Marketing Plan STARSHIP FULL CREAM MILK

POWDER

2

Term Paper Marketing Plan for

STARSHIP FULL CREAM MILK POWDER

Submitted To: Ms. Afreen Choudhury

Lecturer Department of Business Administration

East West University Dhaka 1212

Submitted By: ZENITH

Submission Date: 08 August 2010

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LLEETTTTEERR OOFF TTRRAANNSSMMIITTTTAALL

08 August 2010 Afreen Choudhury Lecturer Department of Business Administration East West University

Dear Madam:

We are very pleased to submit this assignment on Starship Full Cream Milk Powder as you have

authorized us in this semester.

We are honored to prepare this assignment under your guidance since it gave us the opportunity

to know the current marketing status of Starship Milk Powder Brand of Abul Khair Company and

analyze its market condition to increase its market share and relative growth.

We tried our level best to make our marketing plan for improving the sales growth and market

share of Starship Milk Powder as comprehensive as possible. We will be obliged to provide

further clarification on this report whenever necessary.

Sincerely Yours:

Ehsan Habib ID # 2009-1-10-212 ____________

Md. Hasan-Uz-Zaman ID # 2009-2-10-033 ____________

Md. Abdur Rakib ID # 2009-1-10-081 ____________

Md. Newaz Khurshid Alam ID # 2006-1-10-186 ____________ Rokibuzzaman ID # 2009-1-10-079 ____________

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AACCKKNNOOWWLLEEDDGGEEMMEENNTT

First of all we would like to our gratitude to Allah. Thereafter we would like to express

our thankfulness and indebtedness to our honorable faculty, Ms.Afreen Choudhury,

Lecturer, Department of Business Administration, East West University (EWU). With

her inexhaustible guidance, valuable advice, continuous inspiration, constructive

criticism and generosity she helped us to carry out this report successfully.

We would also like to express our gratitude to the website and sales representatives that

helped us to gather all the necessary information.

Finally, we would like to thank to all group members that directly or indirectly helped us

to provide and accumulate all the necessary information for the accomplishment of this

assignment.

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EEXXEECCUUTTIIVVEE SSUUMMMMAARRYY

Abul Khair Company is one of the premier corporations in Bangladesh. Its purpose is

to provide branded products and services of superior quality and value that improve the

lives of the consumers, now and for generations to come.

In this report we have discussed about how it uses marketing segmentation, targeting and

positioning strategy, their marketing mix, distribution channel and their overall market

condition to launch a new product.

Abul Khair Company believes that an abundant and leveraged diverse strategy is a

competitive advantage. Their goal is to grow that competitive edge by fostering an

inclusive culture. Diversity is a business strategy for Abul Khair Company. It's an

intentional choice that creates sustainable competitive advantage. Here we have discussed

how Abul Khair Company plans and uses diverse strategies to improve its product’s

growth and market share segment the market and target each of the segmented market.

Finally, we have depicted how Abul Khair Company gains competitive advantage by

creating product, service, channel, people and image differentiation.

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TABLE OF CONTENT 1.0 Introduction 8 2.0 Overview of Abul Khair Company 9

2.1 Abul Khair Company’s Mission 2.2 Abul Khair Company’s vision

3.0 Product Description: 4.0 Market Analysis: 10-12

4.1 Market Research 4.2 Market Segmentation 4.3 Market Targeting 4.4 Differentiation & Positioning

5.0 Competitive Analysis 12-13

5.1 Strength of Competitors 5.2 Weakness of Competitors

6.0 Operations 13-14 7.0 Marketing Objectives 15 8.0 SWOT Analysis 15-16

8.1 Strength 8.2 Weakness 8.3 Opportunities 8.4 Threats

9.0 Product Development 16-17

9.1 Quality Improvement 9.2 Instant Mixing 9.3 Adding New Flavor

10.0 Marketing Mix 17-23 10.1 Product 10.2 Price 10.3 Place 10.4 Promotion 10.5 Packaging

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11.0 Financial Budget Forecasting 24-29 11.1 Budget Forecasting for Normal Starship Milk Powder

11.2 Budget Forecasting for Starship Choco-Mix Milk Powder

12.0 Conclusion 29 13.0 Bibliography 29

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1.0 Introduction:

We the group members of ZENITH prepared a marketing plan to improve the market

share and relative growth of Starship Milk Powder of Abul Khair Company Ltd. This

report is prepared for the course Marketing Management. We have prepared our report

under the close observation of our honorable madam Ms. Afreen Choudhury, Lecturer,

Department of Business Administration.

