Full Report Bat1

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Chapter One

Introduction


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1.1. Introduction

Promotion is the catalyst of business of business, big or small. It is the agent that gives

direction to an advertising campaign, drive to a dealer organization, and enthusiasm to asales force. Its addition to a company can speed up sales in a specific area through out the

country

Sales promotion, educates and arouses the enthusiasm of sales people, middle man,

consumers and perhaps other through a variety of materials, tools and devices that the

company itself controls. While few firms could exist without personal selling or

merchandising and many could not without advertising. But sales [promotion buttresses and

strengthens a marketing operation, thereby magnifying a companys profits and success.

A good sales promotion needs field selling experience and a full knowledge of dealers

problem, as well as the sales peoples, in order to prepare practical promotional aids that will

help the sale. Advertising can bring them in, but promotion does the on the spot selling.

Sales promotion should always be treated as a separate function-----no matter how

interrelated and connected to advertising it becomes-----because its so important to support

sales on a broad front; the whole idea of sales promotion is conductive to the broader

thinking and action that modern merchandising recquires.Thus an effective promotion can is

a powerful weapon that can carry the sales forward each year at an ever-increasing pace.

1.2 Origin of the Report:

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The intern ship program is been assigned by the School of Business as requirement of the

internship program for BBA degree at Independent University Bangladesh...The

program strted from 2nd February and continued until 30th April.This report on

Principles ofPromotion is being prepared for Mr. Monirul Kabir,Merchandising and

Promotion manager of British American Tobacco. Who orally authorized me to conduct the

study on 2nd February, 2003? This report will be submitted to Mrs. Mamtaz Khanam,

supervisor of the internship program.

1.3 Scope

The report includes elaborate information regarding Principles of Promotions. The report

includes some basic guidelines regarding modification and enhancement of promotions

especially for the sales promotion.

1.4 Background of the study:

According to the updates of the CSM findings on promotion of the company, a project team

identified some key area of improvements in the promotion designs. They found out some

huge lap between the objectives and the strategies of some; infect a significant amount of

promotion campaigns. Where they found that they are far behind from the Benchmark. Thereason is that ---promotions mechanics are not aligned with objectives. For example,

redemption scheme might be more effective fto achieve something else than for that now it

is using for. Thus in most cases customer benefits are not communicated. For instance

product quality was highlighted but the value addition by the company was not effectively

communicated.

The research team also identified that the companys current promotion campaigns do less

of basics .Thus they became superficies in designing promotions rather considering the

basics involved. Thus they need to develop a guideline or written information source for

doing promotions by book in order to run their thought process in words.

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But it is found out that there are areas of improvement at the designing phase of

promotions:

Most promotions are done at random

More into fire-fighting than with clear objective driven

Lack of clarity in what to do , to achieve objective

Promotion mechanics are not aligned with objectives

Value offers are not clearly defined

Too legal and CORA shy

The proposed recommendation by the company proposes defining a process, a

principle, a Guideline for all promotions for the achievement of BTL marketing

objectives.

1.5 Objective of the Study:

The main objective of the study is to prepare a guideline for all promotions of the company

to the achievement of the BTL marketing objectives more effectively.

Specific objective is to explore the following issues in the guideline:

A clearly defined process of running promotion

Induction to principles of promotion

Guidelines to design promotion mechanics

Making promotion mechanics aligned with the objectives( which promotion tool use to

achieve what)

Make the promotion techniques legal and CORA proof.

Format the Guideline manual

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1.6 Research Hypothesis:

As it is made clear that the designing phase of promotions are the major problem as there is

no clear information source or guideline on how to design a promotion.

Hypothesisif we could improve the designing phase of our promotion, it could be moreeffective.

In order to achieve the aforesaid objective a broad hypothesis is developed in relation to it

.Related issues and topics educed from the literature on marketing theory, sales promotions

are specified along with the hypothesis. Thus the hypothesis defines the scope of the study

and help to develop a guideline for the interview.

1.7 Limitations:

In doing this report we have faced some unwanted limitations:

The research has some sampling errors as the time, budget and experience inn choosing

the sample are deemed to be inadequate.

Time: Time is an important issue in report writing. As a specific deadline has been given

for submission so could not perform all the researches. And we hardly found time to sit and

do more library works and to explore more new things as I had to do a regular office job

beside this project. With all the group members and sharing experience and ideas frequently.

Lack of experience: A comprehensive result of practice of marketing study could not be

found as had some pivotal limitations like inexperience. I am aware that no such manual has

been done on promotion guideline like this in Bangladesh so could not take a glance and

learn what are the factors we should be cautious about which barriers to expect and did not

have any forecasts that could help a lot preparing this report. Sometimes it is necessary to

evaluate the primary data through investigations, which, if I could have done, certainly made

our report a better one.

Non-sampling errors like errors in the unstructured questionnaire design are likely to

affect the overall report.

Small sample size:

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The survey was conducted only to the members of the Brand and TM&D only within Dhaka

region. And a few personnel of CORA. So the results found from this could possibly not

reflect all the aspects of promotion perfectly.

Lack of adequate information: The information I was able to collect from the surveys

about their present and potential practices of promotion was not enough to implement or

reconstruct the whole promotion process.

The primary data received from the respondents could be verified and might be biased.

No organized study was available regarding the promotion procedure of the company.

Data Analysis Error: Unable to use few data analysis techniques like CHI-SQUARE,

ANNOVA Table, and SPSS etc.

1.8 Defined possible content of a promotion Guide Book

Promotion Process

Definition & Role of promotion

Component of a promotion

Key principles of promotion

Roles of promotion

Promotion Techniques

Various Techniques(with legal and MI rating)

In-store Exploitation of Promotion

Exploitation by trade channel

Specific in-store issues

Outlet promotion sensitivity groups

Matching objective to techniques

Promotion Personnel

Recruitment

Training

Logistics

Evaluation

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1.9 Chapter Outline:

The first chapter is the introductory chapter. The second and the third chapter are

consequently the literature review and the methodology. The forth chapter is all about the

company profile. And fifth chapter illustrates the induction of promotion process of the

company. In-store exploitation and merchandising promotion is been discussed in chapter

six.

1.10 TIME SPAN:

1ST MONTH 2ND MONTH

3RD MONTH

KNOWING AND UNDERERSTANDING

PROJECT

PROPOSAL

INTERVIEWING &

DATA COLLEDCTION

SUMMERY &

PRESENTATION

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8

Chapter Two

Literature Review


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Observation

Observation is the direct examination of behavior, the results of behavior, or physiological

changes.

Depth Interview

Allow individuals to express themselves without any fear of disapproval, dispute, or advice

from the interviewer.

Channels of Distribution

Channel Definitions

Wholesaler

Wholesalers are the distributors that sell to the retailers in bulk quantities into the consumer

marketplace.

Retailer

A company that performs the same functions as a reseller but operates in the consumer

arena.

Dealer

Dealer is another name of reseller. An industrial or high- technology company that purchases

a product or a service either direct from a manufacturer or from a distributor, depending on

the sales volume levels or services required by the manufacturer.Value- added dealer

The important exception that it also bundles or adds product and service value to provide a

true one- step shop or system solution to its customers. It usually offers less technical

expertise and a smaller library of lower- end products.

Wholesale Distributors

Wholesalers are another type of independent sales organization that producers may use to

reach their final customers. Wholesalers-also called jobbers, distributors, or industrial

distributors, depending on the industry-are middlemen who take ownership title to the

products they sell. They also carry a physical inventory of these products.

Distributors can be very useful in selling situations where (I) individual sales are small, (2)

the buying process is not highly specialized, or (3) rapid delivery and local service facilities

are important.

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Intensive

Selective Exclusive

FigurFigur

ee

Market Coverage StrategyMarket Coverage Strategy

Market coverage strategy

There are three types of coverage channel coverage strategies:

Intensive Distributors can be very useful in selling situations where (I) individual sales are

small, (2) the buying process is not highly specialized, or (3) rapid delivery and local service

facilities are important.

