LG Butterfly Marketing Ltd. Electronics Ltd. mainly focuses on two competitive strategies
Executive Summary In Bangladesh LG started its operation in 1987.Butterfly Marketing Limited is the sole distributor of LG in Bangladesh. Butterfly grasps a majority portion of share for the electric goods and appliances in Bangladesh by the year 2007. In Bangladesh the company spread its wide distribution channel and outlets which is about 210 outlets in number. In the TV industry LG Butterfly offers a large number variation in terms of technologies and size. LG Butterfly Ltd. mainly focused on two different products LCD TV, and Cathode Ray Television (CRT). LG Butterfly Marketing Ltd. Electronics Ltd. mainly focuses on two competitive strategies: Best Cost Provider and Focused Differentiation.
With the Sony
product, LG Butterfly Marketing Ltd.’ target customer base are value conscious buyers. Sony Television has the capability to give customers more value for the money. Most of the products are with modern technologies and appealing attributes. LG Butterfly Marketing Ltd. also focused on a narrow market niche with their Sony products. Their target customers are upper middle-class and affluent people. However, LG Butterfly Marketing Ltd. also takes strategies to be low-cost provider in colour television market with their economical brand LG Butterfly Marketing Ltd. Television. The key resources identified of Butterfly Marketing Limited Ltd. are the competitive advantages. Customer focus, a strong dealer network thought the country, cutting-edge supply chain management capabilities, quickness in responding to shifting market conditions and emerging opportunities, slightly below competitive price help Butterfly to become one of the great market player in Bangladesh. An experienced and capable workforce, talented employees in key areas, cutting-edge knowledge and intellectual capital provide LG Butterfly a sustainable competitive capabilities.
However, there are also some threats for Butterfly are Increasing competition among the market players, entry of new competitors, frequent technological changes makes it difficult to retain LG Butterfly existing market position and to penetrate into the new market are. But so far LG Butterfly Marketing Ltd.’ strategies are working and these strategies makes it a winning company. Origin of the Report: Each professional degree needs practical knowledge and research work of the respective field of discipline to be fruitful. This report gives me the opportunity to relate the theoretical knowledge with the real life practical situation. The report entitled “Television industry of Bangladesh: strategies of LG Butterfly Marketing Ltd.” originated from the partial fulfillment of the Strategic Management course of MBA program. Background of the report: The machines that transmit dynamic or sometimes static images, generally with accompanying sound, via electric or electromagnetic signals is called television. This is an electronic apparatus that receives such signals, reproducing the images on a screen, and typically reproducing accompanying sound signals on speakers. Television (TV), system of mass communication, involving the transmission of images and sounds to distant screens, by electronic means over electrical or fibre-optic transmission lines or by electromagnetic radiation (radio waves). Source: Wikipedia TV is a vastly important medium, for a number of reasons: • •
Its powerful role as a source of information about experiences other than the viewer’s own. Source of news and current affairs, including the progress of wars and political campaigns.