Abul Khair Company is one of the established and oldest companies in Bangladesh. It

already has some dairy foods items in its product portfolio. Now it is going to increase it

product mix depth with Starship Choco-Mix Milk Powder. It has many local and foreign

competitors for this product category. That is why it will not be easy for Abul Khair

Company to grab the market.

The process of making this total report required hard work, patience, consistency and

strong determination. We had to face some difficulties in making this report like

problems in collecting information, load shedding etc. We have collected information to

make this report from Abul Khair Company’s website, Marketing Management book,

market survey, sales representatives etc.

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2.0 Overview of Abul Khair Company:

Abul Khair Consumer Products Ltd is one of the largest & rapidly growing companies in

Bangladesh. It is one of oldest companies of Bangladesh. It was established in 1954.

It is now one of the most successful companies in terms and professionalism and

management excellence. The main Business objectives are to prove guaranteed quality,

fair & competitive price and optimum services leading to total consumer satisfaction. It

has numerous number of business units. Starship is one of the most renowned brand of

Abul Khair Company. Abul Khair Company launched the brand Starship on 25

December 1995 with a vision to be the market leader in its category through providing

quality products to the market. Starship brand already contains Fruit Juice and Milk,

Starship Chocolate Milk, Starship Mango Milk, Starship Mango Juice, Starship Pineapple

Juice, Starship Orange Juice, Starship Full Cream Milk Powder etc.

2.1 Mission:

Abul Khair Company’s corportate mission is to create brand demand, image and

customer confidence by ensuring quality, availability and rich communication with

ultimate consumer.

2.2 Vision:

• To achieve quality leadership that can be produced efficiently and in efficient

way.

• To achieve sustained growth in all brand category

• To build strong brand awareness and brand image in the mind of consumers

• To ensure availability and affordability of its products

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3.0 Product Description:

Starship Full Cream Milk Powder is used as drinking milk for children. It can also be

used as an important ingredient for making various types of home made sweets, tea,

coffee. It also used in different types of rich dilates. It contains best quality cow’s milk

from which only water is removed, butterfat, protein, Calcium, Sodium, Zink, moisture,

vitamin A, vitamin B, vitamin D etc.

Abul khair group already has a strong brand image but Starship Milk Powder has

declining sales growth because of its weak promotional activities. If it is possible to add

some additional features and can be communicated these through strong communication

channel it will manage to increase its sales growth. Good packaging will also help us to

attract potential customers.

4.0 Market Analysis:

4.1 Market research:

Abul Khair Company has a huge number of competitors in its Milk Category. Using

marketing research Abul Khair Company identifies the specific features and benefits that

its target segments consider. Feedback from market tests, surveys and focus groups will

help it to make Starship Milk Powder more attractive to the customers. It measures and

analyzes customer’s attitudes toward competing brands and products. Brand awareness

research will help it to determine the effectiveness and efficiency of its messages and

media.

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4.2 Market Segmentation:

The market segmentation strategy of Abul Khair Company is given below:

Abul Khair Company makes the segmentation of Starship full cream milk powder on the

basis of three dimensions:

Geographical Segmentation:

Under geographical segmentation they have considered own country and abroad.

Demographic Segmentation:

Demographically they have considered age, income and family size. In case of age they

took into consideration significantly the age limit of 2 to 10and 11 to 16 and the people of

all ages. In case of income we are emphasizing the income range of under 10000,10000-

30000,30000-50000 and 50000 above. In case of family size it considers family consists

of 1-2,3-4 and 5 above.

Behavioral Segmentation:

In behavioral segmentation we are trying non user ,ex usr ,potential user to permanent

user.

