Exploring Three Key Trade Marketing and Distribution Practices in Achieving Marketing Objectives

Rationale and Modality

A Case of British American Tobacco Bangladesh

Internship Research

Prepared for

Md. Jasim Uddin Lecturer

Prepared by

Ahmed Tajik Ifrad 082102530

School of Business
North South University 30th April 2012

April 30, 2012

Md. Jasim Uddin Lecturer School of Business North South University

Subject: Letter of Transmittal

Dear Sir, I would like to take this opportunity to thank you for the guidance and support you have provided me with during the course of this report. Without your help, this report would not have been possible to complete. With deep gratitude, I also acknowledge the help provided by Oli Ahad, Senior Marketing Analyst, British American Tobacco Bangladesh, for providing me with utmost supervision during my internship in the company.

I would really appreciate if you would enlighten me with your thoughts and views regarding the report. Also, if you wish to enquire about an aspect of my report, I would gladly answer your queries.

Thank you again for your support and patience.

Yours Sincerely, Ahmed Tajik Ifrad ID: 082102530

Acknowledgements

In the completion of this internship report I would like to thank a few people for their support and guidance.

First I would like to express my gratitude to Oli Ahad, Senior Marketing Analyst, British American Tobacco Bangladesh (BATB), for his assistance and encouragement during the path of my internship.

I would like to thank Mr. Md. Jasim Uddin, my university supervisor, for directing me throughout the planning and writing of the report. He made sure all my questions were answered, kept me on track and gave me the support I needed. I would also like to thank my peers Reaz Rahman and Raige Sade for their immense help, support and most importantly for believing in me and my capabilities.

Executive Summary
This research on Exploring Three Key Trade Marketing and Distribution Practices in Achieving Marketing Objectives is done to understand the effectiveness of trade marketing and distribution (TM &D) in the Bangladesh market. The objective of TM&D department is huge so I have done this research on the three main mechanisms which are: Brand representatives, Contractual Merchandising and Retailers WoM. These three tools have their own individual objectives as well as the main marketing objective of changing consumer behavior.

The research also includes a complete overview of the tobacco industry as it is needed to understand the current situation of Bangladesh. Competitor analysis and market growth has been shown for any stakeholders interested in this research. The major functions of each department have been explained in detail.

This is a qualitative research but it also has statistics and data comparisons as a result it is a mixture of quantitative as well. A survey was done and a sample of 120 respondents was chosen to test the 3 TM&D mechanisms in relation to consumer behavior. Data analysis techniques like ANOVA and correlation is done to further support the research question which is: Can BATB bring a positive change to consumer behavior (a marketing objective) using the three key trade marketing and distribution practices? Many discussions with peers in BATB, interviews from line manager and focus group discussions were done as well for primary research. For secondary research literature review was done and other related information gained from BATB. Findings and recommendations have been given to further improve on the three trade mechanisms, 3

TABLE OF CONTENTS
CHAPTER 1 RESEARCH OVERVIEW ....................................................................................... 5 INTRODUCTION ................................................................................................................. 6 RATIONALE & MODALITY - BR ............................................................................................ 8 RATIONALE & MODALITY - CM ......................................................................................... 13 RATIONALE & MODALITY - RETAILERS WOM ................................................................... 17 OBJECTIVE OF THE RESEARCH .......................................................................................... 20 SIGNIFICANCE OF THE STUDY ........................................................................................... 22 RESEARCH QUESTION ...................................................................................................... 23 CHAPTER 2 LITERATURE REVIEW ....................................................................................... 24 CHAPTER 3 METHODOLOGY .............................................................................................. 37 SAMPLING ....................................................................................................................... 39 LIMITATIONS ................................................................................................................... 39 CHAPTER 4 ORGANIZATION OVERVIEW ............................................................................. 41 BACKGROUND ................................................................................................................. 42 THE MAJOR FUNCTIONS................................................................................................... 45 THE BATB BRANDS ........................................................................................................... 76 INDUSTRY ANALYSIS OF BANGLADESH ............................................................................. 76 COMPETITIVE SCENARIO .................................................................................................. 80 ANALYSIS OF RIVALS ........................................................................................................ 83 CHAPTER 5 DATA ANALYSIS .............................................................................................. 85 CHARTS ........................................................................................................................... 86 ANOVA ............................................................................................................................ 92 CORRELATIONS ................................................................................................................ 97 CHAPTER 6 FINDINGS AND RECOMMENDATIONS ............................................................ 101 CONCLUSION ................................................................................................................. 109 REFERENCES .................................................................................................................. 110 APPENDICES .................................................................................................................. 111

CHAPTER 1 RESEARCH OVERVIEW

INTRODUCTION
British American Tobacco (BATB) uses various trade marketing and distribution (TM &D) strategies to overcome competition. In this research paper, three key trade marketing and distribution methods are discussed in achieving marketing objectives. By the term marketing objectives BATB does not mean just communication or promotion to the consumers or retailers. Smoking is an addiction as a result people will smoke regardless of many restrictions put by the government. According to BATB the adult population chooses to smoke and the company does not encourage them to smoke more however BATB tries to make the consumer choose the BATB brands. Thus the marketing objective of the company is to drive the consumers into smoking good quality cigarette brands provided by BATB. Hence in this research paper the marketing objective would be measured as the influence that BATB has in changing the consumer behavior. Therefore it can be said that the three key trade marketing and distribution practices are a tool to change consumer behavior.

70 percent of shopping decisions are now made at the trade or what marketing practitioners refer to as "point-of-purchase". This new trend leads to the greater importance of merchandising and shopper promotions than consumer directed programs. Below the line (BTL) promotions have become the focus of most consumer goods companies in order to drive higher sales. As retailer giants continually expand throughout every opportune territory, the role of merchandising in generating growth becomes more prioritized.

People make a wide variety of choices as consumers, managers, employers, and regulators. Most of these choices are not made in a vacuum but rather in a context of strategic interactions that make individual payoffs interdependent across the decision makers. It has to be agreed with Bass (1995, p. G12) that science is a process of interaction between theory and data that leads to higher level explanations. Thus data analysis is done in this research to compare the effectiveness of the three TM &D practices in relation to consumer behavior.

In brief the research will focus on the following TM& D practices: 1. Brand Representative (BR): On behalf of BATB, the people who are responsible to contact the smokers are known as Brand Representatives (B.R). Through BR, BATB maintains communication with its consumers. The BRs are an increasingly important asset because the marketing scope of tobacco industry has been narrowed down.

2. Contractual Merchandiser (CM): it is a part of trade marketing in which BATB provides the retailers with various materials relating to the cigarette brands. It is all about making the BATB brands visible and uplifting the image of the company through the retailer.

3. Retailers Word of Mouth (WoM): from previous researches done it is very obvious that WoM is one of the best non paid advertising form. In this research retailers WoM is not just a source of advertising or spreading the goodwill of the BATB brands but also a way to change consumer behavior by direct interactions.

Just finding out the 3 key mechanics is not enough as there has to be a valid measurement to solidify the effectiveness. Thus a survey is done to get results and for retailers WoM set of Key Performance Indicator (KPI) will determine whether the TM&D practices are fruitful or not.

RATIONALE & MODALITY - BR

The people performing as BRs are not just trying to induce trail to the consumers but also creating an image for BATB. It is essential that the BRs understand this and they follow the steps. The following diagram shows the way how to approach the whole deal:

Figure: process of consumer contact

Each steps of the process are explained in detail as follows: Identification of target consumer The objective of consumer identification is providing right message to the right consumer. Some important factors for consumer identification should always be kept in mind. The 8

consumer must be an adult which means at least 18 years of age or older. The person purchasing the cigarette is himself the consumer. This is because BATB is trying to induce trial and if the person is not a smoker then it is punishable by law to force him into trial. The consumer has to be of right profile and by profile it is meant the characteristics of the consumer according to BATB. This means if a person who is a premium user with high income level then that person should be confronted in one way and a person whose consumer profile is lower has to be confronted in a different way. This is done so that there is no mistake in choosing the right brand from the right person.

Introduction to the consumer The first impression of the BR is extremely important. It has often been seen that a consumer decides whether to make trial or not based on the first perception of the BR. An introduction is required for making the consumer enthusiastic to talk as well as to let the consumer express his thoughts for a mutual ground to talk upon. The technique of introduction is to first greet the consumer, secondly shake hand with the consumer and let the consumer know his name and then mention the company name.

Getting verbal permission The verbal permission is required so that the consumer understand that he is being respected by the BR and if he does not want to talk then the BR will not waste his time. It is also done to prepare the consumer mentally prior to take written permission. If a consumer does not want to spend his time with the BR then it is mentioned at first in the verbal permission. If the 9

consumer is not interested to talk then the BR should say Sorry for spoiling his valuable time and thanking him before saying him Bye.

Collecting written permission There has been a lot of controversy about the tobacco industry which resulted in many strict laws by the government. The written permission is required to comply with the Tobacco Control Act 2005 and to make sure that BR have the contact details to re-contact him or to send him tobacco related information. In this modern world the collection and database management of consumer information is increasingly important. There is a method to take written permission as well. First the BR collects information from the consumer in a printed paper which is told as Permission Slip. Permission slip contains the following details: 1. Full Name: the full name of the consumer for future reference 2. Fathers name: the name of father for further verification 3. Address: the full present address in case any delivery of items from BATB 4. Date of birth: to verify that the consumer is an adult 5. Mobile no: in case of contacting the consumer later on 6. Profession: to identify which consumer group he or she falls in 7. Name of the organization: to have an idea about the income level 8. Signature: to show that the BR has the consent of the consumer

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The following is a picture of the actual permission slip:

Figure: Permission slip Providing Brand Message The objective of the brand message is to inform the consumer brand related information through which the consumer will come to know the name of the brand, the attributes of the brand or the company name. Main objective of consumer contact is to let the consumer know the brand message. Usually brand message is given through different BR Tool provided by the company. A BR Tool is used to make the communication more attractive and enjoyable; usually BATB uses different instruments which are known as BR Tool. A BR tool is used to

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make the consumer enthusiastic to listen to what the BR is saying. It also helps to offer him a visual thought and an overall support to what the BR is saying.

However getting a clear brand message is vital so that it remains in the head of the customer as TOMA which is top of mind awareness meaning that when a consumer thinks of cigarette he will think of BATB as his first choice.

Swapping The exchange of similar quantity of competitors brand with our brand and to encourage the consumer for trialing the brand is called swapping. BATB cannot just gift a packet of cigarette to the consumer now due to new laws imposed by the government. For this reason the BR has to switch the BATB brand with the competitors brand because that is the only way to induce trial. The objective of swapping is to offer the consumer to have the taste of a brand so that he will be interested to have the brand later on.

After taking verbal permission, the offering of our brand is made so that the consumer can taste it. Then the swapping is done and the BR takes the competitors brand away from the consumer. Then the BR has to keep the competitors stick carefully in BRs bag.

Sales to consumer Sales to consumer or STC is to sell a pack of cigarette to the consumer with a gift offered by the company at a price prescribed by the company. It is very important to keep in mind that the BR 12

has to abide by the laws. Prior to making the consumer contact, usually BR offers the gift to the retailer and asks him to sell a pack of cigarette with the gift at a prescribed price. The objective of STC is to sell a pack of cigarette to the consumer which will ensure more trial. It will also make the retailer profitable which will encourage him to sell the product.

Give away Give away is to offer any leaflet to the consumer which contains information related to the brand. Give Away is offered at the end of the contact.

Closing After offering Give Away, BR informs the consumer that the company may send tobacco related information through courier to his address. Then BR conveys thanks to the consumer for spending his valuable time and closes the contact.

RATIONALE & MODALITY - CM

Contractual Merchandising is all about decorating the shelves inside the outlet and promoting the product by using merchandising materials inside or outside the outlet. It is a very effective way of communication for a product to get the attraction of the consumers.

The merchandising is required to introduce the product with the consumers. In the market there are lots of cigarette brands which can cause clutter and the consumer might get confused whether the brand is available in the shop or not. For that reason the merchandising materials

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are kept to give a clear visual of the BATB brands. It also helps to encourage the consumers to buy the product.

The items that are used to decorate an outlet inside or outside are called Merchandising Material. There are three types of Merchandising Materials that are used based on durability1. Temporary Merchandising Materials 2. Semi Permanent Merchandising Materials 3. Permanent Merchandising Materials

1. Temporary merchandising materials: the temporary merchandising materials are known as P.O.S materials. POS stands for point of sale and these materials are there to make the shop look good and increase the visibility of the brands. It tells the consumer that you can find the brand you are looking for in this retail shop. These materials are basically cycle based.

Fig: examples of temporary merchandising materials When a consumer sees these materials they know that the cigarette is available here and also encourages consumers of competitor brands to try it.

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2. Semi

permanent

merchandising

materials: These materials usually last for 6 to 12 months and these materials are not Cycle based.

From this example it can be seen that BATB has provided this small cigarette seller with the Parasol which is helping the seller as protection from sun and rain. This is creating a good relationship with the seller as well Fig: example of semi permanent merchandising material

3. Permanent merchandising materials: These materials are sturdier and they last for minimum 1 year. It is the most expensive in all categories as a result it requires regular maintenance.

