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I.

INTRODUCTION

A. Origin of the Report

Masters of Business Administration (MBA) is a comprehensive professional course


planned to widen knowledge in business. Internship is an essential phase of BBA
Program where students get the chance to discover the actual business world. As a
business student one must be acquainted with the conceptual and practical
knowledge of business. Thus, it is a significant task of the concerned business school
to make arrangements for the pupils to get the essence of professionalism.

The author was assigned this project by Prof Mizanur Rahman, Dept of Marketing,
Dhaka University . The topic of the Internship Report is GPDC (GrameenPhone
Distribution Center) A new distribution channel of GrameenPhone

B. Purposes

The internship program and the report have following purposes:


To fulfill the requirement of BBA Program.
To remain attached with an organization.
To do a project on a topic that helps to apply and utilize the academic
knowledge.

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Objective

The broad objective of this report is to provide with an general idea of the knowledge
gathered as an internee at GrameenPhone Limited, during the organizational
attachment period so that the theoretical learning can be related with the real life
business situation.

This report aims to achieve the following specific objectives:


To provide useful data in strategizing the distribution policy.
To depict the telecommunication industry of Bangladesh and to describe
GrameenPhone position in the industry.
To map the distribution channels used by GP in delivering the products to its
customers.
To find out the difficulties in the existing distribution channels.
To sort out a practical solution to the current problem, i.e., influence of gray
market

C. Scope of the study

The intent of the study is to understand the distribution channels followed by the
mobile phone companies to deliver the products to the ultimate customers. To be
more specific the internship program (and the report) concentrates only on
GrameenPhone distribution channels followed in delivering the products to the end
users. The study also describes different problems faced in the existing channels and
the Project work is a means to solve the present distribution problem of
GrameenPhone.

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E. Methodology

I. Study Design
The study is descriptive in nature. It was conducted using the qualitative instrument.
Depth interviews as well as assessment of different historical data were used to
analyze the present scenario.

ii. Source of Data

a. Secondary:
Majority of the secondary data was obtained from the Internet, Market Research and
Development Department of Grameenphone Ltd. Annual reports and different other
departmental analysis augmented this report to take a comprehensive shape.

b. Primary: In Depth Interview


In-depth interviews were conducted with the key marketing and sales personnel of
the GrameenPhone Sales and Marketing team. The idea was to obtain information
related to the distribution of GrameenPhone' product. Eight (8) dealer heads were
also interviewed to get the idea of the present situation. These 8 dealer heads are
selected on the basis of their sales volume.

F. Beneficiaries

This report has helped as instrument in clarifying the conceptual skills gathered
throughout the program. This exposure gained through working in the distribution
department of the company, GrameenPhone Limited has enabled to acquire practical
experience about the real marketing channeling used by a mobile operator. In the
future, this report will act as a guideline and provide valuable information to students
preparing similar reports. This report will be also helpful for those who are
conducting study on the mobile phone industry in Bangladesh.

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G. Limitations

Marketing has a vast area of operation it is not possible to enclose all the topics with
in a few pages of a report. Even operation and execution of distribution channels is
the composition of different factors that could not be depicted properly. Lack of
professional research expertise is weak area of the study. Most of the calculations
had to be made based on GPs figures as the industry average. Most of the relevant
literature and study materials on the telecom sector were not updated, and no
comprehensive in-depth study on the cellular industry could be found. Confidentiality
of information has limited the extent of presentation of this part of the work.
Respondents declined to furnish categories of information treated as business
secret, for obvious reasons.

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II GrameenPhone Limited: An Overview

A. About GrameenPhone

GrameenPhone (GP) has been established to provide high-quality GSM cellular


service at affordable prices. GrameenPhone has a dual purpose:
To receive an economic return on its investment
To contribute to the economic development of Bangladesh where
telecommunications can play a critical role.

B. Historical Background

In 1996, Bangladesh was preparing to auction off private cell phone licenses to four
companies. So at the supervision of Dr. Muhammad Yunus (Grameen Banks founder)
but completely independent of Grameen Bank, a not-for-profit private company
called Grameen Telecom was created. Grameen Telecom, in turn, created a for-profit
company called GrameenPhone, found a foreign partner, and put in a bid;
GrameenPhone received one of the four licenses. GrameenPhone was offered a
cellular license in Bangladesh by the Ministry of Posts and Telecommunications on
November 28, 1996. The Company launched its service on March 26, 1997, the
Independence Day of Bangladesh

GrameenPhones total capitalization was US$120,000,000, including around US$50


million from IFC/CDC, and the Asian Development Bank (ADB). It also received
US$60 million in equity from the two GrameenPhone private partners. These were
the Norwegian Telenor with a 62% share, GrameenPhones another partner is
Grameen Telecom (with 38%), and they borrowed US$10.6 million from the Open
Society Institute to set up Village Phone.

