An Exploratory Research on PRAN Tea of Company Limited. Agricultural Marketing
Goal and the specific objective:
The goal of the projects is; to analyze the current local market of PRAN tea and their marketing procedure in foreign market as well. To achieve the goal we need to attain certain objectives, which are as follows.
1) To get a clear idea about the background of tea and the present market situation in the context of Bangladesh.
2) To know about the different selling strategies of PRAN tea.
3) To get an idea about the present and potential export markets of PRAN tea and the process of exporting and auction.
4) Going for a trend analysis of last five years on the consumption of tea (both foreign and domestic market)
5) To identify the major factors on the basis of which customer prefer certain brands.
6) To find out the brand awareness of PRAN Tea
7) Identifying the current and potential competitors of PRAN tea on the basis of their features.
Objective number 1, 2, 3 and 4 depends on available secondary data. And for the rest a structured questionnaire is formed, which will be used in the survey.
1.1 Scope of the Study
This study deals with tea marketing and selling procedure such as export, auction and domestic sales. It also includes the existing problems PRAN tea is facing in the local market.
Before going into an in – depth research, a conceptual structure was visualized under which the whole study was conducted. Hence, it is an exploratory type of research. Research methodology for this is the combination of tools, techniques and approaches through which a scientifically designed research is actually carried out. No research is complete unless a correct methodology is followed. Any inquiry or research will definitely probe to be negative if it is not done along certain methodology.
1.2.1 Sources of Data
The data for the purpose of the study has been collected in two forms.
18.104.22.168 Primary Data
Primary data will be collected through a structural questionnaire, constructed specially for this report.
22.214.171.124 Secondary Data
Going through different documents and papers developed by the company personnel and by others are the sources of secondary data.
1.2.2 Sample Design
a) Target Population: Target population will be regular tea takers of different age groups.
- Male and Female
- Age: 18+
- Educated (University degree, passed or studying)
c) Sampling Frame: As there is no concrete list or number of tea subscriber, so sample frame will be random selection. I will stand in front of any shopping center and pick any one who fulfills the criteria to be a sample.
d) Sampling Unit: Sample unit for this study is those persons who drink at least one cup of tea every day.
e) Sampling Technique: In this study convenient sampling will be used. This is a form of sampling in which the population elements are selected based on the convenience of the researchers. The researcher depending on his/her convenience chooses elements to be included in the sample, because he/she believes that they are representative of the population of interest or are otherwise appropriate.
f) Sample Size: Sample size refers to the number of elements to be included in the study. The sample size of this study is 100 representatives.
For all the respondents, the collection of data was done using a structured questionnaire. Maximum questionnaire are closed ended, as this report is exploratory and at the same time quantitative in nature.
- Time is the first and foremost constraint that hampered the study. As the report was assigned to prepare within a limited time, it restricted the study to be even better and more informative.
- Sampling error may occur in this study due to the utilization of convenience sampling.
- Due to our country’s secretive culture, it was difficult to obtain the correct information. As a result, I may not have been able to present full information regarding marketing standing. Also the lack of experience of the researcher and lack of cooperation from the respondents was also a worth-mentioning problem.
1.15 Report Framework
The report is divided into 3 parts. At first, there is working experience then secondary data analysis and lastly there is primary data analysis. The following chart will visualize the whole report framework at a glance.
“TO GENERATE EMPLOYMENT &
EARN DIGNITY AND SELF-RESPECT
FOR OUR COMPATRIOTS
THROUGH PROFITABLE ENTERPRISES”
Bangladeshi weather is very suitable for cultivation of agricultural goods specially fruit and vegetable are rich in taste and flavor, sweet, mellow and juicy. Our soils are among the most fertile in the world created and drained by the mighty rivers the Padma, Jamuna, and Meghna. There is plenty of water which makes farming as the major occupation. Our comparative advantage as an economy lies in agriculture. We believe that way to economic prosperity is through agri and agro-business. This natural advantage and values initiates the establishment of a very much agriculture-based company named PRAN. PRAN is in testimony to our convictions. It stands for” Program for Rural Advancement Nationally”. PRAN is the largest grower and processor of fruits and vegetable in modern and hygienic factory in Bangladesh.