Segmentation

Geographic Demographic

Behavioral

Country Abroad Age Income Family size

User status Occasion

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4.3 Market targeting:

Our target market for Starship Full cream milk powder will be teenagers and children

because they need sufficient calories and nutritious food which they can avail from the

Starship full cream milk powder. In category of social class we are taking into

consideration upper class, upper middle class, middle class and lower middle class.

Because upper middle class people wants quality at any price and middle class and lower

middle class people want quality at affordable price.

4.4 Differentiation and Positioning:

Our product will be nutritious and delicious. It will be relatively more affordable

comparing with good quality competitive brands. We will try to make it available

everywhere and whenever customer will want. Our brand image will also differentiate

our product as it will carry an attractive logo. Our product will ensure its position in the

mind of consumers through its taste and nutritious food value.

5.0 Competitive analysis:

We know very well that in Bangladesh milk powder market is very competitive. There

are many foreign brands and also local brands. Some of the leading foreign brands are:

1. Redcow

2. Dano

3. Nido

4. Anchor

5. Nestle

Target Market

Teenagers & Children

Middle Class Lower Middle Class

Upper Middle Class

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6. Horlicks

7. Boost

Some of the local competitors are:

1. Diploma

2. Fresh

3. Quality

It has to mentioned that although Horlicks, Boost, Nestle are not in the milk powder

category they will also be the competitor for our differentiated product Starship Choco-

Mix Milk Powder.

Each of our competitor has a healthy amount of market share. Significant number of

market share is shown below:

Position Beverage Company Market Share

1st Dano 21% 2nd Diploma 17% 3rd Nido 15% 4th Redcow 12% 5th Fresh 8% 6th Starship 5%

5.1 Strengths of competitors:

Abul Khair Company’s nearest competitors:

• Ensure high quality in their products

• Strong promotion

• Strong sales promotion

• Attractive TVC promotion

5.2 Weaknesses of Competitors:

• High price

In competing with these strong competitors Abul Khair Company will increase sales

incentives to its retailers, it will also give discounts on large sale, it will price its products

lower than its competitors in consideration of affordability.

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6.0 Operations:

To cope up with company’s mission company should attempt to run its operation as

smoothly as possible. To run its operation in a silky way Abul Khair Company should

consider the following issues:

It is not extending its product lines. Its major weakness was in its promotion channel and

some managerial problems are also available. It will not currently think of adding new

business units rather developing the current major weakness in its different premises. It

will also identify how it can increase its profitability by reducing manufacturing cost,

delivery cost, and acquiring promotional efficiency.

Abul Khair Company will hire more skilled personnel in different departments for quality

control, branding, selling, and promotion. Marketing executive must have the ability to

understand the perception of consumer. They must understand quickly if there are any

changes in the preference of market and they must inform these to the production

managers about what customers want. They must also give proper instruction to the

product managers so that they can ensure total quality according to the consumer’s

choice. Promotional manager must have the ability to make its consumers understand

how Starship can give proper solution to their problem. They must make them aware of

their demands because in most cases customers themselves do not know what the actual

benefit they want from the product they will buy. To create a strong position in the

consumer’s mind a strong brand image is essential. An experience and skilled brand

manager knows what kinds of branding will easily and quickly attract consumers and

capture a substantial position in their mind. A selling executive must know how to

capture large shelves space of retailer. He must be able to make retailer understand how

his product can generate highest profit for him by providing great benefit to the

consumers. Moreover for pulling demand from customers a group of skilled and

experienced employees must be employed in the organization. Some times it may give

proper training to bring out maximum talent from the personnel.

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Abul Khair Company Limited does not need additional space to extend its industry. It

will establish some small depot offices in big cities. They can easily control over the sales

growth of remote areas. From one head office it might be quiet tough to control over

those areas.

Abul Khair Company Limited does not have the management staff to handle the

development, marketing and ongoing supports of the product. Without efficient

management staff a company can not run the overall operation smoothly. In that case

they will be ultimate sufferer in the long run. That is why the company should appoint the

appropriate staff to accurate place. Thus they can perform their duties efficiently and

effectively.