It is thus a powerful influence on public perception and opinion. LG Butterfly, Rangs Electronics, Rangs Industries (Group), Transcom, Singer, Electra International are the major players in electronic industries. Among these industries LG Electronics Ltd. is one of the market leaders in television market of Bangladesh. Butterfly
enjoys the sole agency ship of renowned Korean brand LG. The company also manufactures and markets their own brand of television Butterfly. Objective: Objectives of the report are: 1. Identify strategies followed by a company which is a major player in TV industry in Bangladesh. 2. Analysis of effectiveness of the strategies in company perspective and industry perspective as a whole. 3. Identify the competitive advantages and their utilization to capture market share. 4. Analysis of Strength, Weakness, Opportunities and Threats of the company. Methodology: We have selected the Television Industry of Bangladesh as a topic of our research. From preliminary study we sort out the major players in the TV Industry. Then each of our group members was assigned to analyze a particular company. Data Collection Sources of Data: Both Primary and Secondary data are used for the research. Primary Data Sources: -
Questionnaire Survey
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Interviews
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Observations
Secondary Data Sources -
Web sites
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Books and Journals
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Annual Reports and other publications
Data Collection Instrument -
Questionnaire
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Checklist
Contact Method -
Personal Interview
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Telephone Interview
Data analysis: Two types of data were collected: •
Qualitative Data
•
Quantitative Data
Data are analyzed and findings are presented in tabular format. Scope of the study: 1. This research work is limited to a particular company i.e. LG Electronics Ltd. in TV industry of Bangladesh. 2. Industry analysis is done based on the information obtained from the major 7 players of TV Industry. 3. Data that are collected represent market scenario in the last 5 to 7 years depending on the availability of information. Purposes: Academicians can have brief idea about strategic Management, different strategy and television industry in context of Bangladesh. Corporate personnel can utilize this study to assess the market and the different strategy followed by the companies to achieve their target. Individual who has an interest about the industry and the product can assess the trend of the market about the product, innovation, marketing strategy, pricing and the corporate social responsibility that the organization is following. Limitations: The study is not free from some practical limitations. Following limitations have faced during the study and the time of working & data collection: 1. Some of the employers are not cooperative to provide necessary information. Many employers believe that data regarding their company are confidential. 2. Very few previous studies regarding this industry.
So scope to take help from
previous study was limited. 3. There is also lack of organized data. Data sources are also limited. So, sometimes it was not possible for us to verify or crosscheck the collected information. 4. Time and other resource constraints also caused to conduct the study within limited perspective. Electronics and Television Industries in Bangladesh:
Electronics one of the principal branches of science that deals with the emission of electrons from conductors and semiconductors, with subsequent manipulation of these electrons and construction of electronic devices. The first electronic device was the thermionic valve, or vacuum tube, in which electrons moved in a vacuum, and led to such inventions as radio, television, radar, and
COMPUTER.
The invention of the transistor, around 1948, and the
subsequent development of integrated circuits (IC) have brought about revolutionary changes in electronics, which was previously based on the technology of the electron tube. Modern electronic devices are based on minute ICs (silicon chips) which are wafer-thin crystal slices holding tens of thousands of electronic components. The minimizations in power brought about by these developments have allowed electronic circuits to be packaged more densely, making possible compact computers, advanced radar and navigation systems, and other devices that use a very large number of components. It has also brought to the consumer such items as smaller and more reliable radio and television receivers, advanced sound and VIDEO-recording and reproducing systems, microwave ovens, cellular telephones, and personal computers (PC). Application of electronics in Bangladesh started in the 1930s in the field of communication with the setting up of radio stations, telephone exchanges and wireless communication. During World War II, the technology of wireless communication was upgraded to satisfy military needs and the up-to-date technology was introduced in India. In East Pakistan VHF (very high frequency) telephone was installed in 1960, followed by telex teleprinter service in 1970. The first television station was established in 1964. A digital telephone