Intensive coverage strategy is covering a market by authorizing several distributors to sell

products in a given geographic area or market segment.

Selective

Selective market coverage strategy is selecting those distributors that meet certain channel

selection criteria to sell products in a given market.

Exclusive

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Exclusive coverage is authorizing only one distributor per geographic area or market

segment to sell products.

Sales promotion

Media and non-media marketing effort applied for a predetermined, limited period at thelevel of consumers or intermediaries in order to stimulate trial, increase consumer demand or

improve product availability.

Promotional Activities

Most companies elicit a steady supply of sales leads with advertising, catalogs, publicity,

direct mail, trade shows, and seminars. Successful salespeople develop an effective system

for utilizing and managing such leads.

Inquiries

A postcard pack is a group of postcards (usually between 15 and 50 different cards) that

provide in-formation from a number of firms. Each firm has one card, usually describing one

product or service. One side of Beckman's postcard contains information about a specific

product or service.

Shows

Many companies display or demonstrate their products at trade shows, conventions, and

fairs. They have sales representatives present to demonstrate their products to inquiring

visitors, many of whom have not been called on by salespeople before.

Seminars

Today, many firms use seminars to generate leads and provide information to prospective

customers. The research specialist usually discusses some new technique or treatment being

developed.

Trade promotion

Sales promotion directed toward wholesalers or retailers.

Types of Trade Promotions

A flow chart is given on the page next of the types regarding trade promotions:

A comparison of push and pull promotional strategies:

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A Push Strategy B. Pull Strategy

Manufacturer Manufacturer

Flow of Flow of Flow of Flow of

Demand promotion; demand promotion;

Simulation mainly simulation mainly

Personal selling directed to

Directed to consumers

Intermediaries

Wholesaler Wholesaler

Retailer Retailer

Consumer Consumer

Pull Strategies

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Pull strategies are designed to pull consumers into the stores to buy the manufactures

products. They include the use of national advertising campaigns, contests and sweepstakes

for consumers, promotions such as the Pillsbury Bake-off and other means.

The importance of salespeople to a successful promotional campaign is illustrated by their

actions when a manufacturer offers a coupon in a freestanding insert (FSI). (When you

shake your Sunday paper and all of those coupon ads fall out, you have shaken out the Fists.)

Creative salespeople will tell retailers that FSIs are coming up, to secure a special display

and plain inventory. Then the retailer can maximize the sales of that product with the coupon

without affecting the store's profit margin.

Manufacturers may have a co-op-advertising program as part of their pull strategy.

Co-op advertising

Short for cooperative advertising means that the manufacturer will pay some of the store's

advertising costs. The manufacturer may provide the advertisement original, and the retailer

will simply insert its name and address into the ad. While the co-op ad does require

marketing effort by the retailer, it is not considered a push strategy because the ad's purpose

is to pull people into the store. The retailer may be retailer may be reimbursed for a

percentage of the advertising costs or may be offered a discount off the price of the product.

Manufacturers in manufacturers offer co-op advertising, although the consumer package

goods industry is the heaviest user. Other users include the fashion industry, some hardware

manufacturers such as Stanley and Black & Decker, and home appliance manufacturers.

Manufactures may also combine co-op advertising with a national promotional campaign.

When you see a manufacturer's ad that says "at participating dealers," you are seeing a

national promotional campaign that depends on the salespeople securing the participation of

resellers. Those salespeople may also help the participating dealers properly display the

promoted products and their in-store advertising to support the promotion.

Push Strategies

Salespeople and their companies often combine pull promotions with a program that

encourages resellers to participate. Promotions that encourage reseller participation and

support are push promotions. Push promotions include contests ad extra incentives for the

reseller's salespeople, special display incentives, and special pricing incentives.

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Features Sometimes the manufacturer will offer additional discounts (called deals, as

mentioned earlier) if the retailer will feature a product- that is, put the product on sale with a

lower price, advertise it, and perhaps build a special display.

Salespeople play a major role in seeing that stores successfully feature their products.

Neither the store nor the manufacturer wants to just sell at lower prices. Without the

additional advertising and in-store promotion (either through an end-of-aisle display or some

other special display), the sales volume will not increase enough to offset the lower price.

The salesperson usually builds the display, sees that the retailer receives originals of any

advertising, and ensures a proper inventory for the sale.

Deals can create problems. Sometimes retailers do not pass the savings on to their customers.

Instead, because they can price the product for any amount, they keep the retail price at its

regular level and pocket the extra earnings.

Contests

Some trade promotions are just like contests for the company's own salespeople. Top dealers

may win trips to exotic; aces or they may be able to pick out merchandise from a catalog,

paying with "dollars" earned through top sales performance. Some trade promotions actually

reward the top salespeople of the reseller directly, rather than the reseller. These types of

trade promotions are used when the retailer requires a personal selling effort.

Push Money

It is similar to contests is spiffs, or pushes money. Like a commission, the manufacturer pays

spiffs or push money (PM) directly to the retailers salespeople for selling the manufacturer's

product. But the reseller's salespeople can only earn PM for a short period of time and for a

specific product, unlike a regular commission. Spiffs work well only when the promotion

requires a personal selling effort by the retailer's salespeople.

Sales promotion

Sales promotional activity is the main short-term tactical weapon in the sales managers

armory. It offers a major benefit over normal advertising activity in that it can be very

flexible in timing, purpose, or direction of effort and manner of implementations; and

additionally can be both very cost-effective (if well planned and implemented) and results-

effective. Sales promotional activity can be very variable in structure and targeted impact

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area and, because many forms of promotional activity need very short lead times for

introduction and planning, they are a very effective supplement to major advertising

campaigns, as well as providing corrective action programmers where sales results and

achievements are off course, or where other external environmental factors (such as

competitive activity) disrupt the companys basic marketing plans and programmers. Sales

promotions may seem infinite; they generally fall into one of a number of categories, such

as:

* display bonuses

* Performance rebates or allowances

* Trade price discounts

* Consumer price promotions (including multi-packs)

* Trade stock bonuses

* Consumer competitions

*consumer premium offers

* Product sampling programmers

* Dealer competitions

* Product demonstrations

* Couponing

* Exhibitions

* On pack give a ways

* Lecturers, film show, etc.

* Point of sale material

* Sales force incentives

* Special magazines and journals

* Product merchandising

* Introduction incentives

* Trading stamps and similar incentives

* Free product trial periods

* Credit cards

* Direct mail shots

* Gifts for buyers

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* Public relations activities

* tie-ins with special events

* Sales and promotional literature

* Promotional aspects of packaging.

The choice of technique will depend in part on the nature of the product industrial, consumer

or service.

Display bonuses

It is a common practice for producers of consumer goods, especially those that have a strong

impulse purchasing elements, to negotiate with retailers to pay a bonus for an agreed

allocated display space in stores.

The bonus might be paid by a direct cheque at the end of each display contract period, or

by a discount of invoice values of merchandise purchased by the stockiest. Bonuses might be

ongoing, or apply only at certain times (e.g. peak selling seasons), and might relate to all

goods sold through the retail outlet or only those featured in special off the shelf displays.

Another variation on the same principle is for the manufacturer or distributor to rent space

and install his own custom-designed display facilities (possibly including a permanent

product sales consultant or demonstrator). This technique is used by the cosmetic industry in

many countries.

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Where a display bonus is paid for a special space rental, it is essential that the

manufacturers own sales force make regular merchandising visits to maintain order and

stock levels. If shelf stocks are low, another manufacturers merchandising team will

rarely hesitate to fill competitors display sections with the working product. In addition,

the retailer should have an obligation within his display bonus agreement to re-stock

shelves between the visits of the manufacturers merchandisers.

