Report on Future Prospects of Walton

Walton is one of the leading companies, focusing on the area of electronics in Bangladesh. It is dedicated to creating and delivering products of unquestionable quality that enable people to enjoy more entertainment and comfort. In this spirit, Walton encourages its employees to ensure quality products and service. in this report briefly explain Future Prospects of Walton. Now a days, everyone likes to have more comfort in life. As progress relentlessly towards this it has been realized that this is the time to pay increasing attention to the subject of human comfort and entertainment.

Executive Summary

This report was commissioned to analyze and evaluate performance and future prospects of Walton in a growing domestic electronic market.The research reveals 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 causes 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 a goal 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 report has found the prospects of Walton promising in its current position. Favorable government policy will help it expand domestic and international markets in the future.

Introduction

Origin of Report

This report was assigned by Professor ……………., Department of Marketing, of MBA, (batch), School of Business, University.

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.

Methodology:

The methodologies used in the research process for this report, were:

Data Collection

Primary data is the information that we collect first-hand and secondary data is the information collected by others and used by us. For data collection, we used three approaches:

a. First, we conduced some field research. We went to some Walton retail outlets and asked the customers about their valuable suggestion and opinions.

b. We searched about Walton on the Internet and found some important information regarding their company background, product lines and promotional programs.

c. We went to Walton head office and collected the annual reports for Walton Bangladesh for the year 2010.

Surveys

For surveys, we made a questionnaire for the buyers. The questionnaire for the buyers included questions about their economic background, their preferences and their buying budget and frequency.

To circulate the questionnaires, we followed two approaches:

a. We handed the questionnaires personally to people. We went to the retail outlets and gave the questionnaire to the people there and collected their answers. Then we chose some random prospective buyers and handed them the questionnaire prepared for them. The random sampling included people from our residential areas, our friends and the students from different departments of University of Dhaka.

b. For the prospective customers, we used an online survey. We circulated the questionnaire in different Face book groups and collected the answers.

Record analysis

After collecting the data, we recorded them. Then we analyzed them by doing the following:

• We collected the survey answers and made charts and graphs using that data for supporting the report.
• Then we analyzed Walton’s annual reports and extracted our required figures from them.

Limitations

Though we tried our best to make a hundred percent perfect report, a few limitations held us back. The main limitations that we faced, were –

a. As many of the common products were barred, we had to choose one from a limited number of options.

b. When we went to collect information from the Walton outlets, they were not fully able to cooperate with us, as our required information was confidential.

c. There was not enough data in the websites.

Company and Market Background

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 we look at the annual GDP growth of the country in the last 10 years, we 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)

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.

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

Market Share:

By conducting a survey among consumers we were 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 must 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.

Strategic Situational Analysis:

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.

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)
• Psychographic bases (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 basis’s

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.

Geographic Segmentation

Walton segments the whole country in eleven zones for marketing purpose. They are

•     Dhaka North Zone
•     Dhaka South Zone
•     Dhaka South-West 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.

Figure: Walton Plazas in Chittagong

Figure: Walton Plazas in Dhaka

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.

PEST Analysis

 Political Factor:

1.     High Import Duty on Imported Home Appliance Product
2.     Export promotion schemes of Bangladesh Government
3.     Tax Incentives on Import of Plants
4.     Constant Government Support

Economic Factor:

1.      Increase in per capita income
2.     Growing GDP high disposable income
3.     Increase in Spending Power
4.     A huge prospect of a profitable export sector

Socio-cultural Factor:

1.     Manufacturing Eco-Friendly product
2.     Changing lifestyle of middle income people

Technological Factor:

1.     Improvement in Technology made electronics cheaper
2.     Increased quality of production

SWOT Analysis:

Marketing Strategy:

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 our 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.

Marketing Mix

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 website 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 famous because 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

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 lower 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

Table 03: Price comparison of TV

Table: Price comparison of Motorcycle

In all three products in which we 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 needs to find a fine balance between price and quality as they move forward in the coming years.

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 its120 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.

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.

Financial Analysis

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

Table: Financial analysis of Walton HIL

Challenges and Future Growth

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: Market Comparison

We 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.

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.

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: Future growth of Walton HIL

Recommendations

• To establish Walton as the brand for home appliances & other electronic accessories, some changes are needed in its strategies-
• Switch to Market Penetration Pricing without compromising quality.
• Partner with local and international OEM (original equipment manufacturers)for elegant & sophisticated designs & equipment.
• Develop gaming consoles like Game boy, PlayStations, X-box and medical appliances for caring old people through innovative approaches.
• Customer Loyalty Program.
• Yearlong incentives and special offers.

Conclusion

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 is a milestone in the path of success and reputation of the brand WALTON. 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. Walton has truly redefined Bangladesh from being a consumer country to a producer country for home appliances.

Appendix

Financial Figures of the year 2010

Survey:

1. In what age group do you belong to?

1.     15-18
2.     19-21
3.     22-25
4.     26-30
5.     30 and above

2. Currently which brand/brands of home appliances are there at your house?

1.   LG
2.   Walton
3.   Singer
4.   Sharp
5.    Sony
6.   Panasonic
7.    My One
8.    Marcel
9.    Other (please specify)

3. What do you value most when selecting a brand from which to buy electronic items?

1.     Brand Value
2.     Convenience
3.     After-sales Service
4.     Price
5.     Quality
6.     Manufacturing Country
7.     Other (please specify)
8.     What is your assumption about Walton Products?
9.     Made in Bangladesh
10.     Very competitive price
11.     Quality less than other foreign brands
12.     Lots of TVC

5. Walton is the only company to mass-produce electronic items in Bangladesh, Will it make you buy Walton products instead of other imported ones?

1.     Yes
2.     No

6. Is there a Walton Showroom near your place?

1.     Yes
2.     No

7. Walton plans to produce first ever car in Bangladesh within 7-8 years. What are your thoughts?

1.     Can’t wait
2.     Walton car! Are you Serious?
3.     I will still remain a Toyota guy
4.     Will be proud to ride a Bangladesh made car