Report on Market Position and Problems of Meghna Cement Mills Limited (Part-2)

BCG MARTIX ANALYSIS

From the BCG Matrix we can find out the organizational market position by analyzing the market share and market growth. It will help to determine what objective, strategy and budget to assign to each stage. Here the market growth rate on the vertical axis indicates the annual growth of the market in which the business operates. In the figure, it ranges from 0 percent to 20 percent. Relative market share, which is measured on the horizontal axis, refers to the market share relative to that of its largest competitive in the segment. At present Meghna Cement have captured 9% market share, on the other hand market leader have captured 13% market share. So relative market share of Meghna Cement is comparatively low than the competitors. Now political crisis and world economy down turn causes low market growth of cement industry.

DATA ANALYSIS AND INTERPRETATIONS

Objective 1:

To find out the brand preference of customer while purchasing cement.

Related Question: Question number 2(For customer) was asked to identify consumers brand preference in purchasing the cement. In question 2 consumers were asked to mention the brand of cement they use.

Data Collected: There were total 36 respondents. The result of the data collected for question 2, which company’s cement the customers prefer are as under

 Table 4: Brand Preference of various brands

Source: Primary data

Source: Primary data

Analysis Technique Used: MS Excel software and simple arithmetic were used to ascertain the percentage and other interpretation.

Findings and interpretation of the survey: In this question respondents were asked to answer which brand of cement they like most. The frequency table below shows 8 respondents were most like King Brand Cement. Here 28% of respondents prefer Shah Cement. According to preference Shah’s position is number one and King Brand Cement is number third. So they have huge possibility to capture the market according to brand preference, if they increase their promotional strategy.

Objective 2:

 To identify the consumers’ perception about the quality of Meghna Cement.

Objective 3:

To identify the consumers’ perception about the customer service.

Objective 4:

To identify the consumers’ perception about the easy availability.

Related Question: Question number 6(For customer) was asked to identify consumer’s perception about the quality, customer service, easy availability and credit facility of Meghna Cement.

Analysis Technique Used: MS Excel software and simple arithmetic were used to ascertain the percentage and other interpretation.

Data Collected: There were total 36 respondents. The result of the data collected for question 6, customer’s perception about quality, customer service, easy availability and credit facility of Meghna Cement are as under 

Table 5: Satisfaction Level Regarding Quality

Source: Primary data

Findings: About 64% of the respondents were satisfied regarding quality offered of Meghna Cement. About 19% of the respondents were dissatisfied regarding quality. The frequency table shows the Satisfaction level of the Meghna Cement user. 

Table 6: Satisfaction Level regarding customer service

Source: Primary Data

Findings: The frequency table shows the satisfaction level of the Meghna Cement users regarding customer service. Here we see about 42 % (Cumulative) are satisfied with their current customer service and 36% are dissatisfied.

Table 7: Satisfaction Level regarding easy availability

Source: Primary data

Findings: The Frequency table above shows the satisfaction level of Meghna Cement users regarding easy availability. About 39% of the respondents are satisfied regarding easy availability of Meghna Cement and 44% customer are dissatisfied.

Table 8: Satisfaction Level regarding credit facility

Source: Primary data

Findings: The frequency table below shows that 41% of the respondents are satisfied and 45% respondents are dissatisfied regarding credit facility.

Interpretation of the survey: It is clear that perception about quality is very high that means they were satisfied regarding quality. On the other hand regarding customer service, easy availability and credit facility are moderate satisfied. So they should increase customer service and credit facility.

Objective 5:

To identify which of the two concepts, quality or price, consumers consider more important in purchasing cement.

Related Question: Question number 7(Both customers and Retailers / Dealers) was asked to give more preference while purchasing cement.

Data Collected: There were total 56 respondents. The results of the data collected for question 7 are given below: 

Table 9: Important criteria for purchasing decision

Source: Primary data

Analysis Technique Used: MS Excel software and simple arithmetic were used to ascertain the percentage and other interpretation.

Findings: It has been found that, out of 56 respondents; only 20 said that they attach more important on price than quality, while 64% said that quality was more prerogative to price in buying decision.

Interpretations: This has wide implications as regard the previous findings. This means that although there was a price hike of King Brand Cement even than it had less effect on sale, as consumers prefer quality than price. As such, quality is the overriding attribute in making purchase decision.