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GrameenPhone launched service in urban Dhaka on March 26, 1997. It makes its
profits by serving wealthier urban customers. But from the point of view of the
Grameen family and its strong anti-poverty mission, the for-profit, urban-only
GrameenPhone exists for only one reason: To fund, with its profits, the extension of
cell phones into rural Bangladesh in order to provide entrepreneurial opportunity to
Grameen Bank members through Village Phone. As Dr. Yunus puts it,
"GrameenPhone is merely what we need to do Grameen Telecoms Village Phone."

Three important and interesting structural aspects of operation on the largest scale
are:

First, that the not-for-profit Grameen Telecom actually owns the for-profit
GrameenPhone. The reason for this structure is that Grameen wants Grameen bank
members-- impoverished women who borrow from Grameen Bank-- to become
owners of the profit-making GrameenPhone.

Second, once GP becomes profitable, GT will sell its GP shares to GB members.

Third is an understanding-- not made explicit in any legally binding contract but
arrived at in the shareholders agreement-- that after 6 years of GP operation,
Telenor and GT will actually switch ownership positions: Grameen Telecom will sell its
38% share to Telenor and Telenor will sell its 62% share to Grameen Telecom, which
will thus become the dominant partner and true manager of the system.
GrameenPhone is thus an unofficial, non-traditional form of Build, Operate, and
Transfer.

"GrameenPhone" might have been born in Bangladesh, but soon it is likely to join the
international cellular jargon. GSM MoU Association at GSM World Congress in Cannes
where many villagers made their first-ever call using pre-paid, recently rewarded
rural cellular marketing, by Vodaphone in South Africa. "GrameenPhone, the unique
cellular operator from Bangladesh, also made an impressive presentation at Cannes.

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Founding Partners of GrameenPhone

GrameenPhone is a joint venture company comprising of:

1. Telenor A state-owned telecommunication company from Norway. It has a long


history of successful cooperation with other operators in Russia, Hungary,
Montenegro, Ireland, Bangladesh, Greece, Germany, Germany, Australia,
Malaysia etc.

2. Grameen Telecom - A sister concern of Grameen Bank. It was established by


Grameen Bank to organize and assist those Grameen bank borrowers who wish
to retail telephone services in the rural areas.

3. Marubeni Corporation A leading investment and trading company from Japan.

4. Gonofone Development Corporation A New York-based telecommunication


development company having investments in many companies in USA, Russia and
other parts of Europe.

These four companies owned shares of GrameenPhone in the following manner:

Table: Funding partners of GrameenPhone Ltd.


Company Percentage of share (%)
Telenor 51.0
Grameen Telecom 35.0
Marubeni Corporation 9.5
Gonofone 4.5

Figure: Share holders of GrameenPhone Ltd.

But currently Telenor holds 62% share & Grameen Telecom holds 38%
share

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C. Mission, Vision, Objectives & Strategies of
GrameenPhone

i. Company Vision: Ideas that Simplify

ii. Company Mission

The vision will be achieved by


Connecting Bangladesh with ease and care
Being user-friendly
Providing value for money
Providing simple and timely connections
Having a right and understandable process

iii. Objectives of the GrameenPhone

GrameenPhone's basic strategy is the coverage of both urban and rural areas. The
Company has devised its strategies so that it earns healthy returns for its
shareholders and at the same time, contributes to genuine development of the
country. In short, it pursues a dual strategy of good business and good development.

Serving the mass market is one of GP's primary goals. By serving the general public
as opposed to niche markets, the Company plans to achieve economies of scale and
healthy profits. At the same time, service to the general public means connectivity to
a wider population and general economic development of the country. In contrast to
the "island" strategy followed by some companies, which involves connecting isolated
islands of urban coverage through transmission links, GrameenPhone builds
continuous coverage, cell after cell. While the intensity of coverage may vary from
area to area depending on market conditions, the basic strategy of cell-to-cell
coverage is applied throughout GrameenPhone's network. In addition, GP has
positioned itself to capitalize on the declining prices of handsets, making its goal to
serve the general public realistic.
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iv. Company Strategy

GrameenPhones basic strategy is coverage of both urban and rural areas. In contrast
to the island strategy followed by some companies, which involves connecting
isolated islands of urban coverage through transmission links. GrameenPhone builds
continuous coverage, cell after cell. While the intensity of coverage may vary from
area to area depending on market conditions, the basic strategy of cell-to-cell
coverage is applied throughout GrameenPhones network.

v. Company Service

GrameenPhone believes in service, a service that leads to good business and good
development. Telephony helps people work together, raising their productivity. This
gain in productivity is development, which in turn enables them to afford a telephone
service, generating a good business. Thus development and business go together.

a. Service for the Rural Poor

Establishing a nation wide network gives fair access to all geographical areas. From a
business point of view, this strategy serves both the long distances as well as the
rural markets. This emphasis on rural coverage brings a much-needed infrastructure
in the underdeveloped rural areas. In collaboration with Grameen Bank, which
provides micro-credit only to the rural poor, GP utilizes the bank borrowers to retail
telecom services in the rural areas. Leveraging on Grameen Bank borrowers reduces
the distribution costs of GrameenPhone's rural services, contributing to the
profitability of this segment.