Fig: examples of permanent merchandising materials From these pictures an idea of permanent merchandising materials can be obtained. As it is more expensive so it looks better than the other categories of merchandising materials also.

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Facing Decorating the shelves of the outlets with the packs of our brands in a sequential manner maintaining a specific ratio is called Facing. It communicates the availability & the presence of the brand in the outlet. It focuses and highlights the brand in the outlet.

Planogram Executing the pack facing according to the design and instruction provided by the company is called Planogram. Planograms may be cycle based highlighting a specific brand of a specific cycle.

Facing and Planogram Strategy The strategy followed is one cluster, one major Brand because it will give a greater visual impact than a mixed cluster. The Premium Clusters (Top 30% B&H Selling Clusters) are used to reinforce the Big Brand feel to combat Marlboro. The High Clusters (Top 60% JPGL Selling Clusters) are used for driving JPGL to reinforce the Big Brand feel. The Low Clusters ( Rest of the Clusters) are mainly used to establish Star as the undisputed leader of the segment.

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Figure: cluster of brands In the above figure the facing and planogram strategy is implemented and the clusters are shown as discussed in the Facing and Planogram strategy.

RATIONALE & MODALITY - RETAILERS WOM

In this vast economy, retailers hold a very crucial part of marketing. They are vital for the trade marketing team in order to sell and also communicate our brands. In a large retail universe it is getting difficult to leverage retailers influence. On top of that without proper guidance a retailer cannot deliver the proper brand message to the consumers. The cluster of outlets has created the following phenomenon:

Outlets emerge mostly based on business hubs, transit points and shopping areas. Even if there is high traffic in some points of the roads then the small scale cigarette sellers go there and start their business. Consumers tend to remain within a cluster because consumers prefer

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convenience. Thus opportunity to communicate through influential retailer in the cluster should be given a high priority.

Also the imminent threat of Marlboro launch by PMI allying with biggest local competitor (DTI) with widest distribution coverage is something that has to be faced with the help of retailers. Hence impending business challenges has created a pressing need for trade loyalty program which will influence the retailers WoM, the name of the program is Partner.

This program to influence retailers WoM has the drive to achieve business results in trade marketing universe in the following diagram:

Figure: achieving retailers WoM through set objectives. 18

Outlet targeting Since resources are limited hence all the outlets cannot be targeted. For that purpose BATB uses a tool called the Retail disposition funnel to measure the relationship of the retailer with BATB. This allows to understand which retailers should BATB choose for the program to enhance retailers WoM.

Strategy statement Building long term loyalty with the top end outlets of key trade planning groups by building strong emotional bond and increasing value of their business

Figure: Program concept formulated to create impact on retail disposition The following diagram shows how BATB is trying to make an emotional and rational approach to the retailers and creating a good relationship with them. This good relationship in tern increases the retailers loyalty to the company and helps in retailers WoM.

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OBJECTIVE OF THE RESEARCH

The goal of this research would be to understand how the marketing works for a demerit product like cigarette and how BATB promotes their brands in such a dark market. The research will find out how the customers and consumers respond to the BTL options that BATB uses to reach their marketing objectives. It will also look into how BATB maintains sound business relationship with key customers of the territory.

The reason for undertaking this research is to further gain knowledge about the effectiveness of BTL in a dark market where people are not extremely brand conscious. If Bangladesh is compared to Japan in the tobacco industry then it is seen that the people of Bangladesh are not Brand loyal, however BATB still manages to hold consumers and this research will find out the reasons. The expected results of this research will ensure that TM&D functions are successful and 3 specific methods are pivotal for this success. This research will help to achieve the to diagnose the situation, screening of alternatives and discover new ideas.

The research will also examine the functions of the 3 trade mechanics as follows:

BR The research will help to understand how the BR presents brand message to the target consumer. Not only that it will also determine how the BR tries to motivate the consumer with the objective of making trial and ensure assistance from the retailer in different activities

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CM The research will help understanding the importance of merchandising for retailers and consumers. CM will also figure out if the consumers are being attracted to the merchandising materials and shifting their preference to the BATB brands.

Retailers WoM The research will test the effectiveness of WoM by retailer in reaching the company target and ultimately affecting consumer buying behavior. It will see how BATB maintains relationship with retailer. The influence of the retailer in changing the consumer behavior will be tested as well.

Consumer behavior Among the marketing objectives of the research one of the most important is changing consumer behavior. In depth analysis of consumer behavior is obtained using survey of the consumers which tests the effectiveness of TM &D.

Distribution Apart from the 3 key trade mechanisms, it is also important to understand the distribution system as it is vital for any organization. The distribution system of BATB is one of the major strengths and a detailed literature review shows the system. 1

Sales Call Memo is given in the Appendix

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SIGNIFICANCE OF THE STUDY

The research will help all the stakeholders of tobacco industry to better understand the current situation of the market. Moreover it is important to the retailers, distributors, BATB officials and outsourcing agencies because they are all directly or indirectly involved. Even the consumers of tobacco have an interest in this to realize how their preferences are affected by the tools used in marketing. All the shareholders and the general people should also be interested in this research as tobacco industry concerns the society at large. This research is important due to the following reasons:

BR The BRs enlighten the brand related information to the target consumers. They assist attaining support from the retailers through relationship building, with the retailers and to motivate them to sell our product. Thus this research is extremely important to all the BRs.

CM The necessity of merchandising for the retailers automatically increases the importance of the research for both BATB and the retailers. Merchandising attracts consumers to an outlet. It ensures growth in sales and profit through attracting more consumers. It ensures the understanding of quality of our product to retailers which he may communicate to consumers and merchandising also increases the beauty and image of the outlet

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The need of merchandising for the company is immense because without the support of retailers the company cannot run. Merchandising increases the awareness of different brands. It helps to promote brands to consumers and it encourages the consumers to buy our brands. Merchandising also helps to hold strong visibility of our brands among the competition brands

Retailers WoM It is important to measure and evaluate the retailers WoM for further strategy building, hence giving value to both BATB and the retailer himself. A retailers WoM enhances the image of the company which in turn can increase the value of the company as well.

Consumer Behavior To understand the choice of the people is one of the most important factors for all marketers. The consumer behavior gives a pattern to the desire of the people and thus gives more depth to the effectiveness of the research.

RESEARCH QUESTION
Can BATB bring a positive change to consumer behavior (a marketing objective) using the three key trade marketing and distribution practices?

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CHAPTER 2 LITERATURE REVIEW

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Trade Marketing & Distribution Department has the responsibility to reach the ultimate consumers through trade, e.g. Retailer. The emphasis is not only on what volume is being sold to the retailers (Sell-In), but also on the volume sold out to consumers (Sell-Out). The mission of TM&D is to reach the target consumers in the most efficient and effective manner by becoming the Benchmark Supplier to the trade within strategic channels in every market where they do business. (TM &D team, 2009)

According to IMS (International Marketing Standard) and Tobacco Control Act in Bangladesh 2005, few restrictions was imposed on Tobacco related activities: 1. All types of tobacco related advertisement both in print and electronic media is prohibited: this means that mass media is completely blocked. It seems like a huge disadvantage, however it is also true that the marketing expense behind mass media is saved which can now be used for other purposes.

2. Distribution of tobacco related handbill and leaflet to the consumers is banned: this results in a loss of local marketing because in small towns or in a crowded place BATB cannot promote its brands anymore. This was a cheap source of marketing as well but now it cannot be done.

3. Offering free cigarette to a consumer is totally restricted: this is a problem for inducing trial. Previously BATB could have made consumers try a cigarette stick for free to show the consumer the distinct taste of the brand but now that 25

cannot be done anymore. Thus the BRs have to be trained to make sure they do not break any laws.

Few activities allowed by the Tobacco Control Act are: 1. Distribution of tobacco related handbill and leaflet through retailer: The retailers can give handbill or leaflet to the consumers but it has to be kept in mind that the consumers have to be over 18 years of age. It also has to be made sure that the retailers give it to the consumer himself and not to someone else who is purchasing it for the consumer.

2. Permission based consumer contact: This concerns the BRs mainly when they try to contact a consumer, he must ensure that he takes the permission of the consumer first.

3. Swapping similar amount of stick: A BR cannot offer free cigarette to the consumer, rather he can offer a switch. This is done by swapping the competitor brands with the BATB brands that the consumer can taste.

As a result of these restrictions put by the government, the activities of Brand Representatives and Contractual Merchandising has been limited and hence the importance of retailers WoM is increased.

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Understanding consumer behavior is vital for this research. A previous research studied the shopping habits of consumers to form an idea of whether or not the store concepts, product ranges and strategies of the companies are appropriate towards consumer requirements (Christopher, 1989). He believed that consumer behaviors are unpredictable and changing continuously. In another study Engel, et al. (1986, 5) define consumer behavior as those acts of individuals directly involved in obtaining, using, and disposing of economic goods and services, including the decision processes that precede and determine these acts.

In order to develop a framework for the study of consumer behavior it is helpful to begin by considering the evolution of the field of consumer research and the different paradigms of thought that have influenced the discipline (Marsden and Littler, 1998). These are factors that influence the consumer before, during, and after a purchase (Schiffiman and Kanuk, 1997), for example, feedback, from other customers, packing, advertising, product appearance, and price (Peter & Olsonetc, 2005). However since BATB sells cigarettes so all types of mass media is banned.

The essence of this approach is critical for organizational success, so that they can have a better understanding of their customer behaviours (Solomon et al., 2006). The physical action or behavior of consumer and their buying decision every day can be measured directly by marketers (Papanastassiu and Rouhani, 2006). For that reason many organizations these days are spending lot of their resources to research how consumer makes their buying decision, what they buy, how much they buy, when they buy, and where they buy (Kotler, Amstrong, 27

2001). To get a well coherent result, organizations normally looked at these behavior base their analysis on difference conceptions; whether customers buying behavior were measured from different perspectives, such as product quality and better service, lower price structured etc (Papanastassiu and Rouhani, 2006)

Different theories and researchers have claimed that when organization fully meet all aspects of its customer needs, the result enhances their profitability (Chaudhuri, 2006), and also enable them to develop a better tackling strategies for consumer (Asseal, 1998). Possibly, the most challenging concept in marketing deals with the understanding why buyers do what they do and what method or philosophy are they using to evaluate the product after the transactions and what might be the effect on future transaction (Schiffman, 2004). The reason why marketer chooses to learning about consumers buying behavior is, from a business perspective; to be able to be more effectively reach consumers and increase the chances for success (Sargeant & West, 2001). Therefore the field of consumer behavior has taken a tremendous turn in the commercial world and became the fundamental concepts of achieving company goal (Schiffman and Kanuk, 2007). Consumer behavior involves lot aspects, such as:

Complex Buying Behavior: This kind of buying behaviors significantly involved the consumers when making a purchase decision. This kind of buying behaviors demand consumer to highly involve within the process. In case of high involvement, consumers distinguish salient differences among the competing brands (Kotler, Wong, Saunders, Armstrong, 2005). 28

Dissonance reducing buying behavior: This type of buying behavior also has high consumer involvement. In terms of expensive and infrequent purchase, consumer also undergoes reducing dissonancy behavior. It is extremely difficult for consumers to differentiate among brands in this type of buying behaviors (Kotler, Wong, Saunders, Armstrong, 2005).

Habitual Buying Behavior: Contrariwise, in this type of buying behavior consumers have lesser levels of involvements. It implies that consumer do not have to bother to retrieve information about the available products and brands in the market. Therefore, there are no potential differences between the different brands. However, some believed that if the consumer persistently purchasing the same product repeatedly, it becomes habit and their mindsets and perceptions changes overtime about the brand and the provider (Cohen and Manion, 1987). This conception will portray the consumer to have unconscientiously developed a brand loyalty to that particular brand due to the consumer regular buying habits (Cohen and Manion, 1987).

Variety Seeking Buying Behavior: This type of consumer level of involvement is low. However consumer may became critical in terms of brand differences. Additionally, consumer may easily switch from BATB to DTI i.e. from one brand to another.

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Distribution Channel The distribution channel of BATB is extremely effective as it is investigated as follows (Distributors manual, 2009):

Factory

Sales Depots

Internal Carrying Agent

Distributors

Retailer

Cash & Carry

Consumer

Figure: Distribution Process

Regional Go-down: There are five regional go-downs throughout the country to fill every regional demand just at the time of need, and to overcome various uncertainties related to physical distribution of products, every regional go-down is directly controlled by separate Regional Manager to face the regional physical distribution challenge.2

Go-down Registry form given in the Appendix

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Carrying Contractor: They are the party engaged in the physical movement of cigarettes from head office go-down to regional office go-down. Normally they are the truck owners who take all the risk and responsibilities of physical movement of goods between two warehouses.

Distribution Warehouse: All distributors have their own warehouse, where cigarette can be kept safely while not degrading its product quality. Distributors buy the cigarette from BATB and from that point ownership and all responsibilities of the products go under the distributors.

