work.

Risk taking: Assuming the risks of carrying out the channel work.

4.3. Number of Channel Levels:

Distribution channels can be described by the number of channel levels involved.

Each layer of marketing intermediaries that performs some work in bringing the

product and its ownership closer to the final buyer is a channel level. Because the

producer and the final consumer both perform some work, they are part of every

channel.

ConsumerManufacturer

Manufacturer Retailer Consumer

Manufacturer Retailer ConsumerManufacturer Wholesaler Wholesaler Jobber ConsumerRetailer Jobber

Customer Marketing Channel

Business marketing channels.Figure: Consumer and business marketing channels.

4.4 Distribution System of this corporation:

Its own sales force to the retailers distributes the products of corporation. In

the corporation, the product will be distributed throughout some rules and

regulations.

Distribution Channel

ConsumerManufacturer

Manufacturer Consumer

Manufacturer Consumer

Manufacturer

ManufacturesRepresentatives of sales branch

Consumer

IndustrialDistributor

IndustrialDistributor

ManufacturesRepresentatives of sales branch

Factory

Sole Depot # 16

Company’s Own Sales Depot # 118 Distributor # 59

Retailer / Whole Seller # 5,00,000

Consumer

At first, we can say that the sales volume will depend on the distribution

frequency. Distribution frequency makes a relationship between the retailers

and the sales representative (S.R). On the other hand the distribution

frequency makes the product available to the final consumer. There are

mainly four types of distribution frequency. Retailers and whole sellers are

also divided into different types according to their nature.

4.5. Central ware housing:

After producing the product, the product will kept in the warehouse to launch for distribution, from where the circulation system will start on. The company has only some direct sales center and forty eight sales distributions points all around the country.

Dhaka Region Geuripur Noakhali Kushtia Mymenshingh Majigonj Sonapur Bheramara Tangil Chandpur Laxmipur JhenidhChittagong Faridgonj Matia Chuadanga Amirabad Matlab Khulan MaherpurSylhet Laksham Satkhira Magura B. Baria Feni Jessore Barishal Cemilla Chagalniya Narial FaridpurChaddhagram Dagonbhuyan Keshobpur Takerhat Barura Ramgonj Kotchandpur Bogra

4.6. Territory Sales depots or distribution:

Dhanmondi & Lalbag this two territory are makes a one territory point. The

significant territories of the corporation that includes three zones to launch the

operation of distribution in this region. Dhanmodi has three zone contains and

Lalbag has contain 2 zone those routes and every route has eighty or hundred

outlets, finally, the total outlets of this territory are 9,808.

4.7. Distribution time:

In the territory of Dhanmondi and Lalbag there is fifty eight routes of the distribution

mechanism is operated. Among these are six routes where the distributor provides

the product every day. Moreover the rest of forty -four routes the distributors

Map of Distribution Wise Point of the Product

provides the product three days per week, the S.R get on their task at 8.30 am and

get back to the distribution house by 5.00 pm after launching the distribution

operation. For the long distance route, usually the baby van, and Tri van are used.

Tasks performed by distribution personnel :

1) Report the office within 7.30 am.2) Ensure the drivers / van pullers arrival.3) Check the fitness of the vehicles.4) Check the safety box of each van.5) Take every day sales target from respective T.O.6) Always keep Memo / D.S.S / P.O.S.M. with yourself.7) Get product from depot by signature.8) Sales out within 8.30 am.9) Know the name of every outlets and delivery product according to

their demand.10) Start your daily activities by greetings, do not hurry and don’t deliver

the product in front of customers.11) Try to call every item of product to increase the range of selling.12) Memo should be according to the demand of sellers try to push in

every item of product.13) Mention full name of the S.R. instead of signature.14) Give a clear idea of the supply frequency in this route to the seller.15) Displaying the product and clean the own cabinets while delivery the

product.16) Make proper nursing of the product that’s why if there found any

stock of the product then took it and delivery it to another fast selling outlet.17) 100 % retail the product. Without prior permission do not wholesale .18) Alone with the selling, build strong trade relation with the traders.19) Set P.O.S.M. according to the guidelines of any promotional program

and always bring such materials.20) Make a list of fixed advertising tools and reserve it .

