mkt 382----mahi's project

TERM PAPER-LICENSING JAQUAR

EXECUTIVE SUMMARY

The next step after learning a theoretical concept is its implementation in practical

grounds. So, to implement the theoretical concept of licensing we have chosen to market

Jaquar bath accessories, a world famous Indian brand in the Bangladesh market. In the

process of writing this project we have tried to implement all the aspects of licensing with

the light of our limited knowledge.

In the recent past most of the people in Bangladesh were not very cautious about the

looks and design of the bathrooms; but now a days there is a new trend in our country to

build own home or to renovate flat with high quality fittings. So there is grate demand of

house fittings in our country. Also now a days people are very much concern about there

own bath room and want to decorate there bathroom with high quality fittings with

exceptional design with affordable price. So this is a new business trends in our country

to import high quality bathroom fittings. But this is much more expensive and also there

is no renowned importer of this product. As a result there is no price boundary of that

kind of product. So customers are loosing there interest of these kind of bath accessories

because of high price or monopoly business. Also many customers want to afford this

kind of product but there is no supplier of high quality product. So we are going to bring

world famous branded bathroom fittings in our country to meet the demand of the

sophisticated customer with low price and high quality and service. We want to bring the

world famous Indian brand JAQUAR in our country to meet the demand of the customer.

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INTRODUCTION

Origin of the report

During the 13 week semester of BBA program of North South University, we are

required to do a term project in the course Mkt 382: International Marketing. This course

is designed to give the business students an idea of International Business. For this, we

are completing a project on Licensing. So we have chosen a company ‘JAQUAR Bath

Accessories’ for our term paper.

Objectives of the report

General objective

The general objective is to prepare and submit the term project within specified time.

To have a very practical idea and over viewing the Pharmaceuticals sector focusing

on a specific corporation, their performance and succeeded in Bangladesh.

Specified objective

By selection of the company ‘JAQUAR Bath Accessories’, we have the intention to:

Over view of the Bath accessories sector of Bangladesh.

Find out the potential for Jaquar bath accessories in Bangladesh.

Find out the best strategy to market the product.

Implementation of the chosen strategy.

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METHODOLOGY

The report is originated from secondary data source. We did not conduct any primary

research for the report.

Secondary data

From different books

From the internet

COMPANY PROFILE

Established in 1960, JAQUAR has carved out a special niche for itself as the India's

largest manufacturer and exporter of bath fittings. Powered by extensive product

development, backed by state-of-the-art production facilities and supported by a vast

marketing network. Acknowledged as a key innovator in the industry, JAQUAR has

revolutionized the designs and utility patterns of bath fittings in the country. At

JAQUAR, technology is the prime enabler - the force that drives the company to new

heights. JAQUAR has installed the world's most advanced plant and machinery sourced

from global leaders.

Constantly keeping abreast of the latest international developments in the industry is an

integral part of the JAQUAR tech spirit, and the knowledge derived from this endeavor is

channeled into a steady stream of innovation that seeks to give its customers the very best

in terms of range, quality and aesthetic appeal. The cutting-edge technology, and the

world-class products that emerge from it enable JAQUAR to entrench itself in quality-

conscious markets like UK, Switzerland, USA, Canada, Denmark and the Middle East.

This uncompromising focus on quality has been internationally recognized - JAQUAR

has been awarded the prestigious Fulham Geissler American Award for Quality -

received by the likes of Apple, AT&T, Boeing, IBM, Kodak and Xerox in the past.

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JAQUAR believe in an ongoing pursuit of excellence at every level. In JAQUAR, quality

is an obsession, and constant evolution and growth are ways of life. And this applies

equally to all spheres of activity - technology, R&D, marketing, financial management…

and every other function in JAQUAR'S ambit. In the long-run it's all about building

lasting relationships with all associates, delighting customers and creating brand equity

that is the envy of the entire industry.

Recently Jaquar brand has been declared “Super Brand”. Jaquar have a reason to be

elated, since they have been awarded Superbrand status. Their brand JAQUAR is now in

the elite company of Nike, Coca Cola, Pepsi and Levi’s, amongst others.

Five months ago, Marcel Knobil, the chairperson of Superbrands Organization, which has

a presence in 17 countries, came to India to kick off the search for Indian brands which

could be added to its global list of the best and the biggest.

