Internship Report by Umme Salma

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AN EMPIRICAL STUDY TO FIND OUT THE OPTIMAL PRICE FOR HOT TEA SHOP CONSUMED TEA AND MEASURING THE VALUE FOR MONEY PERCEPTION (VFM INDEXING) OF MIRZAPORE BOP

by

Umme Salma ID: 0410167

An Internship Report Presented in Partial Fulfillment of the Requirements for the Degree Bachelor of Business Administration

Supervised By

Mr. Aminur Rahman Associate Professor School of Business

INDEPENDENT UNIVERSITY, BANGLADESH May 2008

Letter of TransmittalMay ,2008 To Aminur Rahman Associate Professor School of Business Independent University, Bangladesh Dhaka

Subject: Submission of final report on An Empirical Study to find Out the Optimal Price for Hot Tea Shop Consumed tea And Measuring the Value for Money Perception (VFM Indexing) of Mirzapore BOP Dear Sir, Its my great pleasure to place my internship report for your kind approval. My internship report is on An Empirical Study to find Out the Optimal Price for Hot Tea Shop Consumed tea And Measuring the Value for Money Perception (VFM Indexing) of Mirzapore BOP. The observations and result of my study are embodied on this report. In addition to my careful study, this report has been a worth while review allowing me to go for in-depth analysis about real situation. This study allows to know about the optimal pricing policy of hot teas shop consumed tea. I would be always available for answering any queries on this report. I request your kind excuse for the mistakes that may take place in this report instead of my best effort. Thanking you Sincerely yours

. Umme Salma ID#0410167 BBA Major in Economics Independe3nt University, Bangladesh

DECLARATION

May, 2008

Dear Sir,

I, Umme Salma, student of (Economics) Bachelor of Business Administration of Independent University, Bangladesh hereby declare that the internship report of An Empirical Study to find Out The Optimal Price For Hot Tea Shop Consumed tea And Measuring The Value For Money Perception (VFM Indexing) of Mirzapore BOP is an original and bonafide work done by me for partial fulfillment of Bachelor in Business Administration degree, as a part of academic curriculum. It has not been submitted by me before for any other degree.

.. Umme Salma ID#0410167 BBA Major in Economics Independe3nt University, Bangladesh

AcknowledgementWhile I was preparing this internship report I had to take assistance and guidance from a number of persons to whom I am deeply indebted. At first I would like to express my gratitude to my esteemed teacher and supervisor Mr. Aminur Rahman for providing detailed feedback and advice on the research project. He always gave me his suggestions that were crucial in making the study as flawless as possible. I truly believe that saying, Thank You to all individuals of M.M.Ispahani Ltd. is not good enough to honor their support that I have been provided in preparing my report. My extreme gratitude goes to Mr. M Salman Ispahani for giving me the opportunity to do my internship in this organization. I also like to acknowledge Miss Fowzia Yasmeen, Manager Supply chain & Head of Market research, for precious support all the time. My appreciation also goes to Ashraf Uddin Ahmed, Deputy Manager, market Research, who is the supervisor of this research for his day to day monitoring, supervision and maximum assistance for the last 3 months. After all, the cooperation of my intern mate, Yaser Ahmed is worth mentioning. Finally, I would like to give thanks to all the respondents for their participant and data collector teams to assist me sincerely.

Umme Salma ID#0410167

AN EMPIRICAL STUDY TO FIND OUT THE OPTIMAL PRICE FOR HOT TEA SHOP CONSUMED TEA AND MEASURING THE VALUE FOR MONEY PERCEPTION (VFM INDEXING) OF MIRZAPORE BOP

AbstractThis study has been designed to measure the price sensitivity of an Ideal Tea of the Mirzapore BOP user (HTS). Price sensitivity Meter has been deployed to measure the price sensitivity. The psychological gap between the Value of Mirzapore Bop and its assigned price has been gauged by using Value for Money Index and Value of Product/Brand Value of Price Index. By operating the Price Sensitivity Meter the optimal price point for an ideal tea leaf (1kg) has been derived which is Tk 142.5. The results of VFM index shows that there is a negative psychological gap between the value of brand and the value of price which ultimately suggests price cut. But people don't always buy based on the lowest price, but they do like to feel they're getting a good deal. If an entrepreneurs aim is to give his customers value for their money then his/her asking PRICE should represent the VALUE customers place on his/her product or service. The Value for money index shows hot tea shop owners has negative psychological gap, they feel like they are getting a bad deal. The best thing to combat with this depressing condition is to uphold consumers perception of the value of Mirzapore BOP than to reduce price. As, Steven Bradley says Don't try to give your customers the best price. Give them the best value for the price.

