Letter of Transmittal

9th December, 2015. Dr. Jashim Uddin Faculty of Strategic Management School of Business North South University Dear Sir,

I am writing to you the following report on Walton Bangladesh according to the

instructions provided by you.

After analyzing Walton Dhaka and doing a thorough online research on Walton

Bangladesh, I have been quite successful in collecting strategic information about

Walton Bangladesh. A survey among the existing and prospective Walton also

helped me to understand the market trend and the consumer behavior. The

following report is the result of my findings and efforts.

I appreciate this opportunity to work under you.

Sincerely,

Mohammad Rasel Mahmud

ID No: 151 2698 090

School of Business

North South University

Executive Summary

This report was custom-made to analyze and evaluate performance and future

prospects of Walton in a growing domestic electronic market.

The researches reveal that in a continuously growing market, Walton has become

a reliable name for customers. Countrywide network, inclination towards quality

and dedicated team of employees are the main concern of its success. Though it

had started business with home appliances, yet it has always been committed to

satisfying customer demand by introducing new products. Recent production and

selling of motorcycle and air-conditioner testifies that position of Walton.

Walton has an aspiration to double overall market share in the next 5 years. It has

successfully positioned itself as a customer friendly and eco-friendly Company. It’s

after sales service has contributed tremendously in building this image in

customers’ minds.

Since its target market is middle-income people, the price of their products is

comparatively lower than those of competitors’. This strategy helps the company

greatly in a price sensitive consumers market. In recent years Walton has

increased promotional activities through organizing various national sports

events.

Further investigations have revealed that to achieve the role of market leader, it

will face challenge from foreign brands. Moreover, rapidly growing demand from

customers for electronic products may put pressure on Walton.

It has adopted market penetration, product development and market

development strategy for future growth.

The prospect of Walton promising in its current position is the mainstream of this

research. Favorable government policy will help it expand domestic and

international markets in the future.

Table of Contents

Particulars Page No.

Executive Summary

1.Introduction 01

1.1.Origin of Report 01

1.2.Objective 01

1.3.Methodology 01

1.4.Limitations 02

2.Company and Market Background 03

2.1.Electronics market in Bangladesh 03

2.2.Walton HIL 04

2.3.Competitor Analysis 05

2.4.Market Share 06

3.Strategic Situational Analysis 07

3.1.Market Analysis 07

3.2.Market Segmentation 07

3.2.1.Demographic 08

3.2.2.Geographic 08

3.2.3.Psychographic 09

3.3.PEST Analysis 10

3.4.SWOT analysis 11

4.Marketing Strategy 12

4.1.Market positioning 12

4.2.Marketing Mix 12

4.2.1.Product 12

4.2.2.Price 14-15

4.2.3.Place 15

4.2.4.Promotion 15

5.Financial Analysis 16

6.Future Growth and Challenges 16

6.1.Current Market Status 16

6.2.Challenges 17

6.3.Future Growth 17- 18

7.Recommendation 18

8.Conclusion 18

9.Appendix 19-20

10.References 21

List of Table

Particulars Page No.

Table 01: Import of home appliances in Bangladesh 04

Table 02: Price comparison of Refrigerator 14

Table 03: Price comparison of TV 14

Table 04: Price comparison of Motorcycle 14

Table 05: Financial analysis of Walton 16

Table 06: Market comparison 16

Table 07: Future growth of Walton HIL 18

List of Figures

Particulars Page No.

Figure 01: Walton’s competitors Analysis 05

WALTON, Our Product: A premier pavilion & flourishing smart zone in the hi-tech industry

1. Introduction

1.1. Origin of Report This report was assigned by Professor Dr. Jashim Uddin Faculty of Strategic management, School of Business, North South University. 1.2. Objectives:

Learning a didactic approach to Business Communication. Incorporating theoretical education with practical experience. Gaining knowledge about the current market trend of the country. Getting acquainted with different policies, rules and regulations of

the government on the products concerned. 1.3. Methodology:

The methodologies used in the research process for this report, Ire: Data Collection Primary data is the information that I collect first-hand and secondary data is the information collected by others and used by me. For data collection, I used three approaches: a. First, I conducted some field research. I went to some Walton retail outlets and asked the customers about their valuable suggestion and opinions. b. I searched about Walton on the Internet and found some important information regarding their company background, product lines and promotional programs. c. I went to Walton head office and collected the annual reports for Walton Bangladesh for the year 2010.