Superbrands Organization is an independent international arbiter of brands, originally set

up in London a decade ago, but now has a presence in 17 countries including the United

States, Australia, Denmark, France, Italy, Hong Kong, Spain and Singapore. Considered

to be the Oscars of branding, Superbrands India’s high-power jury, which is known as the

Superbrand Council, includes eminent figures from the world of Indian branding — ITC

chairman YC Deveshwar, JWT India CEO Mike Khanna, and AC Nielsen ORG-MARG

chairman Titoo Ahluwalia — to name a few.

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MARKETING STRATEGY

Advertising Plan:

An advertising plan has been formulated to support Jaquar. First, we have set some

advertising objectives, scanned most of the conventional and non-conventional and

selected some media considering important, related criteria. After selecting media, we

have formulated monthly and annual plans.

Setting Advertising objectives:

The advertising objectives of Jaquar have been incorporated according to the prior

decisions on the target market, market positioning and marketing mix.

The four goal elements for Jaquar are:

Target: Upper middle and upper class Dhaka City and other major city-dwellers

who can afford to buy premium bath accessories brand. Mostly Chittagong and

Sylhet.

Communication Objectives: The ability to notice the emergence of Jaquar Bath

accessories as a premium priced bath accessories

Desired Change: 15% of the total bath accessories market

Time Horizon: Three year (January 2005- December 2007)

Now we are going to set advertising objectives in the light of advertising goals from three

aspects:

I. To Inform:

Telling the upper middles and uppers about Jaquar

Informing them of premium price of Jaquar

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Explaining available services of Jaquar building the grand class image of

Jaquar

II. To Persuade:

Building brand preference for Jaquar

Encouraging switching to Jaquar from Red Label or other premium class bath

accessories

Persuading customers to purchase Jaquar at once

III. To Remind:

Reminding the customers about the need for Jaquar in the new millennium

Keeping Jaquar in their minds all through the year

Maintaining its top-of-mind awareness

Selected Media For Jaquar:

Considering the above criteria of justifies the conventional and non-conventional media

as advertising media for Jaquar, we have resolved as follows:

Conventional media like TV – N TV and Channel I will be our media for

advertisement. We will eliminate ATN Bangla and ATN World as media as these

channels are rarely watched by the upper section of the society. We will advertise in

The Daily Star and Daily Prothom Alo in the introductory stage of Jaquar. Top-of-

the-class magazines like Shaily, The Courier, Priyajan etc. will be our regular media

for advertisements.

Among the non-conventional media, we will go for sponsoring and giving ads in the

prestigious social events and programs like golf tournament or Dhaka Club Dinner

Party. Also, we will sponsor fairs like World Habitat Day Fair, International Trade

Fair etc. We will also engage in sponsoring highly popular magazine shows in

different TV channels.

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Annual & Monthly Advertising Plan:

We have formulated monthly and annual advertisement plans for Jaquar. These are:

a. Monthly Plan:

Giving special advertisements in the Eid Copy of two leading, top class magazine in

January and March 2000.

Giving advertisements in the TV channels as well as the front page of The Daily Star

and Daily Prothom Alo to announce the arrival of Jaquar in the first week of January

2000.

b. Annual Plan:

Giving regular ads in the prestigious magazines.

Regularly getting information about the effectiveness of the advertisement in the

various media and giving required feedback and making changes in the advertisement

decisions.

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HISTORY AND CULTURE

For our project we have chosen to franchise Jaquar in Bangladesh. In the following table

is a quick overview of Bangladesh in brief.

OFFICIAL NAMEThe People's Republic Of Bangladesh. (BD)

LOCATIONLatitude: 20° 34' - 26° 39' north. Longitude: 88° 00' - 92° 41' east.

AREA 144,000 sq. km

BOUNDARYBounded by India from the north, east and west and by the Bay of Bengal and Burma from the south.

LANGUAGEBangla [Bengali]2nd Language: English

CAPITALDhaka (Present area 414 sq. km. Master plan 777 sq.km.)

RELIGIONNearly 83% Muslim, 16% Hindu, less than 1% Buddhist, Christian, and tribal religions.

EDUCATION

Schools based on British system: five years primary, five years lower secondary, and two years higher secondary.Literacy Rate: The literacy rate is optimistically reported as 35.3 of the population over 15 years old, 47% male and 22% female (Source: UNESCO, Paris, Statistical Yearbook, 1994).

CLIMATE Main seasons: Winter (Nov - Feb), Summer (Mar - Jun), Monsoon (Jul - Oct). Temp : Max 34 degree Celsius, Min 8 degree Celsius.