system was introduced in 1983 and mobile phones came in 1992. Domestic electronic appliances and equipment used in Bangladesh include radio, television (TV), VIDEO recorder and player, audio cassette player, microwave oven and cordless telephone. Before 1980 most of these items were imported, except the one-band radio, but after 1980 many assembly plants for radio, television, audio and VIDEO cassette recorders and players were established. Since 1990 sophisticated equipment like computers, cordless telephones, satellite TV signal receiving equipment etc are being assembled and some spare parts are also being manufactured. A number of multinational companies have set up assembly and manufacturing plants in the country. Local companies in joint collaboration with foreign companies have established assembly and manufacturing plants. At present the total number
of such companies is more than sixty. The demand for one/multi-band radios, audio and VIDEO cassette recorders and players, etc are being met by local products, and 50% of the demand for TV, specially colour TV, is being met by local plants but more sophisticated appliances like microwave ovens, electronic cameras and projectors are still imported. Since 1994, when Bangladesh signed the open market agreement, all kinds of commodities including electronic products are being imported freely, which has created a competitive environment, and the people are getting good quality products at a reasonable price. Electronic industry In Bangladesh the consumer electronics industry is still in its infancy. It made a start in the private sector in 1950 with the setting up of a few assembly plants for producing a limited range of radio sets. In the 1960s more assembly plants were added. With the establishment of a television station in Dhaka in 1964, some of these plants started assembling television sets. At present, about one dozen companies including many international ones are manufacturing black and white TV sets of different sizes. Many of them assemble colour TV sets. Many local firms have entered into joint ventures with multinational companies for manufacturing automatic fence-guards, battery chargers, etc on sub-contract basis exclusively for export. They are also manufacturing printed circuit boards (PCB) and different types of transformers for use in electronic circuits. Telephone Shilpa Sangstha is doing some bonding, packaging and testing operations on components used in telecommunication in a limited way. Electronic equipment is not yet produced on a commercial basis and at present the electronic industry in Bangladesh is still limited to mainly assembly operations. The prospect for manufacturing parts and components is very good in the country. Bangladesh has a few PCB industries exporting their products to countries like USA, Australia and those in the EEC. Some foreign and local companies have set up export oriented component industries in the
EXPORT PROCESSING ZONE s
for items like light emitting
diode (LED), digital display, computer joysticks, transformers, etc. Trading in electronics shows a bright prospect for the country. Locally assembled as well as imported goods have great internal demand. There are trading shops in every town and even in remote areas because of the availability of electricity through the
RURAL ELECTRIFICATION
programme. The demand for consumer electronics, especially domestic appliances, is also increasing gradually.
LG South Korean conglomerate (chaebol), which produces electronics, mobile phones, and petrochemical products and operates subsidiaries like LG Electronics operating in over 80 countries. Created in 1947, it assumed the abbreviated name of "LG" in 1995. LG is an abbreviation of "Lucky Goldstar" in South Korea, which is translated into English as Lucky Goldstar —"Goldstar" being 金 星 "Gold Star." LG, as it is now known, was commonly known in Japan and surrounding nations as the "Happy Happy Good Times" company. Before then, many consumer electronics were sold under the brand name Gold Star, while some other household products (not available outside South Korea) were sold under the brand name of Lucky. The Lucky brand was famous for household cleaning products and laundry detergents in South Korea. Before massive industrialization of South Korean society, the name Lucky was synonymous with toothpaste. More recently, the company has attempted to update its moniker by associating "LG" with "Life's Good," which is the current company tagline. Since 2001, LG has two joint ventures with Royal Philips Electronics: LG Philips Display and LG.Philips LCD. LG has made a joint venture with Nortel Networks and has created LGNortel Co. Ltd. LG also has a joint venture with Hitachi which manufactures optical data storage solutions like DVD-ROM drives, CD writers, etc. LG has owned the LG Twins baseball club since 1989. LG acquired a majority share of the American television manufacturing company Zenith in 1995. LG Electronics developed iris recognition technology in 1999 and markets it for security, convenience, privacy enhancement and productivity purposes. By 2005, LG was considered a Top 100 global brand, and just a year later, LG recorded a brand growth of 14%. Now the world's largest plasma panel manufacturer, its joint venture, LG.Philips LCD, is a major maker of liquid-crystal displays for TVs.
