Energypac - LVCD

REPORT ON THE ANATOMY OF LVCD

Prepared By :

Md. Mushfik Monjur

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Energypac - LVCD

ENERGYPAC ENGINEERING LIMITED

Goal of The Report:

“To achieve market leadership, profitability, good corporate citizenship and

a sustainable growth.”

Executive Summary

“The main objective of the company is to increase the market share in related

diversified products and solutions in Bangladesh and to assure the potential

customers of the quality and durability of the Low Voltage components. Although

the products are competitively priced but it is the best bargain that money can

buy.”

MARKETING RESEARCH OBJECTIVE

There is a strong competition in the low voltage component market in

Bangladesh. And we found that, “The sales volume of ABB is higher than the

other brand company of the market”. In our marketing research, we try to find out

the major marketing problems that Energypac Engineering Limited is facing now

for ABB products in the current marketing situation. We have tried to emphasize

the significance of the problems faced by Energypac in selling their ABB products

compare to others in our research work, survey.

Methods of analysis:

In order to attain the objectives of the study, we have gathered primary

information from the market. To prepare our report we use both primary data

analysis and secondary data analysis. We have conducted a questionnaire

survey to the active sales officers of Legrand, SIEMENS, MEM, Fuji, Schneider,

Havels. We have also gathered information from our ABB office, Bangladesh.

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Energypac - LVCD

BACKGROUND OF THE REPORT

The report on the analysis of LVCD, Energypac has two parts. The first part of

the report basically focuses on the facts and findings from the industry and

secondary data information. The second part of the report focuses from the point

of view of the primary data and information gathered from the survey also key

points from interview session with 07 Sales officers of LVCD. Finally The report

analyzes the primary data and reaches to the conclusion.

Reasons for conducting research

The objective of this report is to find out the problems of LVCD for selling ABB

components in Bangladesh market and also the prospects where we can target

and grab the potential market. The analysis is focused on the perspective of the

customer, the sales officers and their views towards selling items, what are their

needs and wants. The reason for conducting the interview session with each

individual Sales executive is to find out the attitude and perception of them

towards their strategies as well as organization and what are the problems

related to it and what the management of Energypac can do to improve it and

gain the market share.

A few of our research objectives:

We primarily try to see whether ABB products are actually popular among the

customers or not and if so, then what are the reasons behind it and what

Energypac can do to retain, improve and gain more market share. We try to

explore the opinions of the Sales people of LVCD, who are actively engaged in

selling ABB components.

We can summarize our report objectives into the following parts:

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Energypac - LVCD

Identify the total market share for low voltage components in Bangladesh..

Identify the proportion of market share that ABB is holding.

To see whether the advertisements of ABB products are effective.

To find out what makes a customer comfortable in case of purchasing low

voltage components.

MARKET SHARE :

Major Competitors For

Low Voltage Components

Market Size

( BDT - Crore) Market Share ( %)

ABB 25 33

LEGRAND 12 15

Fuji 12 15

Schneider 7.8 10

LG 7.2 9

SIEMENS 6 8

MEM 4.8 7

HAVELS 2 2.59

Others 0.2 0.41

Total 77 100

From the above table we get to know that, total size of market for low Voltage

components in Bangladesh is BDT 77 crore whereas ABB is the market leader

and proportion of ABB is BDT 25 crore with 33% of market share. Legrand and

Fuji belongs to second position with 15% market share each.

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Energypac - LVCD

Graphical Presentation of Major Competitors :

Hypothesis:

1) ABB products are popular among the corporate sector compared to other

brands.

2) There is a significant relationship between price of the ABB products

compared to Other brands.

3) There is a significant relationship between sales service of the ABB products

compared to other brands.

4) There is a significant relationship between features. of the ABB products

compared to other brands.

5) Energypac is loosing target market for low voltage components for their credit

policies.

6) Distance of LVCD store is creating problems for smooth and prompt delivery.

7) Factory support for LVCD is not prompt all over the year.

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ABB33%

LEGRAND15%FUJI

15%

SCHNEIDER10%

LG9%

SIEMENS8%

MEM7%

HAVELS3%

OTHERS0%

MARKET SHARE

Energypac - LVCD

SWOT ANALYSIS of LVCD:

Strengths:

Wider product range

Strong local presence

Favorable brand image

Comprehensive knowledge of the total market and client

Good quality and top quality of products with solution

Made in Germany and standard is maintained by them

Using advance high-tech technology

Because of long term experience, customers reliability and loyalty

Efficient after sales service.