1.4. Limitations

Though I tried I best to make a perfect report, a few limitations held me back. The main limitations that I faced, were – a. As many of the common products were barred, I had to choose one from a limited number of options. b. When I went to collect information from the Walton outlets, they were not fully able to cooperate with me, as I required information was confidential. c. There was not enough data in the websites.

2. Company and Market Background:

2.1. Electronics Market in Bangladesh The Electronics Market in Bangladesh is an ever-rising industry. The appropriate market size has never been determined as it is ever changing. The whole market can be separated into several segments like:

Semiconductor Market Electronics Appliances Market Raw Materials and Spare Parts Market IT Market

Walton is one of the major players in the electronic appliances market. They are also manufacturing motorcycles alongside home appliances such as television, refrigerators, air-condition etc. The market of these products relies heavily on the average household income. For most people in Bangladesh home appliances had been luxuries they, which they cannot afford, but recently the situation have been changing. Over the last 10 years, there has been massive economic growth in the country, which has increased the income of lower-middle and middle class people. So the demand for home appliances has increased substantially.

If I look at the annual GDP growth of the country in the last 10 years, I can see that there has been a steady increase.

One of the main reasons of this growth has been because of the increased investment in the fast growing sectors of the economy, which has reduced the rate of unemployment drastically over the years. It is evident that the increase in earning of the population has also had an impact on the buying behavior. Middle and upper middle classes have emerged and reached a certain level that is attractive for the importers and manufacturers. Bangladesh Bank has the records of imports of Home Appliances over the years.

Table 01: Import of Home Appliances (BDT)

Item 2004-05 2005-06 2006-07 2007-08 2008-09

Electrical Home Appliance 150241 204951 243665 236150 190548

At first there was a huge growth to the numbers of Home Appliances imported in the country, but the numbers have declined in recent years, as tax holidays on imported parts and high import tax on electronic products have made companies focus on assembling and manufacturing their products in Bangladesh.

2.2. Walton HIL Walton Hi-Tech Industries Ltd (Walton HIL) is one of the best companies in the electronic sector of Bangladesh. Walton is one of those few Bangladeshi companies that export electronic products since most of the companies in Bangladesh import products of various famous brands. The company was established in 1977. Since then, it has been setting new benchmarks in production of electronic goods in Bangladesh. The company has a yearly production capacity of 1.4 million pieces of fridge, 300,000 pieces of air conditioner and 300,000 pieces of motorbike. In its early stage, the company used to produce home appliances. Today their product mix includes Mobile Phone, Generators, and Motorbikes. In 2009 the company signed an agreement with the Malaysian auto manufacturer Agatha to set up an automobile plant in its factory premises. After meeting the local demand the company is exporting its products to Qatar, Dubai, Abu Dhabi and Kuwait of Middle East, Ghana of Africa and India, Nepal and Bhutan of South Asia and U.S.A It also wants to export its products to

France, Italy, Germany, Spain and other European countries. Walton has been successful in capturing this large international market because of its high quality products. To ensure this high quality of products all the members of the Walton family, both factory and administrative members, work very hard round the year. The factory of Walton is situated in Saver and the corporate office is at Dilkusha C/A, Dhaka. There are 120 outlets of Walton throughout the country so that customers everywhere can buy Walton products. Walton has a dedicated team of skilled engineers and technical personnel from home and abroad who ensure quality products for the customer. Because of this highly skilled team Walton can offer the customers a wide range of products.

Most of these brands have been in this market for a long time. But none of them were able to match the market growth of Walton in the last 3 years. Although LG-Butterfly is the No.1 home appliances brand in the country, Walton is catching up fast. Walton has started manufacturing major parts for the assembly of motorcycles. Right now they hold nearly 8% of the market share. Its competitors are:

Bajaj Hero Honda Dayun TVS Singer Butterfly

2.3. Competitor Analysis

In the field of home appliances such as television, refrigerator, freezer, air-condition etc. some of Walton’s competitors are:

Figure 01: Walton’s competitors Analysis

Competitor

Television Refrigerator Air-Condition

LG

Sony

Singer

Samsung

Panasonic

LG

Samsung

Panasonic

Whirlpools

Sharp

LG

General

Gree

Samsung

2.4. Market Share:

By conducting a survey among consumers I was able to determine peoples’ preference of brands while buying home appliances and which brand of product they have bought. The market demand of different brands of television, refrigerator and motorcycles has been calculated by survey method. It went be noted that had the survey been centered on middle class families in rural areas, Walton would have had a much higher market share since these people are the main target market of Walton. Also, Since Walton is the sole domestic producer among these brands; it enjoys some tax reduction that makes it capable of manufacturing and selling its product at reasonable prices. This facility provides Walton with a competitive advantage. Hence, Walton plans to target another 15% of the market in the next 5 years and they are confident that they will be able to easily achieve that target.

3. Strategic Situational Analysis: 3.1. Market Analysis Bangladesh, with its growing population and economic growth, has huge demand for household products. The fact that only about 60% of the country has electricity available proves that when electricity will be available throughout the country, demand will increase further. As the people of this country are mainly price sensitive, Walton, being the sole manufacturer of refrigerator, freezer and motorcycle, is very keen to meet the demand of this large market by providing competitive prices. Walton’s primary goal is to capture the local market, as they are still behind market leader LG-Butterfly. But they are also exporting their products. Already they have customers in Myanmar, Bhutan and planning to expand their market to Africa.

3.2. Market Segmentation Segmentation is one of the most important factors of strategic marketing. Market segmentation is one of the steps that go into defining and targeting specific

markets. It is the process of dividing a market into a distinct group of buyers that require different products or marketing mixes. Markets can be segmented or targeted using a variety of factor. The bases for segmenting consumer markets include: Demographical bases (age, family size, life cycle, occupation) Geographical bases (states, regions, countries) Behavior bases (product knowledge, usage, attitudes, responses) A psychographic base (lifestyle, values, personality) the market in

which Walton is doing its business is consumer market and Walton mainly segments its market base on Demographic, Geographic and Psychographic bases.

3.2.1. Demographic Segmentation

In segmenting the market on demographic basis Walton mainly considers

occupation and family size of the consumer. It targets the people of middle-

income level and designs its products for mainly nuclear family.

3.2.2. Geographic Segmentation

Walton segments the whole country in eleven zones for marketing purpose &

they are:

Dhaka North Zone

Dhaka South Zone

Dhaka South-Ist Zone

Chittagong Zone

Camilla Zone

Barisal Zone

Jessore Zone

Sylhet Zone

Bogra Zone

Mymensingh Zone

Rajshahi Zone

Area Managers are responsible for these zones and it is their responsibility to

develop market there. Product demand and response of the customer are not

same in all zones.

Maintaining the sales in high demand zones like Dhaka, Camilla, Bogra the

marketing department is trying to increase their sales in low demand zones.

Currently, Walton has either their retail shops or dealer shop in all of the 65

districts of Bangladesh. They have multiple shops in Dhaka and Chittagong in

order to provide maximum convenience.

3.2.3. Psychographic Segmentation

Walton markets its product by using psychographic segmentation. They use

lifestyle to segment their market. For example Walton is marketing relatively

cheaper CRT Television for lower-middle income and rural people and at the same

time LCD Television for higher middle-income people. It also designs the

refrigerators of different size and capacity considering the people of different

lifestyle.

3.3. PEST Analysis

Political Factor:

High Import Duty on Imported Home Appliance Product

Export promotion schemes of Bangladesh Government

Tax Incentives on Import of Plants

Constant Government Support

Economic Factor:

Increase in per capita income

Growing GDP high disposable income

Increase in Spending Power

A huge prospect of a profitable export sector

Socio-cultural Factor:

Manufacturing Eco-Friendly product

Changing lifestyle of middle income people

Technological Factor:

Improvement in Technology made electronics cheaper

Increased quality of production

3.4. SWOT Analysis:

Strengths

Largest electronic base in Bangladesh Strong distribution channels and customer service Leadership in product development and services Good Human Resource and Infrastructure Installation all over the country

First service advantage Ill-recognized brand name and reputation Lower Customer Base High Ethical Standard Experienced management team

Weakness

Limited items. It has management problem. Too much inside out thinking in the company. Different departments not working together. Sometimes a tendency to be ignores. High employee turnover.

