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Chapter-1

Introduction

1.1) Origin of the report :

One of the unavoidable aspects of modern business studies is exposure to the practical
experience and the purpose of business studies is to make the students wind up their imagination
as well as to be innovative in this field. As a part of our course Fundamentals of Marketing, we
were assigned to submit a report on the topic “Developing Marketing MIX of mushroom chips
of HTP Limited”. Through this report we have experienced the activities of entrepreneurs.

We were assigned to develop the marketing mix of a product in Bangladesh. For this, we have
chosen to make a new product and a new company by ourselves, hypothetically.

1.2) Objectives of the report :

The main objective of the report is concentrated on generating new idea of a product and
developing its marketing mix. Overall, this study is to be conducted to fulfill the following
objectives-

i. To generate new idea about producing mushroom chips.


ii. To develop marketing mix for the new product.

1.3) Methodology of the report :

We have used mainly secondary data in our paper. The information of this study have been
collected from different mushroom producing companies as there is no current company who
produce mushroom based chips. The secondary data has been collected from the company
brochures, web sites and paper documents.

1.4) Limitation of the report :

Although, we have tried to complete the report with the best possible way, but we have face
some problems which are-

(a) We do not have enough resource as we are planning to produce a new product.
(b) Limited experience.
(c)We have faced difficulty in gathering relevant data from the local market.

Chapter: 2

Market, Company and Product Description

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2.1) Company Background:

Today’s market is very competitive & commercial. Presently an organization or a firm mostly
emphasizes on customers demand. Nowadays, a new trend is evolving, as consumers look for
more specialized services or products. We found this as a great opportunity for us. In recent
times, we have found that many Bangladeshis have shown their interests in consuming
mushrooms in their diet because they find them tasty and because they are also aware of its
health benefits bbut our research shows that there is a great lack of mushroom based snacks in
the Bangladeshi market though it has high demand among the health conscious people. We will
introduce “HTP Limited” as a specialist in making mushroom chips in the market. Our product
contains mushroom that is very good for health especially for children. In the beginning, we will
start our business as a private limited company which will produce only mushroom chips. If we
success in our primary business, we have plans to expand our business in producing other items
like mushroom cakes, pickles, sauces, soups etc.

Our slogan is-“Healthy Food, Good Food.

2.2) Product Description:

Our product is a consumer product which would add utility to a buyer’s life and meet the wants
and needs of targeted consumers. The specialty of our mushroom chips is that it will contain
mushroom that gives taste with good nutrition because it has the highest level of protein, sodium,
carbohydrate and less fat, Sugar, cholesterol, & so on.

The functions of mushroom includes-

i. Reducing blood cholesterol,


ii. Lowering blood pressure,
iii. Strengthening the immune system against diseases,
iv. Combating tumors,
v. Improving liver function etc.

The raw materials of our chips along with wheat and mushroom will be-

 White Mushrooms
 Vegetable oil
 White vinegar
 Red Chili Powder
 Sea salt

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We will use Oyster mushrooms in our chips because it has the highest productivity and
availability in our local market. All the other necessary ingredients of making mushroom chips
will be procured from the local market. Our product will be free from harmful chemicals. It will
contain less fat and sugar.

2.3) Market/ Industry growth:

The market into which the Mushroom chips will be entering is the food industry. It is a known
fact that the snacks industry has been flourishing in Bangladesh in the last couple of years. There
are many organizations in the market like Bombay sweets Limited, Meridian Foods Limited,
Pran Foods Limited etc who produce chips. But none of them are producing chips based on
mushroom. People now want to try new products and mushroom has a huge demand in the
market. So, it would be safe for us to conclude that the snacks industry is booming and that it can
be safe for the Mushroom chips to enter it.

2.4) Product Life Cycle:

Product Life Cycle Has 4 Stages- Introduction, Growth, Maturity And Decline. Our Product is
on its introductory level.