Bangladesh has a tropical monsoon-type

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climate, with a hot and rainy summer and a pronounced dry season in the cooler months. January is the coolest month of the year, with temperatures averaging near 26 deg C (78 d F), and April the warmest month, with temperatures ranging between 33 deg and 36 deg C (91 deg F and 96 deg F). The climate is one of the wettest in the world; most places receive more than 1,525 mm (60 in) of rain a year, and areas near the hills receive 5,080 mm (200 in). Most rain falls during the monsoon (June-September) and little during the dry season (November-February).

POPULATION Total estimated population 143 million.

OTHER FACTS

80% of the people live in rural areas and 60% of the people depend on agriculture for their livelihood. Rice and fish are common diet. Lungis and vests are the usual attire for men in the rural areas as opposed to shirts and trousers in the urban areas. Sarees are the common dress for womenfolk.

SEA PORTS Chittagong and Mongla.

CURRENCY Taka (US $1.00 = tk. 55.00) [in 2001]

GOVERNMENT Constitutional Parliamentary Democracy

AREA 130,170 SQ KM

GDPpurchasing power parity - $258.8 billion (2003 est.)

GDP - REAL GROWTH RATE 5.3% (2003 est.)

GDP - PER CAPITApurchasing power parity - $1,900 (2003 est.)

GDP - COMPOSITION BY SECTORagriculture: 24% industry: 26.7% services: 49.3% (2002 est.)

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POPULATION BELOW POVERTY LINE

35.6% (FY95/96 est.)

HOUSEHOLD INCOME OR CONSUMPTION BY PERCENTAGE SHARE

lowest 10%: 3.9% highest 10%: 28.6% (1995-96 est.)

INFLATION RATE (CONSUMER PRICES)

5.3% (2003 est.)

LABOR FORCE 64.1 million

UNEMPLOYMENT RATE40% (includes underemployment) (2002 est.)

INDUSTRIEScotton textiles, jute, garments, tea processing, paper newsprint, cement, chemical fertilizer, light engineering, sugar

INDUSTRIAL PRODUCTION GROWTH RATE

4% (2003 est.)

DEBT – EXTERNAL $17.4 billion (2003)

ECONOMIC AID – RECIPIENT $1.575 billion (2000 est.)

GNP SIZE (1999) $47.9 billion

GNP PER CAPITA $370

PRODUCT MARKET

The bath accessories market in Bangladesh is growing at an average yearly rate of around

8.5%. This indicates the growth of the bath accessories in the last few years. The growth

trend is in terms of sales. The bath accessories market got its boost in the late 80s with

the boom of the real estate industry. Before that period, the bath accessories market was

growing at a rate of 3.4%. The market of bath accessories has expanded outside the

country as well in the recent years. The quality brand Gloria is being exported to

Morocco and Russia. Sharif Brand is also planning for exporting their brand to abroad.

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Thus the bath accessories market is growing as day’s progress. The growth trend is quite

encouraging in terms of quality brands as well. Before 1980s there had been only one or

two standard quality local brands. But now in the beginning of the 21 st century, the

industry has several standard quality producers of bath accessories in Bangladesh. But, as

observed by the respondents of the survey, there is lack of premium quality local brand of

bath accessories in Bangladesh. The export of such brand can also be an area of future

growth.

Table: Growth of Bath Accessories in Bangladesh (1982 – 1998)

Year Growth Rate

1982-83 2.3%

1983-84 2.8%

1984-85 3.1%

1985-86 3.1%

1986-87 3.8%

1987-88 3.9%

1988-89 3.9%

1989-90 4.2%

1990-91 4.5%

1991-92 4.9%

1992-93 6.1%

1993-94 6.7%

1994-95 9.1%

1995-96 9.3%

1996-97 8.9%

1997-98 8.3%

Source: Bangladesh Bureau of Statistics

The above table shows the growth rate of the bath accessories market in Bangladesh in

the last 16 years. As it can be observed, the growth rate in 1997-98 was 8.3% while it was

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much lower in the early 80s. This table depicts the growing pattern of the bath

accessories market in Bangladesh.

Why do we think that our product is globally competitive?

A nation’s competitiveness depends on the capacity of its industry to innovate and

upgrade. Once a firm achieves competitive advantage through innovation, it needs to

sustain it by relentless improvement. Competitors will eventually overtake any company

that stops innovating and improving. Hence, holds the theory, the only way to sustain a

competitive advantage is to constantly upgrade it, moving toward more sophisticated

approaches. In order to maintain competitive advantage our product must adopt a global

approach to strategy, and often must endeavor to make its own existing advantage

obsolete- before someone else does.