By bringing electronic connectivity to rural Bangladesh, GrameenPhone is bringing


the digital revolution to the doorsteps of the rural poor and unconnected.

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b. Village Phone Program
The Village Phone program is GrameenPhone's unique method of bringing
connectivity to the rural areas of Bangladesh. This program enables Grameen Bank's
borrowers to retail telephone service in their respective villages, and has the
potential to penetrate the rural areas rapidly and effectively.

A typical Grameen Bank borrower takes a loan of Tk 6000 without collateral from the
Bank to purchase, say, a cow. The cow would then produce milk that the borrower
could sell to her neighbors enabling her to make a living and pay off the loan. The
process allows the poorest of the poor to stand up on their feet. In the case of
Village Phone, a telephone also acts as an income generating mechanism for a
borrower; a telephone serves as another "cow." A woman borrows about Tk20, 000
from the Bank and purchases a handset and sell telephone services to the villagers,
making a living and thus paying off her loan. It creates a self-employment
opportunity in each village and provides access to telephones to all.

Grameen Telecom, Grameen Bank's arm for administering the Village Phone
operators, typically selects women by considering past borrowing records with the
Bank. There are 2144 Village Phones in operation today and soon thousands of
Village Phones around the country are expected across rural Bangladesh.

C. Products and Services of GrameenPhone

The products of GrameenPhone can be characterized as:

Post Paid

Pre-Paid

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i. POST PAID

Explore 1

Explore 1connects to BTTB local, BTTB-NWD (Nationwide Dialing), ISD (International


Standard Dialing), all GrameenPhone mobiles, other mobiles and receives calls from
the same. Recently all Explore 1phones have been given the mobility facility that
enables a Explore 1mobile holder to receive and send calls from anywhere in the
country (under GP coverage). This product has Friends & Family offer for 3 GP
numbers.

Explore 2

Explore 2 / 500 is same as Explore 1connections which connects to BTTB local,


BTTB-NWD (Nationwide Dialing), ISD (International Standard Dialing), all
GrameenPhone mobiles, other mobiles and receives calls from the same. The main
difference is that Explore 2 / 500 has a bundle fee of TK. 1000/= for which the
subscriber will get 450 / 500 min talk time free for GP-GP outgoing call. This product
dont have Friends & Family offer.

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ii. PRE-PAID

SMILE

Introduction of GrameenPhone's SMILE Service is another development of mobile


telephony in Bangladesh. EASY has National Roaming facility and a flat airtime
charge of Tk. 6 per minute. There is no incoming charge.
This service helps the subscriber to control costs. It frees the subscriber from the
hassles of paying bills, security deposits and line rents. But it contains nearly all
services available in other GP products. Subscribers can subscribe the service from
all GP authorized points of sale. To start with, one has to buy the EASY Starter Kit
and a handset. The Starter kit contains a pre-activated SIM card and a Green EASY
card. The Starter kit costs Tk. 800, the Green EASY card worth of Tk. 50 is provided
free.

SMILE PSTN

SMILE PSTN is same as SMILE while it connects to BTTB local, BTTB-NWD


(Nationwide Dialing), ISD (International Standard Dialing), all GrameenPhone
mobiles, other mobiles and receives calls from the same. Easy Gold has a flat airtime
charge of Tk. 6 per minute and 2 incoming from T&T. There are no incoming charges
from mobile.

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Table: Total number of GP products that are existing in the market

Serial Product Connects to Receives From


Mobile, BTTB Local, *NWD and Mobile, BTTB Local, NWD
1 Explore 1
**ISD and ISD
Mobile, BTTB Local, *NWD and Mobile, BTTB Local, NWD
2. Explore 2 / 500
**ISD and ISD
5. "EASY" Pre-Paid Mobile Mobile
Mobile, BTTB Local, *NWD and Mobile, BTTB Local, *NWD
6. Easy Gold
**ISD and **ISD
Mobile, ISD, NWD and
6. Village Phone Mobile, ISD, NWD and Local
Local

*NWD-Nationwide Dialing, **ISD-International Standard Dialing

All the GP subscribers enjoy a number of GSM Features and Value Added Services
(VAS):

E. GrameenPhone Marketing Strategy 2005


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Having a market share of 62 %, GPs main strategy for the year 2005, is to have
more focus on the high end market that is to move upwards in the segment
pyramid.