4.8. Liabilities of the distributor:

The primary task of the distributor is to provide final products to the targeted

consumer in time through the retailers. An effective and efficient distribution

network creates to offer strong competitive advantages to market the products as it

connects to the manufactures to the final consumer. The distribution channel

consists of interdependent and interrelated institutions and agencies, functioning as

a system or network, who corporate in their efforts to product and distribute a

product to end users. Buying and selling activities by distributors reduce the number

of transactions for producers and users.

Distribution network also plays a vital role in the time when the firm conducts

different types of promotional activities. Advertising and sales promotion by

distributors communicate product availability location and features. Here the

distributor offers important cost and times advantages in the distribution of a wide

range of products. As they are engaging directly with the target market , so their

opinion and recommendation is very important to identify the problems and

solution.

4.8.1. Logistics Support of distributors:

This distributor has four baby vans and fifty four tri-vans by which distribution of the

product to the retailers is functioned. There are fifty eight sales representatives of

the product to the retailers is functioned. There is fifty eight sales representative and

five -contract merchandiser in this distribution system. Due to the absence of regular

van puller and drivers the distribution system has to seek transportation with hire

payment. The total staff in this distribution house is one hundred thirty five and two

of them do as territory officer who directly recruited with company. One bidi sales

personnel in territory in-charge who working under Akij corporation Ltd controls the

territory.

4.8.2. Nursing the Product:

Sometimes the retailers do not know how to maintain the cash della, then the CM

make the know how to use it. As the retailer, do not know about the lifetime of the

product then the CM inform them about it.

POSM (Point of Sales Merchandising):

Merchandising Promotion tools & the classification of the Types of outlets:

Merchandising:

By adopting reserving resource policy cyclically set different of adverting class.

The promotional tools are two types:1) Permanent Advertisement Tools 2) Temporal / Seasonal.

1) Permanent Advertisement Tools

2) Temporally add Tools:

a) Metal Day-Light a) Dami Packb) Holding Board b) Posterc) Neon Sigh c) Trade Letterd) Bell Sigh d) Buntinge) Try Vision e) Sample

Packetf) Multimedia vision f) Show packetg) Street Vision g) Stickersh) Case cabinet h) Inner card.i) Shop Sigh board.j) Poly sigh board.

Inner Cards are two types.1) Horizontal 2) Vertical.

Nine Routes of display: a) Eye level displayb) Block display.c) Up right display.d) Up front displaye) Compact display.f) Secondary display.g) FIFO Basis display.h) Clean and Attractive

display.i) Maintenance of display.

Types of Shops/ outlet:

b) Grocery Shop.c) Confectionary d) Battle-mort shop.e) Stationary shop.f) Verities Store g) Tea Stallh) Departmental Store.

A Whole Sale outlet/ Shop could be divided into three types. Those are:

a) Class – A ( 50,000.00 More )b) Class – B ( 20,000.00- 50,000.00)c) Class – C ( 4,000.00 – 20,000.00)

A retailer could the divided into types.

A) Class – A ( 1,000.00 -4000.00)

B) Class – B ( 600.00- 1,000.00)

C) Class – C ( 200.00 – 600.00)

D) Class – D ( 200.00- Less)

4.9. Packaging system of the product:

Usually cigarette packaging are three types typically they are in this way (a) HL-

( Hinge Lid) this packet contains 20 sticks which is comparatively hard packet that is

not well appreciated by the retailers. For instance, Castel Navy . (b) S.C- ( Soft Cup )it

is comparatively soft packet which also contain 20 strikes. For example scissors and

these types of packet are not welcome by the retailer and final consumers as they

think it to be low quality. (c) S.S- ( Shell & Slide )this packet contains 10 sticks, which

is suitable for the retailer and to the final consumer. Within 200 sticks make a

cartoon 4,000 sticks make a box and 10000 sticks a box.