The theory advances four interrelated attributes of a nation, cited as determinants of

national competitive edge through innovation and improvement. The theory is also called

Porter Diamond Model. The determinants of the Porter diamond model are started as

follows:

1. Factor conditions

2. Demand conditions

3. Related and supporting industries, and

4. Firm strategy, structure and rivalry.

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Firm Strategy, Structure, and

Rivalry

Demand Condition

Factor Condition

Government


Determinants of National Competitive Advantage

Factor conditions: According to the standard economic theory, factors of the

production- skilled labor, land, natural resources, capital, and infrastructure- will

determine the flow of trade. For our product factor conditions are very much intensive.

Because we have the availability of needed skilled labor or the condition of pertinent

infrastructure elements.

Demand conditions: Demand conditions refer to the home market demand in a country

for a firm’s products or services. Home demand is conducive to international

competitiveness when such demand gives internationally competing, local companies a

clearer picture of emerging buyer needs, and where demand pressures companies toward

innovation and to become more sophisticated than foreign rivals. Demand conditions are

very helpful for our product which is Jaquar bath accessories .because we have a trend in

our country to build own house or own flat. And the customers are very much choosy

about the bathroom fittings. So there is a big demand for branded bathroom accessories in

our country. Also if we can give the branded foreign item with competitive price with the

local industry we can be able to capture the market easily.

Related and Supporting Industries: Related and supporting industry means the

presence or absence in the nation supplier industries and related industries that are

internationally competitive. Internationally competitive home based suppliers create

advantages in down stream industries in several ways. They deliver the most cost

effective inputs in an efficient, early, rapid and sometimes preferential way. A home

based related industries increases the likelihood that companies will embrace new skills,

and it also provides a source of entrance who will bring a noble approach to competing

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Related and Supporting Industries Chance


We have a very good industry in the ceramic sector also we have the availability of the

raw materials which is essential for producing high quality bath accessories.

Firm strategy, structure and rivalry: Firm strategy, structure and rivalry mean those

conditions in a country that govern or influence how companies are created, organized

and managed, as well as how domestic rivalry is conducted. Every company should have

strategic planning for general direction and specific guidance in carrying out their

activities. Strategic planning is the process of evaluating the enterprise’s environment

and its internal strengths, next identifying long- and short-range objectives, and then

implementing a plan of action for attaining these goals. Without a strategic plan, these

enterprises would have great difficulty in planning, implementing, and evaluating

operations. Before examining the strategic planning process, we must realize that a

company has strategic predispositions toward doing things in a particular way. This

predisposition helps determine the specific decisions the firm will implement. There are

four such predispositions. They are as follows:

Ethnocentric predisposition

Polycentric predisposition

Regiocentric predisposition

Geocentric predisposition

Our company will be fallen in polycentric predisposition because a polycentric

predisposition will tailor its strategic plan to meet the needs of a local demand. The basic

mission of a polycentric is to be accepted bye the local market and to blend into the

country. For our company we have to formulate the strategy.

Strategy formulation is the process of evaluating the enterprise’s environment and its

internal strengths. This typically begins with consideration of the external arena since the

MNE will first be interested in opportunities that can be exploited. Then attention will be

directed to the internal environment and the resources the organization has available, or

can develop, to take advantage of these opportunities.

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According to this theory, we have an excellent opportunity to produce the internationally

high quality bath accessories. All of the conditions and determinants of national

competitive advantage are favorable for doing this business.

COMPETITIVE ANALYSIS

To illustrate the comparison of Jaquar with its competitors, in the following chapters we

will use Bib-cock as an example.

Quality Comparison between local and foreign products

Among all the bath accessories brands available in Bangladesh the foreign brands hold

better quality than that of the local ones. Grohe of Germany is perceived to be the best

among the foreign brands. The degree of difference in the quality of the bath accessories

between the local and foreign brands is quite big. The foreign brands are not made in the

traditional ‘hand molding’ process, rather modern ‘injection molding’ process is used in

the production of the bath accessories. Such use of state-of-the-art technology enables the

foreign brands holding superior quality in terms of finishing of the product. Moreover,

the rate and quantity of the use of different chemicals in the production process differ

among the foreign and local brands. It has been found that many of the local bath

accessories manufacturers use less number and mount of chemical substances as those are

quite expensive and to be imported from England and some other countries. The quality

of the packaging of the bath accessories of the foreign brands is also superior than the

local brands. For instance, Grohe uses a separate packet for each bib cock it produces,

while, the local S Brand packs eight bib cocks in the same packet. The quality of the

packaging materials also differs in this case.