The strategic positioning of GrameenPhone will be to stay in the number 1


position with a market share 60-62% and to be the first company to introduce
Airtime Bundling options and Interactive SMS.

GP will introduce approximately 8 airtime bundling options and new products and
also plan to deliver customized product offering to its three market segments.

i. Main Strategies

Having a market share of 62%, GPs main strategy for the year 2005, is to have
more focus on the high end market that is to move upwards in the segment pyramid.
Apart from that, the overall strategy is also to retain high revenue generating
subscribers by building loyalty & encouraging usage and cater to the needs of the
different segments by developing new products..
The main strategies to be followed are shown below:

Grow upward into high range segments

Retention of customer base (high revenue generating customer)

Grow into mass market

Developing new products targeting new segments

ii. Key Success Factors

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Parameters granted as success factors by all segments are

* Coverage
* Satisfied Customers
* Easy Availability
* Customer Care
* Law Abiding Company

All of these success factors are lead by a major group. In order to keep the
Customers satisfied, we will provide affordable products and value added services.
GP will do strong branding that will strengthen GPs position in the market and help
maintain its image of being the market leader.

Distribution partners will look for profitable company and business in order to
enhance their business further. Affordable products and VAS which gives Value for
money and also strong branding will be favorable in the best of achievements for the
company. Satisfied Employees in a company always provides the best of output.
This issue reflects itself where skilled and satisfied employees come of benefit for the
company to be a profitable one and business comes of benefit to the employees.

iii. Strategic Positioning of GrameenPhone

To stay in the number 1 position with a market share 60-62%.


To be the first company to introduce Airtime Bundling options and Interactive
SMS.
To maintain affordable startup cost for target customers.

iv. Positioning of New Products & Tariff Options in 2005

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GP plans to deliver new products and new features to the market in 2005 which have
been planned keeping the need of different segments in the market, purchasing
power, and usage pattern.

Lifecycle
Cost Focus Area
1 Pride Talk
High in 2004
a Friends & Family
b Night Speak
GP
Regular

Focus Area Explore 2 2 Anytime 450


in 2004
5 VALUE M2M

GP-GP 6
National
Anytime 300
Any Time 300

High Services
Low 3 4SMART
EASY Standar
Pre-Paid d Djuce Offered

Village
Phone

Low

Legend:

Existing Product New Product New Bundling Options

Figure4.1: Positioning of new products & tariff options in 2004

Note:
* Lifecycle cost includes start-up cost, access fee, and tariff.

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* Services offered include mobile to mobile connectivity, PSTN connectivity, NWD,
ISD, International Roaming facility, SMS, VMS, and info services.
* For details of the new products numbered in the illustration, refer below:

v. Distribution Strategy

GrameenPhone distribution plans to increase distribution coverage in line with the


company goal ensuring easy availability of new product offerings to the respective
subscribers by motivating the channel partners to establish a more effective &
efficient distribution channel.

In the year 2005, GP distribution will follow the following strategies:

Ensure availability of GP products & services through POS located in close


proximity of target market(s) and in both new & existing coverage areas.

Increase channel partner motivation to generate quality sales in higher revenue


segments.

Introduce (automated) sales management system in phases within Distribution


Channels to ensure efficiency and accuracy.

Training the channel partners to further improve their skills with respect to
reporting, following routines, time management, educating customers, and effective
selling.

(Introduce uniform profiling of POS throughout the country to maintain GPs image
and bring in more customers to the POS.

vi. Logistics Strategy

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Logistics being the process of planning, implementing, and controlling the efficient,
cost effective flow and storage of materials (handsets, SIM) , in-process inventory,
finished products and related information from point of origin to point of consumption
for the purpose of meeting customer requirements, strengthens the company goal by
pursuing the following strategy

Eradicate impediments of logistics flow


Ensure faster, reliable and continuous flow of products
Make the products available at all the GP authorized POS within the shortest
possible time.

vii. Pre-Paid Card Distribution Strategy

Under the Logistics Department falls the Prepaid Card distribution section. Prepaid
Card distribution is an imperative resource considering the company goal associated
with achievements in the mass market. The strategy followed by the distribution of
Prepaid Card is

Ensure the easy availability of Pre-paid Cards through out GP coverage areas
and at GP authorized POS.
Strengthen distribution system by implementing more control
Further improve service through distributors & GP authorized POS to end
users of pre-paid cards.