Property Group” a well diversifies business conglomerate, ranges from trading to agriculture. Its first business venture Rangpur Foundry Ltd. Started its operation in 1980 and engaged itself as a cast iron foundry which is presently one of the largest tube well, rice holler, PVC pipe and other agricultural implements manufacturing unit in the country. The group gradually moved to other potential sectors of the economy like real estate and agriculture. The group also has its own trading arm mainly to take care of its in house trading. The name “Property Group” came from its real estate business “Property Development Ltd.” This earned its reputation as one of the best real estate builder and developer in the country.
In 1981 property Group converts its name and operates is business as PRAN-RFL Group. Secondly the member companies of the groups at present are listed below:
2.3 The Business units of PRAN Group:
The member companies of the groups at present are listed below:
a. Rangpur Foundary Ltd (RFL)
b. Property Development Ltd (PDL)
c. Agricultural Marketing Co Ltd (AMCL)
d. PRAN Foods Ltd (PFL)
e. PRAN Agro Ltd (PAL)
f. Bangladesh Lift Industries Limited (BLIL)
g. Bango Agro processing Ltd (BAPL)
h. PRAN Agro Business Ltd (PABL)
i. RFL Plastic Ltd (RPL)
j. PRAN Dairy Ltd (PDL)
k. PRAN Confectionery Ltd (PCL):
l. PRAN Beverage Ltd (PBL):
m. PRAN Exports Ltd (PEL)
n. Natore Dairy Limited (PEL)
o. Banga Plastic International Limited (BPIL)
p. Banga Building Materials Limited (BBML)
q. Mymensingh Agro Limited (MAL)
r. Accessories World Limited (AWL)
2.8 ORGANOGRAM of PRAN-RFL GROUP
2.9.1 Corporate Strategy:
AMCL is the first and largest food processing industry of Bangladesh being certified by ISO 9001:2000 version, due to this the production process and overall operation is carried out very significantly. The Company puts in a lot of effort to recruit, maintain and retain its sales force as it has a very strong distribution network all over the country and retain its sales forces as it has a very strong distribution network all over the country and also abroad. A Very strong marketing department and in-house advertising agency of the company handles its over all promotion and advertisement making that has been working successfully. Good Quality products confirming to local tastes and meeting health & hygienic standards are being produced to satisfy the consumer. Affordable price within the reach of target consumers is always being maintained.
|Marketing Division||11. Mymensing Agro LTD||05. Bango Agro processing|
|9||Export Department||12. Rangpur foundry LTD||06. Pran Dairy LTD|
|10||MIS Department||13. RFL Plastic LTD||07. Pran Beverage LTD|
|11||Product Development section||14. Banga Bulding Material LTD||08. Pran Confectionary LTD|
|12||Development Engineering Section||15. Banga Plastic International LTD||09. Pran Export LTD|
|13||Group Audit Section||16. Access ones World LTD||10. Nator Dairy LTD|
|14||Legal Section||17. Property Development LTD||11. Mymensing Agro LTD|
|15||Transport Section||18. Bangladesh|
|16||HO Administration Department||Sales and distribution||RFL Group H/O|
|17||Industrial Sales Department||01. PRAN Sales||01. Accounts|
|02. RFL Sales||02. Sales|
|03. Distribution||03. Sub Contracting|
|SUBCONTRACTING||04. Products Development|
|01. Pran Subcontracting Under Pran||Business Unit|
|02. RFL Subcontracting Under RFL||12. Rangpur foundry LTD|
|13. RFL Plastic LTD|
|14. Banga Bulding Maturial LTD|
|15. Banga Plastic International LTD|
2.9.2 Company Mission
· Serve small farmers with inputs
· Marketing farm produced products for profits
· Organizing contract growers to grow specific crops
· Exports of Agricultural Products.
PRAN stands for “Programme for Rural Advancement nationally.
2.10.3 Company Vision
AMCL and its Brand name “PRAN” have twin objectives – achieving social values with sustainable pecuniary advantage for all our stakeholders. Also within a few years the company aims to reach every household of Bangladesh with at least one of their products from their products line.
3.0 PRAN Tea; a promising product of AMCL
PRAN group has decided to enter the market of tea in the year 2000 with it’s special CTC (Crush Tear & Curl) black tea in polybag. It was indeed a timely taken step of the company in consideration of the huge demand and advantageous affect of tea for human body. Before going into too details lets discover the background and history of tea.