Opportunities

Its more show rooms. No long-term Distribution/Channel strategy. Focus on additional requirement. Improved technological improvement and network coverage. Increased socialization. Demand for new & innovative products. Provide online buying facilities. Increase the brand value though initial offering. New and better interconnection of distributor. Huge need for electronic services. Declining prices for Walton handsets. Economic growth of Bangladesh.

Threats

Aggressive marketing from company. Price war. Switching power of customer increased. More rigid government regulations. Increased marketing/operating costs. Increased bargaining power of the consumers. Sabotage of installation.

Key Success Factor

Walton is the first Bangladeshi company which produce lots of own countries

products, and quality goods at a lower price than any other company product.

Walton works with R.B. groups. It is one of the top business groups in the country

operating with great reputation since 1977. Walton is providing customers the

latest technology based products innovative design and excellent quality with

different models and capacities.

Walton brands main products are

(1) Motorcycle

(2) Refrigerators & Freezer

(3) Air conditioner

(4) Mobile phone

(5) Television etc.

Walton has its own mold & Die making sections, VMC,CNC wire-cut,EDM

machines. It has 08 poly urethane forming plants, 15 thermoforming (vacuum

forming) units highly equipped metal forming units with poIr coating, 2d scanner

& printers, nickel-chrome plants and die ; casting section.

Walton also has robot operated .Injection plastic molding plants, highly equipped

test labs, printing & packaging section, alloy wheel marketing & Ed plants. Walton

has very strong & right quality control policy and ill equipped division consists of

all types of testing device as required including worlds latest CMM.

Financial Situation

Walton strategy is to continue to exercise strong discipline over their operating

costs and capital expenditure to achieve improves efficiency and productivity in

their operations and leverages their existing capacity. They have also plan to

reduce their operation and maintenances expense by, among other things, using

solar power, controlling service agreement pricing and lobbying to reduce the

other tax. That’s why they are using as

continuously grow manufacturer base

focusing on high value customer

Achieve capital and operational efficiencies to improve profit margins

and cash flow generation.

Increased Brand Awareness and reinforce brand values.

Increased revenue from news services

Continue to expand their comprehensive distribution product.

Standard quality certificates including ISO 9001:2008 & ISO

14001:2004

Walton service network is the country’s only ISO 9001:2008 Standard Certified

after sales service network.

4. Marketing Strategy:

4.1. Positioning Strategy

Walton has created huge enthusiasm among the consumers of its target market

with its slogan “Aamader Ponnyo”. They accepted Walton’s endeavor of

manufacturing some electronic items like, refrigerator & Freezer and motorcycle

for the first time in Bangladesh, and are more than willing to buy a product of

high quality made in I own country. On the other hand, as a local manufacturer

Walton can sell quality products at comparatively lower price than other

competitors.

It also makes its product available at the nearest possible places in each areas of

Bangladesh through Walton Plazas (own showroom) and countrywide dealers.

New Walton Plazas are being opened frequently in different places of the country

for getting closer to the customers.

Another strategy of Walton for creating a concrete place in the customer mind is

it’s after sales service in order to providing the quickest possible after sales

service to the customers. Walton has already established 39 Service Centers and

opening more service centers is under process. Walton equally values its sales and

after sales service for maintaining a long and positive relation with its customer

and thus retain and increase the customer.

Strategy

Bangladesh with its growing population and economic growth has huge demand

for household products. The fact that only about 60% of the country has

electricity available proves that when electricity will be available throughout the

country, demand will increase further. As the people of this country are mainly

price sensitive, Walton, being the sole manufacturer of refrigerator, freezer and

motorcycle, is very keen to meet the demand of this large market by providing

competitive prices. Walton’s primary goal is to capture the local market, as they

are still behind market leader LG-Butterfly. But they are also exporting their

products. Already they have customers in Myanmar, Bhutan and to expand their

market to Africa.

Walton always tries to make the best possible services. Moreover, it does not

promise any specific quality standards in service. Walton now try to give service

all side in I country. Walton tries hard to offer the best service quality, though, the

quality, consistency and accessibility of service is not guaranteed as the same are

dependent on various technical, physical, topographical, distinctive, environment,

regulatory, legal, and such other factors. Walton has the right to change /vary /

reduce the extra charges, prices, validity period, product/service feature and any

other offers etc at any time in its sole carefulness for any reason subject to official

notification of such offers prior to giving effect to such changes.