viii. Brand Strategy

Brand strategy of GrameenPhone is based on building credibility by promoting key


brand pillars heavily and presenting the company to all in a committed manner. GP
will build wide brand proposition with focused message, realigning brand imagery &
way of communication through expanding media scope, investing in mass
sponsorship and taking advantage of the media as well.

ix. SWOT Analysis


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Strength

Coverage
International Roaming
Distribution Channel
Pre-paid Service
Provide low priced quality handsets & choice
Connecting Bangladesh with ease and care
Being user-friendly
Providing value for money
Providing simple and timely connection
Having a right and understandable process

Threat Opportunity

Lack of required finance Unmet Demand


Aggressive Marketing from other Flexible billing system
operators Further expansion of Network
Take over of Distribution channels More interconnection with BTTB
New GSM operator Favorable Regularity authority
Better relations of other operators New & innovative products &
with regularity services services
Improved product & services Virtual operator
Increased churn Airtime Bundling & Loyalty
Network expansion by other bonus
operator Utilization of IT resources
Increased ITX capacity

Weakness

Network capacity limitation


Billing inflexibility
Deviated from original Business Plan &
Marketing Plan
Growing customer dissatisfaction
Limitations in Pre-Paid platform
Lack of follow up

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III. THE PROJECT

A. Distribution Channels

Distribution Channels are set of independent organizations involved in the process of


making a product or service available for use or consumption.

B. About Distribution of GP Products

GrameenPhone has a well planned and well structured distribution channel.


Currently, there are 422 outlets that account for 96% of the total sales.
GrameenPhone also takes a more active role in partnering with the distribution
partners than its competitors. All newspaper advertising is done in conjunction with
the channel to help build channel business. In order to build a tighter relationship
with its outlets, GrameenPhone is developing training programs to help them target
and retain customers more effectively, as well as planning to build an automated
service activation system. Interior profiling of the outlets has been developed and it
is under further development so that all GrameenPhone outlets have similar design
and decorum to give a feeling of uniformity to everyone entering any GrameenPhone
outlet.

Since the inception of GrameenPhone, it has been very particular about its selection,
operation and control over its channel partners who are practically an extension of
GP to its subscribers and to general people. The selection process of all the channel
partners are highly standardized, and has become a model for Distribution Partner
selection process among top companies of the country. A range of tailor made
activities are carried out by the Distribution Department of GP before nominating a
channel partner. The logic behind the rigorous selection activity is GP believes in
taking only the best.

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GP Distribution Department also has a comprehensive monitoring and controlling
mechanism, which is put into effect through routine procedures as well as visits,
meetings, formal and informal interaction between supervising GP official and the GP
channel partners. The level of interaction and the controlling activities may vary from
channel partners to channel partners to some extent, bust the basic objectives and
criterions are deliberately kept at a uniform level. The first line of control is set by a
legal agreement between GP and the channel partner which clearly outlines the
followings:

The partner is clearly instructed about their rights and obligations.


Profiling.
Setting office and staffing.
Security deposit and stock distribution procedure.
Monthly sales target.
Sales procedures and after sales service.
Reporting to GP.
Payment and paper Submission to GP.
Commission calculation and disbursement.
Auditing the activities.
Evaluation of channel partners performance.

The supervising officers broad job description basically revolves around keeping a
close eye on the activities of the channel partner and reporting to his/her
management the ways and extend to which the channel partner sticks to the
guidelines delineated in the agreement.

Based on the agreement daily, monthly, quarterly routines have been devised and
clear procedures for sales, service, paper and payment submission, interaction and
reporting procedures are made and communicated to the partners from time to time
and through these activities and reports Distribution Department tries to maintain
effective control over its channel partners.

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Note: Here distribution refers to the distribution of handsets and connections not the
distribution of scratch cards.

i. Distribution Channels of GP

GrameenPhone (GP) views Distribution channel as sets of interdependent


organizations / individuals in the process of making GP product & services available
to the customer through Point of Sales (POS). GrameenPhone distribution channel
mix comprises of the different types of channel for making GP product & services
available to the customers.

ii. Channel levels used by GP

As we know there can be different levels of channeling made by the company in


order to reach the targeted customer group.

GP follows one level channeling model to reach its customers. The channel design is
as follows:

Grameenphone Authorized Customer


Grameenphone Authorized Customer
Channel Partner
Channel Partner

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iii. Objectives of Distribution Channels of GP

To maintain the largest mobile phone distribution channel in Bangladesh.

To ensure the availability of GP products and services throughout Bangladesh.

To create customer value through hassle free and convenient sales and after
sales service.