7.0 Marketing Objectives

ü We are aiming to capture 15 percent of the market share during first year. 20

percent in the second year and 35 percent in the third year,

ü In the first year we will focus on raising awareness and creating brand image.

ü In the second year we will try to cross break-even point and gain profit.

8.0 SWOT Analysis:

8.1 Strength:

• Improved Technology

• Ensuring Affordable Price

• Efficient Worker

• Strong Financial Resources

• Strong Company Brand Image

8.2 Weakness:

• Lack of product variability

• Lack of current product quality

• Weak current marketing promotion

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8.3 Opportunity:

• Available raw material

• Increasing demand

• High promotional opportunity

• Good transportation system

8.4 Threats:

• Existence of many comjprtition in the market

• High price of raw material

• New local competition might arise

• Political disorder

9.0 Product Development:

As Starship milk powder lacks many attributes necessary to attract customers Abul Khair

Company Limited is going to add some new features to the product.

9.1 Quality Improvement:

To ensure quality of milk Abul Khair Company Limited will first ensure the quality raw

materials of milk. Raw materials will be collected from local farmers, because they will

be highly loyal to Abul Khair Comapany Limited and likely to follow important

instructions about nutrition. For example they are provided with the information to avoid

urea in cattle’s food so that there will not be any bad impact of urea in milk. It will also

outsource raw materials from the reliable dairy milk companies like Aftab Dairy Milk

Company and Savar Dairy Milk Company.

9.2 Instant Mixing:

Previously Starship Milk powder would not be mixed up with water. So this feature will

be improved. It will be instantly mixed up with water.

9.3 Adding New Flavor:

It will add choco-flavor in Starship Milk Powder which will be very attractive to the

children those who do not like to drink milk for its smell. It will help them to get nutrition

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as well. The flavor will be collected from good quality Flavor Company named LABH

Group Of Companies of India. The flavor is formulated from natural ingredients which

will be helpful for health.

10.0 Marketing Mix:

10.1 Product:

As described earlier we will improve our product quality. We will use quality raw

materials in our product. We will bring a differentiated product Starship Choco-Mix Milk

powder for children and teenagers. Choco flavor will be added for the purpose of making

our product more attractive to the them. Our product will be different in quantity for

different price. We will provide 25gm, 75gm, 400gm, 1000gm packet for our existing

normal Starship Full Cream Milk powder. For our differentiated product Choco-Mix milk

powder we will bring 25gm, 75gm and 400gm packet. Building a strong brand image is

an integral part of our product strategy. The brand and logo will be displayed on the

product and its packaging will be so attractive and durable. The ingredients that have

been used previously in the Starship Milk Powder is shown below through a table:

Ingredients Each 100 gm

Protein 26

Lactose 38

Fat 26

Moisture 4

Minerals 6

Calcium 0.97

Phosphorus 0.75

Vitamin A 1092

Riboflavin 1.48

Thiamine 0.26

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Vitamin D 400

Energy 499

Thaisine 0.68

Thasine(equivalent) 6.75

Pentatonic Acid 2.87

Pyridoxine 0.33

Biotin 0.044

Colin 88.3

Zink 21

Currently new ingredient choco-flavor will be added to these ingredients proportionately

in this product.

10.2 Price:

We will price our product lower than other existing competitors. We will price Tk480

retail price with wholesale price Tk460 for each 1000gram Starship full cream milk

powder packet when price of same quantity of Dano, Diploma, Redcow is more than

Tk480. Besides we will price Tk190 for 400gram, Tk 230 for 500gram, Tk30 for each

75gram packet. We will follow cost based pricing for this product. The pricing system of

Abul Khair Company Limited for each 1000gram packet is given below:

Unit Cost: Variable Cost + Fixed Cost/Expected Unit Sales

= 362 + 29000000/10000

= 391/-

Markup: We will add 15% markup to the sales. After adding markup to the unit cost of

each 1000gram Starship Full Cream Milk Powder the markup price is given by:

Markup Price: Unit Cost/(1-0.15)

= 391/0.85

= 460/-

In the same way we will price our other Full Cream Milk powder packets.