Among the local brands, Sharif is of the best quality. It is the ‘old horse’ in this business

in Bangladesh and still holding its lead in terms of quality. But, recently, Gloria has come

up and is racing beside Sharif to challenge its superiority in terms of quality. Gloria differ

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from other local brands in the way that the finishing of Gloria is better and this brand has

got diversity in its product line. Other brands like S Brand and Nazma Metal are also

holding comparatively better quality. Raj Metal has got diversity in terms of colored bath

accessories. But, it has been observed by the retailers and also the end users that the

quality of Raj Metal is not impressive. Other local brands fall in the category of medium

and low quality products.

Consumer Preferences among Local & Foreign Brands

It is the trend in Bangladesh that the consumers love anything that is foreign. Each of the

retailers argued that whenever they display any good quality or better products to the

consumer the first question they face is whether the brand is local of foreign. If it is local

than they simply perceive its quality as lower than that of the foreign one. With this

perception among customers it is very difficult to introduce high valued local product in

the market. Another interesting aspect is that the consumers have prejudices against

Indian product. Though Indian brands are doing well in Middle East and Europe, these

Indian brands are yet to overcome this perceptual negativity of Bangladeshi customers.

Customer Sensitivity towards Quality and Price:

The market of the bath accessories comprises customers from lower middle class to the

uppermost class. Thus the choice of bath accessories is quite diversified and has got a lot

of dimensions. Now comes the question of what aspect of bath accessories actually has

greater impact of the buying behavior of these diversified groups of people.

The lower middle class of Bangladeshi people are more sensitive to the prices of

bath accessories than the quality of those products while buying items for home

use. They care for the prices as they have limitations in the money to be spent for

their bath accessories. They are less sensitive to the color, quality of materials

used, total outlook, durability and other quality attributes of the bath accessories.

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That is why, the low end of the market in Bangladesh usually look for the

cheapest or cheaper brands of bath accessories.

The middle class of Bangladesh market are in somewhat gray area in the case of

preferring bath accessories brands either depending on price or quality. The

middle class tries to find out the ‘best’ quality bath accessories at a price they can

afford to spend. Thus, most of them usually go for standard brands like Sharif,

Nazma or S Brand or even Gloria. Very few of the middles go for foreign brands

like Grohe or Ifo spending two or three times more.

The upper middle class of the society prefer Sharif Brand the most due to its

quality. This section of the customers is more sensitive to quality than price of the

bath accessories. It is found from the survey that some portion of the upper

middles are being clinched by the comparatively new brand Gloria in the recent

years. The customers of this section also look for foreign brads at times if they

find the quality has more advantage than price of those foreign brands.

The upper class of Bangladesh market usually go for buying foreign brands of

products as they are quite sensitive to quality. Few of the customers of this class

care for what price they rather than what utility they get from the bath accessories.

It is found from the survey that a sizable amount of this market actually buy bath

accessories from outside Bangladesh individually. They hardly pick products

from the local market.

There is a big portion of the bath accessories market which is the industrial

market. This market consists of the Government and other semi-government and

autonomous bodies, private companies and enterprises. These bodies buy in the

formal procedure of through tender and usually the contractors buy products of

local origin. Hardly the contractors go for foreign brands and they go for foreign

one if the quality of the bath accessories is emphasized more by the contracting

body. In case of the real estate companies, the sensitivity to quality is more than

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price in almost all case, according to the respondents of the survey. The real estate

companies that build flats for middle class and higher middle class usually use

Sharif Brand or buy better quality products from neighboring countries. But in the

case of the real estate companies serving the higher end of the market, foreign

brands like Grohe are preferred most often.

Thus, we can find that the sensitivity of the customers of bath accessories towards price

and quality differ due to several related factors.

.

Price of Jaquar Conceal Bib Cock:

The pricing decision of the Jaquar bib cock is important. We should consider the above

costs related to the setting up, production and distribution of the conceal bib cock. We

also should seriously take into account the prices of other brands available in the market,

their quality and status level as perceived by the customers. The highest prices of locally

produced conceal bib cost is charged by the Nazma Metal which is Tk. 250. Among the

foreign brands, Sweden-made Grohe costs Tk. 750 for each conceal bib cock.

The price of the Jaquar conceal bib cock should be placed in between the price

continuum of Tk. 250 and 750 to attract the customers who want to spent a little more for

a better quality product. Due to the grandiose image of Jaquar and its top-of-the-class

quality and higher production cost, the price should be Tk. 340 for the retailers who will

sell the product to its customers at a price of Tk. 425 having a profit of 20%. The

estimated profit per unit by subtracting the production cost, selling and distribution cost,

licensing fee to the Mother Company and VAT is calculated as Tk. 108 which is 31%

profit in the percentage terms. So, the project is proving to be a money-making venture as

such high profit turnover can be rightly expected.