In 2006, the company's mobile phone division, LG Mobile, marketed the LG Chocolate phone, changing the company's image of the maker of 'fat' 3G phones. It now focuses on the design and marketing of phones such as the LG Shine and LG Prada (KE850). As a result, the company was picked as 'The Design Team of the Year' by the Red Dot Design Award in 2006~2007 and is often called the 'New Apple' or 'New LG ' in the industry and online communities. They also sponsor English Premier League club, Fulham FC. Associated companies • • •
GS Group LS Group LIG Group
Group families •
LG Innotek
•
LG CNS
•
LG Corporation
•
LG Electronics
•
LG-Philips LCD
•
LG Software India
•
LG Micron
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LG Hi-Plaza
•
LG Hi-Logistics
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LG Chemical
•
LG Petro Chemical
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LG Dow Chemical
•
LG Seetec
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LG Health Care Chemical
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LG Life Science Industry
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LG MMA
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LG Telecom
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LG CS Leader
•
LG Powercom
•
Siltron
•
LG V-ENS
•
LG N-Sys
•
LG Serveone
•
LG Economy Institute
•
LG Academy
•
LG Twins
•
LG International
•
LG Dacom
•
LG Dacom MI
•
LG Dacom Crossing
•
Zenith Electronics
•
Serveone
LG Group used to be Lucky, but this leading South Korean "chaebol" (family-run industrial group) has weathered difficult economic times as well. Founded in 1947 as Lucky Goldstar, the multifaceted industrial group consists of more than 30 affiliated companies that operate through more than 300 offices around the globe. After de-merging with GS Holdings Corp., its major operations are now divided into three business sectors: Chemicals (LG Chem), Electronics (LG Electronics, Luseum, and Sitron), and Telecommunications and Services (LG TeleCom, LG DACOM, and LG CNS. Sponsorship LG Electronics sponsored the English football club Leicester City and Weyside Rovers (Guildford) from 2000 until 2002. LG Electronics currently sponsors the English football club Fulham F.C, the Brazilian football club Sao Paulo, AEK from Greece, the International Cricket Council, Australian Football League club the Fremantle Football Club and National Rugby League club Cronulla Sharks. LG Group sponsors the LG Cup Go Tournament. Business areas and main products Mobile communications CDMA Handsets, GSM Handsets, 3G Handsets, Cellular Phones Digital appliance Air Conditioners, Refrigerators, Microwave Ovens, Washing Machines, Vacuum Cleaners, Home Net, Compressors for Air Conditioners and Refrigerators
Digital display Plasma TVs, LCD TVs, Micro Display Panel TVs, Monitors, PDP Modules, OLED Panels, USB Memory, Flat Panel Computer Monitors Digital media Home Theater Systems, DVD Recorders, Super Multi DVD Rewriters, CD±RW, Notebook PCs, Desktop PCs, PDAs, PDA Phones, MP3 Players, New Karaoke Systems, Car Infotainment LG Electronics: LG Electronics is a South Korean multinational corporation and one of the world's largest electronics companies. It is a part of LG Group, operating in 80 countries. Company brands •
& - MP3 Player
•
Cyon - Mobile phone
•
Dios - Premium appliance (before LG's home refrigerator brand)
•
Flatron - computer monitor, TV
•
Gold Star - Home appliance
•
Iris Access - Iris recognition
•
Platon - CRT TV
•
Super Multi - Trademark for DVD+R(W)/-RAM burners
•
Tromm - Home washing machine
•
Whisen - Air conditioner
•
Xcanvas - PDP & LCD HDTV
•
Xnote - laptop computer
•
XD Engine - TV Technology
•
Xpion - Desktop computer
Profile: LG Electronics Type: Public Founded: January 5, 1947
Key people: Yong Nam, Vice Chairman & CEO Number of Companies: 36 Industry: Mobile Communication, Digital Display, Digital Appliance and Digital Media Revenue â–˛ $68.8 billion USD Employees: 82,772 (29,948 in Korea/ 52,824 overseas) - as of 2006 Parent LG Group Slogan: Life's Good Total Sales: 94 trillion KRW (as of 2007) Export: 47 billion USD (as of 2007) Overseas Subsidiaries: Approximately 130 Number of Employees: Approximately 160,000 Website: LG Electronics Worldwide Headquarters:
LG Twin Towers, 20 Yoido-dong, Young dungpo-gu, Seoul, South
Korea LG Vision: The Company Butterfly does not have any vision in its website and they do not have separate vision. But the company strongly believes in the vision of the mother company LG. But some micro and macro environmental reason the company is unable to pursue all of the objectives and mission.