In the longer term a retailer is unlikely to find benefit in continuing to allocate an agreed

display space, even for a display bonus, if the product turnover and profit contribution

(including the display bonus) are not at satisfactory levels according to the criteria used

by the retailer (which might be in terms of profit contribution per square foot of display

area).

Performance rebates and allowances

As an encouragement to buyers to support a particular manufacturer more than competitors,

another common incentive offered is for the manufacturer to agree to the payment of a

retrospective bonus as a percentage of the total goods (industrial, consumer or service)

purchased in a period of time, usually a calendar year. Target sales levels should be agreed

with the customers and there should probably be a scale of incentives to apply at different

volume or value turnover levels, say 0.5-2.0 per cent. If this is to act as a motivator then the

buyer should receive regular feedback on his sales turnover performance, and additional

promotional activity might provide an added means of achieving target turnover levels. The

benefit of such a system is questionable if it does not encourage greater achievement each

year

Through revised targets. A turnover (value-related) b onus should, of course, at least be

adjusted for inflationary price increases year on year. It might be better to gear the bonus to

unit sales volumes rather than monetary targets, although the bonus would be paid at the year

end on turnover achievements for the targeted unit volume.

Trade stock bonuses

Another technique used either to obtain new distribution or to boost stock levels in the user

or distribution channel pipelines is to offer stock bonuses on purchases to the wholesale or

retail trade, such as a buy ten cases and get one free promotion. Where retailers and

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wholesale distributor often expect and might even demand such a bonus prior to agreeing to

list a product. However, if it is abused by buyers who purchase far more than they will move

over a promotion period then the net effect is that the manufacturer has mortgaged full profit

future sales for discounted present sales. Unless there is a reciprocal passing on of all or part

of the bonus in the form of price cuts to consumers, and incentive or bonus that merely

services to boost the profit margins of the distributive trade is unlikely to boost buyer loyalty

or market off take. Limited funds are usually best spent on a programmed of marketing and

promoting that creates or increases consumer and users awareness and that benefits the final

product purchaser.

Consumer competitions

The great range of consumer competitions are designed to increase product display, new

consumer trial of the product, and product usage by existing product users. Such

competitions are generally aimed at final consumers rather than the retail or wholesale trade,

and their popularity often puts considerable pressure on stockiest to buy, display and

merchandise the products.

A manufacturer designing consumer competitions will get more trade acceptance the less

work the stockiest has to do to support and benefit from the promotion. Ideally the stockiest

is happiest just to wants the opportunity to build supporting feature displays, fix prominent

point of sale promotional material, or place competition leaflets at strategic points.

Competitions that both maximize the number of potential winners (but perhaps with a few

major prizes to provide the glamour) and give all product purchasers an equal chance of

winning a prize tend to be the most popular. Competitions that require any significant degree

of skill or knowledge will narrow the participation to those who feel competent to enter; but

that need not be a reason not to consider such as format if the promoters main objective is to

generate extra product display.

To be effective, competitions often need a larger budget and have much longer planning and

implementation lead times than other promotional techniques, and their use is perhaps more

limited to establish mass market products with an existing consumer franchise. It is essential

that the organizers of any promotion comply with any local laws, rules or regulations that

might impact on the promotion: for example, some countries restrict competitions that

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appear to have a lottery element in their design, or where purchase of a product is a condition

of participation; or insist that a trade promotion is offered on similar terms to all traders in

the market. Also, in designing any form of competition that involves collecting items or

clues or making comparisons, it is important that the competitive inputs be concealed until

an item has been paid for.

Consumer premium offers

The manufacturer makes a popular product available in exchange for a financial payment below the products normal fear

market value plus some proof of purchase of the promoting manufacturers products.

This kind of promotion need not be primitively expensive in that the promoting

manufacturer will generally be able to arrange the purchase of the premium items on

favorable terms and recover the costs against the price charged. It is usually more practical to

arrange for a specialist sales promotion agency to handle the mechanics of the premium offer

redemptions. The key to a successful premium promotion is finding a premium item at a

price that will be a real incentive to consumers to purchase more of the promoting

manufacturers products

Product sampling

The main objective of product sampling campaigns is to promote consumer trial of non-

durable products, although this can be extended to include industrial ingredient or

component sampling.

Sampling may be organized in any of several ways. A demonstrator may offer samples to

customers in a retail store and attempt to make an instant sale. Another approach is to

distribute mini-pack samples direct to targeted householders identified as matching the

typical consumer profile. This has the advantage of ensuring that samples reach a target

market group but has the disadvantage that no instant sales can accompany trial. Preparing

small scale samples may be very costly compared with the cost of manufacture of the full

size pack. And some companies might find it simpler and cheaper to give away a full size

pack, possibly by banding it as a free premium with a purchase of another of the companys

established products consumed by the same target consumer group.

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Product demonstrations

Demonstrations have already been mentioned in passing. They tend to be a costly exercise if

used on low unit value products and many manufacturers of mass produced consumer non-

durables would find it less costly to sample through product give a way programmers.However, for products of a technical or practical nature such as most consumer durable

goods, demonstration is a way of attracting consumer attention in stores and showing the

product features, benefits and ease of practical application. If the demonstration is supported

by a special price for the product or other premium offer then the opportunities to motivate

instant purchase are increased. Items sourball as gifts often benefit from pre Christmas

demonstration programme.

Couponing

Coupons are used effectively in some markets with a range of house hold consumer durable

and non-durable products, to encourage both product trial and repeat purchase. To motivate

product purchase, a coupon needs to offer a reasonable price reduction over normal retail

prices.

There must, of course, be an effective way of distributing the coupons to the target market.

Coupons are most commonly distributed by:

Direct mail drop

Inclusion in newspaper advertisements

Loose insertion in newspapers or other journals (including the free local journals

found in some localities)

Inclusion with another package of a product for redemption against the next product

purchase

Placement of coupons at strategic locations in stores (open perhaps to the greatest

potential abuse).

On-pack gives always

An on-pack give away item generally relates to the main product on offer.

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Sales force incentives

These can be extremely effective techniques to direct sales force attention to areas that need

corrective action, to counter competitive activity, or to provide added motivation in the drive

to achieve sales force objectives and forecasts.

Product merchandising

One of the most powerful tools the sales manager must control is his ability to merchandise

product on display in trade and retail distribution outlets. The manner and method of product

display has a major bearing on consumer awareness, attention, interest and purchase,

Effective product merchandising is the art of making the product itself become its own silent

salesperson. Most consumer goods manufactures place great emphasis on training

salespersons in effective product merchandising techniques, including attention to such

aspects as:

* Key site identification (the position in a store where most customers will pass or pause,

such as by the cash register)

* store traffic flows

* Product price marking (to ensure speed and accuracy and visibility)

* Efficient physical case opening and shelf filling

* Price feature cards (i.e. large display cards notifying shoppers of price reductions or special

offers)

* feature display design and construction.

The following gives brief description the various types of promotion techniques within the

above classifications and outlines the examples of communication materials that can be used

to exploit the promotion.

A. Instant/ Guaranteed Benefit

* Temporary Price Reduction

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An instant price offer occurs at the point-of sale. It is a reduction on the normal

selling price. Temporary price reduction may be communicated in the form of a discount, i.e.

20% off.

* Extra product

More product of the same price as regular size pack or special price for multiple pack

purchase. Example: 51 are for the price of 50 or 5 packs for the price of 4. Transom

Beverage (Pepsi), Lever Brothers use this technique for the retailers.

* Premium offer

The offer is a premium of gift the accompanies a purchase. This type of offer is

commonly referred to as in-pack, on with-pack. The cost of the gift or premium may be

built into selling price and it cost is fully recoverable, it is known as a self-liquidating offer.

* Product Sample

Free product, usually small size packs presented or given directly to the target

consumers (retailers).

* Linked Promotions

Two branded products are sold together for a unit price less than that for the two if

bought separately. Sometimes a trial size related product is placed on the full size existing

product.