So, we can say that introduction of Jaquar in the Bangladeshi bath accessories market can

serve the customers’ existing need for a posh-looking, good quality bath accessories

brand at a reasonably higher price. Having such 31% in the conceal bib cocks can be

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increased by producing other kinds of bath accessories like sink cock or pillar cocks. So,

we can conclude that the licensing of Jaquar Bath Accessories for production in

Bangladesh can be a very timely and profitable approach towards better customer service

and profit maximization by the licensing firm.

SWOT ANALYSIS

SWOT analysis means analyzing the strength and weakness of the product in the local

market. It will determine the success of the product or how much it will compete with the

local product. It is very important for a company to know the past, present and the future

situation.

Strength is the most important thing for any company for any kind of operation like

managerial operation, financial operation, etc. There are many strength, which are related

to our business. The strengths of our business are as follows:

Less government restrictions.

Big domestic demand.

Sophisticated buyer.

Fewer foreign and brand competitors.

Banks willing to invest almost 60%of the total investment.

Cheaper labor for recruiting in our company.

We have good quality in contrast of the local product..

We are going to offer almost same price for the product with high quality

and brand name.

As our it is a developing country so contraction works are made in every

where.

We have many opportunities to advertise our business and product

through different Medias.

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Weakness is also important thing for operating and to take the future plans for our

company. We have find out our weakness and then solve the disadvantages for making

profit and expand our market shares. The fewer weaknesses in our company are as

follows:

.

There are other competitors, which are already doing their business

well.

Disturbing political situation.

Our economic infrastructure is not well designed.

Opportunities: An opportunity gives a business new life. Any business, which does not

have any opportunity that will not suitable or profitable for the investors. Although we

have weaknesses but we have great opportunities to do this kind of business. The basic

needs, financial condition, political and legal forces, socio-cultural forces and

competitive environment are also helpful for doing this business. Also government will

help us because of huge demand of our potential customer for giving them the high

quality product with cheaper price and service

Threats: According to market strategy, we know that our competitors are FUWANG,

MIRPUR, ARISTON, MASTER ENG, SALZER, SHARIF METAL, NAZMA METAL, RAJ

METAL etc. We have to handle all the competitors very carefully so that they will not

take any step of our weakness. We should also respect and analysis their market strategy

and gather all the information from the market for our market operation. We have to

welcome their cooperation and cooperate with them very honestly. We have to behave

with them very friendly so that we can also get some good behavior from them. Also we

must remember that any wrong step in the market will cause a disaster for our product.

In conclusion, we can say that Porter Diamond Model and SWOT analysis is very

essential for our JAQUAR bath room fittings. We have to apply those model and analysis

for expend our market shares, expend our services, and to make profit from the business.

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INTERNATION LOGISTICS

The bath accessories market in Bangladesh, as found from the survey, belongs to a lot of

discrepancies and encouraging degree of differentiation that pave the way to some

potentialities in investing in this particular business. The findings of the survey conducted

reveal the fact that the true end users of the bath accessories have the demand for an array

of products – from subsistence quality to the top-of-the-class quality, from discounted-

priced products to premium-priced products, from frequently-seen nickel bath accessories

to grandiose deep-blue basin fittings.

It has been found that there exists a lack in the variety of bath accessories in terms of

price, quality and outlook. For example, the price of locally produced conceal bib cocks

ranges from Tk. 130 to 250, while the price of foreign brands like Grohe is Tk. 800 to

900. In between Tk. 250 and Tk. 800, there exists no other brand of bibcocks. In terms of

quality, the standard foreign brand like Swedish Ifo stands much higher than the best

quality local brand like Sharif Metal. The difference in the outlook of the bath accessories

is also striking, as there is no intermediary brand between local low or standard quality

brands and the high quality foreign brands in Bangladeshi market. But the end users of

bath accessories who want to spend a ‘bit’ more in exchange of a set of posh-looking,

quality products would never be able to pick that set from the existing bath accessories

market. Although

This absence of a standard quality, posh-looking brand of bath accessories is

discouraging, it actually opens up the choice of introducing that kind of brand in the

Bangladeshi bath accessories market.

Now the ultimate question of supplying this kind of brand in the market comes at front.

There is definitely a demand for the above-mentioned kind of product in Bangladesh. The

size of the market is thus encouraging apart from the coming demand from the potential

future end users.