The LG Way includes LG's core beliefs, values, and aspirations. It illustrates a vision that guides the thoughts and actions of LG employees in attaining the ultimate goal of becoming a "No. 1 LG." The LG Way is reached through the practice of "Jeong-Do" Management* and LG's management principles, "Creating value for customers" and "Respecting human dignity." LG’s vision is to become the best in its class by winning customers’ acclaim as a leader in the global market In order to reach number one, LG not only pursues outward growth but is committed to enhancing its market value based on practical competitive superiority. LG aims to be number one in the spirit of competition and victory.
Code of Conduct: LG realizes its management principles through the practice of "Jeong-Do" Management. "Jeong-Do" Management is a code of conduct that is indigenous to LG and governs every aspect of LG's management activities. This code is founded on the principles of ethics but goes beyond ethical management and requires a continuous build-up of competence. The practice of "Jeong-Do" Management is not only open and fair competition but also includes building the competence necessary for LG employees to create a substantial value for customers and to earn their confidence. "Jeong-Do" Management is a manifestation of the uncompromising integrity that LG exercises to fulfill our fundamental beliefs of creating value for customers through management based on respect for human.
Management Principles:
LG believes that the source of our innovation lies in our employees. "Respecting human dignity" implies that LG values our employee's ingenuity and autonomy. We strive to maximize their capabilities and help them realize their potential on the job. This principle is
reinforced through LG's everyday management practice of rewarding employees based on capabilities and performance.
History: 1947- 2008
LG Group founder In Hwoi, Koo set LG history in motion with the establishment of the Lak Hui Chemical Industrial Corp. in 1947. During those formative years, the company emphasized the principle of creating harmony among people. The employees believed that mutual trust and responsibility were crucial to accomplishing business objectives. In 1952, Lak Hui (currently LG Chem) became the first Korean company to enter the plastics industry. As the company expanded its plastics business, it established Goldstar Co., Ltd., (currently LG Electronics Inc.) in 1958. In 1959, Goldstar produced Korea's first radio, opening a new era for the nation's electronics industry. In the early 1950s, LG had already established the foundation for its two major sectors-the chemical and electronics businessesthereby leading the development of Korea's industries. LG has adopted new visions for the 21st century. Its new visions are to develop a corporation where employees reach their full potential, shareholders maximize their value, and consumers are satisfied and touched emotionally. On March 1, 2003, LG launched its comprehensive holding company, LG Corp. LG became the first major Korean corporation to introduce a holding company structure with advanced corporate governance. By converting its structure into the holding company system, where investment and business divisions are separated, LG committed itself to overcoming chronic problems that most of Korea's large companies had in governance, especially in circulatory investments between subsidiaries. LG is now striving to fulfill its goal of becoming a first-class corporation by embracing "Jeong-Do" Management* and continuous innovation.