Objective 6:

To identify the types of sales incentives received from different company.

Related Question: Question number 6 (For dealers/ retailers) was asked that means what types of sales incentives they received from various companies.

Data Collected: There were total 20 respondents. The results of the data collected for question 3 are given below:

Table 10: Sales incentives receive from various companies

Source: Primary data

Analysis Technique Used: MS Excel software and simple arithmetic were used to analyze the data collected for the question. The percentage of to use volume was found out by simple arithmetic.

Findings: From the above Figure we can see that, about 25% of the respondents were received discount, 30% received sales commission and credit sales facility and rest of them received gift items from the various cement company.

Interpretation: From the above Figure we can see that, the important incentives are sales commission, discount, credit sales, gift etc. For both retailers and dealers, sales commission and credit sales facilities has the highest score meaning that this are the most effective promotional tool for increasing sales, which is followed by discount and gift item.

Objective 7:

To identify the problems that decreases the sales of King Brand Cement.

Related Question: Question number 3 (For customers) was asked to find out the reasons for not to buy King Brand Cement.

Data Collected: There were total 36 respondents. The results of the data collected for question 3 are given below:

Table 11: Reasons for not to buy KBC

Source: Primary data

Analysis Technique Used: MS Excel software and simple arithmetic were used to analyze the data collected for the question. The percentage of to use volume was found out by simple arithmetic.

Findings: About 33% of the customers were said high price is the main problem for not to buy King Band Cement. About 19% said customer service is not enough and 14% respondents were not to buy King Brand Cement for lack of advertising. The frequency table shows the reasons for not to buy King Brand Cement.

Interpretation of the survey: Out of 36, only 4 respondents said low quality is the main problem for not to buy King Brand Cement. But 12 respondents said high price is the main problem for not to buy this cement. So, the price increases of King Brand Cement significantly contribute to the decrease of Meghna cement’s sales.

Objective 8:

To find out the consumers’ perception about the price.

Related Question: Question number 4 (Both Customer and Dealer/Retailer) was asked to find out the perception about price.

Data Collected: There were total 56 respondents. In this question the respondents were asked to answer about the price of King Brand Cement.

Table 12: Perception about price

Analysis Technique Used: MS Excel software and simple arithmetic were used to analyze the data collected for the question.

Findings: From the above Table we can see that, about 71% of the respondents were agreed about the price of King Brand Cement is comparatively high. On the other hand 20% of respondents were disagreed with the statement.

Interpretation: Here total respondents are 56. This question asked both consumers and retailers. Among them 40 respondents were agreed with the statement. So price of King Brand is comparatively high. They should decrease the price to survive in the competitive market.

HYPOTHESIS TESTING

Hypothesis 1:

Step 1: Formulation of Hypothesis 

Null Hypothesis: Less or equal to 40% consumers prefer King Brand in purchasing cement.

Alternative Hypothesis: More than 40% consumers prefer King Brand in purchasing cement.

Step 2: Selection of an Appropriate Test

In this case the researcher has selected z-statistic. This statistic is computed as follows:

Z= (p-π)/σ_p

Where  , σ_p= √ π (1- π)/ n

Step 3: Choose the Level of Significance, α

Here, the researcher has considered the Level of Significance is 5%. Thus, the confidence level is 95%.

Step 4: Collection of Data and Calculation of Test Statistic

Here, sample size is 36. In this case 36 users were surveyed and 8 respondents were preferred King Brand Cement in purchasing cement. Thus the value of the sample proportion is

p= 8/36= 0.22

The value of σ_p can be determined as follows:

σ_p= √ π (1- π)/ n

 = √ (0.40) (0.60)/36    = 0.082

The test statistics z can be calculated as follows:

 Z= (p-π)/σ_p

= (0.22-0.40)/ 0.082

 = – 2.20

Step 5: Determination of Probability (Critical Value)

Our calculated value of Z is equal to – 2.20. Now we get the Z value for 95% confidence level from the standard normal distribution table is +1.64.

Step 6 & 7: Comparison of Probability (Critical Value) and Decision Making

Hence, the calculated value of Z = – 2.20 falls in the acceptance region, so we accept the Null Hypothesis (H₀). We reject Alternative Hypothesis (H₁₎

Step 8: Marketing Research Conclusion

As the Null Hypothesis (H₀) is accepted and Alternative Hypothesis is rejected, so we can say that less than 40% consumers prefer King Brand in purchasing cement. So authority of King Brand Cement should decrease the price of King Brand Cement, increase more advertising to increase consumers’ preference.