Sample of Merchandising in Outlet:

4.10. Survey of Zorda:

Akij zorda limited is one of the units of Akij Corporation limited. So far, I have seen

that tobacco is one of the core product and with its vast distribution channel, it is

achieving its goal. However, zorda cannot achieve its target market share. In the

following below. I tried to analyze those things of zorda sequentially.

Zarda Brand Picture:

About Zarda: The zarda can be divided mainly into types, wet patti and Dry patti.

Akij zarda factory limited has 5 types of blends, three of them are dry and two of

them are wet, namely:

Name Size 50 gm

25 gm

12.5 gm

Spetial patti

99 / 35 tk

99 / 20 tk

99 / 12 tk

Jafrany Patti Golden Patti 44 Patti Kalo Patti Vhija 33 33 /

patti / 8 tk

5 tk

Bale patti

20 tk

12 tk

8 tk

It is mentioned that zorda could also be divided on the basis of their size and price

range as well. Each of the category of zorda is dived into different sizes. 10gm,

12.5gm, 25gm, 50gm ,100gm sizes are available.

To find out the reasons why zorda is not getting market I gone through a market

survey. The survey is based on some basic questions. Mainly the retailers are

targeted and tried to find the answers form them and the questions are arranged in

that way. Firstly, I asked them about the brands they sales and tried to find out the

market share of different brands. Secondly, the opinions of the retailers about akij

zorda. Thirdly their opinions to recover the problems (if any). Lastly, the competitor’s

strengths, why they are getting the competitive edge. For my survey, I took outlets of

five different routes and collected data from them. I gathered many experiences

from there. Some of them, I will describe later on.

Total Market Share of Zorda Industry:

4.10.1.Competitive Analysis:

According to the survey Akij Zorda mainly have six competitors namely Hakimpuri,

Baba, Surovi, Nurani, Shova, Shantipuri, Though There are various types of Zorda in

the market but it, I took the most popular ones. I asked the retailers about different

Zorda and about there quality and why these brands are cutting lose. According to

their opinion, I ranked different brands. The market shares of different competitive

brands are as follows.

4.11. Sales analysis:

Castle Monthly Sales in- 2007.

Castle Monthly Sales in- 200.

Year - 2006

Navy (Medium Segment) Yarely Sales in- 2007.

Navy (Medium Segment) Yarely Sales in- 2006.

Navy (Medium Segment) Yarely Sales in- 2005.

l. Segments Average Monthly Industry Volume in Million Sticks. 2004 2005 2006

1 Premium ( 4 tk & above)

241.53 186.15 169.27

2 High ( 2-3 tk)

535.28 556.1 580.75

3 Medium ( 1.50 tk )

1843.01 2147.02 2334.09

4 Lower Mid ( 1.0 tk )

5 Low ( 0.75 tk )

991.59 1013.32 1300.27

From the chart we could see the average monthly industry volume ( in million

sticks).Here we see that the sales is increasing in a increasing rate. Comparing

to each year the average monthly sales is increasing. In each year the

medium segment contributes the maximum. Except 2007, the lower medium

segment does not make any contribution in total average sales.

Dhaka Tobacco Industries:

Average Sales of DTI in Million Sticks per Month

Year 2004 2005 2006 2007Volume 1220.00 1508.3 1688.4 1823.8

The chart shows that the increasing volume of Dhaka Tobacco’s product.4.12. Calculate Brand strike Rate and its effectiveness:

B.S.R. =

Call Productivity =

F.B.B (Frequency Basis Outlet)

Total Number of Outlet X Supply Frequency.

Aim: More Memo More Sales: Using the BSR and CPR to increase the total number of memo.

Calculating the number of Vehicles:

Number of Vehicles =

The importance of S.D.A.F and D.S.S & T.A

S.D.A.F (Salesman Daily Activity Format)

Set daily target, compare the daily achievement.

Implement the plan of increasing sales.

Comparing the sales of previous month with current month.

To find out the daily productivity ratio.

S.D.D (Daily Sales Statement and trend Analysis)

To calculate the dales target on the outlet basis.

To know the delivery time.