Instant/Non-Guaranteed Benefit

* Scratch & Win Games

Upon purchase, consumers (retailers) qualify for a scratch & win ticket, which

gives them opportunity to win a gift. It is a game of chance and consumers (retailers) may

not get a prize.

C. Delayed/Guaranteed Benefit

* Redemption Scheme

A voucher or coupon accompanies each purchase of promotional stock. The consumer

(retailer) collects these to a defined quantity to qualify for a gift. Gifts vary in types and

value. Normally the more coupons, the bigger the value of the gift. Gifts are normally

redeemed at a redemption center, e.g. distributor.

* Delayed Price Offer

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A coupon or voucher offering money (fixed value) off the next purchase. The coupon can be

offered on the target product. This technique is often linked with other promotional

techniques to encourage repeat purchase and sale.

* Delayed Free Offer

These are commonly known as free mail-ins. Proofs of purchase may be

required; these are collected and sent to a handling house for the gift to be dispatched. Other

than the cost of postage, the gifts are free.

D. Delayed/Non-Guaranteed Benefit

* Lotteries/Games

Different from competitions, this category contains promotions that do not require

skill or knowledge. The award of the prize is based on chance only. Offers are deferred and

not guaranteed.

* Competition/Contest

A competition or contest is defined as an exercise where people compete by using

skill, knowledge or expertise to win the prizes. It the result is based on the skill, slogans are

normally included as tie breaks. There may be legal restrictions in doing form of promotion.

Offers deferred and not guaranteed.

* Lucky Draw

These are similar to lotteries and games in that they are based on chance only. The offer is

delayed if customers (retailers) are given a closing date to submit their entries. Winners are

determined at a later date, driven by the element of chance in a lucky draw.

Merchandising is a tool, which is any device, sign, or advertisement used inside or outside

the outlet to provide information about products/services available. It is used to highlight the

brand and create an image in consumers mind. The concept Out of side, out of mind is

applied to reach the consumers continuously. The objectives of merchandising are as follow.

1. More presence of brand.

2. To build a bridge between retailer and company.

3. To get more attention from consumers.

Merchandising is any visible useful device that helps the retailers to maintain the outlet. It

covers all sort of necessary elements except the product. The practice of establishing various

is a new addition of the companies in the country. Various local and multi-national

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companies are engaged to establish heir own brand merchandising materials to the outlets.

They try to visualize more about their product.

BATB is using the retail media concept to branding its merchandising materials. Retail

media concept is visualization of word, color, symbol that represents the brand which

customer can easily identify brand instantly. Using the concept BATB need not to display its

products in any merchandising.

The following gives a brief description the various types of materials that are already in a use

by the retailers to exploit merchandising.

* Display Stand/Board

A standing boar used to display necessary/urgent/new information or offer for

the targeted customers related to the product and/or outlet.

* Poster/Leaflet, Flags

Printed information about any new or existing product is distributed through

posters/leaflets. Flags are used to announce the arrival of any new product to the outlet.

* Ampersand Stickers/Stickers

Ampersand sticker is the sign & representing AND [and per se and]. This is a copyright

sing used by BATB. Stickers are the sticky papers representing any brand that is attached in

outlet.

* Drop & Pick

For security of the outlet, customers have to drop their additional baggage (before

shopping) in a box that is popular as Drop & Pick.

* Dispenser/Shelf/Tray

A rack used to display the products.

* Identifier/Category Identifier

Guide map for the customers to move easily in the outlet. It is also used for the

products to inform the customers what and/or where it is.

* Main Signage

The first look of the outlet displayed outside to inform the customer. The name and

address is displayed on it so that any customer can easily find the outlet.

* Counter (Reception, Food)

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Normal desk used for reception and/or to order food.

* Visuals/Light Box/Tri Vision

Normal branded photography is visual, when it is in a box with light it is the light

box. Tri vision is an invention where three visuals are displayed one after one while the

surface rotates after a set period.

* Interior (Carpet, false, Ceiling, Glass Pasting, Lighting, Floor Tiles) Common

interiors used to decorate any outlet presently the hot merchandising item using by the

companies.

* Furniture (Chairs, Tables, Sofa)

Branded sitting and eating materials used in the outlet.

* Exterior

Outside attraction and/or support for the outlet e.g. canopy-to gets rid to of sun, shop

screen etc.

* Refrigerator

Cooling device used to chill the liquid items. Generally used by the beverage

companies.

* Pool Table Shades

Tailor made table shade used on top of the pool table to give adequate light for

playing the game.

* Miscellaneous (Ashtray, Cover)

Some branded materials using in various hotel, restaurants, and cafes.

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26

Chapter Three

Methodology


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Chapter-3

Methodology of the Study

3.1. Introduction:

Once the study area, objectives and propositions are finalized the next logical step is

to select the methodology of the study in achieving the objectives and assessing the

propositions. The present research is an exploratory one rather than test of any hypothesis.

Therefore, it appears that to accumulate the data required for the present study, qualitative

method through case study is more appropriate than quantitative one. Accordingly, the deep

and insight understanding are necessary to explore the range of phenomena critical to

relationship, while how and why questions are to be posed to collect attitudinal and

behavioral data. Literature suggests that to conduct such a research qualitative methods

(Baker, 1991) in particularly case study approach (Yin, 1990) is relevant.

Research methodology has been discussed in relation to processes of sample

selection, negotiating access to agencies and clients, instrument and processes of data

collection and the field experience in collecting data. In addition, strategies and techniques

and actual steps of data analysis have also been discussed. However, the proper

implementation of research methodology helps collect accurate and adequate data. Thus, it

assists to achieve the objectives of the study and to assess the propositions.

3.2. Methods of Sample SelectionThe foremost step of research methodology is the sample selection. In order to

achieve the research objectives, the attempt has been made to select the sample from

management both deportment of marketing and TM & D Also from some key individuals of

CORA.

3.2.1. Criteria of Sample Selection

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In selecting the sample of the cases for this study the following criteria are used:

(1) Age of the agency (minimum 5 years old),

(2) Size of the agency (in terms of account volume),

(3) The agency which deals with a client directly,

(4) The client must be a major one (in terms of account size handing by the agency),

(5) Maintenance of prolonged interaction (minimum 5 years) between agency and client.

The reasons for using the above criteria are as follows:

1. Only an old firm is likely to have one or more old clients. Only a big firm is likely to

handle at least one major (in terms of account size and prolonged interaction) client.

Moreover, the big advertising agencies are more likely to have formal organizational

structure within the firm and having a number of employees capable in providing the

services a major client.

2. It is likely that an old firm may handle the big account. Thus, it may handle the

considerable account size of advertising.

3. Since the study aims at examining the nature of relationship between advertising

agencies and their clients, a case should be constituted considering an agency and a client

and therefore, there must be a direct interaction between them.

4. Again, since the dynamic of relationship between an agency and a client is the key

addressing research issue, the long-term business interaction between the parties is

necessary. It is essential to be sufficiently capable of providing adequate data on relationship

aspects by both the agency and the client to enable the researcher to carry out the necessary

verifications.

3.2.2. The Process of Sample Selection

The scope of sample selection for this study is limited to the internal manager main

agenda of this study is intergenerational relationships between these two parties. According

to proposed qualitative research methodology and the case study research strategy in

particular, although the method of sample selection does not necessarily have to be as rigid

as quantitative one, a logical consideration is necessary.

One may observe that for selecting the sample size it is necessary to know the size of

the population of advertising agencies and advertisers. In our case it is not necessary to

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consider those agencies as population who are not directly involved with the client rather

only doing subcontracting job for another agency and also not necessary to consider those

advertisers who are not advertising through agencies rather advertising directly or by setting

up their own in-house agency service. In order to achieve the research objective data are

collected from the agencies that are directly involved in interaction process in providing

services to the clients and the advertisers that are taking services from the agencies.