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We will try to gain cost leadership with substantial quality of milk powder. For this

purpose we will price differentiated product Starship Choco-Mix Milk powder. The price

of each 400 gram Choco-milk powder will be Tk225. Pricing system for each 400gram

Choco-Mix Milk powder is given below:

Unit Cost: Variable Cost + Fixed Cost/Expected Unit Sales

= 162 + 29000000/1000000

= 191/-

Markup: We will add 15% Markup also to the sale of this product. The markup price of

each 400gram packet is given by:

Markup Price: Unit Cost/ (1-0.15)

= 191/.85

= 225/-

Other Choco-Mix Milk powder will also be priced in the same way.

10.3 Place:

To make Starship Full Cream Milk Powder available everywhere so that our target

market can easily get the product is our motive. We will create strong distribution

channel for this purpose.

Distribution Channel:

This function can be easily accomplished by a strong distribution channel. A distribution

channel performs the work of moving product from producers to final consumers. A

strong distribution channel is the only way to fulfill the purpose of making a product

available to its users. Manufacturers create value but this value delivered through

distribution channel. So our all effort will go in vain if we will not be able to make our

distribution channel efficient. For this strong requirement we will bring some changes in

our existing distribution channel.

We are going to recruit 10 efficient agents of Full Cream Milk Powder through out the

country. Our distribution channel will be three level distribution channels. The agent will

provide our product to the wholesalers. The wholesalers will provide this the retailers.

Then customers will collect our product from them. The total distribution system is

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shown below:

In Chittagon we will have two distributors, in Dhaka, Rajshahi, and Barisal we will have

two distributors for each district. For Khulna and Sylhet we will have one distributor for

each district.

In Dhaka and Chittagong we will make our product available in big retail stores like

Shopno, Agora, PQS, Nando Megashop etc. We will also make it avail able in each small

retail store.

Apart from Dhaka and Chittagong in big cities like Rajshahi, Khulna, Barishal, Sylhet,

and many other medium and small towns we will make all types of packages of Starship

full cream milk powder available.

10.4 Promotion:

For Starship Normal Full Cream Milk Powder:

We will bring many changes in the existing promotion system for our Starship Milk

powder. Our current promotion will include TV commercial, Print Media, Billboard,

Radio, Make Sweet be Sweet Program, Selling promotion, Choco-Mix talent hunter etc.

Our promotion programs are described below:

Abul Khair Company

Distributor

Retailer

Consumer

Diagram: Two level marketing channel

Map: Distribution System

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‘Starship Make Sweet be Sweet’ Program:

It is a program sponsored by Abul Khair Company Limited in which housewives will

participate in making different kinds of sweet dishes. This program will be performed

through in three steps.

a) First Step: In the first step eager housewives will have to be registered for the

program. They will have to fill up a form. This form will be provided in every packet of

Starship Milk Powder. They will also have to send recipe of sweet disheses.

b) Second Step: In the second step the selected candidates will be informed to join a

contest. On the fixed day they will have to make dishes any kinds of sweet dish they can.

Maximum delicious dish maker will be the winner of the contest. She will be given with

a special gift hamper. There will be attractive gift for the candidate who will innovate

something new. The contest will be promoted in Television, Print media and Radio.

‘Starship Choco-Mix talent Hunt’ program:

It is program for promoting our differentiated product Starship Choco-Mix Milk powder.

In this program children of different segment will participate to show their talent. We

consider two different segments of children and different contest for different segments.

The segments and contests are shown below:

Type Segment Contest

A From 5 years to 10 years General Knowledge

B From 11 years to 16 years General Knowledge & IQ test

The winners of the contests will be given with a healthy amount of scholarships. The

contests will promoted in NTV and national dailies and FM radios.

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Television Commercial:

For the existing normal Starship full cream milk powder our TVC will focus on our

cultural emotion. Their will be shown some cultural women collecting milk and

providing to the manufacturer. It will be shown in a way that will have an emotional

impact on people’s mind. There will also be shown that Starship is improving economic

condition of rural farmers by collecting quality milk from them.