Classify the outlet on the basis of its sales.

Calculating the sales target achievement on the basis of its outlet.

Find out the stick rate on the basis of brand.

Calculate the total number of memo.

Calculate the CPR.

Comparing the previous and current sales for each outlet.

To know the closing or refusing rate of each route.

5. SWOT Analysis:

5.1 Strengths: DTI is the dominant leader in the cigarette industry. It can utilize its dominant leadership in the procurement of raw materials, import of tobacco leaf and other important ingredients and high-tech machinery, gaining strong channel access.

High Brand LoyaltyDTI produces a number of international and national brands. Its brands like Castle, Navy, Wheikh, 5 Star, K-2, Real and Surma are among the most valued brands to which the consumers are highly loyal. Smokers are highly brand loyal to its brands as well.

Cross functional Integration:

Recently DTI has integrated the operations of its different functional areas by introducing MRPII. As a result of this functional integration, any single transaction now simultaneously impacts all the major accounts. This clearly gives the company a distractive competitive advantage.

Social Responsiveness and competitive advantage:

DTI has a high degree of responsiveness to the social problems and issuers. It is actively involved in the key national events like forestation program, highlighting child labor, helping the flood victims, Sidor and sponsoring sports and cultural events. It always engages with any type of natural disaster, infrastructural

development. All these have helped the company gain a social acceptance even in a controversial industry like this.

Recruitment of managerial Staff:

DTI has the strongest TM & D network in the country. No other local and international competitor gets channel access with such ease and comfort, as does DTI.For recruitment of managerial staff of any level, DTIL consider the performance of those employees.

Efficient Management of handle Business Government Relationship:

DTI has most efficient and effective pool of management body that can maintain a smooth business-government relationship even in a controversial industry like this.

Merger with major Marlboro International: The global merge of DTIL and Marlboro International is under processing. It jointly lunch their product within March-2008. The merger brings together the number 2 and 4 players, which together boost a combined volume exceeding a huge amount of cigarettes around the world with some 120,000 employees and a worldwide market share of 18 %.The merger is a step forward in DTIL’s vision of becoming the world’s leading international Tobacco Company.

100% tax Compliant Company:

DTIL is a 100% tax paying company in Bangladesh. Last year the company paid 1020,66,00,000 tk as tax to the government revenue board.

Strong Distribution Network:

DTIL has a strong distribution channel of its own. The distribution is very responsive and efficient as well.

Multiple product line:DTIL has a multiple product line e.g. cigarette, match and zarda. Each product line is different from one another. Each line is financially strength and have a positive minded to invest more.

5.2 Weakness:

No cigarette in premium segment:

DTIL has no brand competing in the premier segment. So the competitor company BATL takes some advantages of monopolistic business.

High Overhead Cost:

DTI has burdened high overhead costs. The number of employees it employs in the factory and their high pay scale, the high pay structure of the managers, imported (with duty) raw materials and tobacco leaf, indiscriminate use of indirect overheads in the factory in the factory are the main causes of the high overhead cost.

Absence of Focus on a Single Brand:

Like its major international competitor Philip Morris Inc. and its Marlboro Brand, Dhaka Tobacco does not have any worldwide single brand. Clearly, the company is not in the position of creating a global single brand image by which it could have created a global brand image.

Low level of Acceptance by the community as a whole:

Because of the controversial product is producing it has a comparatively low level of acceptance by the community as a whole compared to the other multinationals (in other industries) operating in the country. However, within the cigarette industry, DTIL has the highest level of acceptance because of the number of community and social programs it is involved in.

High rate of manpower turnover:

DTIL faces a very high rate of employ turnover. It is a major weakness for this company because it leads a very high turnover cost.Location of the Factory in a Residential Area:

The odor emission from the factory creates problem to the residents of the locality where the factory of the company is located. In spite of installing a Bio-Filter Plant in the factory ( which reduces the intensity of the odor ) many influential residents, in any influential residents, in many occasions, have lobbied with the government and the cantonment Board of stop the operation of the company in that area.

