Olympic - providing Energy in Rural life

Rashid vai, 4 cups of tea and an energy packet; says Mr. Anowar, a local school teacher of the village Gozariapara, Gazipur thana. Take 2 packets of Energy, I guess your gossiping will not be over before Magrib prayer, Mr. Rashid replies. Oh you are right Rashid vai, without Biscuit & tea, can any discussion take place? says Mr. Al Amin, a local business man who runs a small rice factory. Mr. Babul, a local garments factory worker & Md. Aziz, (rents land & tin shed houses) also agreed with Alamin. Energy Plus, a Glucose Biscuit, priced at tk 12.00 per packet of 20 biscuits, from Olympic Industries Ltd. is the most available bakery items, in the village of Gozariapara, located at Joidebpur Thana, Gazipur District. It is a bright afternoon & people have started to gather in the local haat of gozariapara village. Here Mr. Abdur Rashid runs a small retail store (kiosk) of daily necessity and house hold products as well as a tea stall. He is about 55 years old, there are 5 members in his family, his wife, two sons, one daughter-in-law & a grand daughter, he has an elder daughter, and she got married three years ago & now lives in Tongi. His two sons work in nearby garments factory as production workers with monthly salaries of around Tk. 4,500 each. On an average, daily 80 to 100 villagers visit Mr. Abdur Rashids shop. On the 10th day of every monty, Mr. Rashid goes to the wholesale markets like Master Bari, Vawal Bazar, Bangla Bazar in Gazipur Town and buys the necessary products to sell from his koisk. In these villages, only 45% people have their own television set at home. The female populations in these villages usually watch TV at home & those

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who do not posses TV; they went to their neighbors houses to enjoy TV program. But the male communuity generally watches TV programs in groups at local meeting places like retail shops. For this reason, in villages almost 70% to 80% retail shops have small television sets, so that more local people will be coming here to enjoy different programs like cinema, sports & news in groups. Because of the TV program attraction, customers are spending more time in these shops, then they take tea & biscuits, while watching TV program & discussing on various issues. Anowar Ali, Al Amin, Babul Mia & Md. Aziz are on of several regular customers in Abdur Rashids shop & shops like these are also considered as a meeting place for the villagers where they sit & discuss on various local issues. Such daily gatherings of local people & having a cup of tea with Energy glucose biscuits is an integral part of village life. Generally in rural areas of Bangladesh, there is not much variety of packaged foods & bakery items which can serve the purpose of quick snack. Only some biscuits & cookies are famous as snack food. In the local retail outlets of gozariapara, Energy Plus from Olympic Industries, Glucose Biscuit form Dekko Group and some local biscuits are available. The factory of bakery products of Olympic Industries is located in the Madanpur locality of the district of Narayangonj. It is due to the efforts of Olympic Industries to capture sales from rural market, especially in the Gazipur, Narshighdhi, Narayanganj district, some brands of Olympic biscuits and bakery items are now getting available in the villages of those areas. Olympic Industries Limited (OIL) was established in 1979. For more than 30 years, OIL is a leading FMCG manufacturer based in Page 2 of 7

Bangladesh. It manufactures markets and distributes biscuits, candies, dry-cell batteries and ballpoint pens. Biscuits Products of Olympic are: Biscuits Energy Plus Tip Crackjack Classic Crackjack Spicy NEW New Glucose Olympic Elachi, Orange & Milk Pric e 12 10 8 Biscuits Milk Plus Orange Plus Marie Gold Milk Marie Popular Pineapple Cream Premium Cream - Pineapple & Orange

Pric e

Bakery & Biscuits Sales volume at retail outlets in villages of Gazipur district during the last 5 years
1,600,000 1,400,000 1,200,000 1,000,000 800,000 600,000 400,000 200,000 0 2005 2006 2007
Years

Sales in BDT

2005 2006 2007 2008 2009 2008 2009

Bangladesh supports a large rural population, with only 21 percent of the Bangladeshi people classified as urban in the year 2000. During the years of 1999-2000, Olympic was trying to generate more sales from rural markets. This was due to the fact that in urban areas, especially in metro cities, the market for bakery items & cookies is generally dominated by international brands such as Lexus, Britania,