In the long history of human civilization man has selected and improved three important non-alcoholic beverage from nature’s rich store house of plant resources (i) the extract of tea leaves, (ii) the extract of the coffee beans (iii) the extract of cocoa beans. Of the three beverages tea is the oldest and is consumed by over two- third of the world’s population and the trend of consumption is gradually increasing. It is again one of the cheapest beverages and that may be the reason of fetching constant from all walks of human being.
Tea made from the young two leaves and unopened buds of tea plants, (camellia synesis-L) of which there are widely different varieties. Origin of tea can be traced in china around 2723 B.C when it was ascribed medicinal properties. Thus, “TEA” “CHAR” “TAY” is the Chinese ideographic word for tea. Tea drinking started spreading from middle of 17th century. It was discovered in Assam (Gabroo Hills) in 1835. Tea plantations begun in Darjeeling (west Bengal) around the end of 1865 but the industry of tea had its beginning in 1834 in south India. The first tea company was formed by Indians. In 1879 which could be the beginning of tea trading in South Asia.
3.3 VARIOUS TYPES OF TEA
The different types of tea that are being produced in our country are as follows:
- ORTHODOX: Very gentle process by rolling tables. Common in Darjeeling
- CTC Crush, tear & curl. Very high rpm process. Demand in all over the world.
- GREEN TEA. Pan firing (china) or steaming (Japanese) heat treated roll dried to inactivate enzythes. .
- NSTANT TEA: Extraction the fermented leaf mass, followed by drying in a spray drier, drum drier or freeze drier.
- OOLONG TEA: Same as green tea but semi wither & light fermentation is allowed before drying.
- JESMINE TEA: Spreading jasmine flower to absorb the fragrance under semi?fermenting condition then sifting out the flowers.
- BRICK TEA: Steamed over a boiled & when flaccid soft, pressed heavily under hydraulic into bricks.
IThere are also several types of tea presently in the market satisfying different dimension of tastes of human being. They are as follows:
w Herbal Tea
w Flowered tea( Pitch, strawberry, apple tea, lemon tea)
w Jhin Sun Tea
w Tea Cola
Among these teas CTC (Crush – tear & curl) is widely accepted in our country, CTC tea has different grades which are:
These teas have different types of Granules, (considering FP first & CD last) FP has the largest grandles and CD has the smallest (which is like the powder).
3.5 PRAN tea:
PRAN tea can still considered as a child in the tea market whereas her competitors like Ispahani (over 100 years), Lever Brothers, HRC, Shaw Wallace Bangladesh Ltd. have started not less than 20 years ago. Due to excellent marketing network with 380 distributors all over Bangladesh. PRAN tea slowly penetrating market with area wise tea grade selection. Every month the sale proceeds is increasing and has reached Tk.1.60 crore, almost Tk.85/ 90 lacks per month on an average.
After analyzing the present marketing activities of major companies and different tea consumption habits of people PRAN has decided to market six verities of tea which are marketed under the following brand names:
1. (Clone Blended) PRAN Super Tea (CTC)- Export
2. Premium Blend- Domestic Premier Tea
3. Dust- Domestic Average people
4. Churamon Dust (CD) – For North and South Bengal
5. Red Dust (RD) – DO
6. Broken Orange Pekoe Grainy (BOP) – For average Common people
7. PRAN Gold – Highest quality for local market is in process
8. PRAN Double Chamber Tea Bags – are in process and will be in the market very soon.
PRAN premium tea is of above average quality for higher medium class of people and family level. PRAN BOP, PRAN Dust tea, PRAN Fine Dust tea and PRAN CD tea are of medium quality for common people. Double chamber tea bags in 100pcs packs and 50 pcs pack are already available in the Middle East market developed in collaboration with Sri Lanka Empiret (Pvt) Co. Ltd. Efforts are being made to have joint venture in tea with Uganda as African Teas are treated to be the best.
While working in ‘PRAN’ came across the tea selling procedure. It’s a huge and complex but at the same time well managed system. It might be quite impossible to describe the
Process in a manner that I have experienced, still I am trying to discuss about some basic steps and processes. PRAN’s teas are sold in the following ways:-
1. Foreign Export
2. Local Sales
Selling procedure of PRAN Tea
4.2 Foreign Export
The foreign export is a direct negotiation between the company and the buyers. The buyers directly communicate with the company and inform their requirement; this is called straight lined business. The company sends tea samples to the buyer & on having their choice the negotiations takes place between the buyer and the company. After negotiation, the buyer opens a L/C in its bank. The company sends the shipping documents to the Chittagong AMCL tea office (who obtain all government approval from Chittagong). The shipment of teas is made from the Chittagong. ICCRD, Komlapur Dhaka if it is HCL and if it is FCL it will be Chittagong sea port according to the instruction of the head office.