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In the question of supplying this kind of brand in the Bangladeshi market, we have two

options at hand. First, we can produce an elegant brand by our own. Second, we can

import the bath accessories from neighboring India or Pakistan where good-quality, posh-

looking brands like Jaquar or Mark is available at a slightly higher price. Second, we can

license any of these brands, produce bath accessories in Bangladesh and market those by

our own.

The first option of introducing a new product is subject to a huge cost of research and

development in the area of bath accessories that may later prove to be unsuccessful or too

ambitious. The second option of importing is also eliminated as importing is not a long-

term solution of the need for a quality, medium priced bath accessories in Bangladesh.

Moreover, it has been observed that big portions of the end users of bath accessories in

Bangladesh have prejudice against Indian products.

Thus, we have opted for the third option and in the following part, the potentiality of

licensing of Indian brand Jaquar to produce in Bangladesh and its projected prospects

are discussed.

A study on Jaquar’s prospect in Bangladesh

Jaquar Bath Accessories, an Indian bath accessories maker, is worth mentioning in terms

of its high quality, attractive design and affordable price for the upper middle class and

upper class of the customers. Some cool deep-blue or brilliant black basin cocks rimmed

with golden knobs win the heart of the people who like to have an aristocrat touch in their

bathrooms. Encouraging from Jaquar’s success in India, Bangladesh’s neighboring

country, a Bangladeshi company has recently introduced colorful bath accessories in

Bangladesh in the brand name of ‘Raja Metal’. But, due to the lack of the touch of quality

and delicacy of being in the premium section of the market, Raja Metal is not found often

in the market. Failure to stand apart from its other Bangladeshi counterparts, Raja Metal

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shows that the introduction of something ‘cool’ with top class quality and grandeur can

be proved to be moneymaking for an entrepreneur.

Now, we will take a deeper look into the analysis of whether it is feasible and worth

trying to license Jaquar Bath Accessories and produce locally a top quality brand. For the

ease of analysis and understanding, we have taken one of the bath accessories – bib cock.

Bib cock is largely used in the basin. Now, we will discuss the total cost of

manufacturing a conceal bib cock – from licensing to distribution and sale.

a. Cost of Licensing: The first step to produce Jaquar Bath Accessories in

Bangladesh is to get the license for producing this brand. The cost of licensing

is a continual one. Because, usually, the licensing company has to make the

mother company a one-time payment for the licensing. Moreover, the

licensing company has to give a certain percentage of its profit to the mother

company for using the brand name. In the case of Jaquar, the one time

payment is $ 35 000 (Tk. 1750 000 app.). From the first of year of production

of bath accessories, the licensing company has to pay 18% of the total sales to

the mother company.

b. Cost of Setting the Production Plant: The cost of setting the production

plant will include several costs. The cost of purchasing a land, construction of

the production building and the warehouse, the cost of purchasing the lathe

machine and injection molding machine and other machines like galvanizing

machine, mixer machine, converter, generator, all these will require an

amount of Tk.12 million to setup the production plant. Some of the machines

may be imported from India if it is asked by the mother company.

c. Cost of Production: Now, apart from the initial setup cost, the manufacturing

cost for producing conceal bib cock should be considered as well to help in

setting the price of the product. According to our calculation, the per unit

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Manufacturing cost for producing a good quality, colorful Jaquar conceal bib

cock will be as follows*:

Items Associated cost per unit (in Tk.)

Manufacturing Cost:

Brass 27

Production Accessories

(like molasses, sand etc.)16

Electroplating 10

Color and powder 13

Total Manufacturing Cost 68

Manufacturing Overhead

(like utilities etc.)6

Direct Labor Cost 22

Total Cost of Production 94

* All costs are calculated taking the market prices of items in November 1999 .

The brass that is going to be used is the scrap brass, which costs Tk. 70 per kg and

bought from Chittagong. Beside this main element of production, several

chemicals like Chromium, Nickel Salt etc. are used. These chemicals are all

imported from William Canning Company Ltd. UK. In the production process,

molasses, sand and some other heat-related materials are used to help the final

output look good and gracious. To color the bath accessories, different colors and

powders are used. Electroplating is an important part of the production. The cost

of these elements and procedures are mentioned above.