Hypothesis 2:

Step 1: Formulation of Hypothesis 

Null Hypothesis: More than or equal to 60% customers are satisfied regarding quality provided by Meghna Cement Mills Ltd.

Alternative Hypothesis: Less than 60% customers are satisfied regarding quality provided by Meghna Cement Mills Ltd.

Step 2: Selection of an Appropriate Test

In this case the researcher has selected z-statistic. This statistic is computed as follows:

Z= (p-π)/σ_p

Where  , σ_p= √ π (1- π)/ n

Step 3: Choose the Level of Significance, α

Here, the researcher has considered the Level of Significance is 5%. Thus, the confidence level is 95%.

Step 4: Collection of Data and Calculation of Test Statistic

Here, sample size is 36. In this case 36 respondents were surveyed and 23 respondents were satisfied regarding quality offered by Meghna Cement. Thus the value of the sample proportion is

p= 23/36= 0.64

The value of σ_p can be determined as follows:

                                                            σ_p= √ π (1- π)/ n

                                                               = √ (0.60) (0.40)/36

                                                               = 0.082

The test statistics z can be calculated as follows:

                                                            Z= (p-π)/σ_p

                                                              = (0.64-0.60)/ 0.082

                                                             = 0.49

Step 5: Determination of Probability (Critical Value)

Our calculated value of Z is equal to 0.49. Now we get the Z value for 95% confidence level from the standard normal distribution table is 1.64.

Step 6 & 7: Comparison of Probability (Critical Value) and Decision Making

Hence, the calculated value of Z = 0.49 falls in the acceptance region, so we do not reject the Null Hypothesis (H₀).

Step 8: Marketing Research Conclusion

As the Null Hypothesis (H₀) is accepted and Alternative Hypothesis is rejected, so we can say that more than 60% customers are satisfied regarding quality provided by Meghna Cement Mills Ltd. Though they were satisfied, any time they can be dissatisfied. So, they should more improve in quality.

Hypothesis 3:

Step 1: Formulation of Hypothesis 

Null Hypothesis: Less than or equal to 60% customers believe the price of King Brand Cement is comparatively high.

Alternative Hypothesis: More than 60% customers believe the price of King Brand Cement is comparatively high.

Step 2: Selection of an Appropriate Test

In this case the researcher has selected z-statistic. This statistic is computed as follows:

Z= (p-π)/σ_p        Where            , σ_p= √ π (1- π)/ n

Step 3: Choose the Level of Significance, α

Here, the researcher has considered the Level of Significance is 5%. Thus, the confidence level is 95%.

Step 4: Collection of Data and Calculation of Test Statistic

Here, sample size is 56. In this case 40 of the respondents were agreed about the price of King Brand Cement is comparatively high. Thus the value of the sample proportion is

p= 40/56= 0.71

The value of σ_p can be determined as follows:

                                                            σ_p= √ π (1- π)/ n

                                                               = √ (0.60) (0.40)/56 = 0.065

The test statistics z can be calculated as follows:

                                                            Z= (p-π)/σ_p

                                                                                   = (0.71-0.60)/ 0.065 = 1.69

Step 5: Determination of Probability (Critical Value)

Our calculated value of Z is equal to 1.69. Now we get the Z value for 95% confidence level from the standard normal distribution table is 1.64.

Step 6 & 7: Comparison of Probability (Critical Value) and Decision Making

Hence, the calculated value of Z = 1.69 is more than the table value Z =1.64. So we can not accept the null hypothesis.

Step 8: Marketing Research Conclusion

As the Null Hypothesis (H₀) is rejected and Alternative Hypothesis is accepted, so more than 60% customers believe the price of King Brand Cement is comparatively high. So to increase the sales they should decrease the price of King Brand Cement.

Hypothesis 4:

Step 1: Formulation of Hypothesis  

Null Hypothesis: More than or equal to 40% customer think that high price is the main problem for not to buy King Brand Cement.

Alternative Hypothesis: Less than 40% customer think that high price is the main problem for not to buy King Brand Cement.