LG in Bangladesh: In Bangladesh LG started its operation in 1987.Butterfly Marketing Limited is the sole distributor of LG in Bangladesh. Butterfly grasps a majority portion of share for the electric goods and appliances in Bangladesh by the year 2007. In Bangladesh the company spread its wide distribution channel and outlets which is about 210 outlets in number. The brand Butterfly is so strong in Bangladesh that it does not use the name of LG in its website. The only trace of LG is the slogan of the parent company: Life's Good....That is alike and the font color of LG slogan and Butterfly slogan are alike. LG Butterfly Products in Bangladesh: Television • • • • • • • • • • • • •
Butterfly 17'' B/W TV 44SYE - 4A Hyundai Brand 20'' Color TV HCT 2060 Butterfly 14'' B/W TV 35SYE-4 Butterfly 14'' CTV - 14C3 Butterfly 14'' CTV MODEL MBL - 14D40B B/FlyB/Fly 20'' Joymax CTV Model BML 20C50B Butterfly 20'' Colour TV Model BML 20D40B Butterfly Colour Television 21C1 Goldstar 29'' CTV Model CF-29C76 G. Star 20'' Joymax CTV CF 20D70 LG 21'' Golden Eye CTV CF 21D30 LG 20'' Golden Eye CTV CF 20D30 LG 21'' Joymax CTV CF - 21D70 Source: http://www.bangladeshonline.com/butterfly/current.htm
Butterfly television: Product wise price Product Butterfly 14" B/W TV Butterfly 17" B/W TV Butterfly 14" CTV Model 14D40B Butterfly 14" CTV 14C50B Joymax Butterfly 20D70 & CTV 20D50B Joymax Butterfly 20D16 Soundmax
Cash 4692 6670 15560 16560 21985
Hire 5430 7670 17990 18960 25500
Total D/P 1530 2470 5965 6740 8340
M/Inst. 300 400 925 940 1320
22495
25995
8445
1350
21D16 Soundmax LG 20D30 Golden Eye LG 21D70 Joymax LG 21D30 Golden Eye LG CF 29C76 LG 29" CTV CF-29C76 Butterfly 21" CTV 21C1
23385 22985 22860 23960 39960 42665 21781
27125 26665 26520 27795 45950 48660 24990
8600 8725 8585 9010 10250 18760 8350
1425 1380 1285 1445 13450 2300 1280
High
Electra
LG Butterfly Marketing Ltd. Electronics LG Butterfly Marketing Ltd. Industries Transcom
Singer
Price/ Quality Others
Low
Figure: Competitive position of LG Butterfly Low Low
Market Share Market Share
High High
Figure: Five forces model facing by LG Butterfly in Bangladesh
LG Butterfly Marketing Ltd.’ Key Success Factors: Key Success factors Technology-related
LG Butterfly LG Butterfly Marketing Ltd. brings the latest state of the art technologies from one of the best Television manufacturers of the world LG Corporation
Manufacturing-related
Because of high market share LG Butterfly
Marketing Ltd. achieve economies of scales. High level of quality control High labour productivity Low-cost product design and engineering Distribution-related
A strong network of distributors and dealers Strong direct sales capabilities
Marketing-related
A well-known and well-respected brand name. Courteous, personalized customer service Customer guarantees and warranties Clever Advertising A talented workforce Short-delivery time capability
Skill and capability-related
Supply chain management capability Ability to provide fast, convenient after the sale repairs and services A strong balance sheet and access to financial capital.
Bargaining Power of Suppliers In case of LG Butterfly Marketing Ltd. Electronics Ltd. the bargaining power of the suppliers is not a major issue as the company directly import from LG Corporation. In case of LG Butterfly Marketing Ltd.’ own brand LG Butterfly Marketing Ltd. TV the company imports from the reputed suppliers of China, Malaysia and other countries. Bargaining Power of Buyers Buyers have strong bargain power in this industry. They compare prices of particular brand, model or size among different outlets in the clustered electronics market in the country. Price is the only or main competitive factor at that level. Price cut reduces profit margin. Baited Mukarram and Stadium market traders have expressed their frustration resulting from loss
they are incurring or very low profit they are making due to intense competition and price cut. Competition from Substitutes Multimedia Computers: TV faces competition from alternative recreation choices consumers have. But most important and direct substitute of television is computer monitor that, in addition to its normal function as a computer output device, can be used as a television by adding some features. A TV card priced between Tk. 3,000 and Tk. 4,000 can transform a computer monitor into a television. The innovation of Multi-media and MP3 compression system enacted the PC users to enjoy high quality music with addition of a little money. This may be a threat for not only the twoin-one industry but the whole music player industry as well. Internet: The information and entertainment lovers are increasingly getting interested about Internet now a day, which also can cause a significant loss of customers of TV sellers. SWOT Analysis Of Butterfly: STRENGTH: •
Wide variety of product ranges to cater different segments of the market
•
Country wide distribution network
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Strong advertisement and promotion.