Internal Carrying Agent: They are like carrying agent but carry small volume of products. Normally they are local truck owners. They carry products from, regional godowns to distributor warehouses. They also take all the responsibilities and risk engaged in physical movement of products.

Opening Stock at Distributors Office: Apart from the warehouse, every distributor also maintains another stock at their office. This stock is for maintaining any change in market demand instantly. Dealers sometimes sell cigarette through their counters to face special situation.

Delivery Van: All the delivery vans are owned by the dealers to assure the supply of cigarette on the door of wholesalers, cash & carries and retailers just according to their demand. There are two types of delivery vans. One is Scooter van and another is Rickshaw van. 31

Cash & Carry: They are businessmen who sell cigarette directly to consumers and at the same time they sell cigarette to the retailers.

Retailers: Retailers are at the end of the physical distribution system of cigarette Selling products directly to the consumer.

Distributors: The financial standing of the distributors, their reputation in the local region, and prior related business experience are some of the key criteria examined when a distributor is selected. The regional manager, supply chain manager and head of trade marketing prior to making a decision check the evaluation forms and field recommendations. After a distributor is selected, they issue a letter of intent that specifies certain requirements of the company. After these requirements are satisfactorily fulfilled, a formal letter of appointment is issued.

Distributors buy fixed volumes of cigarettes from BATB at a set price and resell to the retailers. The company closely monitors their activities and performance and ensures them to operate in the market at the highest standard. Distributors follow a work routine set by the company, generating paper work, and reports as required. Distributors are assigned a certain geographic region within which they sell their cigarettes. Different routes are assigned within the region that helps to sell their stock. Vehicles owned and operated by the distributors are responsible for carrying stock along these routes and selling it to the retailers.

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Trade planning groups (TPG) and clusters

It is important to know the TPGs and clusters as trade marketing cannot be done without this analysis. BATB refers to Hotels, Restaurants and Cafeterias as HoReCa. This classification of different clusters helps in distribution as well. Detailed overview of each cluster and TPG is as follows (Distributors Manual 2009):

1. MODERN TRADE This cluster is mostly frequented by premium consumers. This cluster is important for driving image and trial of premium brands.

TPGA) Key Accounts: Mostly refers to premium grocery shops with multiple chain stores. These outlets are extremely important for driving brand image. B) Organized Grocery: Refers to premium organized groceries frequented by premium consumers and important for driving premium brands image. C) Premium HoReCa Premium hangout places offering differentiated amenities to the consumers. This TPG is very important for driving image and consumer engagement activities to premium consumers.

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2. GENERAL TRADE: High volume generating cluster, where consumers time spend is limited.

TPGA) Street Kiosk: Refers to cigarette selling street cabinets. Highest consumer frequented. This group plays a key role in pushing brands to consumer and is most important to generate mass awareness & trial. B) Semi- Structured Outlets: Another high consumer frequented group, where tobacco is one of the prime category product. Retailers play a key role in pushing the brands here. C) Structured Outlet: Refers to general trade where tobacco is not the key category. It is yet important for generating awareness.

3. HORECA HoReCa refers to the outlet where consumers gather for spending time and usually purchases product from the outlet for immediate consumption. This cluster is mainly the hangout place for ASU30 consumers and important venue for 1-2-1 consumer engagement to drive conversion and loyalty.

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TPGA) Mass HoReCa: This TPG is an important hangout place for ASU30 consumers. Time spent of consumers here is highest amongst all TPGs. Critical venue for consumer interaction to drive loyalty. Tobacco is one of the prime products for these outlets. B) Popular HoReCa Refers to HoReCas where tobacco is a supporting product. (I.E Rice Hotels) Consumer communication opportunity is low from these outlets. C) Canteen Canteens are mostly institution specific HoReCas. Consumers are mostly captive here. This group gives high opportunity to build exclusivity and ensure forced trial. Ideal for consumer engagement to drive loyalty.

4. CASH & CARRY Cash & Carry refers to high volume contributory outlets that play an important role in making our brands availability beyond Direct Store service (DSS). These outlets also play the gap filling role within DSS.

TPGA) Topping UP Cash & Carry: Topping up Cash & Carry outlets works as a feeder for marginal outlets. Usually retailers lift a portion of their regular demand from these outlets. 35

B) Distribution Cash & Carry Distribution Cash and Carry outlets sell a large portion of stock to the Non- DSS outlets. This TPG is highly important for managing maximum brand availability in a large & fragmented universe. Certain number of DCCs in a particular market may come under some agreement on specialized rate to ensure better control in Non Dss Markets.

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CHAPTER 3 METHODOLOGY

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This is a qualitative survey, with both secondary and primary data. These are two types of techniques used in the research:

Primary Data The primary data collection was done using methods such as interviews and questionnaires. A sample of the questionnaire is given in the appendices. The key point here is that the data I collected is unique to my research. A survey of 120 smokers was done for the research. In the primary data a Pilot study was conducted which is less structured, more open ended questions to peers and some retailers. It is in the form of focus group (from other interns working in different departments). The pilot study helped me in both data collection and analysis as well. Among other basic primary methods, observations

Secondary data (historical data) This research is mainly a qualitative research, however many there are quantitative analysis as well as I have dealt with numbers and statistics to prove the research. I have obtained previously collected information about the tobacco industry and BATB as well as other related government statistics (from BATB internal resources). The literature review is done as well which covered all the areas of the research and its aim was to review the critical points of current knowledge including substantive findings as well as theoretical and methodological contributions to a my topic.

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SAMPLING
To select the sample, I used nonprobability sampling. The sampling units were chosen arbitrarily as I relied strongly on my personal judgment. The sample size was 120.

Due to the nature of my study i.e. the need for segmenting my research to analyze whether the 3 key trade mechanics have positive effect on the adult smokers, I used a quota sampling procedure. This method of choosing sampling units ensured that various subgroups of a population would be represented on pertinent characteristics to the exact extent that I, the investigator desired. This was very important while conducting the survey because by law the direct communication of smokers under the age of 18 is prohibited.

LIMITATIONS
The following limitations were anticipated with the conducting of this research: Sample size: The survey is going to be carried out with a limited sample size; so the findings could vary if it is conducted with a larger sample size.

Respondent Participation: While I recognize that not all the respondents will be uncooperative it would be nave of me to ignore the fact that some of them will be highly disinterested or annoyed with the questionnaire. This might result in attempts to quickly get it over with and so their true attitudes and feelings may not be accurately represented.

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Difficulties in accessing information: Secondary information will be hard to obtain, as it may not be made available. The concept of research still hasnt been developed properly in Bangladesh. Also, any similar studies done in the past might not focus on Bangladesh, or again it may be difficult to access.

Statistical limitations: As I have used nonprobability sampling to choose a sample. So under these circumstances, there are no suitable statistical tools to determine the random sampling error.

It is not possible to physically visit and interview so many regions to actually get an overview of the operations done in the whole country. A lot of time needs to be spent and to understand the factors of TM&D a person has to be experienced in that particular field.

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CHAPTER 4 ORGANIZATION OVERVIEW

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BACKGROUND
British American Tobacco Bangladesh (BATB) Company Limited is the recognized leader in Bangladesh cigarette market, with a long established reputation for providing its consumers with consistently high quality brands. The journey of this company started long back. BATB was established back in 1910 as Imperial Tobacco Company Ltd. with head office in Calcutta. In March 01, 1949 Pakistan Tobacco Company (PTC) came into existence with head office in Karachi; with the assets and liabilities of ITC Limited held in Pakistan. Then the East Pakistan Office was situated in Alico Building, Motijheel. In order to meet the increasing demand, the first factory in the then East Pakistan was established in Chittagong in 1952. In 1954 PTC established its first cigarette factory although high-grade cigarettes still came from West Pakistan. The Dhaka factory of PTC went into production in 1965. Now the main factory in Dhaka and the head office is situated in the following location: British American Tobacco Bangladesh, New DOHS Road, Mohakhali, Dhaka-1206.

After independence, Bangladesh Tobacco Company (Pvt.) Limited was formed on 02 February 1972 under the Companies Act 1913, with the assets and liabilities of PTC. BTC (Pvt.) was converted into a public limited company on 03 September 1973. British American Tobacco played a pivotal role in BTC's creation in 1972 and since then has been involved in BTC's development every step of the way. To pronounce the successful relationship with British American Tobacco, BTC has changed its name and identity to British American Tobacco (BAT) Bangladesh Company Limited on March 1998.

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VISION OF BAT GROUP

BUSINESS PRINCIPLES OF BATB THE PRINCIPLE OF MUTUAL BENEFIT: The principle of Mutual Benefit is the basis on which we build our relationships with the stakeholders. We are primarily in business to build long term shareholder value and we believe the best way to do this is to seek to understand and take account of the needs of all our stakeholders.

THE PRINCIPLE OF RESPONSIBLE PRODUCT STEWARDSHIP: The principle of Responsible Product Stewardship is the basis on which we meet consumer demand for a legal product that is a cause of serious diseases. Therefore, our products and brands should be developed, manufactured and marketed in a responsible manner. We aspire to develop tobacco products with critical mass appeal that will, over time, be recognised by scienti_c and regulatory authorities as posing substantially reduced risks to health.

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THE PRINCIPLE OF GOOD CORPORATE CONDUCT: The principle of Good Corporate Conduct is the basis on which all our businesses should be managed. Business success brings with it an obligation for high standards of behaviour and integrity in everything we do and wherever we operate. These standards should not be compromised for the sake of results. Corporate Slogan Success and responsibility go together. To us, responsibility is a way of life and that is why our corporate slogan in BATB is Success and responsibility go together. THE STRUCTURE OF BATB
Managing Director

Head of Trade Marketing and Distribution

Production Director

Head of Personnel

Finance Director

Head of Brand Marketing

Deputy Managing Director Incharge of Leaf Department

Head of Corporate affairs

Head ofTrade Marketing

Production Planning Manager

Personnel Services Manager

Chief Acountant

Head of Brand Marketing

Research/Project Manager

Supply Chain Manager

Logistic Officer

Procurement Manager

Personnel Planning And Development Manager

Employee Relation Manager

Manager Audit Brand Manager

CROP

Technical service Manager

Management Accountant

Assistant Brand Manager

GLT Plant

Trade Development Manager

Sales Promotion Officer

Plant Manager

Management Services Manager

Blending and Lab

Security Manager

Administration

Regional Manager

Area Manager

Territory Officer

Fig: Organogram of BAT Bangladesh

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The above diagram shows the overall structure of BATB in a glimpse. This structure does not necessarily mean that it always has to be like this because it is a very flexible organization the management often works in multiple departments at the same time. The Management Trainee program makes the managers gain experience from various departments anyways. This structure gives an idea of the hierarchy of the company which will help to understand the grading and seniority of the management roles.

THE MAJOR FUNCTIONS

BATB is a process-based organization, instead of having isolated departments the company has some support functions and some core functions. Typically the structure of the organization can be explained through the supply chain. In BATB it is called seed to smoke as the supply chain process. The core functions of BATB are (detailed explanations are given later on): Leaf Production Brand Marketing Trade Marketing & Distribution CORA

Along with the core functions there are some support functions such as(detailed explanations are given later on): HR IT Finance 45

Leaf Operations Mission: To exceed costomet expectations by providing quaity tobacco at competiotive price.

The leaf department of BATB is responsible for Tobacco Growing, Production & Procuremnt, Green Leaf threshing and packaging, leaf bending, leaf export and import . BTAB procures almost 80% of their leaf from their own cultivation. The Leaf department is involved in cultivating and purchasing flue-cured tobacco. BAT does not own farmland nor does it employ farmers directly to produce the tobacco it uses for cigarette production. Instead, each year the company registers thousands of farmers along with their land, to grow and cultivate tobacco crop. The company provides seed, fertilizer, and other loans to the farmers throughout the crop season to ensure quality growth. At the end of the season BAT buys fixed quantities of tobacco from the farmers, paying rates based on the grade of the crop. Tobacco growing and buying activities is conducted throughout the country. The two main areas are Kushtia Leaf Division and Chittagong Development Area.

Green Leaf Threshing Plant (GLT) The tobacco crop is processed at the Green Leaf Threshing (GLT) plant in Kushtia. The purpose of the GLT is to convert the tobacco into a form suitable for cigarette production. The tobacco is brought to a uniform moisture level and temperature. Initial blending of the different grades of tobacco takes place at the GLT. The processed tobacco is sized and packed before delivery to Dhaka factory. 46

The Leaf department makes an estimate of the quantity of tobacco that BAT will need to purchase for the based on the input of the Sales & Operation Planning (SOP) committee. Based on these estimates the number of farmers and the amount of land, which will have to be registered, are fixed.

The leaf season begins in the month of July. At this time tobacco seedbeds are prepared to generate the seed that will be distributed to the farmers for cultivation. Plantation in the registered lands occurs during October and November. BAT provides the necessary fertilizer, pesticides, and other loans to ensure proper growth for the crop. Farmers use their own irrigation and plowing methodology to prepare the land. Harvesting and curing begins at the end of January and continues till March. Almost 100% of raw tobacco is 'flue' cured.

