CowShar MKT II

8/6/2019 CowShar MKT II

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5/16/2010

Supplementary Feed For Cow | CowShar

INSTITUTE OF

BUSINESS

ADMINISTRATION

MARKETING MANAGEMENT


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Supplementary Feed For Cow - CowShar

Submitted by

Group-9

1.Omaer Ahmad, ZR-09

2.Kawsar Ahmad, ZR-50

3.Rafaat Wasik Ahmed, ZR-53

4.Nasim Ul Haque, ZR-54

5.Sadek Jake Alam, ZR-556.Rashed Al Ahmad Tarique, ZR-61


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ContentsExecutive Summary ................................................................................................................................. 5

Introduction ............................................................................................................................................ 6

Situation Analysis .................................................................................................................................... 7

Market Summary ..................................................................................................................................... 7

Market Demographics ......................................................................................................................... 7

Geographic .......................................................................................................................................... 7

Demographic ....................................................................................................................................... 8

Behavioral ........................................................................................................................................... 8

Market Needs.......................................................................................................................................... 9

Market Trends ......................................................................................................................................... 9

Breed Management ............................................................................................................................. 9

Feed Management .............................................................................................................................. 9

Growth of Cattles .............................................................................................................................. 10

Market Growth .................................................................................................................................. 10

Product Offering .................................................................................................................................... 11

Value Chain ....................................................................................................................................... 11

Keys to Success .................................................................................................................................. 11

Critical Issues ..................................................................................................................................... 12

SWOT analysis ....................................................................................................................................... 12

Competition .......................................................................................................................................... 13

Marketing Strategy ................................................................................................................................ 13

Mission .............................................................................................................................................. 13

Marketing Objectives ......................................................................................................................... 13

Financial Objectives ........................................................................................................................... 13

Segmenting, Targeting and Positioning .................................................................................................. 14

Segmenting ....................................................................................................................................... 14

Targeting ........................................................................................................................................... 14

Positioning ........................................................................................................................................ 14

Marketing Plan ...................................................................................................................................... 15


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Marketing Mix ....................................................................................................................................... 15

Product ............................................................................................................................................. 16

Price .................................................................................................................................................. 16

Place.................................................................................................................................................. 16

Promotion ......................................................................................................................................... 16

Market Research ................................................................................................................................... 16

Competitive strategy: ............................................................................................................................ 17

Finance.................................................................................................................................................. 18

ANNEXDetailed demographics of dairy enterprises of Bangladesh .................................... .................. 20

ANNEX - Extension Recommendations for Preparation of Urea-Molasses-Mineral Block (UMMB), and

feeding to cattle as a supplement .......................................................................................................... 21


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Executive Summary

Bangladesh is the 12th largest livestock rearing nation in the world with the highest density of cattle

population in south and south-east Asia. This sub-sector is also the fastest growing part of GDP with an

increase of 7.23% per year (as of 2004-05).

Despite this tremendous growth the milk yield per cow is less than half compared to that of neighboring

India and Pakistan. Also due to the low quality of cattle feed, cows here suffers from poor health

condition which results in more infertility, less meat yield and decreased draft power.

On the other hand, recent studies show that cows contribute to more 20% of the worlds methane gas

emission. They do it mainly in the form of burping, belching and excreting. This percentage is higher

than the contribution of the transportation sector, combined.

Although antibiotics such as Monensin and Mootral provide a slow-release formula which reduces

methane emission by cows, they prove to be too expensive for widespread use.

Our product, CowShar, attempts to address these problems. CowShar is a Urea-Molasses Mineral Blocks

composite which increases milk yield by 21%, increases weight gain by more than 1.5 times for heifer,

increases fertility rate and decreases methane gas emission by 50%.

Our market is divided into segments in two stages. First, we break the segments down geographically

and then through the size and purpose of farmers. The most attractive segment is the medium and large

scale cattle farmers who have ten or more cattle.

Our promotion and awareness building campaign include feature in agriculture documentary programs,

TVCs, banners and hosting events at the grassroots level. These help us to gain most attention from our

target audience.

Being the first player in this market, we will adopt the competitive strategies adopted by the market

leader. After analyzing the market with Porters five forces our strategies are to expand the whole

market and keep the most market share. In addition, as our product is targeted at the mass market, we

are operating in a low margin market. The only way to take market share away from us would be by

selling the product at a lower price than us. But this would lead to huge losses in the short-run and

probably bankruptcy in the long run. So the room for multiple firms operating in this market is low.

A 50 kg sack of CowShar will cost Tk. 600 to the farmer. This gives us a profit margin of Tk. 95.08 per

sack. This gives us a breakeven volume of 22087 bags. This is achieved in the first year of output. At our

targeted volume we make a profit of Tk. 166,592,362.


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Introduction

Indolent cows languidly chewing their cud while cattlemen are taking a nap under the tree. Now,

however, Bangladesh's ubiquitous cows of which there are 23.4 million, are assuming a more

menacing role as they become part of the climate-change debate.

By burping, belching and excreting copious amounts of methane a greenhouse gas that traps 20 times

more heat than carbon dioxide1 Bangladesh's livestock of roughly 210.03 million (including sheep,

buffalo, chicken, ducks and goats) contributes more to global warming than the vehicles of the country.