Quality Certificate: The quality certificate is issued by AMCL PRAN. The company hereby certifies that:
a. These teas are of Bangladesh origin, high quality and 100% from current season crop.
b. There is no defect in this tea.
c. Aver rage moisture contest at the time packaging.
d. The tea was stored in a cool and dry place and in an area, which does not hold any product, which could harm the tea.
e. These tea samples were submitted to the buyer and approved by them.
f. The self-life of the tea and in which condition it should be stored.
g. Whether the tea is fit for human consumption.
5.0 Market Trend Analysis
This chapter is totally based on secondary data. These data are collected mainly from different annual report and weekly reports. Source and name of all secondary data are included in the appendix. Market trend analysis of last 05years (2003 – 2007 is done from these secondary data.
The trend analysis shows the total production, export and local consumption, market share of top five companies, market share of top ten brands, Channel contribution.
Graph No. 1 Total production of Bangladesh in last 5 years
The above graph shows the total production of tea in Bangladesh. The production trend is very healthy for Bangladesh, because the production has never gone down less then 54 million kg, in last 5 years.
The production of last 5 years was very impressive. Except year 2005 production was never less then 55 million kg. The total production of tea in the year 2005 was 54.915 million kg. It was the contribution of all the 171 gardens of Bangladesh. Production of tea fluctuates because of climatic condition. 2005 was the lowest production year within the last 5 years.
Graph No. 2. Total export of Bangladesh in last 5 years
The export of Bangladesh tea has never been stable. One reason could be foreign buyers like to take Black tea, but the production of September to December Bangladesh tea became a bit brownish in. At this time, foreign buyers are more reluctant to take Bangladeshi tea. The major buyer of Bangladeshi tea is Pakistan
Graph No 3. Total Internal Consumption of Bangladesh in last 5 years
The total consumption of Bangladesh tea is growing 2% per year while production increases by only 10% per year. Tea consumption is less in 2003 and 2006. The reason may be more export in those years.
Graph No 4. Market Share of Top Five Companies
Ispahani is the oldest company in tea industry and holding highest 37% market share since long years. Unilever is a foreign multinational company is holding 2nd height share16%.
PRAN is in last position out of top five.
Graph No 5. Market Share of Top Ten Brand
Graph No 6. Channel Contribution
FINDINGS AND INTERPRETATION
6.0 Data Analysis and findings
Primary data is collected using a structure , close-ended questionnaire . primary data fulfils specific objective number 5.6 and 7 . There are 13 questions in my questionnaire .
As PRAN tea is a new comer in the market it’s local sales are not in huge. But PRAN always tries to keep the price of tea (of different types) reasonable to the consumers. They are also trying to compete with the competitors by offering better quality tea with lower price.
· In question number 1, 96 respondents said yes. That means 96 of the 100 respondents take at least a cup of tea regularly. The rest of the 4 respondents take tea but not in a regular or habitual basis. Basically this figure is representing the scenario of the tea taking in Bangladesh. The Bangladeshis are really fond of tea.
· The highest number of cups of tea taken by most regular tea taker respondents are 5 and above cups everyday, 51% of those 96 respondents have the habit of taking that amount of tea per day. It is followed by 3 to 4 cups of tea consumed by 40% respondents. A handful number that is 9% takes more than 1 to 2 cups of tea a day.
· The most preferred brand of tea is Ispahani Mirzapur. Lipton is the second most preferred brand. Lipton is preferred by 36 respondents. In comparison, Ispahani is preferred by 11 more respondents than Lipton. Tetley, Finlay and HRC are preferred by a few numbers of respondents. There is 1 respondent who is a non-branded tea taker. Only one respondent prefers PRAN as the most favorite. The other companies in the market particularly the market leaders have started their business long time ago. Compared to them PRAN can be considered as a new comer. Yet it haven’t reached a position where it can be selected as a preferable brand to the consumers.
· The reason most respondents gave as their brand preference is `flavor/ taste’. It is given the highest preference by the respondents.48 respondents among the 100 have stated it as the most important factor while prefer a brand of tea. Other reasons are quality(33%), price(4%), availability(12%) and advertisements(l%). Two respondents couldn’t recognize any reason behind their brand preference. But it can be said that tea is being chosen on the basis of flavor and overall quality.