The buying process begins in mid-February and continues till the end of May. The farmers bring in their cured tobacco in the form of bales to the buying courts in the depots. The tobacco is graded according to set criteria and purchased at these sites. All relevant information is marked on the bales and stored at the depots till shipment to the GLT.

At the beginning of the season the various depots distribute registration forms to the farmers in its region. BAT strives to maintain an ongoing relationship with its registered farmers. Information on each farmer is maintained at the depots through in-house database software called Integrated Leaf System (ILS). On the basis of these records a decision is made on whether to register the farmer for the following crop season. 47

Buying courts are located at the depots. The farmers bring their tobacco to these sites in the form of bales on a specific day and time. At the buying courts the bales are graded, priced and weighed. After the tobacco is bought and graded it is stored in the depot godowns; each bale identified with its grade, weight, and price. These bales are stored in the depots and moved to the GLT when needed for processing.

Tobacco processing The Green Leaf Threshing Plant in Kushtia is used to treat the raw tobacco and convert it to a form suitable for use in cigarette production. It is a seasonal factory operating for six months of the year, on two shifts per day. The remainder of the year is used to clean the machinery and make modifications as necessary.

Each tobacco leaf that is processed at the GLT is separated into four components- tip, lamina, stem, and by product. At the beginning of the process flow, tips of the tobacco leaves are cut off by a calibrated cutter. The leaves are then passed through the sand reel where foreign materials and dirt are separated. The tobacco leaves are then proceeds to the threshing line to separate the lamina from the stem by hitting the leaves. The separated lamina are then dried and the re-dried lamina is then packed at a temperature of about 43 Degrees Centigrade with approximately 12% moisture content for storage. The separated stem, meanwhile, moves to the stem dryer where it is re-dried for storage purposes and then sent to the stem packer. The

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moisture content level of the stem is brought to around 12% at the time of storage. Byproducts are sold to the outside contractors.

The GLT's main objectives are as follows: First it has to separating the Lamina from Stem. After that it retains physical and chemical properties of the leaf. Then the removal of foreign materials and finally conversion of bale to packed dry product capable of long storage.

After the tobacco is stored in the depots, it is brought to the godown at the GLT for processing. The GLT godown has a capacity of around 500 tons. The different 'buying' grades of tobacco are combined in fixed proportions to create 'packing' grades. The packing grades are further blended at Dhaka factory. This final blend goes into the different brands of cigarettes.

Manufacturing Mission We delight our customers with superior quality product through flexible operations In order to support the mission, Production department is performing the following activities successfully. It supports brand portfolio / new product launch. It ensures availability/product harmonization. The quality is met with the international standards. The production department has to make compliance with the ISO 9002. A low cost production is vital for the company. Competitive position of EH&S in the group (Achieved 3.4 on scale 4.0) must be maintained.

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Backward vertical integration BATB requires most of its suppliers to deliver raw materials just in time for using on its production line. KANBAN system for inventory control for domestically produced or converted raw material is a benchmark within British American Tobaccos Operating companies. Only oneday stocks of raw materials are available in the factory premises. This reduction of inventory happened only for the long term contract with the suppliers for a period of 3 years, where price are settled for that period and suppliers are well aware of sales forecast and manufacturing plan for next 18 months through direct link with BATBs computer terminals. Technical helps are always extended to the suppliers in case they ask for it.

The prized tobacco from the GLT comes to the DF for further processing according to need. The first stage of production is known as PMD. The Primary Manufacturing Department: The primary manufacturing department (PMD) is responsible for further conditioning the domestic and important tobacco to make it ready for production. The tobacco passes through a set of integrated and regulated machinery whose purpose is to blend the different 'packing grades' in specified proportions, convert the bales into 'rag' suitable for use in cigarettes, and bring tobacco to a uniform temperature and moisture.

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The PMD(Primary Manufacturing Division ) process

Cutting

Conditioning

Slicer

lamina

Storage Drying

Cutting

Add Moist

Stem

Watering

Add Back

STS Expansion

Stem Dryer

Final product Bin

Box Fill Station

SMD

Figure: PMD Process The Primary Manufacturing Department (PMD) is responsible for further conditioning of the domestic and imported tobacco to make it ready for cigarette production. The tobacco passes through a set of integrated and regulated machinery whose purpose is to blend the different

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"Packing grades" in specified proportions, convert bales into "Rag" suitable for use in cigarettes, and bring tobacco to a uniform temperature and moisture.

Threshed lamina and stem are not of the size suitable for cigarette preparation. To make them suitable for cigarette making the following operation has to be performed. The bales of lamina which comes in a compressed form have to be 'opened'. Lamina has to be cut to a size suitable for cigarette making. Before cutting, the moisture content has to be raised to be a level, which is required so that excessive dust is not produced. After cutting, the moisture content has to be raised to a level, which is required for cigarette making. After the dryer stage, the temperature of the tobacco is bit higher. It has to be cooled down. The moisture content of the stem has to be increased to a level, which is required for cutter stage. Stems are to be cut to a very thin size. The 'fill value' of the cut stem has to be increased by applying sudden High Velocity Steam (in the HVST. Stage). After the HVST it has to cut stem has to be dried to a level required for cigarette making. Apart from the above 'normal' functions, casing has to be added to some Air Cured Tobacco to increase the sugar content.

From the final product bin it goes to the SMD (Secondary Manufacturing Division) for further manufacturing.

SMD (Secondary Manufacturing Division) The secondary manufacturing department (SMD) uses the tobacco that is blended and conditioned by the PMD along with wrapping materials to manufacture cigarettes. The PMD 52

delivers its final processed tobacco to the Cut Tobacco Store (CTS). The CTS has a 50-ton storage capacity and the tobacco is stored there typically for one and a half days before it is used. The SMD brings in the processed tobacco from the CTS as needed for production along with wrapping material.

Trade Marketing & Distribution Department TM&D Mission: To reach our target consumers in the most efficient and effective way by becoming the benchmark supplier to the trade within strategic channels in every market place where we do business.

The Trade Marketing and Distribution department identifies the areas in which best practice must be achieved to enable markets to meet the Trade Marketing and Distribution objectives, which are to create an efficient entry barrier against international competition and to improve our benchmark supplier status to the trade pioneer among all FMCG companies.

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Fig: Supply Chain from TM&D Perspective The Marketing Department and the Production Department activities are highly correlated. According to the needs of the Marketing Department, Production Department carries out the cigarette manufacturing. The marketing Department forecasts the sales volume of the different brand cigarettes for the coming business year and based on this, prepare a marketing plan known as the Sales Operational Plan (SOP). According to the Plan, Marketing Department communicates the brand wise sales target for each month to the Production Department. Based on the SOP, Production Department sets its production schedule. The inventories of cigarettes are also evaluated at this stage to find out the actual output to be produced.

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The British American Tobacco Bangladesh has a well-defined mission for the marketing and distribution of products, which is to reach the target consumer in the most efficient manner by becoming the benchmark supplier to the trade within the strategic channels in every market where the company operates. A well-organized trade marketing team is working continuously to make this mission successful; furthermore the whole country has been divided into six regions to perform the marketing activities efficiently. Moreover the regions are further spitted into 11 areas. Right now there are 6 regional managers, 12 area managers and 42 territory officers working under the Head of Trade Marketing. At present, there are 62 distributors involved with BATB who are responsible to make the products of the company available throughout the country.

Corporate and Regulatory Affairs (CORA) The CORA Vision: To become the most respected FMCG Company among key stakeholders Reputation management involves identifying and prioritizing the companys stakeholders and preparing and implementing plans to engage and communicate with these stakeholders.

The CORA Mission: To proactively build strengthen relationships based on mutual benefit and trust with all our stakeholders and enhance our corporate reputation through visible responsible activities

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The Corporate and Regulatory Affairs Department (CORA) of the company is dedicated towards achieving the companys strategic imperative, which is: To be a responsible company in an industry seen as controversial. CORA has two wings internal and external communication. the internal communication wings core task is to align and create awareness amongst the management and also floor employees. External communication, on the other hand, deals with Corporate Social Responsibility (CSR) and media.

Activities of CORA:

Dishari This is a basic IT education center was born in Chechua, Kushtia in 2002 to spread IT education among the youth of the country. In May 2003, the second center of Dishari kicked off in Moulvibazar. BATB has taken this initiative to contribute to the promising IT sector of the country, which is a thrust sector of the Government.

Afforestation British American Tobacco Bangladesh initiated this well recognized program to create mass awareness of the need for afforestation with the free sapling distribution program in 1980. Today, after more than two decades, we have contributed more than 4 crore 6o lakh saplings to the countrys afforestation initiative.

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Biodiversity British American Tobacco Bangladesh is the first company in the country to embrace biodiversity in its way of work. British American Tobacco Bangladesh drafted its Biodiversity Conservation strategy in the year 2002 which is also a first of its kind by any corporate in Bangladesh.

Supporting Social Organizations British American Tobacco Bangladesh supports various social programs like Shandhanis posthumous eye donation, polio vaccination, and blood donation as well as to the Centre for Rehabilitation of the Paralysed (CRP) to contribute to the greater cause of social development of the country.

Social Contribution for Farmers Our excellent relationship with over 18,000 farmers has come through various community relation initiatives. Our major presence in leaf growing areas has helped us build this trusted relationship. In our leaf growing areas, we have a wide range of social programs giving significant impetus to sustainable development. Our various community relations initiatives include: promoting primary education for farmers children, forestry education programs, and adult literacy programs for farmers, free health check-ups and improvised sanitation facilities. We also try to improve the farmers quality of life by linking them to the formal banking sector and other income generating activities like growing vegetables, poultry farming and apiculture.

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Leaf Tobacco Export Since the early 1980s British American Tobacco Bangladesh started exporting tobacco to other British American Tobacco companies in Europe like BATUKE, BAT Hungary, BAT Australia, Holland and others, as well as to international leaf dealers, i.e. Universal and Dimon. Our journey has been both exciting and educational and we have learnt a lot from our valued customers, both domestically and overseas. This has enabled the company to understand the specific needs of each customer and tailor the service accordingly.

Human Resources HR Mission: Embedding winning culture where people always strive to excel.

To develop the most vital element of the organization which is the human resource BATB has put in a lot of efforts in responding to various changes and problems through effective formulation and implementation of human resource strategies through the HR department.

1. Bridging the gap between top level and lower level management: The HR department helps build a bridge between the top ad lower management to keep the goal of the company clear. Every year an event called the line of sight is organized with help of the HR department and in there the goals and objectives of the company for that year is set.

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2. Improved performance through attractive reward system: The HR is very proactive to motivate the employees. If a person performs well then awards are given and his efforts are recognized. Also an outstanding employee would get promotions sooner.

3. Strive for excellent management practice: The HR uses various HR practices that are described as follows:

Safe, Healthy and Happy Workplace: Creating a safe, healthy and happy workplace will ensure that your employees feel homely and stay with your organization for a very long time. Capture their pulse through employee surveys.

Open Book Management Style: Sharing information about contracts, sales, new clients, management objectives, company policies, employee personal data etc. ensures that the employees are as enthusiastic about the business as the management. Through this open book process you can gradually create a culture of participative management and ignite the creative endeavor of your work force.. It involves making people an interested party to your strategic decisions, thus aligning them to your business objectives. Be as open as you can. It helps in building trust & motivates employees. Employee self service portal, Manager on-line etc. are the tools available today to the management to practice this style.

Performance linked Bonuses: Paying out bonuses or having any kind of variable compensation plan can be both an incentive and disillusionment, based on how it is 59

administered and communicated. Bonus must be designed in such a way that people understand that there is no payout unless the company hits a certain level of profitability. Additional criteria could be the team's success and the individual's performance. Never pay out bonus without measuring performance, unless it is a statutory obligation.

360 Degree Performance Management Feedback System: This system, which solicits feedback from seniors (including the boss), peers and subordinates, has been increasingly embraced as the best of all available methods for collecting performance feedback. Gone are the days of working hard to impress only one person, now the opinions of all matter, especially if you are in a leadership role (at any level). Every person in the team is responsible for giving relevant, positive and constructive feedback. Such systems also help in identifying leaders for higher level positions in the organization. Senior managers could use this feedback for self development.

Fair Evaluation System for Employees: Develop an evaluation system that clearly links individual performance to corporate business goals and priorities. Each employee should have well defined reporting relationships. Self rating as a part of evaluation process empowers employees. Evaluation becomes fairer if it is based on the records of periodic counseling & achievements of the employee, tracked over the year. For higher objectivity, besides the immediate boss, each employee should be screened by the next higher level (often called a Reviewer). Cross - functional feedback, if obtained by the 60

immediate boss from another manager (for whom this employee's work is also important), will add to the fairness of the system. A relative rating of all subordinates reporting to the same manager is another tool for fairness of evaluation. Normalization of evaluation is yet another dimension of improving fairness.