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Labor cost is substantial in this industry especially in such a technology-based

industry. To run a factory having 20 machines, about 85 skilled and semi skilled

labors are required. Their wages vary from Tk. 1800 to 6000 according to their

skill and experience. These costs are included in the production cost calculation.

d. Taxation: Taxes are imputed in the bath accessories production and sale. The

chemicals imported are under the tax net. VAT is 15% on the sale of the bath

accessories. Moreover, the companies have to pay industrial tax at a high rate as

well. So, taxation is seemingly quite high in the bath accessories businesses in

Bangladesh.

e. Cost of Distribution: The licensing company of Jaquar can set up their own

show rooms – one at Nawabgonj and another in the Green Super Market where

the two big bath accessories markets are situated. If these showrooms are rented,

the set up cost of these showrooms are estimated to be Tk. 0.1 million. The

retailers of the Jaquar conceal bib cocks will be given an attractive 20%

commission so that they feel motivated to sell Jaquar products.

CONCLUSION

The bath accessories market of Bangladesh holds a very prosperous prospect in the near

future. The introduction of a new high quality, posh-looking brand like Jaquar can serve

the existing demand for a good brand at a slightly higher price. The introduction phase

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may take more than a year, even then its better to have a better quality brand rather than

having some at a much higher price.

The bath accessories industry is having a growth of about 100% in the last decade mainly

due to the boom in the real estate industry. Although this sector is not performing as

better as it did in a couple of years ago, the bath accessories market is increasing at a

yearly rate of about 12%. The Government is yet to encourage the bath accessories sector

in the recent years. But some direct Government intervention and support is required to

flourish this sector. The steps related to the taxation of the taxation of the bath

accessories, the import of the raw materials required for the production of the bath

accessories etc are crucial in this regard. The customer section of the bath accessories

should become more aware of the quality and price aspect of the bath accessories. It has

been found that the customers are biased somewhat blindfold for the foreign brands.

Some recommendations related to bath accessories industry are made in the following

stanza for the development of this sector in Bangladesh.

RECOMMENDATION

1. The Government of Bangladesh should take immediate step to revise the taxation

policy related to production of bath accessories. The Government should decrease

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the tax in the import of raw materials for the production of bath accessories. Such

move will encourage the local bath accessories producers to decrease the cost of

production and thus profit more. The tax for the export-oriented bath accessories

industry should be lower to zero or near zero figure to encourage export in other

countries like Russia, Morocco, India, Pakistan etc.

2. The VAT of 15% in the bath accessories is somewhat discouraging. The

Government should decrease the VAT in the selling price of the bath accessories.

This will enable the producers of the bath accessories to decrease the price of the

bath accessories so that the bath accessories market widens. Tax holiday should

be given to the bath accessories industry for 2 years so that more entrepreneurs

get motivated to invest in this sector.

3. The Government should facilitate the local bath accessories manufacturers by

availing them with easier loan facilities. Increased financing will enable the

existing manufacturers to expand their present capacity and on the other hand, the

new entrepreneurs will invest more in this sector.

4. The Government, EPB, Ministry of Industry, Ministry of Foreign Affairs and

other Government and Semi-Government organizations should come forward to

provide required knowledge about making business ties with foreign counterparts,

international trade facilities and barriers, managing foreign buyers or other

business partners etc. Such assistance will be very beneficial and money making

for both the bath accessories entrepreneurs and the organizations.

5. The Government can promote Bangladeshi bath accessories in various foreign

countries by taking part in various international fairs, taking local entrepreneurs to

foreign buyers through government sponsorship etc. Such moves will be directly

contributing to boost local entrepreneurs to produce better quality bath accessories

and making business links between local and foreign companies.

6. The Government can provide technical knowledge in the educational and

technical institutions regarding bath accessories production and marketing of such

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product so that Bangladesh can have adequate supply of skilled labor and future

entrepreneurs in this particular sector.

We are hopeful that the bath accessories industry in Bangladesh can become a

money-fetching sector both locally and internationally in near future and will

continue to grow to meet the demand of the country and across the borders.

REFERENCES

Rugman, Alan M., and Richard M. Hodgetts. International Business.

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Porter, Michael E. The Competitive advantage Theory.

Bangladesh Bureau of Statistics [Available Online] - http://www.bbsgov.org/

Hill, Charles W.L. International Business.

Jaquar [Available Online] - http://www.jaquar.com/

Bangladesh – Economy profile [Available Online] -

http://www.indexmundi.com/bangladesh/economy_profile.html

Country Profile [Available Online] - http://www.un.int/bangladesh/gen/country.htm

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http://www.un.int/bangladesh/gen/country.htm

http://www.indexmundi.com/bangladesh/economy_profile.html

http://www.jaquar.com/

http://www.bbsgov.org/

mkt 382----mahi's project

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