To provide one shop solution to the subscribers

To retain the GP channel partner to restrain the competitors from capitalizing


the existing channels of GP.

iv. Distribution Strategy of GP

Making the products available at all GP authorized POS within shortest


possible time.

Ensure quick presence of GP products and services in new coverage areas


through newly appointed POS.

Diversification of channel mix to cater to the different market segments.

Creating customer value through convenient sales service.

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C. Distribution Channel Mix of GP

GP uses four types of channels to deliver products to the customers. These channels
are unique of their own. The channels are as follows:

Sales Centers

Dealers

Outlet Agents

Individual Agents

i. Sales Centers :

Sales Centers are GPs own Point of Sales (POS) that sells directly to the
customer. There are 05 Sales centers in five different zones.

Features of Sales Centers:

It stands as a GP model outlet for setting standard of service for the other GP
channel partners.
Sales centers are fully controlled by GP.
Sales Centers can serve the segments of customer who want to buy GPs
product & services directly from the company.

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ii. Dealers:

Dealers have several Point of Sales throughout the country. Dealers are
Usually local agents of handset and provide after sales services on handsets.

There are two types of Dealers as mentioned below:

a. Exclusive Dealer:
Dealers exclusively dedicated to GP product & services only are termed
as Exclusive Dealers. i.e. Grameen Telecom, Startel.

b. Shop in Shop Dealer:


Established brand of Dealers outlet where a specific area within a shop
is allocated for GP products are of this segment. These Dealers are
engaged in other business on their own and they are already reputed for
that as well. i.e. Butterfly Telecom Limited, Flora Telecom Limited.

Features of Dealers:

1. Operational cost is greatly reduced and economies of scale are generated.


Most GP distributors are renowned and successful in different brand item
sales and distribution throughout Bangladesh. This brand image, experience,
goodwill and strong financial base can benefit the POS.

2. Dealers are suppliers of different handset brands. Therefore, its POS may act
as service point for that particular brand. That will ensure customer service,
repeat purchase and additional income through handset service by the POS.

3. This will ensure healthy competition among large GP channel partners as well
as ensure uniformity in management, profiling and commission structure.

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4. Dealer can serve the segment of customers who want to have the handset
from its dealer. As GPs dealers are the importer of different handset, they
can surely serve the purpose.

iii. Outlets:

An outlet operates in one particular locality. They can only sale the GP product &
services of GrameenPhone. Example: Orange Telecom, Queen Traders, Air Cell.

Features of outlets:

The control of GrameenPhone is greater on the outlets, as GP officials


directly supervise all of the outlets.

As the Outlets are fully dedicated for GrameenPhone, the salespersons can
contribute to enhance GPs brand image by more dedication in selling of
GPs product.

Branding is possible in the outlets (Unique Profiling of POS) which


eventually strengthens the position of GP as a brand in the market.

In case of discontinuation of business of Dealer POS, there would still be


presence of GP with its outlets.

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iv. Individual Agents:

Individual Agents are sales people who sell GP products and services from door to
door.

Features of Individual Agents:

1. In some places, setting up an outlet is not feasible due to the small size of the
target customer. Individual Agent can play role in these places.

2. Some customers (especially busy peoples) are reluctant to go to the Dealer


POS or outlet to buy GP product. Individual Agents surely meet the demand
of this group by reaching the product to their doorsteps.

3. Individual Agents can sell the products even when the Dealer or Outlet POS
are closed (during Holidays and Vacations) ensuring round the clock selling of
GP products and services.

D. Functions of Distribution Department

Appointing Distribution partners

Profiling of Point of Sales (POS)

Product distribution and sales

Training and development of channel partners

Reconciliation

Disbursements of commission

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E. Reasons for restructuring the distribution channels

i. Dealers Control

Although GP has three different channel wings to support its sales activities, Dealers
are the main streams of the distribution channel mixes within GPs system. Its
happened because of the following reasons:

Firstly, the dealers have a huge investment. Generally, in order to be dealer an


organization need to have crore of takas. Because, dealers need to operate within
the country. Till today GP has ten dealers. All of them are well renowned within
different corners of the country because of their businesses. On the other hand other
two wings of GPs channels (Outlet and Agent) are not financially as strong as the
dealers. These two wings (Outlet and Agent) generally operate within the specific
regional scope, not in the whole country.

Secondly, since dealers operate within the whole country, they have better coverage
of the market in compared to other two wings (Outlet and Agent) of distribution.

These two factors made dealers the attractive wing of operation. Thus, they also
have to go through though commitments. As, we all know the mobile market is
growing every day and all the operators are constantly fighting each other to reach
their expected market share. Thus, in order to keep with the market pace, even GP
has a steep target of sales. These targets are generally split within the total
distribution channels for implementation. Yet, as the dealers are the giants of the
distribution, they have to swallow the bigger bite of the market share without any
compromise of course.