However, sample selection process could be considered either from agency side or from

client side, while we need both an agency and at least one of its clients (i.e., advertisers) or a

client and its agency for studying a specific case. Here sample selection processes have been

considered from agency side for the following three reasons.

(1) It has been assumed that if we first select an agency there is an option for

selecting one of the clients of the agency to meet the objectives of the study.

(2) On the other hand, if first select a client and if the client does not agree to

participate then it will be difficult to constitute a case for the study.

(3) After selecting the client we may find that the client has just changed his agency

and the age of the new agency is only few months while we need an agency and a client who

have been maintaining their relationship at least for 5 (five) years.

Keeping in mind the above criteria and process of sample selection three major

agencies and corresponding three major clients are purposively selected in constituting the

cases of the study (refer to Table 3.1). It has already been argued earlier that we need to

consider one major (in terms of account size) client from each agency with whom the agency

has been working for a long time. Therefore, the following two aspects are considered in

selecting the clients: (1) account size of the client (in percentage), and (2) length of

relationship with the agency.

After selecting the sample cases the next immediate step appeared necessary to

negotiate access to the organizations.

Table-3.1

Advertising Agencies and their Corresponding Clients

Advertising Agency Client

ADCOMM Bangladesh American Tobacco, Bangladesh

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(BATB) Ltd.

MODONNA advertising Ltd. BEXIMCO Groups Ltd.

BITOPI Advertising Ltd. SINGER Bangladesh.

3.3 Negotiation Process to Access to the Organization

In the process of negotiation with agency and client both formal and informal

approaches were used. As the formal approach, a formal letter was written addressing to the

Chief Executive (CEO) of the agency and to the Director / Manager an Advertising /

Communication Department of the clients organization requesting to participate in the study

(Appendix-3.1).

As the informal approach, necessary steps were taken. To this end, the researcher

tried to find out the persons either previously known to him as a friend, student and relative

or known to his colleagues, friends or relations working in the selected samples

organizations. After getting such a known person researcher directly contacted him, but if

researchers friends, colleagues or relations knew the person, the researcher requested them

to introduce him to the person. Using all these means the researcher got access to the

organizations. Getting access to the organizations the researcher establishes the rapport with

the person. In addition to the process above, for getting access to the clients organizations

the researcher also approached to all three agencies to introduce him to the key personnel of

the clients.

3.4 Criteria Used for Selecting the Key Personnel

The following two criteria were considered for selecting the key personnel from both

agency and client:

(1) The respondents must be involved directly in the campaign development process like an

account executive from the agency side and an advertising communication manager from the

client side, and

(2) One must be an executive with experience and authority in decision-making process.

3.5 Instruments of Data Collection

Different techniques and instruments were used to collect adequate information.

These are as follows:

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3.5.1. Techniques of Interview

The in-depth interview technique was used for data collection while other techniques,

like group discussion, were not a suitable technique for the study. The researcher personally

took face-to-face interview with the key personnel of both agencies and clients.

3.5.2. Instruments Used for Data Collection

As an instrument Firstly the interview guidelines were used for data collection. To

this end, two separate interview guidelines, one for agency and the other for client, were

developed. Broadly, interview guidelines covered the issues like core services provided by

the agency, agencys strategy to know the clients need and processes of delivering their

services, briefing procedure, assessment processes for both parties offer, negotiation,

decision-making processes and communication processes, underlying issues critical to long-

term relationships etc. However, the detailed interview guidelines can be seen in Appendix-

2.

Secondly, a tape-recorder was also used for recording the interview. Otherwise the

researcher took necessary notes, while the interviewee was not agreed to using such tape-

recorder. Through all these above processes necessary data were collected interviewing 13

executives from two organizations.

In addition to interview, some of the current documents in relation to brief provided

by client, minutes of the meeting regarding decisions taken by the parties, rough and final

copy of the script for print media and story board for audio-visual and clients comments and

suggestions on those etc, were collected. In some cases, respondents willingly provide such

documents, while in other cases researcher supplied the photocopies of some papers related

to advertising that the brought from UK. As a reciprocal way to gain abovementioned

documents from organizations. Researcher also collected available annual reports and

profiles of both organization studied. Moreover, direct observation served as secondary

source to collect evidence in relation to environmental and cultural aspects of the

organizations. Such data were considered as secondary/subsidiary subject to availability and

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opportunity to corroborate evidence collected from interviews. Thus, from all these sources,

sufficient data were collected for the present study.

In short, data were collected through:

a. In-depth interview

b. Using unstructured questionnaire in the form of Interview Guide,

c. Stimulate-to-Say-More technique is used,

d. Key respondents are interviewed,

e. Average length of interview was around one hour each,

f. Interviews & tape-recorded,

g. Significant documents (i. e. archival data) are collected,

Once the data are collected the next step is to develop the strategy the technique of

data analysis. To this end, firstly, the relevant literature is reviewed. Secondly, appropriate

strategy and technique are chosen; thirdly, necessary steps are followed in order to analysis

the data.

3.6. Strategies and Techniques of Data Analysis

Although, the strategies and techniques of qualitative data analysis are the least

developed areas, Yins (1990) suggestion relying on theoretical propositions strategy is used

to verify three board propositions developed in the first section of this chapter. It is found

that there is no standard technique of data analysis for the qualitative researchers at least as

the quantitative researchers has different standard statistical tools such as standard deviation,

correlation coefficient, regression, factor analysis etc. Therefore, qualitative data analysis is

usually seen as problematic. However, some researchers (e.g. Griggs 1987, Miles and

Hagerman 1984) have discussed this issue and suggested three stages of data analysis such

as data reduction, data display, and drawing and verifying conclusions. Similar to these

stages Wells (1974) has suggested and Khan (1991) has applied more practical techniques

for analyzing the data collected from interviews using tape-recorder such as transcribing,

editing & coding, bracketing, joining the bracketed part, writing findings, conclusion

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drawings etc. Following Wells and Khans suggestions the actual steps are taken for the

present study these are:

1. Audiotapes are listened to carefully and repeatedly,

2. Verbatim-transcription of all interviews has been done manually by the researcher

himself.

3. The Bengali transcriptions are translated into English.

4. All the transcriptions have been typed into Microsoft Word Program.

5. Duplicate files are created for different transcription of interviews,

6. In relation to research objectives, the relevant parts from transcribed data are blocked.

7. The blocked parts are marked by bold and underlined,

8. Using different font sizes the similar marked themes are classified,

9. Similar classified themes are transferred into same page (s),

10. Classified themes are skimmed and addressed to specific research issue.

After completing the above processes, interview data are corroborated with

secondary information collected from annual report, profile of the organization, current

documents in relation to brief minutes of the meetings etc. and also from observation.

3.7 Conclusion

The chapter discusses the different aspects of methodology of the study. To this end,

methods of sample selection criteria and processes, negotiating process to access to the

organizations both formal and informal, criteria used in selecting the key personnel

instruments of data collection and implementation processes of data collection have been

discussed and explained. Finally the strategy and technique of data analysis are discussed

with the support of relevant literature.

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34

Chapter Four

Company Profile


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PART-1

INTRODUCTION

COMPANY OVERVIEW

COMPANY MISSION

COMPANY VISION

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4.1. Company Overview

The British American Tobacco Group is one of the worlds leading international

manufacturers of cigarettes, marketing its products in almost every country worldwide. It is

clear leader in a competitive and fast moving business. The group consists of four tobacco

subsidiaries and they are:

British American Tobacco Company Limited, which produces cigarettes in over 45

countries for domestic and export markets in Europe, Australasia, Latin America, Asia

and Africa.

Brown & Williamson Tobacco Corporation is the third largest tobacco company in

the US.

British American Tobacco (Germany) GMBH is a leading cigarette company in

Germany.

Souza Cruz S.A. is the market leader in Brazil and a world leader in tobacco leaf

export.

BAT subsidiaries operate in more than 90 countries employing around 173,000 people.