As it’s just the beginning, we need heavy cost of production and promotion. So ultimately our
expenses will be high, as we just started the business or entered the market and profit expectedly
will be low. We expect that this period will last for first couple of months of our business. In
introduction stage-

 Per customer cost will be high


 Low sales rate
 Profit will be low

2.5) Competitors and market share:

In snacks industry, there are many renowned companies having their products. Currently there is
no company in Bangladesh who produce mushroom chips but we have some industry
competitors. They are-

i. Bombay sweets Limited


ii. Meridian Foods Limited
iii. Pran Foods Limited
From various secondary sources, we have found find that Bombay Sweet chips have the highest
market share in the Bangladeshi snacks industry.

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2.6) SWOT Analysis:

SWOT analysis is a tool for companies to assess the industry and to develop strategies to remain
competitive. The overall evaluation of a company’s strengths, weaknesses, opportunities, and
threats is called SWOT analysis. It is a way of monitoring external and internal marketing
environment.

Strengths:

1. Providing quality product: As we are new to the market, we will give focus on providing
quality product to take a better position on customer’s mind and to build a good brand image.
2. Introducing a new type of chips: There are many types of chips are available in our country
but the chips we are going to introduce are new in the market. So it is strength for us.
3. Concentrated on providing proper nutrition: We are going to focus not only on quality
product but also on providing proper nutrition.

Weaknesses:

1. Reputation: As a new company we are going to launch new flavored chips we can find it
difficult to capture the market. It will take some time to create good response in the market.
2. Low consumer knowledge: Consumer may not have enough knowledge about our new flavor
of chips and it can be considered as our weakness.
3. Limited target market: We only target the customers of Dhaka city in our initial stage.

Opportunities:

1. Export: There are many branded chips are available in the world market but our chips can
create a large market in global market. We can export our mushroom chips to other countries.
2. Industry and lifestyle trends: People always want something new in taste. In this situation our
product can create a good position among customer mind as our product is unique in both
flavor and taste.
3. Large distribution: When we will have a good position in customer’s mind, we can get a
large market through large distribution.
4. Good communication with supplier & consumer: We will have good
communication with our supplier and consumer.

Threats:

1. Political effect: Our main raw material is mushroom. Government can implement any rule or
law against collecting our raw materials. It can be a threat for our business.

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2. New technologies and ideas: Every time there is using new technologies and ideas. If new
technologies and ideas come that we cannot adopt easily may be a threat for us.
3. Environmental effect: We can have environmental effect. Like if we face any big disaster in
future that can harm a lot to mushroom cultivation, we will face problem to make mushroom
flavored chips.
2.7) Market Segmentation & Targeting:

Target Market consists at a set of buyers who share common needs or characteristics that a
company decides to serve. Market targeting can be carried out several levels, like-

Undifferentiated Differentiated Concentrated


(mass) Marketing (segmented)
Marketing (Niche) Marketing

We have selected concentrated marketing which a firm goes after a large share of one or a few
segments or niches. As our company is completely new and have noel limited resources we have
targeted this, because we think through concentrated marketing, we can market more effectively
by fine-tuning our products, price and programs to the needs of carefully defined segments. Our
targeted customers are-

i. Initially the people of Dhaka city only.


ii. Health conscious people especially for children.
iii. The people who try to taste new flavor in chips.

2.8) Positioning:

Positioning is one of the greatest strategies of marketing. Positioning is based on price, product
competition, and end-goal strategy. Our sustainable competitive advantage will be our quality
centered product with new thought and ideas s well as comparatively low cost. We hope we will
get competitive advantage (gained by providing greater customer service) by differentiation of
our product and we are differentiated by-

 Product Differentiation – packaging, taste, size, consistency and reliability are


differentiated from our industry competitors which will give us an advantage.
 Channel Differentiation – We will have a strong channel coverage, expertise &
performance by which we will distribute our product more effectively and efficiently to
our targeted area.
 People Differentiation – We will hire & provide monthly training to our employees better
than our competitors.
 Image Differentiation – Our logo is totally unique and attractive than our competitors.