In doing so, sometimes the distributors set their own rules in the market. They take
different imitates that work as catalyst in sales but harmful for GPs image.

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ii. Price Discrimination

GP provides a set of different standardized products in the market. Basically, GP sells


connections which are popularly known as SIM. Yet, as our Government prohibits the
operators to sell SIM separately, operators have to attach handsets to sell SIM.
Initially that was not a problem. As the GP products were sold with handsets
generally known as package.

In a short period of time a new problem occurred. In order to have a better market
control the handset providing dealers who are also GPs trusted dealers started to do
the split sale offering lower price for both the SIM and the handsets. This strategy
of the dealers really helped dealers to keep pace with both the market demand and
control, yet GP started to lose control over the market and over the people.

iii. More channeling than desired

As the saying goes nature shapes everything the market has taken a distinct shape.
Although GP planned for only two levels of channels between the customer and the
product, there are sometimes more than two channeling phases working in the
middle. One of the very important channel segments is the curb market.

As said earlier that the mobile phone market is growing very fast, the marketing
instruments are also taking newer shape. Though GP planned to sell only the
packages, the dealers could not do so as they also import handsets for the market.
In order to sell the handsets in the market dealers need to depend on the curb
market. The dealers cannot sell the handsets directly from their franchises as they
are authorized for selling only the GP packages.

Thus the dependency on the curb market has given raise to a newer channel. This
channel helps dealers, to some extent outlets to reach their targets, but diminish
GPs control over the marketing channels.

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iv. Influence of the curb market

As GP has discovered the curb market is a major wing of the total market in our
country and the curb market controls the main functions in generating the sales. The

odd part is that GP does not have any control over the curb market.

v. Alternative Channeling

It has been observed that a big chunk of sales comes from unstructured sales
generally known as curb market. The tendency of the curb market is to distort the
desired market positioning of GP. The curb market is growing fast and eating away
the market share and market control of GP. So, GP has a thought of developing an
alternative channeling system. The objectives will be;

To increase GPs own entity in the market.

To restrict the influence of the curb market.

To have more access in the market.

vi. The current market scenario

The mobile market is evolving very fast. With the increased demand the change in
mobile market has affected GPs structured channels. Curb market is successful in
creating its own position in selling products to the customer without even providing
the required service(s).

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The following tables and graphs will help to understand the present market situation
in a single look:

Table: The market share of curb market sales relative to the structured
sales

Structured Curb Market


Year Sale Total Sale
2000 131690 191690 60000
2001 279681 471371 191690
2002 334392 774881 440489
2003 417956 1140531 722575

Table: The growth of curb market relative to the structured sales

Curb market GPs Sales


Year Growth Growth
2000 0.00 0.00
2001 0.31 0.47
2002 0.44 0.84
2003 0.61 0.80

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Graph-3: The Structured Sales VS Curb Market sales

800000

700000

600000

500000
Sales

GP Channel Sale
400000

300000 Curbe Market

200000 Linear (Curbe


Market)
100000

0
2000 2001 2002 2003
Year

Note: The different sales figures (i.e. total sales, structured sales, curb market sales
are only GPs sales)

The above statistical presentation depicts he real market scenario consisting of the
curb market. The existence and the growth of the curb market are clearly visible. In
graph 3 and in graph 4 the curb market growth and the curb market trend can be
seen. The important part is that the curb market is taking away the GPs structured
market share sharply. Thus, if it keeps going on like this, the threat is that GP could
lose its market control over the total mobile market in near future.

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The above situation forced GP to give a second thought about its channeling. In
order to achieve the target market control and market positioning, GP gave a
thought of restructuring its present marketing channels. The following channel
instruments are used in maturing GPs intention of market existence.

F. Project GPDC: A modified version of existing channel

i. Background of the Project GPDC

Project GPDC was launched in July, 2004. Before that Market was dominated by 7
10 informal market leaders. They had greater control over price. Dealers are
squeezed for price and other benefits by them. Besides, GP had lesser control over
authenticity of subscription papers as the unauthorized sales points supplied false
subscription papers. Moreover, Lack of system in distribution of stock throughout the
country by the informal leaders was prevailing. GP Lacked information regarding:
sales, area of sales, area demand.

ii. Objectives

To meet the ever-growing sales target.

To have a control over the curb market

To stop price discriminations in the market.

To create means for the low performing outlets.

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iii. Steps to be considered to mature the GPDC Project

Firstly, the market to be made dry before launch GPDC. This will create a vacuum
and let GrameenPhone establish its control.

Secondly, in order to smoothing the distribution process GP curtails gray market


and ensures freelancers not to get stock from dealers.