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Cheezcrack, Parle G etc. In this scenario, Olympic focused on making rural sales through a distribution & promotion strategy that involves the effective role of authorized dealers and local sales representatives who work along with village retailers. In Tongi, Olympic has one of their products depots for temporarily storing their bakery products from which their authorized wholesalers and dealers channel the products to nearby localities. Distribution Strategy of Olympic: Factory/ Authorized Depots Gozariapara is a village of approximately 5000 people. In this locality, Production Dealers & Retailers Center Wholesalers there are four schools & one collage, one medical center operated by local NGO. On an average, for every 500 people or 100 families, there is one retail outlet (kiosk). During the last 10 years, there has been a considerable development in peoples lifestyle & economic conditions in Gazipur district. This is due to the fact that different garments companies, food processing plants etc. are setting their production stations and factories in these areas where the labor cost & location cost, are comparatively lower than urban areas. Due to such industrial factory establishments, most of the villagers are factory & garments workers, some others are involved in non agricultural works. The following table represents the population (age), occupation, income range and family size distribution of Gozariapara: Table: 1 Occupation distribution Occupation category Self employed in agriculture Self employed in non-agriculture (renting land for housing, % of people involved 15 35

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transport, retailers etc.) Others (factory workers) Table: 2 Population (age) distribution Age segment Children (< 12 years) Teens young adults & adults

60

% of local people 20% 25% 40% 15%

(<

50

years) Seniors, 50 years and above

Table: 3 - Income range distribution Income Range (per % of rural households 8 14 48 30 annum) Tk. 75,001 & above Tk, 50,001 75,000 Tk. 25,001- 50,000 Tk 25,000 & below

Olympic introduced Tip (tk. 10) and New Glucose (tk. 8) for the villagers with Tk. 25,000 Tk. 50,000 income range. Milk Marie (tk 15) and Popular Pineapple Cream (18) are sold by targeting the factory workers & other occupation holders who has comparatively higher income (Tk. 50,000 Tk.75,000). The most popular biscuit in the villages in Gazipur locality is Energy Plus (Tk 12) which is preferred for household consumption and quick snack item in daily local assembly in village bazaars and haats. Biscuits availability in Gazipur locality can be broadly categorized into the following segments:

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Biscuit Category Glucose Cream Marie Milk Salted Others

Availability in Percentage 44% 20% 15% 10% 8% 7%

In Gzariapara & some other villages like Haldoba, Olympic distributes primarily Glucose (like Energy Plus) biscuits, and then Cream & Marie biscuits. Cream Biscuits like, Popular Pineapple Cream are very famous among kids & teenagers. Recently, another Glucose biscuit is getting famous in this locality, which is Dekko Elachi, from Dekko Foods, 4 biscuits in a mini packet with bright red colored packaging & a price Tk. 2.00 per packet. This Dekko biscuit is very affordable for the villagers in terms of price and small quantity per packet also allows them to increase consumption because unlike urban people, rural population usually do not think of keeping varieties of biscuits & bakery items at home. More over, local kids can easily buy this 2 tk packet for their school time tiffin. Also, for villagers with lower income, dekko biscuit is price convenient. Now a day, Dekko Foods is focusing on spreading their products in rural Bangladesh. Other than biscuits products, Dekko foods sell packaged spices products targeting the sub-urban and rural locality. Now retailers like Abdur Rashid also prefers Dekko bisciuts as a saleable product for their shop. Dekko has started to generate rural sales by introducing Dekko Elachi in Different villages of Gazipur district. The market status shows that their mini packet Biscuit is accepted by villagers and there are much more potential for Dekko in rural localities to bring varieties of Bakery items & biscuits like Olympic to increase Page 6 of 7

their market share. As a result, in this situation, Olympics Energy Plus is facing a competitive situation from Dekko. Their Energy Plus is still doing welll in these markets but as because competitors like Dekko and others like Alamin Biscuits, Bengal Biscuits, Haque Brothers are constantly searching for ways to increase the spread of their product distribution and gain more market share, now Olympic must consider devising strategies on targeting their consumers with products that will give them greater value in terms of price, quality and availability.

Questions: 1. At current scenario, what market segmentation & targeting strategies Olympic is following in Gazipur locality? 2. Can there be other market segments in these localities that can be profitable for Olympic? 3. How Dekko targeting the rural market to get rural sales? 4. How can Olympic devise market segmenting strategy with their bakery products to limit Dekkos sales in the local market?

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