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Chapter-3

Budget & Pricing Strategies

3.1) Cost & Time Frame:

In the preliminary stage, we will launch mushroom chip for 2 years limited only in the Dhaka
city. Our total fixed cost will be 42 lac approximately. We assume our fixed expenses will look
like this-

Items Amount in BDT


Rent 12 lac
Administrative salaries 10 lac
Utility bills 1 lac
Insurance 2 lac
Raw materials & machineries 10 lac
Vehicles 1 lac
Telephone 50 thousand
Tax 50 thousand
Interest 1 lac
Sales & Marketing 3 lac
Miscellaneous 1 lac
Total 42 lac

3.2) Funding Mechanism of ‘Mushroom Chips’:

Types Percentage Amount Sources Collateral

Owner’s Equity 60% 2520000 Owners Funding n/a

Debt 40% 1680000 Lease financing Machineries,

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Bank Loan Generators etc

As we are introducing new business and it is in introductory level, our business would be private
limited company. We are planning to go for manufacturing of mushroom oriented consumer
products called “Mushroom chips”. So, we are expecting our total fixed cost will be 42 lac for 2
years business plan initially. As it is a new company so we are not expecting that we will be able
to get loan of big amount so we are mostly relying on our internal funding and expecting tax
holiday on profit from government. Our capital structure will be look like this-

3.3) Pricing Objectives:

Pricing objectives or goals give directions to whole pricing process. Determining the objectives
is the first step of pricing. Five major pricing objectives are-

 Survival
 Maximum current profit
 Maximum market share
 Maximum market skimming
 Product-quality leadership

We will try to gain maximum profit by selling Mushroom Chips to the customers.

3.4) Our Pricing Method:

There are several methods to set up the price for a business break-even analysis and target profit
pricing, cost based pricing, value based pricing, contribution pricing competition based pricing
etc. Between all of that, we have chosen cost-plus pricing as our pricing method.

We will figure out our costs and we will add our expected profit with that, and that will be our
price. We have fixed costs of total 42 lac for 2 years business and we want to earn a 25 percent
markup on sales. We will offer 2 different prices of mushroom biscuits for 2 different sizes-

1) Small size-25 gm 2) Large size- 60 gm

3.4.1) Small size price:

Variable Cost (VC) – 7 tk, Fixed Cost (FC) – 42 lac tk, Expected unit sales (EUS)- 21 lacs

So, to produce one small size mushroom biscuit packet, our cost will be-

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Unit cost (UC) = VC+ FC/EUS= 7 tk+ (42 lac/ 21 lac) = 9 tk.

We want a 25 percent markup, so our Markup Price will be= UC/ (1-Desired return on sales)
= 9 tk/ (1-.25) = 12 tk.

3.4.2) large size price:

Our large size will weight 60 gm. It will contain more biscuits than the small size. So, here
Variable cost will be high and we assume that it will be 18 tk. Fixed cost, expected unit sales and
markup on sales will be same as the small size.

Unit cost= 18tk+ (42 lac/21 lac) = 20 tk.

Markup Price= 20 tk/ (1-.25) = 26.67 tk.

3.5) Pricing strategy:

Pricing strategies usually change as the product passes through its lifecycle. In introductory stage
is specially challenging. Companies bring out a new product. That’s why we faced the challenge
of setting price for the first time. We have only one strategy which is,

.
 Market skimming pricing.

Market skimming pricing: Many companies chooses this strategy to set a high price for new
products to skim maximum revenues layer by layer from the segment willing to pay high price,
the company experiences fewer but more profitable sales.

We chose this as our pricing strategy as we are only going to enter the market. It is essential for
us to attract consumers as well as we have to make profits through our business. In our business,
at the introduction level, we will face huge amount of costs like innovation cost, machineries
cost, rent cost etc. Currently there is no mushroom Chips producer in our country. We are
assuming that in future there will be many mushroom Chips producers in our country inspired by
us but their costs will be less than us. So, they will be able to charge a lower price. To compete
with them we also have to charge lower price on that time. So, it would be pretty easy for us to
make revenue from our business if we charge a bit higher price than our industry competitors in
the introduction level. For this, we will give high importance on our promotional activities so
that people can attract to consume our quality chips.

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3.6) Comparison of prices with the competitors:

We want to maximize our current profit. To satisfy our pricing goal, we have to set
comparatively higher price than our 2 competitors.

Biscuits Amount Price


Alooz 25 gm 15tk
60 gm 40tk
Meridian Chips 16 gm 15 tk
25 gm 28 tk
Mushroom Chips 25 gm 12tk
60 gm 26.67 tk

Bombay sweets chips have the highest market share in the chips industry. We set a little bit
higher price than their same size chips packets but our price is not unnecessary or irrelevant. To
produce a quality innovative product, we have to charge this extra amount.