Step 2: Selection of an Appropriate Test

In this case the researcher has selected z-statistic. This statistic is computed as follows:

Z= (p-π)/σ_p

Where  , σ_p= √ π (1- π)/ n

Step 3: Choose the Level of Significance, α

Here, the researcher has considered the Level of Significance is 5%. Thus, the confidence level is 95%.

Step 4: Collection of Data and Calculation of Test Statistic

Here, sample size is 36. In this case 12 of the respondents were said high price is the main problem for not to buy King Band Cement. The frequency table shows the reasons for not to buy King Brand Cement.

Thus the value of the sample proportion is

p= 12/36= 0.33

The value of σ_p can be determined as follows:

                                                            σ_p= √ π (1- π)/ n

                                                           = √ (0.40) (0.60)/36

   = 0.082

The test statistics z can be calculated as follows:

                                                            Z= (p-π)/σ_p

                                                                                   = (0.33-0.40)/ 0.082

   = – 0.85

Step 5: Determination of Probability (Critical Value)

Our calculated value of Z is equal to – 0.85. Now we get the Z value for 95% confidence level from the standard normal distribution table is 1.64.

Step 6 & 7: Comparison of Probability (Critical Value) and Decision Making

Hence, the calculated value of Z = – 0.85 is less than the table value Z =1.64. So we can not reject the null hypothesis.

Step 8: Marketing Research Conclusion

As the Null Hypothesis (H₀) is accepted and Alternative Hypothesis is rejected. So price is the main problem for not to buy King Brand Cement.

Hypothesis 5:                                                                      

Step 1: Formulation of Hypothesis 

Null Hypothesis: No association between company name and quality.

Alternative Hypothesis: There is an association between the two.

Step 2: Selection of an Appropriate Test

          ∑ (f_o-f_e)²

   χ² = ————-

               f_e

Step 3: Choose the Level of Significance, α

Critical value with degree of freedom 1 and confidence level 95%.

Step 4: Collection of Data and Calculation of Test Statistic

Here, sample size is 36. In this case 14 of the respondents were said well known organization provide high quality cement.

Table 13: Cross- tabulation

Source: Primary data

                                                     n_r n_c          18*18

Here, expected frequency (r1c1) =       n       =      36           = 9

                                                            n_r n_c          18*18

Here, expected frequency (r1c2)  =  n          =       36          = 9

                                                            n_r n_c          18*18

Here, expected frequency (r2c1) =       n       =       36        = 9

                                                            n_r n_c          18*18

Here, expected frequency (r2c2) =      n        =       36        = 9

          ∑ (f_o-f_e)²

   χ² = ————-

               f_e

           (14-9)²            (4-9)²                      (4-9)²                        (14-9)²

      = ————- + ———— + —————— + ——————

               9                     9                       9                          9

        = 11.11

Step 5: Determination of Probability (Critical Value)

Our calculated value of χ² is equal to 11.11.

Degree of freedom = (r-1) (c-1)    = 1*1   = 1

Critical value with degree of freedom 1 and confidence level 95% = 3.841

Step 6 & 7: Comparison of Probability (Critical Value) and Decision Making

Calculated value > Critical value

So, H₀ cannot be accepted. There is an association between the two.

Step 8: Marketing Research Conclusion

There is an association between company name and quality. Well known organization provide high quality product.

FINDINGS

•         Among 36 customers only 8 prefer King Brand Cement and our hypothesis is less than or equal to 40% customer prefer King Brand while purchasing cement. So our hypothesis is accepted.
•         36 respondents were surveyed and 23 respondents were satisfied regarding quality offered by Meghna Cement and 19% were dissatisfied. So the quality of King Brand Cement is comparatively good.
•         Our hypothesis is more than or equal to 60% customer believe the price of King Brand Cement is comparatively high. Among 56, 40 respondents were believe the price of king brand cement is comparatively high.
•         There are many reason for not to buy King Brand Cement. Among the 36 respondents 12 respondents said price is the main problem for not to buy King Band Cement.
•         We have asked, if there any association between company name and quality. In this case we have found, most of the respondents said there is an association between company name and quality.