Knowledge Sharing: Adopt a systematic approach to ensure that knowledge management supports strategy. Store knowledge in databases to provide greater access to information posted either by the company or the employees on the knowledge portals of the company. When an employee returns after attending any competencies or skills development program, sharing essential knowledge with others could be made mandatory. Innovative ideas(implemented at the work place) are good to be posted on these knowledge sharing platforms. However, what to store & how to maintain a knowledge base requires deep thinking to avoid clutter.

Highlight performers: Create profiles of top performers and make these visible though company intranet, display boards etc. It will encourage others to put in their best, thereby creating a competitive environment within the company. If a systems approach is followed to shortlist high performers, you can surely avoid disgruntlements.

Open house discussions and feedback mechanism: Ideas rule the world. Great organizations recognize, nurture and execute great ideas. Employees are the biggest source of ideas. The only thing that can stop great ideas flooding your organization is 61

the lack of an appropriate mechanism to capture ideas. Open house discussions, employee-management meets, suggestion boxes and ideas capture tools such as Critical Incidents diaries are the building blocks that can help the Managers to identify & develop talent.

Reward Ceremonies: Merely recognizing talent does not work, you need to couple it with ceremonies where recognition is broadcast. Looking at the Dollar Check is often less significant than listening to the thunderous applause by colleagues in a public forum.

Delight Employees with the Unexpected: The last but not least way is to occasionally delight your employees with unexpected things that may come in the form of a reward, a gift or a well-done certificate. Reward not only the top performers but also a few others who are in need of motivation to exhibit their potential.

From recruitment to selection and also from employee welfare to industrial relations, this department has to play an important role.

New HR Practices & Programs: BATB now values its people as Human Capital. As a measure to that, BAT has taken extensive training programs, which include educational programs like English training, Computer literacy

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etc. In order to improve individual performance, different skill development programs are also in place. Teams are being formed to implement flexible work practice.

Removal of barriers: Barriers, both physical and mental, were hindering the progress of the company. Company started removing barriers from early 1999. All offices were brought into a single location and all offices were made open. Managers and employees started using the same dinning facility and the same uniform. Managing Director initiated Skip Level meeting with all levels of employees where issues are discussed openly. A Family Day was arranged where all members of the organization participated along with their family members and enjoyed throughout the day.

Reward system: BATB has introduced new Reward and Recognition system throughout the company to motivate the employees. Any employee, doing something extraordinary, is being selected as Champion for a specific month. As a result, people are opening up and trying to grab the title. This has generated a positive competition among the employees.

Winning in Our World: BATB has very good corporate reputation for excellent management practices based on Trust, Commitment and Achievement, which is the main driver to develop WOW (Winning in Our World) culture throughout the organization. The WOW values are clearly defined and employees, management & Union all are continuously striving to achieve these values. 63

There are certain guiding principles that center on the corporate principles of the company. The core asset of the company is a result of the four philosophies that the company adheres to in every management aspect of the organization:

Open Minded: It encourages within the organization to be able to maintain an environment where the managers can have open-minded approach to various strategic decision-makings.

Enterprising Spirit: The core asset of the organization will come from the enterprising spirit embedded in the minds of the managers, resulting from effective strategies.

Freedom through Responsibility: Managers at all levels work with freedom of responsibility in their areas of functioning.

Strength from Diversity: The company derives its drive for effective attainment of goals from the strength of Diversity

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Enterprising Spirit

Open Minded

Guiding Principles

Strength From Diversity

Freedom from responsibility Figure: Guiding principles

The departments various activities cover setting criteria for the selection procedures: Interview techniques, training standards etc. According to the BAT policy guideline, the department maintains the personnel through formulation policies on wages, fringe benefits, annual leave, training calendar, provident fund, performance appraisal etc. Remuneration is managed centrally and there is never any negotiation but settlement. It also settles with the trade union for Long Term Agreement (LTA) between management and workers and the collective bargaining agents. The concept behind the industrial relations is always win-win situation.

Information Technology Mission: The mission BATB IT is to enhance BATB's competitive position by increasing operational efficiency and timely decision making through measurably better and more compatible 65

information system, and by harnessing the most appropriate technology and implementing new business practices to enhance BATB's business effectiveness.

Information Technology department was mainly acting as a supporting service for all the other functions of BAT. As the emergence of super information highway and other technological advancement made the business world more competitive, BAT also made necessary adjustments towards the changes and in continuation with that process IT was made a separate department in February 2000. The head of IT is also a member of the executive committee and he is supported by the function support IT managers.

British American Tobacco Bangladesh IT department drives the demands of its business and processes. IT delivers comprehensive, timely, and relevant business information to decision makers wherever they are located. This will allow the organization the maximum ability and flexibility to identify new opportunities and quickly respond to competitive challenges.

Key Functions of IT 1. Establishing and maintaining information and infrastructure architecture to support knowledgeable business users who incorporates IT into their decision making and of doing business, supported by specialist team who manages and seeks continuous improvement, outsourcing where possible. 2. Resilient communication infrastructures that are flexible and are able to take new technical innovation to keep the cost down. 66

3. To adopt global application convergence strategy that meets the local business requirements, and develop local applications where appropriate, outsourcing data processing where possible. 4. To support the changing organizational structure and requirements, IT continues to make available innovative services and training. 5. To develop application and promote the use of the group working tools as first choice of communications and to become center of excellence for group working. 6. To develop and retain IT professionals: it is done with the support of HR, the senior IT managers train the new joiners and also takes interviews in coordination with HR.

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Finance Department

Finance Director

Senior Corporate Finance Manager Corporate Finance Manager

Marketing Finance Manager

Operations Finance Manager

Treasury Manager

2 Manufacturing Managers, Leaf Finance Manager and Supplier Finance Manager

Accounts Payable Manager and 2 Deputy Corporate Finance Managers

2 Deputy Treasury Managers

CARG Manager Deputy CARG Manager

2 Deputy Marketing Finance Mangers

Figure: Finance Department Organogram

Finance department is responsible to evaluate the economic performance of the Organization. BAT strictly uses the budget as part of the strategic plan to go for operational activities. The company budget helps to measure its performance acting as a tool for feed forward and also for feedback. The company at the beginning of the year starts its operation with the budgeted sales, target, cost, investment and other financial activities. The company for control purpose evaluates its performance at the end of each month. It helps to give the actual information of cost, sales and other data and compares with the budget allocation or target. In this way it finds the variances, then find out the reasons and take necessary corrective action or review the 68

budget. The overall responsibility of doing this goes to the Cost Accountant and Finance Director of BAT. The Finance department has its established strategic plan, normally the person involved are Finance director, company executive, Material Resource Planning Manager (MRP), Information Technology Manager (IT), Management Accountant and Financial accountant. Under Financial Accountant there are three accountant officers, Head Office accountant, Production accountant and Leaf Accountant. These three-accounts managers individually have Deputy Head Office accountant, Deputy Production Accountant and Deputy Leaf Accountant. Under these three Deputy Accountants three Assistant account officers works.

Finance Department audits the expenditure at a regular interval to ensure that rules and regulation are properly adheres the operation. External auditor also checks all the BAT Financial system and also prepares the annual financial report. If they find any deviation they report to the Chief executive for taking corrective action. The Auditors Inform the BAT Head Office and makes them visit the operating company to ensure the Management Control are directly administrated. Any new proposal is analyzed from the viewpoint of future prospects of the plan, Profitability, Capital Investment and Shareholders wealth. Here the Finance department gives special consideration on the Return on Investment of the proposal. Detailed month wise cost analysis is done in detailed to access the variances. At each financial point's corrective action are taken to remain within the budgeted plan.

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Budget The Budget process is done at BAT in two steps. First the former year annual report is taken as the base of the budget. And in the second step, top management with the help of financial department tries to integrate proposal of the next year, which have been already established. The proposals have been considered from the viewpoint of inflation of the currency, cost of living, and exchange rate prevailing in the country. By integrating the proposals the concerned authority figure out the costs involved. After that they add these costs with the former year Annual Balance sheet and thus formulate coming years budget.

There are various parties involved in making and executing the budget. Some of the parties are organization, Budget Committee, Negotiation, Issuance of guidelines, Initial Budget Proposal. As all the costing comes from various departments and units so the role of the organization as a whole is vital preparing Budget.

BAT always keeps a budget committee for each year and this committee is consisted of MD, National Sales Manager, Finance Director and Chief Accountant. This committee reviews the budget then either approves or adjust the same. BAT is not allowed to do any budgetary activities other than directed by the main Head Office.

Transfer Pricing Method There is no special rule on transfer pricing at BAT. They use a mixed transfer pricing system in the company, there are two ways BAT do their transfer pricing. In production department they 70

do cost based transfer pricing and in finished goods they do market based transfer pricing, between two production units they set the pricing and for market based they set the pricing while distributing product to the wholesalers and retailers. The managers from each unit get the transfer pricing by negotiation and set the pricing after that the top management sets the transfer pricing and contribution margin. When the top management decides and especially after the negotiation they send the pricing to the senior managers after that the final report is structured on the base of final decision from the Finance Department.

Measuring and Controlling Assets Employed In this part measuring and controlling is done under strict supervision of the finance department. Finance department takes necessary measures as per top management decisions. Major areas of assets employed are Cash, Accounts Receivables, inventories, Working Capital, Equipment Replacement, Disposition of Assets, Leased Assets, Idle Assets, Non current liabilities and finally Capital charges.

About account receivable, the company does not make any credit sales, the amounts depicted are from other sources. Leased holdings, land and building are depreciated over the life of the lease term.

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Foreign Exchange Policy Some tobacco is being exported to BATBs sister companies in overseas countries and there by it earns very limited amount of foreign exchange. For manufacturing its product BATB needs lot of Raw Material i.e. tobacco and packaging materials which are not available in the country and so the company have to import those items by purchasing Foreign Exchange from the secondary exchange market. To keep the cost down of the secondary rate, the company makes the forward booking of the required amount for the individual letter of credit. And the Treasury Manager of the company finds the best solution to Hedge the currency market and accordingly the company negotiates with the foreign exchange rate with the Financial Banks. As a policy, BAT Bangladesh will engage in foreign exchange transactions through usual banking channels only: to meet the requirements of its (a) Normal commercial trading activity, and to manage and provide for (b) currency cash flows relating to this activity on up to a rolling 12- month basis. This policy is issued by the EXCO. The Managing Director and Finance Director are authorized to jointly take decisions on matters arising in the course of business not covered in this policy and report such decisions in the immediate next EXCO meeting.

Foreign Exchange Exposure BAT exposure to foreign exchange is mainly imports and to lesser degree on scheduled remittances, i.e. for T&A fee, consultancy services, overseas training etc. BATs exposure to foreign exchange can arise at a variety of points. Normally exposure will arise on the opening of 72

a LC for the import of Leaf, Wrapping Material, Capital Equipment, Spare parts etc. However, there is also commitment and exposure to foreign exchange risk.

BAT Bangladesh will seek to take forward cover for all known commitments within the constraints imposed from time to time by the Bangladesh Bank or the government. For offshore commitments denominated in Taka, for instance dividends and royalty, BAT Bangladesh will hedge the exchange rate only if requested to do so by the beneficiary.

In no circumstances will the company undertake a foreign exchange transaction that may violate the exchange control regulations of the country or attempt transaction that may be otherwise improper. Further, it is the company's policy not to take any speculative position or enter into any transaction with the intention of securing a gain in foreign exchange trading.

Accounting Department The Accounting department of Dhaka Factory is headed by the production accountant. Under him are six Assistant Production Accountants working. The department has been divided into seven sections according to the job each of them performs. The first section is time Office Section. It is used to time keeping of the workers, processing of the time cards, reporting to the HR Department for absenteeism, reporting the overtime, shift allowance information to the wages section, dealing with all leave information, maintenance of the master pay roll, keeping records about promotions, new appointments, and dismissals for accounting purpose and keeping records of the crew developments sheets from production. The second is Wages 73

Section which deals with payments of wages to the workers, dealing with the allowances like smoking allowances, festival bonus, and annual bonus, to inform the Head Office about the employees group insurance, payment to the and casual workers and reporting monthly reports to the Head office. The third section is Bills and Ledger Section which has all types of bill processing, preparing trial balance and sending it to the Head Office, keeping records of all fixed assets, ledger posting of all records. The fourth section is Cash Section which deals with all sorts of cash receipts and payments e.g. PF loan and refund. Scrap selling, Waste paper selling, selling of tobacco waste, Misc. payments. The fifth section is R&RS section. This section deals with the imported parts locally fabricated parts and the items those are bought against works order. The 6th function is Factory Office Section which creates productive reports, absenteeism reports, machine downtime reports, record keeping in connection with the excise, preparing the excise reports, dealing with the vats, selling of wastage and maintaining the sales register. The seventh section is Costing Section which calculates leaf costing, wrapping material costing, standard costing of product and marginal costing.