Chapter-4
Distribution of Mushroom Chips

4.1) Distribution Strategies:


This refers to how an organization will distribute the product or service they are offering to the
end user. The organization must distribute the product to the user at the right place at the right
time. Efficient and effective distribution is important if the organization is to meet its overall
marketing objectives. If an organization underestimated demand and customers cannot purchase
products because of it, profitability will be affected.

Two types of channel of distribution methods are available.


1. Indirect distribution involves distributing product by the use of an intermediary for
example a manufacturer selling to a wholesaler and then on to the retailer.
2. Direct distribution involves distributing direct from a manufacturer to the consumer
For example Dell Computers providing directly to its target customers. The advantage
of direct distribution is that it gives a manufacturer complete control over their product.
We will follow indirect channel distribution.
4.2) Distribution Intensity:

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Distribution Strategies
Depending on the type of product being distributed there are three common distribution
strategies available:
1. Intensive distribution: Used commonly to distribute low priced or impulse purchase
products such as chocolates, soft drinks.
2. Exclusive distribution: Involves limiting distribution to a single outlet. The product
is usually highly priced, and requires the intermediary to place much detail in its sell.
An example of would be the sale of vehicles through exclusive dealers.
3. Selective Distribution: A small number of retail outlets are chosen to distribute the
product. Selective distribution is common with products such as computers, televisions
household appliances, where consumers are willing to shop around and where
manufacturers want a large geographical spread.
If a manufacturer decides to adopt an exclusive or selective strategy they should select a
intermediary which has experience of handling similar products, credible and is known
by the target audience.

As a consumer product we will follow the selective distribution method.

4.3) Our Product Distribution Strategy:

4.3.1) Geographical Coverage: As a new organization, we made our product in such a way that
it can crate differentiated value for customers and can acquire and retain a position in consumers
mind relative to competing products. For this we have followed some strategy. We have also
followed the three steps of coverage and positioning task:
 Identifying a set of possible customer value differences that provide competitive
advantages upon which to build a position
 Choosing the right competitive advantage
 Selecting an overall positioning strategy
The main consumer of our product is city people specially the children. So initially we target
only in main city of Dhaka. We target and we will cover all the corner of Dhaka city. We also
follow selective distribution process. When we will be making profit, we will spread our
business in other districts of Bangladesh.

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4.3.2) Distribution Channel: The most important part of marketing is how our product will get
from the seller to the buyer. Many products go through a channel of distribution, which involves
manufacturers, retailers, and consumers. The distribution strategy proposed for our product is
through the large retailer stores and departmental stores like Agora, Nandan, Meena bazar,
Shwapno etc. After reaching all the large superstores, we will also try to reach our products in
smaller retail stores. Our Company will follow retailer channel, push strategy and online selling
strategy to Market the Product –

Retailer stores

Electronic
Producer Consumer
Distribution

Physical
distribution and
logistics

 Producer:
Producers distribute the product through retailer stores, electronic distribution and
physical distribution.
 Retailer Stores:
Retailers also distribute the product to the consumer on their process. They try to influence
the customer to buy the product.
 Electronic Distribution:
Electronic distribution means online selling process. We also distribute the product to the
customer on online buying process. We introduce an online site to selling this product to
attract the customer to buy the product.
 Physical Distribution and logistics:
We also distribute the product physically by selling door to door service. Some young
energetic boy and girl recruited to go customer’s door to sell the product and also

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introduce the product. We will manage our own vehicles like mini truck or van to deliver
our products.

Chapter-5
Promotional strategies of Mushroom Chips
5.1) Promotional goals of Mushroom Chips:
Promotion is one of the market mix elements or features, and a term used frequently in
marketing. Promotion is an important part of marketing mix. Promotion refers to raising
customer awareness of a product or brand, generating sales and creating brand loyalty.

At first we will set our promotional goals. Our promotional goal will be-

 To create a strong position on consumers mind.