Thirdly, freelancers will negotiate with GP and with dealers for ensuring the flow of
stock.

Lastly, The dealers and GP will take the initiative to make the collections of
subscription papers and payments.

Flow Chart of GPDC functions

GrameenPhone Dealers Freelancers

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Subscription Paper
&
Payment

iv. Registration Criterion for the Freelancers

Dealers should recommend their third party contacts for registering with
GPDC.

Freelancers should have experience in selling GP products from unauthorized


point.

Able to finance 5 to 20 lacs taka at a time

Every freelance must agree to take 50-200+ connections at a time.

Strong network of retailers to be ready involved in connection sales.

Payment mode should be cash or DD.

Have a permanent office, checked out by GP.

Skilled manpower to keep books, arrange paper and customer service

Long term commitment to sale GP product only

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v. Registration Flowchart

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vi. Delivery & Collection Process

vii. Project GPDC Structure

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DGM, Distribution

Manager Manager
Manager Manager
Zone 1 Zone 2

Officer Officer Officer Officer


(DNC) (DNC) (DNC) (DNC)

Officer Officer
(DNC) (DNC)

Other Zone 1 Dhaka Other Zone 2

viii. Categorization

There are basically two different categories involved in the market, i.e. Wholesalers
and Retailers. The pricing for these two categories of market players are as follows;

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A) Wholesalers (W) Tk. 1,100
B) Retailers (R) Tk. 1,200

All the registered POS have been categorized in to the two categories (100-W & 550-
R)

ix. Market response to GPDC

As the new distribution process brought a new dimension of development in the


overall GPs distribution process, it (the project) also had different impacts over the
present curb market operations. Some of the important phenomena can be depicted
as follows:

The big informal market leaders trying to create under-rate, as their third
parties are breaking off from them.
Retailer confidence on selling GP products have increased substantially
Small & medium wholesalers are interested in doing business with GP.

x. Milestones & Achievements

There are several important achievements involved with the T004 project. Some of
these are as follows:

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The Kits (Prepaid SIM) are being delivered to the registered informal market
POS @ Tk. 1,100 (fixed and flat rate) D& C points are fully within GP
control.

Average activation have risen from 1200/day to 4500/ day, this shows retailer
confidence on GP products/ stable-price.

Creating new wholesalers & potential new wholesalers.

End-customer price is stable at Tk. 1,200 (+/- Tk. 10).

The standard for Kit-price has been set in the market.

People have registered from out of Dhaka, the informal market leaders are
under pressure of losing parties (as they call it).

IV. FINDINGS

Alternative Channeling:
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It has been observed that a big chunk of sales comes from unstructured sales
generally known as curb market. The tendency of the curb market is to distort the
desired market positioning of GP. The curb market is growing fast and eating away
the market share and market control of GP. GP had planned to develop an alternative
channeling system for the proper and effective distribution of their products.

Supervision over Dealers for better performance:

GrameenPhone is now directly considering the third party as the means to deliver
the product in the market. GrameenPhone is registering the total of the curb market
into its own distribution channel. Thus GrameenPhone is in the position to have
more control over the dealers as well as the market, as the curb market people are
different wings of the dealers to provide all the necessary services to the customers.

Making partners in minimizing the threat of curb market:

With the inauguration of GPDC project, the third party people were made partners of
GrameenPhone. These people were registered formally with GrameenPhone. They
are also given different distribution related instruction for smoothing their market
penetration and operation. Thus these people came closer to GrameenPhone
operational level. At the end with GPDC GrameenPhone successfully became closer to
the curb market and made them business partner of GrameenPhone.

Quick and better market response:

After introduction of GPDC GrameenPhone was able to be more close to the curb
market. As GrameenPhone directly registered different third party people and
coordinated distribution through them the market vigilance developed in a better

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way. Thus it became easier for GrameenPhone to get market response. Now
GrameenPhone can get market information very quickly and effectively as market
change occurs.

III. CONCLUSION

Each year GrameenPhone is achieving a huge sales target in order to retain its
market share and have grater control over the market. GP is utilizing its marketing
channels for recovering its objective. Yet, it is not as simple as it seems. GP relies on
the structured distribution channels for the sales and services for the GP products.
These GP channels partners are also in tremendous pressure in executing the
required sales every month. So, they have to depend on the third party, generally
known as the curb market. The problem starts from this point as the curb market
has its own way of maturing sales and expansion. The curb market actually distorts
GPs exclusive policy and product delivery concept. The curb market establishes new
price and different variation of the original GP products which are really unwanted by
GP. GP is also conscious about losing the control of the price of the product. In order
to bring in harmony GP has decided to modify and develop the existing channels to
have sound operations and control.

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