COMPETITIVE CONDITIONS Global: British American Tobacco, the second largest Tobacco Company in the world is also the worlds most global tobacco company. Based in London, UK, it operates in more than 50 countries with 85,000 employees selling more than 300 brands in more than 180 markets worldwide. Tracing its heritage back to a joint venture formed by the Imperial Tobacco Company of the United Kingdom and The American Tobacco Company of the United States in 1902, today's British 74

American Tobacco Company was born on the world stage. Extent of operation of British American Tobacco Company are America-Pacific (USA, Japan, South Korea), Asia-Pacific (China, Indo-China, Taiwan, South-East Asia, Australasia), Europe (50 countries including Russia), Latin America (Central & South America, Mexico, Caribbean), Africa (More than 50 countries) and MESCA (Middle East, South & Central Asia)

British American Tobacco is the mother-company of, at present, around 56 companies worldwide. BAT is the worlds most international tobacco group. With a market share of 15 per cent, they make the cigarette chosen by one in seven of the worlds one billion adult smokers and make nearly two billion cigarettes worldwide every day. BAT holds strong market positions in each of its regions and has a leadership in more than 50 markets of the 180 markets where they have an active business presence.

In order to support the company's business goals, the merger of British American Tobacco with Rothmans International had been announced on 11 January 1999. This global merger was completed on 7th June 1999. This brought together the number 2 and 4 players which together will boost a combined volume exceeding 900 billion cigarettes around the world with some 120,000 employees and a worldwide market share of 16 percent (Phillip Morris has a 17 percent share). The merger is a major step forward in British American Tobaccos vision of becoming the worlds leading International Tobacco Company.

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THE BATB BRANDS

Benson & Hedges Launched in 1997, Benson & Hedges maintains our prime market share in the Premium segment. Within a short time Benson & Hedges became a successful brand in our portfolio.

John Player Gold Leaf, Pall Mall and Capstan John Player Gold Leaf, Pall Mall and Capstan are positioned in the High segment. Launched in 1980, John Player Gold Leaf is one of the highest selling brands of our company, enjoying large market share in the High segment. Pall Mall was the Groups first Global Drive Brand to be launched in Bangladesh in 2006.

Star and Scissors Star and Scissors are positioned in the Medium segment. Star, launched 40 years ago, is still a leading brand in this segment. Currently, it is the highest volume generating brand for the company.

Pilot and Bristol Pilot was launched in 2009 in the Low segment, which is growing rapidly in Bangladesh. Bristol was launched also in the Low segment in October 2010.

INDUSTRY ANALYSIS OF BANGLADESH

Bangladesh is the 6th largest tobacco market in the world with absolute dominance of Full Flavor. 76

0.1

98.9

FF

Lights

Menthol

Fig: Preference of smokers in Bangladesh

The main cigarette manufacturers today are (Detailed description of main competitors are given later): British American Tobacco Bangladesh Dhaka Tobacco Industries Abul Khair Tobacco Nasir Tobacco Azizudin Industries and New Age Tobacco.

The main biri manufacturers are: Akij Biri Abul Biri Nasir Biri Karikar Biri Aziz Biri and Hundreds of local biri manufacturers. 77

At the moment, there are two main tobacco industry associations i.e. Bangladesh Cigarette Manufacturers Association (BCMA) and Bangladesh Biri Manufacturers Association (BBMA) representing the industry.

Today, the market is estimated to be over 64 billion sticks of biri

Smoking Tobacco

>132 bn Size (bn) Ratio 51% 49% Price index 100 21

and over 68 billion sticks of machine cigarettes. Biri manufactured overtook Cigarette Biri >68 >64

cigarettes as the more popular smoked product in 1979. However, the market for biri has been on a declining volume trend since 2003. This reflects the switch by consumers due to social pressure, urbanization, literacy rate, economic growth and awareness level.
Daily Tobacco Incidence (in %)

60 50 40

Male Population who are tobacco user (%)

38% 34% 33% 32% 31% 28% 25% 23% 24% 27% 24%

55 46

21%

21%

22% 20% 18%

23%

23%

23% 22% 21% 18%

30 20 10

Any Tobacco

Smoking Tobacco

2010

'00

'01

'02

'03

'04

'05

'06

'07

'08

'09

'10

Bidi Incidence

Cigarette Incidence

Fig: Male Tobacco user

Fig: Migration from biri to cigarette 78

From the figure of Male Tobacco users it can be seen that a large population of male use any tobacco. The aim of BATB would be to convert those consumers into smoking BATB cigarettes. The other figure shows migrations from biri to cigarette which is good in terms of profit as well as health issues. The market has a high International Brand share (18%) and most importantly, a high ASU 30 share (59%) which promises future growth.
170 150 130

63 Bln. sticks
110 90 70 50 30 10

33

34

36

37

42

47

47

52

68

88

89

87

87

83

82

79

78

87 64

'01

'02

'03

'04

'05

'06

'07

'08

'09

'10

Biri Vol

Cig Vol

Figure: industry growth It can be seen from the above diagram that the cigarette industry has doubled in 8 years. This is especially good because its not the tobacco industry its is specifically the cigarette industry which shows the change in the taste of the consumer from biri to cigarette as well. Cigarette industry is growing from increasing population and up-trading from Biri. Higher consumer disposable income is leading to higher new entry in cigarette. Growth rate slowed down in 2011 driven by high inflation and volume contraction due to industry-wide price increase 79

Fig: Industry Value

Source: Marketing IT BA Forum

In the above diagram it can be seen that the industry value has gone year in the last few years in every segment. Industry is growing faster in value terms driven by successful price increases.

COMPETITIVE SCENARIO
In May 2008, Philip Morris International launched both full flavoured and light variants of Marlboro brand cigarettes in different markets of Dhaka. Dhaka Tobacco Industries is manufacturing and distributing the brand.

80

Tobacco products are distributed either by manufacturers themselves, third party distributors or wholesalers. The sales and distribution effort requires a large number of field employees and agents because they have to serve about 1 million individual retail outlets throughout Bangladesh with a growth of 8% per annum. The proliferation of retail outlets is mainly due to the ease of entry and the low capital requirement. Many of these outlets operate on limited capital and are unable to purchase quantities beyond their immediate daily sales. The high number of retail outlets has created a stick market and consequently imposed more frequent sales visits compared to other similar

businesses. Figure: Market situation 81

From the above figure it is seen that till 2005 BAT share remained stable, DTI gradually caught up in the race at the expense of other small operators. After price increase in 2006, BAT-share started to decline while DTI continued its momentum riding on the low segment. The launch of Sheikh also crippled the growth of BATB. However after a long and hard strategy formulation and fighting off DTI in the low segment BATB regained some market share by launching more brands in the low segment like Hollywood.

Figure: Volume of shipment representing growth The sale of BATB has increased in the past few years which can be seen from the above data of shipments. This is a good sign for the company and gives hope to the shareholders to invest.

82

ANALYSIS OF RIVALS

83

Phillip Morris International Yet to establish a foothold with Marlboro since its launch in 2008 Aggressively investing (i.e. 3 mln in 2010) behind merchandising and trade engagement PMI apparently is keen to buy equity stake in DTI/acquire DTI ensuring management control in the long term

84

CHAPTER 5 DATA ANALYSIS

85

CHARTS
The data analysis is done with SPSS and the charts are from MS excel for better understanding. It has been explained in detail as follows:

Fig: data analysis 1 As it can be seen from the above diagram that the survey comprised of mostly male because in our country the number of female population smoking is very low.

Fig: data analysis 2 The age from the sample shows that the number of young smokers is a lot more that the older smokers. This can probably be a sign that as people get older they tend to stop smoking. However this means that the future for tobacco industry is good.

86

Fig: data analysis 3 It is seen that the married proportion of smokers is a bit more that the unmarried. This is a hint that when people have a family and have more pressure they tend to smoke more as they claim that smoking reduces pressure.

Fig: data analysis 4

Middle income earners have the highest proportion of smokers from this survey and it is observed that the top income earners do not smoke as much. Astonishingly low income earners smoke a big chunk of cigarettes which shows that addiction does not care for income.

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Fig: data analysis 5 From the survey done it is seen that most of the people have faced a brand representative of our company which means that our brand representatives are very active.

Fig: data analysis 6

Even though our brand representatives are very active it is sadly seen (Fig: data analysis 6) that they have not been very successful in inducing trial to the consumers. This hints that the brand representatives need more training as well as better communication skills to convince the consumers.

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Fig: data analysis 7 It can be seen that the smokers do not purchase a cigarette from the display facing. This can be because most of them already have a preference and they like that particular taste as a result they just go to the retailer to buy that specific cigarette even though there are many others in the display.

Fig: data analysis 8 Almost all of the options in this question have very close results. This is because people are not too aware of what they feel about the cigarette they smoke. The main reason is that feeling about a cigarette means that you have to feel about the brand. Since people are not sure about their brand feelings concerning cigarette so the results are vague. This is because of complex consumer behavior.

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Fig: data analysis 9

The above diagram shows that consumers are very receptive to retailers. Hence if a retailer recommends a different brand there is a good chance that the consumer will try it.

Fig: data analysis 10

Smoking is an addiction as a result the above diagram shows that even if a person cannot find the cigarette he is looking for, he will still buy any other brand because at that moment he needs to smoke.

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Fig: data analysis 11

Almost everyone in the survey seems to understand the difference in brand personality. This means our company has done great in communicating to the consumers and people are aware of the brand message.

Fig: data analysis 12

A chunk of people give moderate importance to the retailers word of mouth which is a good sign and it means the company should build relationship with the retailers.

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Fig: data analysis 13

It is seen that the brand representative are important to the consumers. However from the previous diagram (Fig: data analysis 6) it is clear that BRs have not been too successful so they have to be trained properly.

ANOVA
The following section covers ANOVA and its corresponding descriptive: Display Choice by Display Perception Descriptives Display_Choice 95% Confidence Interval for Mean N Uplifts the image of the brand Encourages you to try a new brand Do not pay attention Std. Std. Mean Deviation Error 23 1.4783 36 2.1667 .73048 .15232 .87831 .14639 Lower Bound 1.1624 1.8695 Upper Bound 1.7941 2.4638 Minimum Maximum 1.00 1.00 3.00 3.00

34 2.1176

.47767 .08192

1.9510

2.2843

1.00

3.00

92

Do not have any involvement even though you notice it Total Display_Choice

27 2.2963

.60858 .11712

2.0555

2.5370

1.00

3.00

120 2.0500

.74303 .06783 ANOVA

1.9157

2.1843

1.00

3.00

Sum of Squares Between Groups Within Groups Total 59.802 55.898 65.700

df 3 116 119

Mean Square 3.267 .482

F 6.780

Sig. .000

In this anova, the means of display choice and display perception is calculated. The significance level is .000 which is less than the critical value of .05 thus it is significant. The strength of the display perception on display choice is calculated by this method: This results in: = 0.91.This means that the strength is strong because 0.91 is very close to

1 and display perception does have a good influence on display choice.

Retailer Recommendation by Income Descriptives Retailer_recommendation 95% Confidence Interval for Mean N Tk.10000 less Tk.1100025000 or Std. Mean Deviation 34 1.6765 45 2.0222 Std. Error Lower Bound 1.3824 1.7544 Upper Bound 1.9705 2.2901 Minimum Maximum 1.00 1.00 3.00 3.00

.84282 .14454 .89160 .13291

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Tk. 2600040000 Tk. 41000 and above Total

32 2.0000 9 1.6667 120 1.8917

.91581 .16189 .86603 .28868 .88684 .08096

1.6698 1.0010 1.7314

2.3302 2.3324 2.0520

1.00 1.00 1.00

3.00 3.00 3.00

ANOVA Retailer_recommendation Sum of Squares Between Groups Within Groups Total 69.173 90.419 93.592

df 3 116 119

Mean Square 1.058 .779

F 1.357

Sig. .260

From this anova it can be seen that significance level is less than .05 so the test is significant. The strength of income on retailer recommendation is very strong ( ) = 0.74 because it is

close to 1. In my survey the middle income earners are the biggest in number and thus in here it means that the middle income earners are more influenced by retailer recommendation.

BR importance by People facing BR Descriptives BR_importance 95% Confidence Interval for Mean N yes no Total Mean Std. Deviation 1.13336 1.11765 1.14615 Std. Error .13451 .15966 .10463 Lower Bound 2.9993 2.4749 2.8678 Upper Bound 3.5359 3.1169 3.2822 Minimum Maximum 1.00 1.00 1.00 5.00 5.00 5.00

71 3.2676 49 2.7959 120 3.0750

94

ANOVA BR_importance Sum of Squares Between Groups Within Groups Total 106.450 149.875 156.325 df 1 118 119 Mean Square 6.450 1.270 F 5.078 Sig. .026

Once again the significant level shows that the test is significant as it is 0.26. The strength of BR importance on people facing BR is = 0.68. This means that the people in my survey who

have actually faced a BR understand the importance of a BR and people who have not been confronted by a BR do not get the value of it.