5.3 Opportunities:

Expanding market size of cigarette due to up trading from Bidi:

Akij bidi is one of the most popular phenomenon in our country. It has a huge market share of this product. So DTI gets the opportunity to expand its market in cigarette sector.

Full line extension by launch brand in premium segment:

As DTIL has no brand in the premium segment, so there is a great opportunity for this company to lunch a brand in the premium segment. Growing Marketing Demand:

Like in many other developing counties, DTIL is experiencing a growth in the market demand in the country. Although the potential for growth in the future years is questionable due to increased health consciousness among the people, it is still very high.

Expansion of Regular Brands:

DTIL has supplemented its regular versions of brands with the “Lights’. If in the future, the “Lights” versions of the local brands were launched, the sales of the company would increase.

Acquisition of Rival Firm:DTIL can increases its market share even further by acquiring weak rivals of the country at the bargain price. By doping this DTIL can increase its market share in the local brands segment and can gain a competitive advantage over its major local competitors.Consumers’ Switch from lower value adding Brands to Medium and High value Adding Brands :

The increasing trend for the consumers to switch from low value adding national brands to high value adding international brands gives DTIL a unique opportunity of gain. This means that per one Tk. Price of cigarette, the condition is relatively higher for high value- adding brand.

Growing Leaf Areas in the country:

Growing amount of leaf areas in the country gives DTIL opportunity to procure local leaf these at a low price. If DTIL had to import these from abroad, it would have to pay high price due to duties and other taxes imposed on the imported materials.

5.4 . Threats:

1. .2. Frequent revision of excise structure.3. Govt. attitude positive toward multinational negative to Nation Company.

Increase of Trade barriers: The increasing amount of trade barriers is a big threat for DTIL. Often the government imposes restriction and high duty on imported materials. This decrease the competitive cost saving DTIL could have gained by importing necessary materials from abroad that are, of course, costly in the local market.

Entry of Major Rivals:

Recently Phillip Morris Inc.(PMI), the leading cigarette manufacturing company of the world has started its marketing operation in Bangladesh. It would be no surprise if PMI sets up a factory in the country and starts producing its brands here to gain

sufficient cost savings and make profits. This threat of entry of PMI and other sufficient cost saving and make profits. This threat of entry of PMI and other international competitors of British American Tobacco remains as a big headache for DTIL.

Increasing Duty Structure: Whenever the government falls short of revenue in its national exchequer, it

attempts to impose additional duty on the cigarette companies in the name of

supplementary Duty. Although DTIL’s local competitors can manage to escape tax,

DTIL cannot do it as a responsible corporate citizen. As a result, its costs of producing

cigarettes soar up and profits shrinks.

Constant pressure from Anti-Smoking Groups:

From the very beginning of the operation of DTIL this has been a major threat. But the intensity of the threat has increased in the recent years as a result of increasing health consciousness among the people.

Vulnerability to Governmental Policy Changes:

DTIL’s operation is highly vulnerable to government policy changes. Every time a new

government comes to power, it is likely to change policies regarding the operation of

the cigarette industry and imposes a new kid of tax in order to increase the national

revenue. Since, LCD’s are highly vulnerable to political and policy change risks, this

also remains as a major threat.

Uneven and unethical competition:

Sometimes DTIL faces some uneven and unethical competition from the local

brands. It is a major threats for DTIL because in some districts the local brands are

popular and it expose that unethical pressure.

Chapter-6 Conclusion6.1 Recommendation

1) Increase the quality of the product and maintain it.

2) Take appropriate incentive program for both the customer and seller.

3) Avoid frequent price change.

4) Provide proper promotional tools.

5) Initiate gifts to the consumers and increase their loyalty.

6) Decorate the selves while delivery the product. The first & second row with

the castle, Navy, Sheikh and other lower and low branded cigarette in the

respective rows.

7) Initiate regular consumer contact program.

8) Ensure the presence of all segments of products in every single shop.

9) Product’s delivery should be in time and have to maintain regularity.

10) Keep the current price in steady.

11) Frequent change in product’s packaging should be avoided.