Television Commercial for Starship Choco-Mix Milk powder will be totally different

from that of normal Starship Milk Powder. The spoke person will be a cartoon Character

like Rabbit. All TVC of Choco-mix milk powder will be promoted in all Channels of

children.

Print Media:

In print media we will give advertisement in selective way. Advertisement of normal

Starship Milk Powder will be given in recipe page of the news paper so that housewives

can be attracted in this product. For the first month of launching the improved product we

will provide a time table of Ramadan in our leaflet sticker which will also contain a

recipe of delicious dishes.

Print media for Cho-Mix Milk Powder must be attractive to the children. So a leaflet

sticker will be provided to all renowned schools of Bangladesh. A routine will also be

given with the sticker. The routine will contain picture of Rabbit that will have used in

TVC.

Radio:

FM radios are becoming famous day by day. So we will give advertisement in FM radio

also, besides will sponsor some programs of FM radio.

Starship Choco-Mix Milk powder can be instantly prepared with a shaker. For the

essence of making milk shake and to attract children a shaker will be given for free with

each 400 gram Starship Choco-Mix Milk poeder.

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Billboard:

All billboards presenting starship milk powder will be placed in all residential area so that

housewives can understand the benefit of using Starship Milk Powder for their family.

All billboards promoting Starship Choco-Mix milk powder will be placed in the front of

all renowned schools of big cities of Bangladesh so that childrens can influence their

parent’s buying behavior. Bill boards will also be placed in residential areas for the same

purpose.

Free Glass and Shakers:

We will give a glass free with each 400gm and 1000gm normal Starship Full Cream Milk

powder. It will attract people who want additional advantage of acquiring a product.

10.5 Packaging:

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We will try to make our packaging more attractive than previous ones:

Color: We will make our packaging color yellow because this color is more attractive

than others.

Logo: We will use our previous logo because it has already gained a brand image, so it

will be able to leverage brand.

Picture: We will use a cartoon character Rabbit on Starship Choco-Mix Milk Powder

Pack so that it will attract children.

Improved Ingredients: We will show the improved ingredients in our Starship Choco-Mix

Milk powder so that it can give a strong reason why people should buy this product.

11.0 Financial Budget Forecasting:

Our financial budget forecasting will include fixed cost, variable cost, unit cost, markup

to the sales. It will also include break-even point that is the intersection point of break-

even sales and revenue. Our forecast for each section is discussed below:

Unit Cost:

Our forecasting will be for the unit cost of each packet. Unit cost of each 1000gm normal

Starship Full Cream Milk powder is given below:

Total Fixed Cost:

We will use the same plant for producing both normal Starship Full Cream Milk Powder

and Starship Choco-Mix Milk Powder. Therefore, our Total Fixed Cost (TFC) for both

products will be the same. Total Fixed Cost for our whole plant is Tk29000000. TFC will

include plant cost, promotion cost, distribution cost etc.

Total Variable Cost:

Per unit variable cost will include cost of raw materials, cost of packaging etc. As these

costs will not be the same, per unit variable cost will differ for different category of

products.

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11.1 Budget Forecasting for Normal Starship Milk Powder:

Unit Cost: Unit cost of each 1000gm normal Starship Milk Powder is:

Unit cost =Variable Cost + Fixed Cost/Expected Unit Sales

= 362 + 29000000/1000000

= 391/-

Markup Price: After adding 15% markup to the cost our markup price is Tk460.

Markup is shown below:

Markup Price = Unit Cost/(1-0.15)

= 391/0.85

= 460/-

Break-Even sales:

Break-even point for each 1000gm normal Starship Full Cream Milk powder is given by:

Break-Even Sales: Fixed Cost / (Markup Price – Variable Cost)

= 29000000/(460 – 362)

= 295918 units

Break-Even Revenue: Break-Even Revenue for different size of Starship Milk Powder

will be different. Here Break-Even for only each 1000gm Milk Powder is given by:

Break-Even Revenue = Break-Even Sales * Markup Price

= 295918 * 460

= 136122280/-

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Break-Even Point: Break-Even Point is the intersection point of Break-Even revenue

and sales. The break even point is shown below through a diagram:

This Break-Even sales and revenue will be different at different price. A chart is given

below which shows different Break-Even sales for different price.