4.2. Marketing Mix

4.2.1. Product:

Walton has a good number of products available in the market. The company

produces home appliances, mobile, generator and motorbike. A brief description

of its major products is given below:

➢ Refrigerator

Walton mainly produces home appliances. In fact in its Ibsite the company is

introduced as the pioneer in refrigerator production in Bangladesh. Walton

Refrigerator & Freezer ensures highest quality compressor, Condenser is made by

100% copper, which lasts for 20-30 years. The most important thing is that every

spare parts including door with different color are changeable and available

everywhere over the country.

➢ Television

Walton produces LED, LCD, and CRT televisions. Walton Television ensures home

cinema entertainment. Walton Television’s d4ta Digital Technology is one of the

most innovative technological solutions that automatically reduces video noise,

Selects the best picture and performs fine-tuning by auto frequency tracking

technology.

➢Motorcycle

Walton motorcycles are now competing with the Indian Hero-Honda and TVS

brand. The motorcycles have become famome becamee of the special

specification like mobile phone indicator, Digital gear display, Fuel location meter,

Air shock absorber, Remote control, Hydraulic Brake, Anti-Theft lock and Alloy rim

etc. Walton motorcycles are also fuel-efficient.

Other than these products Walton also produces Mobile handsets, generators, air

conditioners, DVD players, and microwave ovens.

Walton Product

4.2.2. Price

Walton’s main target market has always been middle-income group. SO they have

been very careful in setting their price of product. Also the fact that they

manufacture their products, it allows them to set a loIr price than their

competitors, as they don’t have to pay heavy import duty. Below is a comparison

of the prices of different products of different brands-

Table 02: Price comparison of Refrigerators

Model Walton LG Transtee Sharp

10 CFT 26,200 35,000 32,000 29,500

10.5 CFT 28,100 38,300 32,500 31,000

11.5 CFT 29,700 ,40,600 ,36,000 3700,0

Table 03: Price comparison of TV

Model Walton LG Sony My One

29” Color TV 18,500 28,350 26,350 22,700 37” LCD TV 48,800 65,600 59,500 -

42” LCD TV 75,200 95,000 88,000 -

Table 04: Price comparison of Motorcycle

Model Walton Bajaj Hero Honda TVS

125 CC 103,900 175,000 155,000 160,000 110 CC 96,000 148,500 145,000 140,500

Cruiser 93,300 120,000 110,500 98,000

In all three products in which I have done market research, it is evident that

Walton is providing the consumers with the least expensive product. It is vital for

Walton as price is the only tool where they have a superior advantage

over other brands. But it must be noted that consumers in higher

income level also look for quality products. So Walton n e e d s t o f i n d a

f i n e b a l a n c e b e t w e e n pr i c e a n d q u a l i ty as t h e y m o ve fo rw ar d in

t h e coming years.

4.2.3. Place

For making the product available to its target customers Walton use its

distribution channel. Walton generally uses its own transport facilities for

reaching the product to its 120 Walton Plazas and about 700 dealers. If any dealer

wants to use his own transport for transporting Walton products from factory to

his shop, he gets 1% reduction on dealer price.

4.2.4. Promotion

Ever since Walton started its production in its manufacturing plant, they have

started a wide promotional campaign on its product. Their tagline “Amader

Ponnyo” reflects the pride they take by being able to sell home appliances

manufactured in Bangladesh. Right now Walton has TVCs running in all major

satellite channels of Bangladesh in peak hours targeting their core target

customers. Also they have numerous billboards and advertisements in print

media. Also their 120 Walton Plazas across the country also works as a major

advertising tool. Walton has recently started sponsoring different major sports

event in the country. Recently they sponsored their first International Cricket

Tournament and thus it allowed their brand to be viewed by millions of people

across the world.

5. Financial Analysis

Summary of the Financial Report of Walton for the year 2010:

Table 05: Financial analysis of Walton HIL

Particulars Amount TK. Total Sales 2,553,024,782.10

Cost of Goods Manufactured 2,414,093,716.05 Gross Profit 305,852,566.6

Operating Profit 99,636,450.2

Net Profit 26,530,733.5

6. Challenges and Future Growth

6.1. Current Market Status:

Although Walton is a growing brand, it is yet to establish itself as the market

leader. In fact it still has a long way to go, especially in capturing the elite

customer bracket.