12) Permanent and temporal sales promotion should be conducted on the basis

of season, competitor company’s activities or establishing a new market.

13) Conduct different types of programs like slide program, coupon programs.

Incentives on the basis on the peak sales of the retailers.

Recommendation1. Develop efficient manpower by imparting required professional training.

2. To infuse fresh blood in the marketing dept give all support for

developing a world class mkt team.

3. To offer competitive compensation packages for deserving marketing

managers.

4. To introduce brand in premium segment.

5. Focused brand building activity across the segment.

6. To catch the market demand ensures adiquction production facilities.

7. To justain volume leadership by providing logistic manpower POSM &

consumer promotion program in right time.

8. To meet the increasing demand of HLP.

9. Develop strong relationship with appropriate govt. authority for putting

pressure of tax non compliant company.

DOLPIN MATCH

1) Ensure the presence of sufficient amount of product in every outlet.

2) Increase the products quality and maintain it .

3) Try to be producing a 0- defeat product.

4) The length of the stick should be according to the matches’ to avoid noise.

5) Wrap every single match to increase the acceptance by the customers.

6) Take appropriate fixed and temporal sales promotional activity.

7) Ensuring 100% products availability and distribution.

AKIJ ZORDA

1) Give commission for the wholesaler on the basis of their purchase

2) Ensure the products quality.

3) Ensure the products availability in every outlet.

4) Monitor the activity of Competitor Company’s performance and evaluate it.

5) Introduce direct selling and build a good business relation with the customer.

6) Arrange frequent customer contact program.

7) Provide different types of sales promotional tools.

6.2 Key Success Factors: The company posse’s strong leadership heredity which is a strong success

factor of the organization.

The organization maintains its distribution network through “I & I” and

maintains direct contact with the customers which gives the management to

have a direct control over the product and the price.

To maintain a competitive position in the industry DTI has given emphasis

on product differentiation.

Using the most sophisticated equipment and state of the art technology,

they have increased productivity and efficiency and gained the economy of

scale.

The highly qualified and competent sales representatives have the quality

and capability to influences the customer in this so that those customers

show a brand loyalty.

Communication process is too faster so that the management has updated

information about the market situation.

Influence consumers to the slogan of consuming the domestic product and increase the GDP of our country

Conclusion:

Distribution is one of the important stages of marketing. The marketer uses

distribution channels to display or deliver the physical products to the buyer and end

user. The rising phenomenon of using the using n cost effective distribution channel

companies now give emphasis to improve the effectively and efficiency of the

distribution.

DTIL use a very fast and efficient distribution channel to deliver the product and

collect information to the management body.

So far, we have seen that retail distribution system is the main strength of Akij

Corporation Limited. As the fast moving consumer goods should reach to the

ultimate consumers as early as possible for its perish ability. However, is it the one

and only thing that the company should emphasis? The answer may be ‘No”

sometimes, in case of introducing a new product sampling and other promotional

activates should be taken. Retail distribution is very costly for the company for the

short run. Nevertheless, to gain strategic advantage over the competitors and to gain

customer loyalty it is very important. Some time the BAT gets together in meetings

along with their retailers and inspires them with some gorgeous gift packet. Now and

then, the company conducts some kind of programs with their retailers to make out

of selling target regarding by some sophisticated incentives. That of it is not allowed

by this company i.e Navy. Although the mechanism of gift giving policy there arise a

personally bi-lateral relations between the company and the retailer. As a result, if

that very company traces out a new product they can easily get entrance into the

market with the assistance of retailer. To launch the operation the claims for some

festival presentation like cash dalla in pahala baishak, Eid, Puja or in etc. So as

commentary, I can tell about the fact that there should be training feasibly for the

sales representatives. During the market study, it has been observed that many

retailers ask for cash dalla from the company in lieu of BAT Company due to war-

sentiment.

Also in the time of the company’s sales promotion it provide various types of gifts to

the sales mans like; T-shirt, caps, different types of electronic products. Etc.

From the above it is clear that retail distribution along with the above

mentioned criteria will make Akij Corporation more efficient than it is now.