Price

Unit Demand

Needed to

Break Even

Expected Unit

Demand at

Given Price

Total

Revenue Total Cost Profit

Tk450 329545 1450000 6525000000 553900000 98600000

Tk455 311828 1160000 527800000 448920000 98880000

Tk460 295918 1000000 460000000 391000000 69000000

Tk465 281553 878787 408635955 347120894 61515061

Tk470 268518 783783 368378010 312729446 55648564

Fixed cost

TC

TR

295918 Sales volume in units

144

0

Cost in TK (lack)

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From above chart it is clear that when price increases required demand for Break-Even

decreases. But at the same time expected demand also decreases. As we will price our

product Tk460 for each 1000gm packet we will have to reach to the sales volume of

295918 units. Otherwise we will not be able to gain profit. So at first out main target will

be to reach the break even point as early as possible. For this purpose we will focus on

more promotion on raising aware ness about out improved product. We will perform all

promotional activities possible to attract people’s attention. After reaching to the Break-

Even point we will try to acquire highest margin of safety that is we will try to make our

distance as far as possible.

11.2 Budget Forecasting for Starship Choco-Mix Milk Powder:

Unit Cost: Unit cost of each 400gm Starship Choco-Mix Milk Powder is given below.

Unit Cost = Variable Cost + Fixed Cost/Expected Unit Sales

= 162 + 29000000/1000000

= 191/-

Markup: After adding markup the gained markup price is given below:

Markup Price = Unit Cost/ (1-0.15)

= 191/.85

= 225/-

Break-even sales: Break-Even Sales Volume will be different from that of normal

Starship Full Cream Milk Powder. Break-Even Sales volume for each 400gm Choco-Mix

Milk Powder is given below:

Break-Even Sales = Fixed Cost/(Markup Price-Variable cost)

= 29000000/(225-162)

= 460317/-

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Break-Even Revenue: Break-Even revenue for each 400gm Starship Choco-Mix Milk

Powder is given below:

Break-Even Revenue = Break-Even Sales * Markup Price

= 460317 * 225

= 10357125/-

Break-Even Point: The Break-Even point for each 400gm Choco-Mix powder is:

Here is chart of Break-Even sales at different price and Profit at different expected level

of demand:

Price

Unit Demand

Needed to

Break Even

Expected Unit

Demand at

Given Price

Total

Revenue Total Cost Profit

Tk215 547170 1380952 296904680 252714224 44190456

Tk220 500000 1160000 255200000 216920000 38280000

Tk225 460317 1000000 225000000 191000000 34000000

Tk230 426471 878787 202121010 171363494 30757516

Tk235 397260 783784 184189240 155973008 28216232

Fixed cost

TC

TR

464317 Sales volume in units

104

Cost in TK (lack)

0

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Here is also the same condition like normal Starship Milk Powder. The maximum profit

Tk44190456 is at Tk215, but this requires a huge Break-Even sale (547170units). Tk235

requires 397260 units of demand for Break-Even. But this produces very small amount of

profit Tk2821632. At Tk225 the product produces substantial amount of profit at a

standard level of demand requirement. At this level also the first requirement will be

reach the Break-Even and then to acquire highest margin of safety.

12.0 Conclusion:

Abul Khair Company’s major objective is to increase the market share of its declining

product Starship Full Cream Milk Powder and to increase its relative growth. Its another

objective is to differentiate itself from its competitors through providing quality products

at standard price. Increasing brand awareness is another objective of Abul Khair

Company Ltd. This fact is indicated by its strong focus on high promotion and different

kinds of image building programs. Moreover, it is willing to be the market leader through

performing the maximum activities possible in the competitive market.

13.0 Bibliography:

http://www.abulkhairgroup.com

http://www.tootoo.com/s-ps/flavors--p-911143.html

Market Survey

Marketing Management Book