CONCLUSION

Cement Industry a relatively fast growing industry, is developing in pace with increasing building and construction activities. Cement has long been used as a bonding agent to unite particles or to cause one surface to adhere to another. The most common form of cement, Portland cement, is a powder obtained from burning together a mixture of lime and clay, which when mixed with water and sand or gravel, turns into mortar or concrete. The amount of cement now annually consumed in the country is about 5 million metric tons. The production however, falls short by about 3 million tons per year. This shortage is met through imports.

The growth of cement market in Bangladesh was not in satisfied. There was a critical competition in the market. In that critical time King Brand Cement of Meghna Cement Mills Limited start its operation in the country. Availability and awareness of this brand is very good. Most of the people prefer quality cement and they are willing to pay a little bit higher prices for that. As King Brand Cement has a reputation about its quality it has a good market response.

As cement is the industrial product, reference group is important for its sale. King Brand Cement should keep its close eye to generate new ideas for reference group along with customers and users for its better growth.

RECOMMENDATIONS

Major findings and recommendations are as under:

•         From interview, it explored that end user purchase their cement based on recommendation of the masons, Architect’s opinion, retailer’s pushing and some others factors including weight, price, depends on use and loyalty towards the particular brand. It also indicates that Meghna cement has a lack of brand image.
•         In designing organizational hierarchy Meghna Cement Mills Limited follow functional strategy. In the whole organization hierarchy MCML have eight major wings. They are audit division, IT division, commercial division, HR & admin division, marketing and sales division, accounts and finance division, operation and engineering division, construction division. But there is no research & development department. It is recommended that the organization can have a separate research & development department.
•         The quality of King Brand Cement is comparatively better than others. But the price of King Brand Cement is high. For the high price it lost its market share. So they should decrease the price.
•         At present, there are six dealers spread over the whole country. As such transportation of cement from one place to another is a big hassle. This also involves huge amounts of cost, as such decentralization of production facilities including placement of portable production facilities at the strategic points can be considered.
•         Company can not deliver the product in time to the customer. Its price is comparatively high and price also fluctuates every day. There is no credit facility from the company. So customer can not purchase the product on credit. Their factory location is so much far from the Dhaka city. So they should solve this problem.
•         In context of packaging, it is explored that to develop the packaging system is essential. For said reason final user think that retailers mix less quality cement with that bag and sometimes final user also think that cement weight is not accurate. It means that 50 Kges cement is not there. Another problem is paper sack; during rainy season cement looses its quality.
•         In pricing the products, Meghna Cement Mills Ltd follows premium pricing strategy. In these they should keep in mind the psyche and attitude of the customers and competitors in setting the price. They may resort to pricing methods like cost plus, return investment, value pricing that means low price for high quality products etc.
•         In promoting products King Brand Cement puts emphasis on direct marketing and personal selling, no advertising. MCML exercises a little effort in advertising their products. The resulting effect of this practice is twofold; on the other hand, lack of advertising makes King Brand Cement unknown to the some customers. Meghan Cement Mills Limited should advertise more to focus on their product and high standard of product.
•         Meghna Cement Mills Limited (MCML) may resort to both informal and formal recruiting methods. Informal recruiting methods tap a narrower labor market. Formal recruiting methods search the labor market more widely for candidates with one having previous connection with the company.
•         From the analysis it is seen that the growth in sales is slow than the growth in capacity of Meghna Cement. One of the main reasons is the higher price. MCML should have to take care of this issue.
•         Cement market of the country is facing turbulence due to various environmental factors. To overcome this MCML may consider giving sales incentives. Sales commission is considered to be most attractive incentives followed by gifts and similar items.
•         Competitors are very aggressive in providing best service to the customers in order to survive in the competitive market and complete MCML in terms of customer service. MCML needs to give more attention to this aspect so as to keep up its image.
•         Meghna has lost its brand image. Retailers are not getting on time delivery. Price is fluctuating tremendously compare to its competitors. Retailers are not enjoying any kind of credit / commission from the company. Retailers are facing troubles for loose packet of the product. There was a communication gap between retailers and sales representatives.
•         Quality is considered as most important aspect in marketing a purchase decision. Meghna Cement Mills Limited should strive hard to further improve this standard.
•         This research shows a decreasing trend in the cement market. Meghna Cement Mills Limited should revise its price and marketing strategy to face the challenges.

Another Part of The Post:

Report On Market Position And Problems Of Meghna Cement Mills Limited (Part-1)