Weakness:

Lack of brand awareness

Lack of consistency in promotional activities

Less competitive price; competitor sourcing product at cheaper

price

Less organized distribution

Less compliance to market demand

Product support is not always available

Store location.

Opportunities:

The major three sources of barriers to new entry are to gain: brand loyalty,

absolute cost advantage, economy of scale and governmental regulation.

Besides, it created brand loyalty through continuous advertising of the brand,

company names, patent protection products, product innovation, and

emphasized on high product quality, and good after sales service.

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Energypac - LVCD

Threats:

Recently the competition in the market has become stronger as many

multinational companies have started their business. At the same time local

companies are being established. They are becoming rivals of ABB. Especially

Legrand, Fuji, Schneider, LG, Siemens used by other multinational company can

offer a lower price to the customers. In some cases the local company is offering

a moderate standard product at a cheap price like Nababpur area. They are

entering the competition gradually. But the most challenging part for us to

compete with Multiple Trading which is also distributing ABB products in

Bangladesh.

THE MARKETING AND MANAGEMENT PROBLEM

We have identified some problem of Low voltage components through our primary and

secondary market study. These problems directly and indirectly have link with the

company’s marketing and management system.

The marketing problem:

LVCD of Energypac Engineering Limited deals with ABB low voltage components

has great deal of problem in their marketing part. The problems are more or less

related to the strategies taken by the company regarding product advertisement

and promotion, market segmentation. The marketing problems are concerned

with the fact that the strategy taken by the company is not always well

implemented. The problems from the point of view of marketing are:

Credit facilities compared to competitors

Marketing strategies

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Energypac - LVCD

Market segmentation

Credit facilities :

Recently Energypac Engineering Limited has decided not to give enough credit

facilities to customers. But ultimately end of the day, this vital decision has

restricted to grab the attention of LVCD’s target market whereas competitors are

giving enough credit facilities to grab the attention of their target customers as

MR basis. For example, Adex corporation is selling low voltage components to all

over Bangladesh and their payment terms are as follows :

50% advance payment + 30% during delivery + 20% after final delivery. We are

simply loosing our target customers in these cases.

Marketing strategies:

There are some conflicts between the marketing strategies and the target market

of the product. The company wants to attract the large market of including Panel

builders, industrial sectors, private clients as well but promotional activities are

very poor for this target market. The overall marketing plan and strategies of the

company is concern with this issue but it doesn’t reflect in the actual planning or

marketing and promotion issues.

The industry analysis shows that the largest market of the product is the

industrial sector group but the strategies of the company doesn’t indicates

enough importance to this part of the market. The information gathered indicates

that the company needs to go through the marketing strategies and plans to

come up with some better solution of the issue. The marketing strategies need to

be more detailed in some cases, which are lacking at this point. Moreover as

Multiple Trading is also selling and distributing same products, so they are

considered as strong competitor for Energypac compared to other brands. In this

particular case, our marketing strategy is very weak in searching and attracting

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Energypac - LVCD

both actual and potential buyer from Multiple Trading. Sales officers need to give

proper sales training under the guidance of expert supervision.

Management Related Issues :

After arranging one to one interview with seven Sales officers of LVCD, we got to

know about few critical issues related to motivation. We get to know that most of

the Sales officers are trying to give their effort with sales as it’s a part of their

responsibility but are not interested to give their level best just due to lack of

motivation such as poor salary structure, job promotion.

Analysis of the Advertisement

The most of the products are known to their customers by advertisement to the

people. Knowing from the friends, family and others about the products are very

important advertisement that easily goes into the people. Energypac is not very

successful in this field. Hence, people are not much conscious about the ads.

This made the statement neutral that promotional activities are better than the

other ads for products in this product category.

Some critical issues

Majority of people in our country are price sensitive. They like to buy

things, which have a good quality within their affordability.

Customer from the corporate class aware of using branded products like

ABB but customers, who belong to the lower middle class and middle

class society are not aware of using original ABB products rather they

used to purchase fake branded items from Nababpur market.

Most of the customer want products as MR basis and they want flexible

credit facilities.

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Energypac - LVCD

Questionnaires used during one to one Interview session with

Sales Officers about:

Personal attitude towards the customer.

Status of bad credit.

Ways of recovering bad credits from customers.

Problems facing by Sales people during sales.

Requirement of Sales training

Credit policies of other companies.