· Here respondents are told to write the name of brands they tried besides their usual brand. Here again Ispahani Mirzapur is being -hosen by most of the respondents. In question no 3 people who have chose other brands as their first preference have chosen Ispahani mirzapur in this case. The Lipton scored second here. PRAN is again the least preferred brand, it is chosen by only five respondents.
· The awareness level of PRAN tea within the respondents is very low. Only 7 of 100 respondents-know-about PRAM. The rest of the 93 -respondents have never heard-about it. So, these 7 respondents are those who have given their response on question no 7.Regarding the year, 3 of the 7 heard about it two years back.2 have come across the name before 1 year. There was only one respondent who said that he has heard the name 3 years back. It’s true that PRAN tea is a new comer in the market but still it has already passed about 4 years in this industry and it has failed to reach the awareness level that it would have required within this time.
Tea industry in Bangladesh is a historical and traditional one. Still there is a lots of opportunities left in this industry waiting to be explored and discovered. Tea market of Bangladesh still considered as a very much lucrative one for investors. It requires more concentration to be given as a new product of PRAN group
PRAN should consider their tea department as an individual business unit; like RFL or AMCL. The product tea require a completely different marketing strategies, thus it is difficult for AMCL to run such a huge, product along with it’s other food products. More, er they have to market a wide variety of tea. If it is possible to appoint an individual brand manager for individual product, it would be more effective.
The low level of awareness is a problem for PRAN tea. So they should mostly focus on building their awareness level and that can be only done through a massive promotional arraign. An integrated promotional campaign is needed for PRAN tea. They should keep in mind that other competitors are investing a huge amount of money towards advertisements, material promotion and also a lot of promotional activities. Though PRAN tea is maintaining high quality, good flavor/ taste it’s not reaching to consumers because they are not being informed about it.
The company should develop a more effective and complete marketing plan and programs.
PRAN should take steps to make their tea widely available in the market. Thus, they should encourage the sales force to sale this particular product as the retailer and the distributors always concentrates more on the product that possess higher demand rather than the new products. At the same time the company should take steps to make the distributors and retailers more knowledgeable about the different types of teas they are selling.
- The company should try to maintain a higher quality in all of its products. If a single product somehow create a negative impression in a consumer’s mind he will, posses a negative image towards all of the other products of the company. So a company with multiple products like PRAN should give equal importance to all of the products.
- PRAN needs to target new segments and new markets, in order to do that they should to et the urban and sub-urban sector of the country as it is a very big and target market. As at present they are mainly focusing on the export market. But in doing se they missing a huge number of local customers.
- The company needs to improve the environment of the warehouses where the tea is being kept.
- They should try to reduce the Conflict between marketing knowledge and application
- The company should offer a similar quality packaging in their local markets and the export markets.
7 .2 Conclusion
AMCL PARN is the largest manufacturer of processing fruits and vegetables in Bangladesh. They are now a very well established brand in the country and have a very strong distribution network all through out the country. They are selling their product all through the country and they are also exporting a huge volume to foreign countries.
PRAN is competing very hard in order to create a name for them-selves in the tea market. In order to improve performance in the tea market PRAN should take some initiatives, which would lead them to grasp more market share and develop their performance.
PRAN should come up with policies by which they can reduce their price, improve their packing, and target newer segments and markets. One important aspect in which PRAN is lagging behind that is promotional campaigns and activities for their tea. Only then PARN can achieve respectable position in the tea industry. In order to go in to a better position they should plan ahead for future as this industry is very lucrative because it is having a very high growth rate each year.
Today’s organizations work in a war zone of rapidly changing competitors, technological advancements, new rules, and diminishing customer loyalty. Organizations find themselves competing in a race where the road signs and rules keep changing, where there is no finish line, no permanent `win’. They simply must keep racing, hopefully in a direction where the mass people want them to go.
Therefore, in a nutshell in can be said that, to be one of the winning name in the tea industry PRAN needs to focus on their local market thus improving their promotional activities.
· Bangladesh Tea Board (BTB)-Annual Report
· Bangladesh Cha Shangshad (BCS)-Annual Report
· National Broker’s Limited – Weekly Report
· Annual Report of AMCL
· The Book of Tea, Flammarion. 1992
· China – Homeland of Tea – 1989