Retailer recommendation by Brand availability Descriptives Retailer_recommendation 95% Confidence Interval for Mean N yes no sometimes Total 57 18 45 120 Mean 1.5439 1.8889 2.3333 1.8917 Std. Deviation .80335 .67640 .87905 .88684 Std. Error .10641 .15943 .13104 .08096 Lower Bound 1.3307 1.5525 2.0692 1.7314 Upper Bound 1.7570 2.2253 2.5974 2.0520 Minimum Maximum 1.00 1.00 1.00 1.00 3.00 3.00 3.00 3.00

ANOVA Retailer_recommendation Sum of Squares df Mean Square F Sig. 95

Between Groups Within Groups Total

56.674 77.918 93.592

2 117 119

7.837 .666

11.768

.000

The significance level of this anova shows that it is perfectly significant. The strength of the retailer recommendation on brand availability is = 0.61 which is moderately strong. This

means that if a brand is not available then a smoker will listen to the retailers word and buy the recommended brand.

Brand message by Age Descriptives Brand_message 95% Confidence Interval for Mean N 18-24 25-34 35-44 45-54 55 and above Total 50 31 20 10 9 Mean 1.4000 1.3226 1.4000 1.8000 1.5556 Std. Deviation .78246 .70176 .75394 1.03280 .88192 Std. Error .11066 .12604 .16859 .32660 .29397 Lower Bound 1.1776 1.0652 1.0471 1.0612 .8777 1.2831 Upper Bound 1.6224 1.5800 1.7529 2.5388 2.2335 1.5669 Minimum Maximum 1.00 1.00 1.00 1.00 1.00 1.00 3.00 3.00 3.00 3.00 3.00 3.00

120 1.4250

.78497 .07166 ANOVA

Brand_message Sum of Squares Between Groups Within Groups 1.929 71.396

df 4 115

Mean Square .482 .621

F .777

Sig. .043

96

Descriptives Brand_message 95% Confidence Interval for Mean N 18-24 25-34 35-44 45-54 55 and above Total 50 31 20 10 9 Mean 1.4000 1.3226 1.4000 1.8000 1.5556 73.325 Std. Deviation .78246 .70176 .75394 1.03280 .88192 119 Std. Error .11066 .12604 .16859 .32660 .29397 Lower Bound 1.1776 1.0652 1.0471 1.0612 .8777 Upper Bound 1.6224 1.5800 1.7529 2.5388 2.2335 Minimum Maximum 1.00 1.00 1.00 1.00 1.00 3.00 3.00 3.00 3.00 3.00

With a significance level of just below .05 this anova is still valid and significant. The strength of Brand message on Age is = 0.03, which is very weak as it is close to 0. Thus it can be said

that age does not have much influence on the understanding of brand message.

CORRELATIONS

Descriptive Statistics Mean Faced_BR_of_BATB BR_success BR_importance Age 1.4083 1.7167 3.0750 2.1417 Std. Deviation .49359 .45251 1.14615 1.25889 N 120 120 120 120

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Correlations Faced_BR_of_ BATB BR_success BR_importance Faced_BR_of_BATB Pearson Correlation Sig. (2-tailed) N BR_success Pearson Correlation Sig. (2-tailed) N BR_importance Pearson Correlation Sig. (2-tailed) N Age Pearson Correlation Sig. (2-tailed) N 120 .622
**

Age -.109 .236 120 .027 .771 120 -.057 .401

.622** .000 120 1

.203* .026 120 .348

**

.000 120 .203* .026 120 -.109 .236 120 120 .348** .000 120 .027 .771 120

.000 120 1

120 -.057 .401 120

120 1

120

**. Correlation is significant at the 0.01 level (2-tailed). *. Correlation is significant at the 0.05 level (2-tailed).

Fig: data analysis correlation 1 The analysis of the correlation matrix indicates that few of the observed relationships were very strong. The strongest relationship was between BR success and the faced BR of BATB. This means that obviously the success rate of the BR and the people who faced a BR is positively correlated (r=0.622), hence as a BR reaches more people the success rate of that BR will increase as well.

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BR importance and BR success also has a moderately strong correlation of .348 which means that people who have been happy with the BR performance and where the BR was successful, to those people the importance of BR is high as well.

It can be seen from the above figure that age and being faced by a BR is negatively correlated (.109) as well as age and BR importance is also negatively correlated (-0.57). This means that as the age increases the chance of being faced by a BR and the importance of BR to that person decreases. This is mainly because the BRs are targeted mostly for the young and middle aged people and not for older people.

Descriptive Statistics Mean Std. Deviation N Income 2.1333 Display_Choice 2.0500 Brand_message 1.4250 Brand_availability 1.9000 .91609 120 .74303 120 .78497 120 .92036 120

Correlations Income Display_Choice Brand_message Brand_availability Income Pearson Correlation Sig. (2-tailed) N Display_Choice Pearson Correlation Sig. (2-tailed) N 120 .163 .075 120 120 1 .163 .075 120 1 .603 .264 120 -.338 .134 120 .034 .713 120 .376** .000 120 99

Brand_message

Pearson Correlation Sig. (2-tailed) N

.603 .264 120 .034 .713 120

-.338 .134 120 .376

**

.034 .715

120 .034 .715 120

120 1

Brand_availability Pearson Correlation Sig. (2-tailed) N

.000 120

120

**. Correlation is significant at the 0.01 level (2-tailed). Fig: Data analysis correlation 2

From the above correlation it is seen that the strongest relationship was between brand message and income. This positive correlation of (r=.603) means that as income increases people understand the brand message more clearly.

Another moderately strong relation is between brand availability and display choice (r=.376). The question on brand availability was gave the results that people will buy the available brand even if they cannot find the desired brand. Hence this correlation means that if people cannot find the desired brand then they will choose a brand from the display.

The Brand message and display choice has a negative correlation of (r=-.338) which means that as if the brand message is not clear then the people will not choose a brand from the display. This is very true because if a person does not know the brand then why will he choose it.

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CHAPTER 6 FINDINGS AND RECOMMENDATIONS

101

The findings for BR are as follows:

According to the survey done, 59% of the sample have at least had interaction with a BR. This is a sign showing that the reach of BR is not bad however it should be improved even more. Since the sample does not have people from the rural areas so the reach of BR outside the city is questionable.

Though people have faced BRs but they have not been successful in changing consumer behavior most of the time. It is seen that the BRs have been successful only 28% times which means the BRs need more training. It is seen from the survey that 76% of the respondents can differentiate the brands of BATB properly. This is a very good sign showing that the BRs have been successful in presenting the brand message to the target consumer which was a part of the research objective.

From the research the BR administration has been found out as follows: Interspeed Marketing Solutions Limited (IMSL)- a third party agency employed by BATB is solely responsible for BR management. IMSL has appointed Area Coordinators (AC) for all the areas that are accountable for BR management starting from recruitment, supervision to salary disbursement. This is done to remove some pressure from the HR department of BATB because a lot of BR has to be handled. Very close coordination is required with IMSL by the trade marketing department to make sure that they understand the demands of BATB.

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The following figure shows a visual process of the BR administration:

Figure: Reporting structure Territory Officer (TO) is the main personnel in charge of all the BRs from the BATB side. From the IMSL side the AC manages the BR supervisor who manages the BR directly. All of IMSL reports to the TO directly to make sure there is no gap and they are always hand in hand with BATB.

Practical findings from field: During my research I went to the field one day to make an observation from which I understand the details about the Day of a BR. At first the BR reaches the distribution house within 8:30 a.m. and signs the attendance sheet. Then he collects the tools to conduct consumer contact from the supervisor. The BR has to collect route plan from the supervisor as well. Then he reaches the target outlet according to the route plan. The BR has to introduce with the retailer prior to starting his job. Then the BR conducts consumer contact and returns back to distribution house

103

within 5:30 p.m. Then he has to submit the tools to the supervisor. After that he has to report days activity to the supervisor and finally end the day after taking permission from the supervisor.

These findings show that the BRs are supervised very carefully and the Territory Officers of BATB make sure that there is no confusion in the BRs mind. However the BR needs to motivate the consumer more to induce trial, this objective has not been completely successful by the BR.

The following are the findings from CM:

Fig: CM process According to the survey it has been seen that when a consumer sees a cigarette in the display of the shop, then they feel encouraged to try a new brand and it uplifts the image of the brand. Some people just ignore the display and buy the brand they want however a good

104

merchandising coupled with retailers WoM can solve that issue. Thus the importance of CM has been proved which was an objective of the research.

The results of the importance of a good facing is as follows: 1. A well organized facing draws the attention of consumers: from the research it has been found out that the consumers respond positively from a good facing. This is a good way to fight off competition as well.

2. Encourages the consumers to buy: when a facing and planogram strategy is executed properly, then the clusters of the brands are suitably visible which encourages consumers to try a brand of BATB

3. Exists in an excellent condition for long time: a good facing ensures brand quality. When the brands are kept in clusters in a proper facing then it is not damaged in any way and also made sure that all the packets in the display are clean. Thus increasing the durability of the packets.

4. Uplift the image of the brand: when a consumer sees the brands in a good display with top quality then it enhances the image of BATB. Thus forming a positive perception on the brands which adds value to the company.

105

It has to be kept in mind that in a dark market where cigarette promotions are banned, the only place for BATB to make an appearance is the point of purchase or point of sale. Hence CM is extremely valuable as it provides visual of all the brands and it is the stop of marketing. If the consumer likes a brand from the display and buys it then BATB has been successful in changing the consumer behavior. The competition brands will also be trying to grab the good slots in the display but that is where the BATB distribution comes in and makes sure that we have the best visual position in the display.

A very important finding is that the facing should be done in such a place which remains within the eye level of the consumer so that they can see it directly.

Retailers WoM

The survey results show that 45% of the respondents would choose a different brand if the retailer recommends it, moreover 34% respondents would also choose it sometimes, but only 21% will not choose a brand according to retailers WoM. Hence it is clear that the people listen to the retailers recommendation. On top of that 47% of the respondents give moderate importance to the retailers WoM and 23% give high importance. This shows that the retailers are an important part of the consumers decision making process. Thus the consumer buying behavior is affected by the retailers WoM.

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After realizing the great importance of retailers WoM, the Partner Program was launched with the theme: Together we move ahead for a brighter future. This greatly encouraged the retailers to work with BATB and hence affecting the retailers WoM.

The result of this program was a positive shift in the retailer disposition funnel ( a tool that measures the relationship between a retailer and BATB and it is used to understand what level of involvement is required with which retailer) which helped to improve the relationship with the retailers.

The following Key Performance Indicators (KPI)3 measured the effectiveness of the program: 1. Volume Growth: From the trade marketing efforts the volume of the brands like B&H, Pall Mall and Gold Leaf are measured. It has been seen that the volume of the shipments has increased which hints that the sales has risen. Hence the volume growth proves that the demand of the consumers increased meaning that the trade mechanism has been effective.

2. Visibility Drive (Facing): the survey showed that people do not always choose from the survey however it affects their perception of the company so even if it has not been completely successful but still it had some impact. Hence this KPI shows that the CM trade mechanic was not too successful and it needs more work.

Form of Sales Performance against last year is given in the Appendix

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3. Retail Advocacy (Trial & Brand Message): the retailers have done an excellent work with their word of mouth. From the survey it is seen that people respond positively when a retailer recommends a certain brand. The partner Program which was implemented by BATB has had a great impact on the relationship between the retailer and BATB. The partner concept gained confidence and credibility internally by generating business results achieving active trade support. This has encouraged the retailers to put more effort into promoting the BATB brands. Thus this trade mechanism has been very effective and successful.

Distribution BATB tries to maintain 70% awareness and 70% distribution of their brands all over the country. It is seen from the survey that people buy any cigarette they like from the display if the brand they desire is not available. Thus it is important to make sure that the consumers always get the preferred brand because otherwise BATB will lose consumers.

Consumer Behaviour The marketing objective of changing consumer behavior is reached in some cases for example when the people choose a brand from the display or when people listen to the retailers WoM. Consumer behavior is a very complex study and it changes from person to person however from previous researches it is seen that consumers follow a pattern. For a product like cigarette which has low involvement but since it is an addiction so the value of cigarette in the mind of the consumer is high. From the survey also it is found out that most of the time the consumers 108

already have a perception about a brand before purchase so they do not change their buying decision just by looking at the display, rather they change their decision when the convincing power of retailer or BR is high.

CONCLUSION
The research showed a positive result for the three key trade mechanisms. It is obvious that BATB is reaching their marketing objectives using the methods discussed in this paper. However it can be improved even more with the help of the recommendations. From prior consumer behavior researches it is clear that a low priced general product like cigarette which is consumed on a daily basis the involvement should not be too high; however from this research it is seen that consumers have a strong loyalty and preference to each different brand. There the consumer will purchase the brand of cigarette which is suited to their taste. This is the reason why BRs, CM and retailer WoM has not been 100% successful but it has been extremely effective. BATB has a strapping hold over the distribution network all over the country and so the key trade mechanisms have reached a lot of people and have been effective. Therefore the research question is answered and it can be said that the 3 key trade marketing and distribution practices are effective in bringing a positive change to the marketing objective which is to change consumer behavior.