Reasons for not reaching personal target.

Support from organization for reaching actual target.

Status of meeting with clients.

Proposed Target For Each Individual Sales Officer For FY 2010-11 :

1. Mr. Mostafizur Rahman : BDT 3.20 crore

2. Mr. Mahmudul Hoque : BDT 2 crore

3. Mr. Shaheb Ali : BDT 2.50 crore

4. Mr. Matiur Islam : BDT 2 crore

5. Mr. Mohammad Ali : BDT 2 crore

6. Mr. Kaisar Hamid : BDT 1.20 crore

7. Mr. Munshi Ajeeb Hossain : BDT 1.50 crore.

RECOMMENDATIONS

Having analyzed the problems of the company and the opinions of the Sales

Officers, we are able to come up with the following recommendations :

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Energypac - LVCD

First, we are suggesting that the company should think of new credit policy for

selling ABB products to their target customers. The reason behind that through

the market research, we have found out that other companies who are also

selling low voltage components of different international brands are giving much

more flexible payment facilities to their target customers whereas Energypac;’s

revised credit policy creating restriction in attracting potential as well as existing

customers. So they should come up with strong research and development in

their credit policies.

Second, As the price of ABB products are very much competitive, the quality of

customer support and after sales service is the main the issue here. In terms of

quality service and support, they need to prepare their sales & service team

active all through the year so that Energypac can retain it’s customers forever.

Third, Special spotlight on Industrial corporate clients and Panel builders as their

target consumer (Niche Marketing): In spite of taking the huge target market and

a huge amount of money on advertisement and competing with other brands,

Energypac can target this specific group of customers for half yearly meeting with

entertainment scopes. If they can manage to do so, they will be able to retain

their customers as well get loyal customers by doing such promotional activities.

Fourth, Energypac should create a solid brand image among the consumers

through consistent marketing strategy: Energypac’s marketing strategy is very

poor has a very poor brand image among the customers. While marketing their

ABB low voltage components, Energypac should focus on delivering one single

theme about the product to its target market. This is important because we saw

respondents are unable to show any single reaction to this brand. Therefore with

an ‘integrated marketing communication” Energypac can build better brand

awareness. For this they can implement the following steps;

1. Specialize on specific features of product.

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Energypac - LVCD

2. Promote their product by associating with other products or events like

annual meeting with customer..

3. Provide intense customer service and after sale service.

Fifth, Persuade ABB to lower the price on imported ABB items. One major

problem that Competitors price is comparatively lower than ABB. Moreover lower

middle class customer is interested to purchase from Nababpur with cheaper

price.

Sixth, No Warranty unless clear payment. Energypac can form a policy

regarding warranty of the product to their target customer in such a way that,

warranty will be given only after receiving full payment from customers.

Seventh, Energypac can take security deposit from repeated customers. As a

result of that, the company will be in safe side regarding credit payment status. If

any customer wants to delay the credit more than six months then this security

deposit can at least save some portion of credit risk.

Eighth, Energypac can make a long term agreement with their potential

customer by doing a master agreement with them. This master agreement will

include all the terms and conditions.

Ninth, In some cases Head of the LVCD should go and meet with corporate

client for solving critical issues with the Sales team member. From the study it is

found that department head should be little more active and need s to actively

participate and involve in negotiating some critical issues.

Tenth, Motivation through job security and salary enhancement. From the study

we have found that, employees are more or less demotivated. Department head

should communicate with HR department to know the status of each employee

and by monitoring performance of each employee, they can enhance salary or

secure job.

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Energypac - LVCD

Eleventh, Energypac should arrange sales training for LVCD Sales officers to

improve their personal sales skills under expert supervision and proper guidance.

It is very essential to give them proper sales training.

Twelfth, Energypac should set a sales target for each individual sales officer

which is achievable. Based on their performance, willpower, strength we have

found that too some extent, target is too high to achieve for some of them.

CONCLUSIONS FOR THE OVER ALL RESEARCH:

In our conclusion part we can mention that ABB is the market leader in

capturing low voltage components in Bangladesh. But through our research we

have found some critical issues, which provide the negative impact on the LVCD

of Energypac Engineering Limited. But they can come up with solution under

strong research and development procedure and promotional campaign. In our

marketing research we have found out that our hypothesis about ABB and other

competitors were more or less correct.. So there is opportunity for ABB to raise

its market share under proper guideline as their popularity is has raised and in

terms of brand value and image.

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