Multi-national, multi-cultural and multi-disciplined, British American Tobacco Group, a

world-class group of tobacco companies. BAT offers a brand for every taste and preference.

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British American Tobacco, the second largest Tobacco Company in the world is also the

worlds most global tobacco company. Based in London, UK, it operates in more than 50

countries with the strength of 100,000 employees and sells more than 250 brands in more

than 180 markets worldwide. Tracing its heritage back to a joint venture formed by the

Imperial Tobacco Company of the United Kingdom and The American Tobacco Company

of the United States in 1902, today's British American Tobacco Company was born on the

world stage. Extent of operation of British American Tobacco Company is given below:

America-Pacific (USA, Japan, South Korea)

Asia-Pacific (China, Indo-China, Taiwan, South-East Asia, Australasia)

Europe (50 countries including Russia)

Latin America (Central & South America, Mexico, Caribbean)

Africa (More than 50 countries)

MESCA (Middle East, South & Central Asia)

Today British American Tobacco sells the leading brands in over 30 markets covering 102

countries, has more than 200 brands worldwide, employs more than 55,000 people and

produces some 2 billion cigarettes every day. More than a billion people across the globe

enjoy smoking tobacco. One in every eight chooses a British American Tobacco brand. In

order to support the company's business goals the merger of British American Tobacco with

Rothmans International had been announced on 11 January 1999. This global merger was

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completed on 7th June 1999. This brings together the number 2 and 4 players which together

will boost a combined volume exceeding 900 billion cigarettes around the world with some

120,000 employees and a worldwide market share of 16 percent (Phillip Morris has a 17

percent share). The merger is a major step forward in British American Tobaccos vision of

becoming the worlds leading International Tobacco Company.

British American Tobacco Bangladesh a subsidiary of British American Tobacco was

established in 1971 and since than it has been the market leader in the country. Based in

Dhaka the company has one packaging factory in Dhaka and one leaf-processing factory in

Kushtia. The company currently employees more than 200 managers and 1300 employees.

In its brand portfolio British American Tobacco Bangladesh has a wide range of cigarettes

for different consumer segments. Starting from Benson & Hedges (Lights & Regular), which

are currently imported from Europe to locally produced International Brands such as State

Express 555 and John Player Gold Leaf (Lights and Regular) and also National Brands like

Capstan, Star family and Scissors family are members of the portfolio.

British American Tobacco Bangladesh is involved in various community services in the

country. Affore station is the pet project of the company, which was started in 1980 and till

now the company has planted 32 million trees across the country. In this regard, British

American Tobacco Bangladesh has won many awards during last 28 years but the most

prestigious of all are Prime Minister Affore station Award in 1993, Presidents Award in

Agriculture in 1975, Sports Journalist Award and FAO Award in 1998. Besides this, the

company is also involved in vegetable seed multiplication project, supports philanthropic

organizations like Sandhani and other Social and Cultural groups.

The Company has its Head Office and the cigarette factory in Dhaka, a Green LeafThreshing Plant in Kushtia and a number of Leafs and Sales Offices throughout the country

The following figure shows the flow from the parent company to BATB:

38

BRITISH AMERICAN TOBACCO GROUP

Brown & WilliamsTobacco Corp.

British American

Tobacco (Germany)GmbH

Souza Cruz S.A.

America-Pacific

Europe

Africa

Latin America

Asia-Pacific

MESCA

British American Tobacco Bangladesh.

British American

Tobacco CompanyLtd.


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4.2 Company Vision

To extend our leadership through World Class performance

BATB is already a leader in the Bangladesh cigarette market. In the future the company

wishes to extend the present leadership through world class performance. The company

39

Parent Company

Subsidiaries

Regional Operation

Company in Concern

Figure: 1 Relation with BAT Group


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believes that the management already possesses world class product and people. Right now

they need to concentrate on improving their process capability. This company proved itself

to be a world class company by achieving the prestigious MRPII recognition. Now the whole

process is going to accelerate more and altogether it will reach the level of world class

performance and gradually it will extend its leadership in all aspects in a very competitive

environment.

4.3 Company Mission

Double the net revenue by 2005

The company is planning to double its net revenue by the year 2005. That means in the span

of 5 years time the revenue must rise at a tremendous rate. This requires a continuous andconsistent growth in revenue in the coming years. One thing must be noted here that the

target is to increase the revenue rather than the profit. This is because BATB is a responsible

company and wants to generate profit for all its stakeholders and create and maintain a win-

win situation for all.

Growing our share of the total tobacco market

The biri segment has captured the major share of the total tobacco market. BATB plans to up

trade the smokers in the country and wishes to transfer their smoking habit from biri to

cigarette. This is also coherent with the first objective of the mission as more people will

start smoking BAT brands instead of biri, more the revenue will increase.

Dominating key identified segments

The total brand portfolio of the company is divided into 3 major segments- high, medium

and low. BATB is already dominating the high and medium segment in the market. But it is

facing tremendous competition in the low segment. BATB wishes to dominate all the key

identified segments and they are planning accordingly. The company doesnt have any brand

competing in the very low segment.

GUIDING PRINCIPLES & VALUES

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BATs Global Guiding Principles - Freedom through Responsibility, Open Minded,

Enterprising Spirit, and Strength from Diversity - describe key characteristics of the group,

which BATB aims to nurture. BATB upholds the following values, which are in line with

the parent company:

Fig 1.3 BATB Values Source: BATB

BATBs CORPORATE SLOGAN

In a recently held, companywide competition, a corporate slogan was generated from among

the employees of British American Tobacco Bangladesh. The results yielded more than 350

responses, out of which the following slogan was selected as the corporate slogan of BATB.

This slogan will represent BATB on all promotional and official banners, pads, envelopes

etc.

Success and Responsibility Go Together

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ACHIEVEMENT

1. Vision We are inspired by our dreams

2. Map We believe in our plans

3. Consumer focus We live for our consumers

COMMITMENT

4. Confidence We will win.

5. Standards We keep raising our standards

6. Drive We are innovative and energetic.

TRUST

7. Teamwork We win as one.

8. Support We stand by each other

9. Belon in we are art of one famil .


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BATBs WAY OF WORKING

Ensure consumer focus is at the heart of every business process.

Become the benchmark performer compared to world class FMCG companies.

Drive innovation and individual empowerment to the heart of our organization.

Be admired, respected and trusted by stakeholders.

Do our utmost to ensure that products are enjoyed only by adults who are continually

informed of the risks associated with smoking.

Nurture a progressive, dynamic and transparent working environment and culture.

BATB recognized as a leading partner in the development of Bangladesh

PART-2

BATB: On the Move

Historical Background of BATB

Structure of BATB

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Functional Area

Ownership status of the company

Employment and Trade Union in BATB

Physical infrastructure of the Company

Tobacco Cultivation in Kushtia

EHS Policy and Afforstation Program

Commitment to develop the Future

Journey towards Class

Historical Background of BATB

British American Tobacco Bangladesh (BATB) Company Limited is the recognized leader

in Bangladesh cigarette market, with a long established reputation for providing its

consumers with consistently high quality brands. The journey of this company started long

back. BATB was established back in 1910 as Imperial Tobacco Company Ltd. with head

office in Calcutta. In the very beginning Imperial Tobacco Company (ITC) launched a

branch office at Moulivibazar Dhaka in 1926. Cigarettes were made in Carreras Ltd.,

Calcutta. Imperial and Carreras merged into a single company in 1943. After the partition in

1947, cigarettes were coming freely from Calcutta, but introduction of customs barriers in

1948 between India and Pakistan interrupted the smooth flow of cigarettes from Calcutta to

East Pakistan. In March 01, 1949 Pakistan Tobacco Company (PTC) came into existence

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with head office in Karachi; with the assets and liabilities of ITC Limited held in Pakistan.