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REFERENCES
Belch, G.E & Belch, M.A (2003). Advertising and Promotion. Delhi: Tata McGraw-Hill

Pazgal, Amit and David Soberman (2008) Behavior-Based Discrimination: Is it a winning play and if so when? Marketing Science 27(6), 977-994

Sabreen Khan Brand Communication in the context of British American Tobacco Bangladesh, working paper

British American Tobacco, (n.d.), About Us, Retrieved April 10, 2012, from http://www.batbangladesh.com

British American Tobacco (2011), .Annual Report. Bangladesh

British American Tobacco (2011), Bangladesh Cigarette Industry overview and economic contribution. Bangladesh

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APPENDICES

111

Exploring Three Key Trade Marketing and Distribution Practices in Achieving Marketing Objectives. -- By Ahmed Tajik Ifrad

Dear Respondents, I am conducting a survey to find out the effect of 3 key trade marketing practices used by British American Tobacco Bangladesh to achieve marketing objectives which is to change consumer behavior. Kindly circle your selected answer to the questions that follow. All information obtained will be kept confidential, and will be used only for the purpose of my research. Thank you for your participation.

1. Sex:

Male

Female

2. Age:

18-24

25-34

35-44

45-54

55 and above

3. Marital Status:

Married

Unmarried

4. Income (monthly): a. Tk.10000 or less b. Tk.11000-25000 c. Tk. 26000-40000 d. Tk. 41000 and above 112

5. Have you ever faced a Brand Representative of British American Tobacco Bangladesh? a. Yes b. No

6. If yes, then has the Brand Representative been successful in inducing trial? a. Yes b. No

7. When you go to purchase a cigarette, do you make your choice from the display? a. Yes b. No c. Sometimes

8. When you see the display of cigarettes in the retail outlet then how does it make you feel? a. Uplifts the image of the brand b. Encourages you to try a new brand c. Do not pay attention d. Do not have any involvement even though you notice it

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9. If a retailer tells you to choose a different brand then would you trial? a. Yes b. No c. Sometimes

10. If you do not find a brand of cigarette you are looking for then will you buy the other available brand? a. Yes b. No c. Sometimes

11. Do you see the difference in personality of each brand in British American Tobacco Bangladesh? a. Yes b. No c. Not clearly

12. How much importance would you give to a retailer's word on a rating of 1 to 5? 1 2 3 4 5

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13. How much importance would you give to a Brand Representative's recommendation? 1 2 3 4 5

14. Give your opinion on the marketing efforts of BATB affecting your buying behavior.

GODOWN STOCK REGISTER

DATE: B & H JP GL S M PALL MALL LTS PALL MALL MTL PALL MALL SMOOTH SR FT 10 SS GOLD FLAKE 20 HL GOLD FLAKE 10 SS

BRANDS OPENING STOCK RECEIVED QTY TOTAL SALES CLOSING STOCK

B&H L

JP GL

CAFT

SRFT 20HL

SSFT 20HL

TOTAL

115

SALES CALL MEMO

NAME OF THE HOUSE DISTRIBUTOR BRITISH AMERICAN TOBACCO BANGLADESH Address..Phone. Sl Date: Route & Section. Name of the outlet: TPG: Address: Ideal Order Quantity (IOQ) Value Tk/Ps No.

Brand

Pack Type KSF 20 HL KSF 20 HL KSF 20 HL KSF 20 HL KSF 20 HL KSF 20 HL KSF 20 HL KSF 20 HL KSF 20 HL KSF 10 SS KSF 20 HL KSF 20 SC

Last Lifting

C&C Lifting

OHS

Actual Order

Rate (Per Pack) 93.00 93.00 53.00 53.00 46.72 46.72 46.72 46.72 33 16.5 33 33

B&H Lights B&H Special Filter JPGL JPGL Smooth Pall Mall Lights Pall Mall Menthol Pall Mall Filter Capstan Filter Kings Star Filter Kings Star Filter Kings Scissors Filter Kings Scissors Filter Kings

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Viceroy Rich Taste Viceroy Rich Taste Gold Flake Gold Flake

KSF 20 HL KSF 10 SS KSF 20 HL KSF 10 SS

17.5 8.75 14.6 7.3

TOTAL

Signature of the SR

Signature of the Retailer

SALES PERFORMANCE AGAINST LAST YEAR

MO N. AVG

SEGME NT

YEAR 20 20 (+ %) 20 20 (+ %) 20 20 (+ %) 20 20 (+

JA N

FE B

MA R

AP R

MA Y

JU N

JU L

AU G

SE P

OC T

NO V

DE C

TOTA L

PRE

MID

LOW

V.LOW

117

TOTAL

%) 20 20 (+ %)

(COMPETITION) SEGME NT YEAR 20 20 (+ %) 20 20 (+ %) 20 20 (+ %) 20 20 (+ %) 20 20 (+ %) JA N FE B MA R AP R MA Y JU N JU L AU G SE P OC T NO V DE C TOTA L MO N. AVG

PRE

MID

LOW

V.LOW

TOTAL

Board of Directors Mr. Golam Mainuddin, Chairman Mr. Golam Mainuddin has been the Chairman of British American Tobacco Bangladesh since August 2008. After obtaining his Master of Science degree from Dhaka University, Mr. Mainuddin pursued the first 30 years of his career in the agro-based industry followed by corporate management over the next decade. He was a Tea Garden Manager at 118

Duncan Brothers from 1969 to 1982, and then joined Bangladesh Tobacco Company to soon become the Head of Leaf in 1985. He was appointed to the Board of Directors in 1986, and was given the responsibility of Deputy Managing Director in 1997. Over the 26 years in BAT Bangladesh, he was instrumental in achieving self sufficiency in tobacco production with strong focus on quality improvements to meet the international standards required for domestic use and export purposes while driving wider introduction of Bangladeshi tobacco in the world market. He played a key role in popularizing the tree plantation program of BAT Bangladesh, which was greatly recognized throughout the country. Mr. Mainuddin serves as an Independent Director and the Chairman of the Audit Committee of Advanced Chemical Industries (ACI) Bangladesh. He is also the Director of Federation of Bangladesh Chambers of Commerce and Industries (FBCCI), a Committee member of Metropolitan Chamber of Commerce and Industries (MCCI), and an Executive Committee member of Bangladesh Employers Federation (BEF). He has recently been elected as a CIP (Commercially Important Person) by the Government of Bangladesh.

Mr. Kamrul Hasan, Non-Executive Director Mr. Kamrul Hasan obtained B.A. (Hons.) and M.A. in English (1st position) from University of Chittagong. He completed diploma degree in Public Management and Development from

Connecticut State University, USA. He also completed Diploma in Development Planning from Planning Academy, Dhaka. He was former Secretary of the Ministry of Fisheries & Livestock and the Ministry of Defence. Prior to this position, he was Additional 119

Secretary in the Ministry of Finance (Finance Division). Before that he worked in various important senior positions of Government of Bangladesh i.e. Economic Relations Division of Finance Ministry, Chairman of Jiban Bima Corporation, Director of Telephone Shilpa Shangstha, WASA Board and Grameen Bank Board. Mr. Kamrul Hasan was appointed as Non-Executive Independent Director of BAT Bangladesh in 2004, representing Governments shares in the Company till July 2011. He then has been appointed one of the Non-Executive Directors of the Company. He was awarded University BLUE by Chittagong University in 1974 for his remarkable achievements in study and extra curricular activities. He was a national level tennis player during 1972-1979.

Mr. K. H. Masud Siddiqui, Non-Executive Independent Director Mr. K. H. Masud Siddiqui, after having completed Master's from the University of Dhaka, joined Bangladesh Civil Service in 1982. He has also earned an MA degree in Economics from Manchester University, England. He further received a Post Graduate Diploma in Development Administration and Management from UK. He has been appointed as Secretary of Ministry of Industries on September 2010. Before this, Mr. Siddiqui led Bangladesh Chemical Industries Corporation as the Chairman. In his around 30 year successful career in the civil service, he held several important positions in both field administration and different Ministries. Mr. Siddiqui joined BAT Bangladesh Board of Directors in October 2010, representing Governments shares in the Company.

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Mr. Syed Monjurul Islam, Non-Executive Director Mr. Syed Monjurul Islam is a career civil servant. He passed B.Com. (Hons.) from the University of Dhaka majoring in Finance and also did his MBA (Finance) from IBA of the same university. Later he pursued a PGD in Development Planning Techniques from the Institute of Social Studies of The Netherlands. Mr. Islam has been working in important positions for the Government of Bangladesh for the last 28 years as a member of Bangladesh Civil Service (Administration) cadre. He worked in different Ministries/Divisions and organizations of the Government in progressively higher position. However, he mostly worked in the area of Public Finance and Commerce. An illustrious careerist, Mr. Islam is now the Additional Secretary, Finance Division, Ministry of Finance. Mr. Islam joined in the Board of Directors of BAT Bangladesh in July 2011, representing Governments shares in the Company.

Mr. Md. Fayekuzzaman, Non-Executive Director Mr. Md. Fayekuzzaman, born in 1953, obtained B.Com. (Hons.) and M.Com. in Management (1st Class). He completed his Post Graduation studies in Investment Planning, Appraisal and Management of Development Finance Institutions in Bradford University, Bradford, United Kingdom. He was appointed Managing Director of Investment Corporation of Bangladesh (ICB) in July 2010. Prior to this position, he had been Deputy Managing Director of Agrani Bank since 2007. Before that he was the General Manager of ICB.

121

He was appointed Non-Executive Director of BAT Bangladesh in July 2010, representing Governments shares in the Company.

Mr. Arun Kaul, Managing Director Mr. Arun Kaul was appointed as the Managing Director of BAT Bangladesh in July 2010. Prior to this assignment, he was General Manager of BAT Taiwan. Mr. Kaul joined BAT group in 1996 as the Area Country Head of BAT Oman and thereafter held various senior leadership roles in BAT Group such as Country Manager - Philippines; General Manager Egypt; Program Director - BAT Iran; Commercial Director Vietnam etc. Arun obtained Masters Degree in Marketing Management from Kellogg Graduate School of Management, Northwestern University, U.S.A. in 1984. He holds an MBA degree majoring in Marketing from Indian Institute of Management, Calcutta in 1981 and a Bachelor degree in Mechanical Engineering from Indian Institute of Technology, Delhi in 1978.

Mr. Shehzad Munim, Non-Executive Director Mr. Shehzad Munim joined BAT Bangladesh as Territory Officer in 1997 after graduating from the Institute of Business Administration (IBA) of Dhaka University. He worked in different marketing roles within BAT Bangladesh before being seconded to BAT New Zealand as Group Brand Manager in 2003 and there he subsequently took over the role of Head of Brand Marketing in 2005. In 2006 he took the challenge of developing the 122

innovations process in BAT Australasia as Product and Packaging Innovations Manager. In 2007, Shehzad returned to BAT Bangladesh as Head of Brand Marketing. In 2008 he assumed the role of Head of Marketing Bangladesh and delivered very strong business results. After completing a very successful tenure as Head of Marketing in Bangladesh, Shehzad has taken over the challenging role of Area Head of Marketing, South Asia Area.

Mr. Anthony Yong, Finance Director Mr. Anthony Yong joined British American Tobacco Asia Pacific Region in 2000 as Regional Finance Manager after having spent 8 years in KPMG performing audit and advisory services. He was then transferred to British American Tobacco Malaysia Berhad in 2001 where he performed a variety of finance roles as well as a stint in Strategic Planning and Programme Management Office. In 2008, Anthony was appointed as the Head of Finance for British American Tobacco Switzerland before returning to Asia Pacific in 2011 as Finance Director for British American Tobacco Bangladesh Company Limited.

Mr. Zakir Ibne Hai, Corporate and Regulatory Affairs Director Mr. Zakir Ibne Hai joined BAT Bangladesh as Corporate Communications Manager in 2007 after working for subsidiaries of Reckitt Benckiser, Bayer and Axiata in Bangladesh and India. He moved to the role of Regulatory Affairs Manager in 2008 and assumed the responsibility of Head of Corporate and Regulatory Affairs (CORA) of BAT 123

Bangladesh in May 2009. He has been inducted as a Director in the Board of BAT Bangladesh in 2011. Mr. Hai has versatile experience in areas of communication, regulatory affairs, marketing, stakeholder and media management. He holds a degree in Economics and completed his MBA from IBA, Dhaka University in 1996.

Mr. Md. Azizur Rahman, Company Secretary Mr. Md. Azizur Rahman is a fellow member (FCS) of Institute of Chartered Secretaries of Bangladesh and associate member of Internal Audit Institute. After obtaining a Masters degree in Accounting from University of Dhaka, he completed Chartered Accountancy course and Chartered Secretary professional degree. Mr. Aziz joined BAT Bangladesh in March 2002 in Company Secretarial function. He took the challenges of cross functional movements in his twenty years career span which made him well experienced in company secretarial, finance, audit, corporate and banking affairs. He worked as visiting lecturer on corporate affairs in different private universities and professional institutes. Being the Secretary General of Intellectual Property Association of Bangladesh and Vice-Chairman of IP Committee of FBCCI, he works with different national and international organizations for addressing IPR issues in Bangladesh.

124