 To increase sell.
 To create brand image for our company and our product.
 To give information about our product to customers.
 To influence customers to buy our product.
5.2) Promotional Mix:
The specific blend of promotional tools that company uses to create customer value and build
customer relations is called promotional mix. The promotional mix is the marketer’s bag of tools
for communicating with customers and other stakeholders. To deliver a clear and compelling
message, each tool must be carefully coordinated under the concept of integrated marketing
communications.
The five promotional tools are as follows:

 Advertising: Any paid form of non-personal presentation and promotion of ideas, goods or
services by an identified sponsor.
 Sales promotion: Short-term incentives to encourage the purchase or sale of a product or
service.

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 Personal selling: Personal presentation by the firm’s sales force for the purpose of marketing
sales and building customer relationships.
 Public relations: Building good relations with the company’s various publics by obtaining
favorable publicity, building up a good corporate image, and handling or heading off
unfavorable rumors, stories, and events.
 Direct marketing: Direct connections with carefully targeted individual customers to both
obtain an immediate response and cultivate lasting customers’ relationships.

5.3) Uses of Promotional tools for Mushroom Chips:


We will follow three promotional tools- advertising, public relations and personal selling in our
primary level business. As we are new in the market, so for first 2 years we will not offer any
incentive packages. But if we prosper in the long run, we will hope to give price incentives to our
customers which will increase our further sales. For first 2 years, we will not use sales promotion
or direct marketing as our promotional tools.
Advertising: We are planning to follow market skimming strategies. So, we need heavy
advertising for market skimming as a new manufacturing company. We are going to advertise
our product in the Print and Electronic media. There will be-

 Adds in news papers


 Magazines
 Social networking sites etc.
Advertising Objective: Objective Setting is a specific communication task to be accomplished
with a specific target audience during a specific period of time. As we are launching a new
product and our company is new in business our Advertising Objective is “Informative
Objective”.
Public Relations:
A public is any group that has an actual or potential interest in or impact on a business
organization’s ability to achieve its objectives. Public relations include a variety of programs to
promote or protect an organization’s image, services or individual products.

Public relations can be maintained through various steps. We will do the followings to create and
maintain a good and long term public relationship.

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 Press relations: We will present news and advertisements on different electronic and
print media like the radio and the newspapers and magazines. We will hire some
personnel in big super stores to promote our products.
 Influencing specific target groups: We will circulate the views, messages, the
characteristics and the benefits to our target customers and we will try to influence
them to be a member of the library.
 Word of mouth marketing (Buzz marketing): Consumers use word of mouth to talk
about dozens of products such as movies, books and so on. We will try to use this tool
in our favor. We will influence and encourage our members in such a manner that they
will surely talk to each other about the library.

Personal selling: Personal selling is the interpersonal arm of the promotional mix. It will be
offered to some unique customers of our product whose buy will be an effect in our sales
volume. It is most effective tool for building customers preferences, convictions, and actions.
Through personal selling, we can get instant feedback from customers. It will help us to further
plan for product quality, price, and distribution systems. We will also arrange a promotional
party and let the people know about our new products. We will hire our representative in the big
stores to gather customer reviews.

Chapter-6:
Conclusion
Mushroom is a large reproductive structure of edible fungi, which is the most popular nutritious,
delicious and medicinal vegetable in the world. It is now one of the promising concepts for crop
diversification in Bangladesh. Analyzing its demand in the processed food like chips, we have
developed our concept of making Mushroom Chips. To reach our targeted customers, we have
planned different marketing mix tools and strategies. Though HTP Limited has planned its
business strategies only for 2 years, it hopes to sustain in the industry for a longer period. Once
we start gaining profit in Mushroom Chips, we will bring more innovative ideas in our business.
If people like our chips, we will introduce more innovative products in the market.

‘Mushroom Chips’ is totally a new concept in our country. It will introduce people with new
taste, flavor and variety. Besides it is very much nutritious. We hope this product will fulfill the

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customers’ needs, wants and desires through its effective and efficient marketing tools.

References

1. Principles of marketing by Philip Kotler.


2. Emirates Journal of Food and Agriculture.
3. ‘The effects of mushroom powder on the quality of cake’, Sheikh et al., Agric.21 (1 & 2):
205 – 214, 2010.
4. www.olympicbd.com

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