The then East Pakistan Office was situated in Alico Building, Motijheel. In order to meet the

increasing demand, the first factory in the then East Pakistan was established in Chittagong

in 1952. From this time onwards requirements for cigarettes for East Pakistan markets were

met from products manufactured in Karachi. In 1954 PTC established its first cigarette

factory although high-grade cigarettes still came from West Pakistan. The Dhaka factory of

PTC went into production in 1965.After the War between India and Pakistan in 1965;the

import of tender leaf from India for the production of Biri was stopped. This gave a big boost

to cigarette business. It was at that time the East Pakistani entrepreneurs set up 16 cigarette

factories in this region.

After independence, Bangladesh Tobacco Company (Pvt.) Limited was formed on 02

February 1972 under the Companies Act 1913, with the assets and liabilities of PTC.

Shareholding position for GOB and BAT was 1:2. BTC (Pvt.) was converted into a public

limited company on 03 September 1973. British American Tobacco played a pivotal role in

BTC's creation in 1972 and since then has been involved in BTC's development every step of

the way. To pronounce the successful relationship with British American Tobacco, BTC has

changed its name and identity to British American Tobacco (BAT) Bangladesh Company

Limited on March 1998.

March

1949

Formation of Pakistan Tobacco Company (PTC)

1954 PTC opened its first factory in Fouzdarhat, Chittagong

1962 Opened a branch in Moulavibazar, Dhaka

1965 Building of a factory in Mohakhali, Dhaka

February

1972

Incorporation of Bangladesh Tobacco Company with a paid up capital of

Tk. 400 million

March 22,

1998

Changed its identity from Bangladesh Tobacco Company (BTC) to British

American Tobacco Bangladesh Company Limited (BATB)

Source:BATB

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Structure of BATB

BATB is a public limited company. Management Director is the operational head and

appointed by the British American Tobacco. Head of every department carries out

their functions with the help of line managers. Different departments have different

structure according to their function and responsibility.

Source: BATB

The Board of Directors and Executive Committee (EXCO) govern the overall activities of

the company. The "Board of Directors" is composed of 10 members who are called

Directors. The Chairman heads the Board of Directors. Chief Executive of British

American Tobacco Bangladesh is called the "Managing Director" who is normally appointed

by "BAT Holdings". Managing Director of the company is the chairman of the Executive

Committee.

This committee includes the head of all the functional departments.

45

BOARD OF DIRECTORS

Chairman

ManagingDirector

Deputy

ManagingDirector

FinanceDirector

Rep. of ICB

Rep. of

Ministry ofFinance

Rep of Ministry

of Industry andCommerce

Rep. of BAT

Table: 1 BATB History


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BRITISH AMERICAN TOBACCO BANGLADESH

EXECUTIVE COMMITTEE

Source:

BATB

46

Paul Kirkham

Managing Director

Golam Mainuddin

Deputy Managing Director

Jean J

Walravens

Head of Brand

Marketing

Lutful

ChowdhuryHead of Trade

Marketing

Steve Rae

Head of

Production

Emil

MoskofianHead of

Finance

Ezaz Ahmed

Choudhury

Head of Leaf

Mahbub Mannan

Head of Human

Resources

Mahmudur

Rahman

Head of CORA

Shezad

Hussain

Head of IT


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Functional Areas

BATB has been operating its business under the following major functional areas:

Production

Leaf Finance

Human Resource

Brand Marketing

Trade Marketing and Distribution

Information Technology

Corporate and Regulatory Affairs

Business Development

Ownership Status of the Company

British American Tobacco Bangladesh is listed in the "Dhaka Stock Exchange (DSE)". It has

an authorized capital of Tk. 400,000,000 of 40,000,000 ordinary shares of Tk. 10 each.

British American Tobacco Bangladesh, which encompasses 62% of the shares of the British

American Tobacco, London. The Government held 32% of its shares. Subsequently the

government has gradually sold its holdings to different organizations of the country. The

composition of shareholders on December 31, 1999 was:

Source::

BATB

47

Raleigh Investment Co. Ltd. UK 65.91%

Investment Corporation of Bangladesh 26.99%

Sadharan Bima Corporation 2.86%

Bangladesh Silpa Rin Sangstha 0.84%

Government of Bangladesh 0.65%

Sena Kalyan Sangstha 0.52%

Others 2.23%


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Rele igh Investment Co. Ltd. UK Investment Corporation o f Banglades

Sa dha ra n Bima Co rp ora tion Ba ng la de sh Sh ilp a Rin Sha ng stha

Government of Banglade sh Sena Kallyan Sangstha

Other Bangladeshi Shareholders

Employee and Trade Union of BATB

The employees of the BATB are dynamic, self-motivated and energetic to perform any

assigned job, because they are selected on the basis of excellent academic and experience.

The company employs 845 permanent employees and varying number of seasonal and

temporary workers as required. Each permanent employee receives remuneration in excess

of Tk. 36,000 per annum. Remunerationdepends on the nature and conditions of work. The

workers are labeled in the following categories:

Permanent

Probationer

Temporary (seasonal)

Badli

Casual

Trade unions are established in the following companys working locations:

Head office and Dhaka factory

Chittagong factory

Rangpur leaf factory

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There is a positive relationship between the company and the trade union based on mutual

trust and respect. All the employees of the company belong to the trade union. When a

worker becomes a member of the union, according to his request a certain amount of his

wage is deducted as the union subscription fees on a check off system. Trade union election

is held after every two years and governed by their respective constitutions. The terms and

conditions of services of the employee are negotiated and determined through a process of

collective bargaining between the company and the union.

Physical Infrastructure of the Company

The infrastructure of the company has a broader field where the company plays its important

role. BATB has 6 Regional Trade Marketing Offices (RTMOs), 12 Regional Sales Depots,

1 Factory, 1 Green Leaf Threshing Plant, 7 Leaf Depots and a Head office consisting of

Corporate Head office and Production Head office. The Companys Head office and

Cigarette factory are located in Dhaka. A Green Leaf Threshing (GLT) Plant has been set up

in Kushtia and it has started operation from April 1995.

The companys products are manufactured in the factory at Mohakhali, Dhaka. The Plant

Manager who reports to the Production Director at the Head Office heads Dhaka factory.

The company procures tobacco leaf maintaining the international standard and it imports

processed tobacco leaf for its international brands. It procures green tobacco from the

registered farmers of the leaf area mainly for its local brands.

The companys authorized leaf areas are located in Kushtia, Chittagong and Manikgonj. But

bulk of tobacco leafs comes from Kushtia region. The Chittagong area is under development

process and it now covers Rangunia and Lama. The companyoperates 7 leaf depots in the

leaf area. 4 of them are located in Kushtia region, 2 of them are located in CDA and other 1

is in Manikgonj, The Company provides all sorts of supports to the registered growersthrough its depot personnel. This includes technical know how, agricultural inputs and

financial assistance.

The company performs its sales and distribution operation all over the country through its

five regional sales offices. They are located in Dhaka, Khulna, Chittagong, Sylhet and

Rajshahi. Each of the regions is again divided into operational areas, each of which in turn is

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divided into territories. To perform its sales and distribution smoothly, the company operates

10 sales depots in different locations of the country and it has 63 authorized distributors.

Tobacco Cultivation in Kushtia

Tobacco cultivation in Kushtia Leaf area was first introduced in 1967 with an area of 10

acres. It was expected to expand to 650 acres by 1971 Flue-cured and air-cured tobacco was

cultivated in Kushtia and the Leaf Department achieved self-sufficiency in cigarette tobacco

by 1975. Tobacco cultivation though registered growers and procurement of the product

tobacco is done through four leaf depots In Kushtia. Those depots are Meherpur, Jhenidah,

Chechen and Allardarga Leaf Depot. Kushtia Leaf Factory stands on 4.31 acres of land and

is located at about three kilometers away from main town. The Green Leaf Threshing

(GLT) plant could complete the entire leaf purchase in 1995. A team of management

including the Plant Engineer, Processing Manager, Shift Manager, Quality Control Manager,

Leaf Account and the Leaf personal Manager is managing the GLT plant. The Plant Manager

is the team leader of GLT management team.