BackdropM. M. Ispahani Limited having the motto Growing Tradition is leading the market with almost 45% share among the packaged tea marketers in Bangladesh. Ispahani offered variety of tea in the market maintaining good quality. Mirzapore Best Leaf is the leading brands for household consumers. But the Mirzapore BOP which is delivered to the Hot Tea Shop (HTS) consumers has been unable to grab the major market share. The tea market is a fragmented one with various other players combating to grab the market share. Some of the key brands, especially Hot Tea Shop (HTS) consumed tea, are thrusting for space in the consumer purchase basket as well as retailer shelf space. Among the household consuming brands, MBL is far ahead from the competitors, but BOP facing challenges from different competitors in different regions. In HTS category, most of the time consumers dont want to compromise with price and they dont have that much brand loyalty as well. Junior Divisional Managers weekly reports of M.M. Ispahani reveal that the overall demand for Mirzapore BOP is decreasing. Commensurately, the market share of BOP is falling. Some of the junior divisional managers point out to reduce price with maintaining quality. Others are suggesting for improving quality to justify the current price. Thus, Ispahani have to concentrate on the competitive weapon, the pricing strategy, to determine the best pricing policy by measuring the responsiveness or sensitivity to changes in prices to maximize profits. This study has been designed to measure the price sensitivity of an Ideal Tea among the BOP user HTSs. The meat of the paper would

also gauge the value for money perception of Mirzapore BOP. To dig out whether Ispahani should go for price cut or upholding its value.

Organizational OverviewIspahani- Growing Tradition, using the motto, M.M.Ispahani Ltd. , a renowned conglomerate consists of different business enterprise engaged in diverse business activities with quality product. Tea is the driving product of Ispahani family. Beside this, Ispahani has stepped into the textile, energy, food, shipping, real estate, and jute and engineering industry. The policy maker of the Ispahani feel that the company can make more money and sustain its marketing department profitably on the goodwill its has gained in the market. This believe is sub stained over the time and now it can be generally said that the goodwill is probably its single most important assets. The companys main area of concentration is the consumer tea packs that are fewer prices sensitive and hence yield a better margin. The current marketing strategy of Ispahani focuses on pushing only one brand. The basic aim of the company benefits is to popularize only one of its best brands in the market. The company believes in delivering the best quality tea at affordable to the consumer. It seems like putting all eggs into the same basket. There is a proverb- Dont put your all eggs in the same basket. Ispahani is just ignoring the concentration on trade pack (price sensitive) which serves the hot tea shop market. As a result one employees of sales depot of Ispahani reports the trade pack is loosing its demand. Although Ispahani spent a lot of money on advertisement and promotional activities, these cant pull the customers accordingly. It seems like Ispahani is just on its reputation

which has been earned earlier. But to pull the customers, no new promotional tool has contributed much. Infact, the advertisement of Ispahani is below average. Recently in this shaken agro-based economy of Bangladesh, to boost the agricultural sector, Ispahani has come up with its new product- Ispahani seeds with a view to serve the nation. In a way, Ispahani would help to build food sovereignty. Besides these, Ispahanis Market research division always devoted to introduce new business sector to open up the employment opportunity. Inflationary pressure and at the same time unemployment is going ahead to the path of stagflation. So, this type of endeavor of Ispahani to make the employment opportunity is worthy. Although Ispahani has footstep on several industry, Tea is the driving product of Ispahani family Ispahani tea is a household name across the Bangladesh. The family has been involved in the business since 183 years. Now its is almost a hundred corer business. Ispahani is diversified into tea production. It owns four finest tea garden in the country- Mirzapur, Gazipur, Zareen and Neptune Tea Estates Presently Ispahani tea is a domestic leader. Mirzapore Best Leaf is the leading brands for household market. But in the hot tea shop market to whom Ispahani cater Mirzapore BOP, the picture is not lucrative for Ispahani tea.

Problem definitionMirzapore BOP is loosing its demand. Whats the scenario behind that