Table 06: Market Comparison

Price Quality Variety Distribution Scoop For Growth

Walton **** ** * *** ****

LG *** **** **** **** ** Sony * *** *** * *

Singer *** ** ** ** **

Samsung ** *** ** * *

I can see from the above table that clearly overall LG leads and have a significant

lead when it comes to these values. They have been in the market for 20 years

and have done remarkably to capture nearly one-fourth of the total home

appliance market. But coming second right now is Walton. By providing the same

quality in much lower price, Walton has created an excellent brand following.

They have a very good distribution system, without lets all over the country. But

their main problem has been variety. They are still way of the benchmark at the

moment when it comes to product variety. But Walton will put more emphasis in

this sector and plan to catch the lights of LG and Sony in the next 5 years.

6.2. Challenges:

Establish Walton as the No.1 Home Appliance Brand of the Country Capturing the market share of existing foreign brands Bringing more variety in their product line Continue increasing market share at the same rate over the next 5years.

6.3. Future Growth:

Walton has decided to penetrate market, develop both market and product to

achieve profitable growth in future.

Market penetration

Through extensive promotion campaign Walton has set goals to make more sales

in future. Countrywide distribution system helps it achieve its goals.

Market Development

Walton is exporting its products in Middle East, Latin America and Africa. It has

plans to explore European markets also.

Product Development

Recently, Walton brought Air-Condition in market. Though it hasn’t gained

spectacular market share yet, continuous customer attraction reflects future.

Expected market growth of Walton in the next five years:

Table 07: Future growth of Walton HIL

Product Line Present Market Share

Expected Market Share

Main Competitor

Motorcycle 5% 25% Bajaj, Hero Honda

TV 8% 30% LG, Sony

Refrigerator 13% 25% LG, Samsung Air-Condition 2% 10% LG, General, Gree

7. Recommendations

To establish Walton as the brand for home appliances & other electronic

accessories, some changes are needed in its strategies-

Control to Market Penetration Pricing without compromising quality.

Establish partnership with local and international OEM (original equipment

manufacturers) for elegant & sophisticated designs & equipment.

Emerge gaming consoles like Game boy, PlayStations, X-box and medical

appliances for caring old people through pioneering approaches.

Launch Customer Loyalty Program.

Incentives and special offers for customer season wise.

8. Conclusion

Walton HIL is the first company to introduce advanced research and

manufacturing technologies and equipment for household & commercial

Refrigerator & Freezer, Motorcycle and Air Conditioner etc. in Bangladesh. For

Bangladesh, Walton has become a company to be proud of in the export arena. It

has truly redefined Bangladesh from being a consumer country to a producer

country for home appliances.

The company has been running its business with good reputation since 1977.

Establishment of Walton HIL to manufacture Refrigerator & Freezer, Air

Conditioner, and Motorcycle etc. In Bangladesh it is a milestone in the path of

success and reputation of the brand WALTON, I believe.

9. References

www.walton.com.bd Arif Ahmed: Marketing Officer LG-Butterfly Annual reports for Walton Bangladesh for the year 2010. “ITALTEL’S new chief gets what she wants” bmeiness Iek, april 30. 1984, p.51; Robert ball, “italy’s most talked-about executive,” fortune, april 2, 1984, pp. 99-102; marisa bellisario “the turnaround at ITALTEL,” LONG RANGE PLANNING, VOL. 18, NO. 6(1985), pp.21-24.

Zachary schiller, “a model incentive plan gets caught in a vise,” bmeiness Iek,January 22,1996,pp.89-90;caroiyn wiley, “incentive plan pmehes production” in Arthur A.thompson,jr,a.j.

Smean scherreik, “yI performance review: make it perform,”bmeiness Iek,December 12,2001,pp.139-40.

http://walton Bangladeshlimited.edu/cahrswp/414,accessed November 13,2008

Michale totty, “the dreaded performance review,” the wa;bdllstreetjInal,November27,2006;http//www.halogenoftware.comirl.cornell.edu/cah...