EHS Policy and Afforestation Program

All the activities in the manufacturing unit and Green Leaf Threshing Plant ensure that work

is conducted in a manner to minimize environmental pollution. Kushtia a GLT has won

British American Tobaccos EHS (Environment, Health and Safety) Merit award for the year

1995 and 1996 for achieving consecutive two years of operation with zero accident. The

company also received the prestigious EHS Silver Award for 1999 without any lost time

accident in any part of the company, which was the second year in a row.

In line with BAT's environmental, health, and safety policy, the company is involved in an

afforestation program. The contribution of the company in afforestation program in

Bangladesh has earned recognition in the country though winning of the Prime Ministers

Trophy in 1993. In 1998 the company distributed 3.5 million free saplings in Dhaka through

the Bonsai Nursery project. This program had caused more than 28.5 million trees planted or

distributed till 1998 and is expected to yield around 120,000 metric tons of timber for fuel-

wood, furniture making, or construction process in 1998. The Food and Agricultural

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Organization (FAO) has awarded British American Tobacco Bangladesh for pioneering the

development of vegetable seed industry in Bangladesh. The company had started its

vegetable seed multiplication program in 1990 with the technical support of FAO with a

view to provide quality vegetable saplings for free distribution amongst farmers in the

tobacco growing areas.

It is not enough for BATB to only contribute to the afforestation of the country. The

company felt the need to promote the use of alternate wood fuel for tobacco curing by its

farmers. Briquette as an alternate was introduced to the farmers, to reduce their dependency

on trees for wood fuels. Briquettes made of paddy husk and sugarcane bagasse. Briquettes

can be used for cooking, in burns for curing tobacco and brick. The company promotes

Briquette manufacturing in the tobacco growing areas and tries to make them easily available

to the farmers.

A company wide safety awareness program was initiated and completed in 1996. The

objective of this program was to brief employees about the techniques to reduce the risk of

occurrence of preventable accidents. The company's commitment to the highest level of

safety practices is recognized with awards being received from the British American

Tobacco Group headquarters in more than one year. Workers and management are provided

regular safety training. Hard hats are required during shift work. All movable machine parts

have guards to prevent workers from accidental injury.

Commitment to Develop the Future

British American Tobacco has over the decades consistently invested in the Bangladesh

market through BATB. Thus BATB has always been in the business of manufacturing and

marketing brands that meet standards found anywhere in the world.

The company believes in attracting the best talent available by offering a challenging

working environment with international career development opportunities. Individuals here

are entrusted with significant responsibility and autonomy, and investment in people throughregular training and career development has helped to establish a culture, which encourages

people to think creatively, generate new ideas and approach problems from a number of

different perspectives. In the quest of becoming a World Class Company by achieving the

visions, strategic imperatives and the values, the company has launched a change

management program called Winning In Our World in 1999. The objective is to bring

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about a cultural change by embedding the WOWValues and removal of barriers. To this

effect the company has organized different workshops, employee care and development

activities throughout the year with direct participation of its people.

With state-of-the-art machinery, world-class people, and a portfolio of world-beating brands,

British American Tobacco Bangladesh couldn't be anything but instinctively international.

People's attitudes have changed much over the time. Without this changed attitude of

excelling in their performance it would not have been possible to make so much progress.

This spirit of people will help in achieving the company's Vision and Mission and ultimately

to be a world lass company.

Lotus notes is a highly evolved advanced communication system of BAT through which all

the employees of BAT worldwide communicate among themselves. This is a hi-tech device

that helps to provide quick and uninterrupted communication and factual information.

Quantum is a marketing information tool with the objective of effective utilization of

marketing spends through better targeting and evaluation of BATBs marketing activities.

This is a strategic investment that helps BAT to achieve competitive edge in case of facing

any competition. The company has implemented Tetra CS/3, a totally integrated software

package that links Manufacturing, Finance, and Distribution providing one set of clearly

understood information that can be used throughout the company. Apart from this software,

the company uses several other software packages for some specific purposes that can also

be shared throughout the company.

Another important development with regard to accessibility of information is the

implementation of the Global Enterprise Network (GEN) standard. GEN provides a

standardized IT infrastructure throughout the British American Tobacco group that allows

users to access their work areas from any location within the group.

Also the company has developed a system to have better control of its supply chain process.

This has made a major impact in terms of automating the entire supply chain process from

shipping godown to retailer, providing on-line information at every stage of the secondary

supply chain.

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As a company that aspires to be the world class, the company also looks at the interests of its

suppliers and trading partners. A team is currently looking at how the company can support

them as they strive to improve their performance.

ENVIRONMENT, HEALTH, AND SAFETY POLICY (EH&S)


is conducted in a manner to minimize environmental pollution. In line with BATs

environmental, health, and safety policy, the company is involved in an aforestation

program. In 1998 the company distributed 3.5 million free saplings in Dhaka through the

Bonsai Nursery Project and 3.9 million free saplings in Dhaka through the Bonsai Nursery

Project in 2002. This program had caused more than 28.5 million trees planted or distributedtill 1998 and is expected to yield around 120,000 metric tons of timber for fuel-wood,

furniture making, or construction process in 19981.

It is not enough for BATB to only contribute to the aforestation of the country. The company

felt the need to promote the use of alternate wood fuel for tobacco curing by its farmers.

Briquette as an alternate was introduced to the farmers, to reduce their dependency on trees

for wood fuels. Briquettes made of paddy husk and sugarcane biogases. Briquettes can be

used for cooking, in burns for curing tobacco and brick. The company promotes Briquette

manufacturing in the tobacco growing areas and tries to make them easily available to the

farmers.

A company wide safety awareness program was initiated and completed in 1996. The

objective of this program was to brief employees about the techniques to reduce the risk of

occurrence of preventable accidents. The company's commitment to the highest level of

safety practices is recognized with awards being received from the British American

Tobacco Group headquarters in more than one year. Workers and management are provided

regular safety training. Hard-hats are required during shift work. All movable machine parts

have guards to prevent workers from accidental injury.

1British American Tobacco Publication: "The Green Campaign"

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is conducted in a manner to minimize environmental pollution. Kushtia a GLT has won

British American Tobaccos EHS (Environment, Health and Safety) Merit award for the year

1995 and 1996 for achieving consecutive two years of operation with zero accident. The

company also received the prestigious EHS Silver Award for 1999 without any lost time

accident in any part of the company, which was the second year in a row.

Journey towards Class A

At the end of 1993 the company adopted a change management program called MRPII, the

acronym for Manufacturing Resource Planning, with the objective of becoming a world-

class company with world-class systems, processes, products, and people. The strategy for

Partnership Excellence Program is based on a clear understanding on meeting world-class

performance and to achieve MRPII Class A. BATB conducted series of training for the

vendors and the result was very positive in terms of quality and delivery improvements.

Back in 1997, the organization was a Class C company. In 1999 it had achieved the status of

Class B and in this year, 2000 the company was awarded Class A status which has made

BATB the only member in BAT group to achieve A in four categories. The categories are:

1. Strategic Planning

2. People and Team

3. Planning and Controlling

4. New product development, reducing lead time

5. Continuous improvement

BATB has achieved Class A in the first four categories.

MRPII

This Chapter applies more focus and direction on the roles and responsibilities of theLeadership Team. It challenges this team to provide greater motivation and resource to

drive the business to sustainable competitive advantage.

Overall this chapter is more specific, uses sharper language and has a much clearer

structure.

It particularly challenges and reinforces the following issues:

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That the Mission (why we are here) and the Vision (what we seek to be) are

leadership initiated and controlled.

There are four main areas where success can be identified and all must be

pursued; Customers, Stakeholders, Employees and the Community.

Goals are to be established and clear strategic (paths to meet long-term goals) are

t

Full Report Bat1

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