•
Experienced and well trained human resources.
•
Low price
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Changing life style specially in urban region makes television an essential commodity.
WEAKNESS:
•
A strong brand image
•
A very attractive customer base.
•
Strong market player.
•
Good customer service capabilities.
•
Existence of different fake brands television.
•
Lack of research and development in local market.
•
Too many players in the market.
•
Slow market growth.
•
High market price in superior quality television (e.g. Plasma TV, LCD TV)
•
Does not exist in the Black and White TV market
•
Technological changes help to diversify product ranges.
•
Integrating forward and backward linkage.
•
Entering into alliances or joint ventures that can expand the
OPPORTUNITIES:
market coverage and brings economies of scales. •
Utilizing existing industry skills or technological know how to enter new product lines or new business strategy.
THREATS: •
Frequent technological changes can make some older model of television obsolete.
•
Shift in buyer needs and tastes away from the industry’s product.
•
Low quality and low priced smuggled TV sets from neighboring country.
•
Increasing intensify of competition among industry rivals may squeeze profit margin.
•
Growing bargaining power of customers or suppliers.
•
Entry of potent new competitors
•
Loss of sales to substitute products.
Competitive strategies: Butterfly Marketing Ltd. mainly focuses on three competitive strategies: •
Best Cost Provider
•
Broad Differentiation
With the LG product, Butterfly’ target customer bases are value conscious buyers. LG Television has the capability to give customers more value for the money. Most of the products are with modern technologies and appealing attributes. LG also focused on a broad market differentiation with their LG products. Their target customers are middle-class and below-middle calss people. However, LG also takes strategies to be low-cost provider in color television market with their economical brand Butterfly Television. Butterfly sales black and white television foe the poor village people Product Strategy Product: As discussed before Butterfly mainly markets LCD TV and CRT of LG Brands. These products are of different sizes and models. Among all the sizes 21” is most popular size. Warranty: Warranty of TV is the force that shapes and reshapes a companies market potentiality. Normally major TV brands provide 1 year warranty for replacement of tube and component and 5 years after sale service. But in case of major TV wholesaler or retailer, component warranty and after sale services are not very much common. Warranty is the main difference between TVs sold in show rooms of company’s distributor or agent here and the TVs sold in independent retailers or wholesalers. Formal distributors or franchisees of internationally reputed companies charge extra price for the warranty and after sales service they provide. Pricing Strategy Prices of the various sizes of TV are stated earlier. Premium prices are charged for LCD TV and 29" and above sizes of the TV. Among the customers purchases of above stated sizes of the TV work as status symbol. This group of buyers are not price sensitive.
5.5.3 Promotion Strategy The main promotional activities of Butterfly are TV commercials and published advertisement in major daily news papers. In the promotional campaign Butterfly focus on the unique characteristics of the product by which customer could differentiate among the brands. Around 20% of their promotional budget is allocated for sales promotion. This short term incentive tool is used for special events like World Cup Cricket and Footballs, Religious festival such as Eid. In these program they offer their product at reduced price Or offer a discount at regular prices. This incentive tools stimulate the buyers and increase the sale of the brand. Distribution Strategy Butterfly use its wholly owned distribution channels. Butterfly has country-wide distribution network through which it markets its products. Generally they follow any of the following approach or both. In the first approach they select the distributors for the divisions and decentralize the authority to divisional distributors to select the distributors at lower level. They also follow the approach of selecting divisional distributors but in the both approach they keep control over all types of distributors. Usually they provide 10% margin to the distributors. But the margin can be varied to some extent from brand to brand.
Franchisers
Divisional Distributors
District or lower level distributors
Customers
Fig: Distribution Strategies of Butterfly Marketing Ltd. Generally lower level distributors communicate with divisional distributors to meet their needs. Regional service centres are established by the franchisers to offer post sale or maintenance services.