This is not a problem for Bangladesh alone. Last month, scientists at the Space Applications Centre in

Ahmedabad in western India published a pan-India livestock methane-emission inventory, the first ever,

which put the figure at 11.75 million metric tons per year higher than the 9 million metric tons

estimated in 19942. Although there are no similar data present about Bangladeshi cattle, but there is a

high probability that the same problem also exists here. The intensity of this problem is likely to increase

as higher incomes and consumption rates put pressure on the country's dairy industry to become even

more productive.

Already in shortage of locally produced milk, Bangladesh will have to yank up production five times the

current amount by 2021-22 to keep pace with growing population and expanding disposable incomes.

Livestock such as cows, buffalo, goats and sheep are indispensable to Bangladesh's rural economy

whether the animals are yoked to plow land, raised for milk and manure or harnessed to pull carts to

move goods and people. The Ministry of Agriculture estimates that livestock contribute 3% to total GDP.

But while livestock plays a crucial role in the economy, global warming is becoming a huge worry.

For starters, most Bangladeshi livestock is underfed and undernourished, unlike its robust counterparts

in richer countries. The typical Bangladeshi farmer is unable to buy expensive dietary supplements even

for livestock of productive age, and dry milch cattle. Poor-quality feed equals poor animal health as well

as higher methane production. Also, even when Western firms are willing to share technology or whenWestern products are available, these options are often unaffordable for the majority in Bangladesh. For

instance, Monensin and Mootral, antibiotics whose slow-release formula reduces methane emission by

cows, proved too expensive for widespread use. So the emphasis for scientists is on indigenous

solutions.

That is why we will produce urea-molasses-mineral blocks that are cheap, reduce methane emission by

20%, provide more nutrition and also increases milk production by almost 21 percent. So they will be

easier to sell to illiterate farmers who don't know a thing about global warming but want higher milk

yields.

This dietary interventions work by checking methogens microbes that thrive in oxygen-free

environments like cows' guts, where they convert the available hydrogen and carbon (by-products ofdigestion) into methane, a colorless, odorless gas. We will encourage well-to-do farmers to use oilseed

cakes, which provide unsaturated fatty acids that get rid of the hydrogen.

1. The Financial Times- Reducing cow flatulence;

http://www.ft.com/cms/9d1713dc-13ae-11de-9e32-0000779fd2ac.html

2. Time.com Cows with Gas: India's Global-Warming Problem;

http://www.time.com/time/world/article/0,8599,1890646,00.html#ixzz0nzmEkNL5


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Situation Analysis

It is an established fact that high quality animal protein in the form of milk, meat and eggs is extremely

important for the proper physical and mental growth of human being.

In Bangladesh, around 8% of total protein for human consumption comes from livestock. Hides and skinof cattle, buffaloes, goats and sheep are valuable export items, ranked third in earnings after RMG and

shrimp. Surprisingly, Bangladesh has one of the highest cattle densities: 145 large ruminants/km2

compared with 90 for India, 30 for Ethiopia, and 20 for Brazil.3

But most of them trace their origin to a poor genetic base. The average weight of local cattle ranges

from 125 to 150 kg for cows and from 200 to 250 kg for bulls that falls 25-35% short of the average

weight of all-purpose cattle in India.

Milk yields are extremely low: 200-250 liter during a 10-month lactation period in contrast to 800 litre

for Pakistan, 500 liter for India, and 700 liter for all Asia. Despite highest cattle densities in Bangladesh,the current production of milk, meat and eggs are inadequate to meet the current requirement and the

deficits are 85.9, 77.4 and 73.1% respectively.4

Market Summary

Market Demographics

Our market has been divided in three criteria which include geographic, demographic and behavioral

aspects of the cattle farmers. Each of them is broadly described below:

Geographic

Baghabari area in present day Sirajganj district was a traditional milk producing area. A large community

of Ghoshs collected the milk and supplied chaana, ghee, curds and sweets to sweet sellers across the

country. In 1965, the then East Pakistan government created the Eastern Milk Producers Co-operative

Union Limited (EMPCUL). This was renamed to Bangladesh Milk Producers Cooperative Union Limited

(BMPCUL). BMPCUL is popularly known as Milk Vita, the brand name of its product. Milk Vita organized

farmers in the Baghabari area into cooperatives and started collecting milk in the area. It set up a

pasteurization plant. Among its other products are butter and ghee. Milk Vita achieved significant

success in increasing the milk production in Baghabari area by providing training and extension services.

However its impact and success outside the area has been limited.

In other areas farmers still operate on an individual basis selling milk mostly to sweet manufacturers.

3. Beef Cattle Production in Bangladesh- A Review, M.A. Baset , M.M. Rahman , M.S. Islam , A. Ara and A.S.M. Kabir

4. National Livestock development policy 2007- ministry of fisheries and livestock, government of Bangladesh
http://scialert.net/asci/author.php?author=M.A.%20Baset&last=http://scialert.net/asci/author.php?author=M.M.%20Rahman&last=http://scialert.net/asci/author.php?author=M.S.%20Islam&last=http://scialert.net/asci/author.php?author=A.%20Ara&last=http://scialert.net/asci/author.php?author=A.S.M.%20Kabir&last=http://scialert.net/asci/author.php?author=A.S.M.%20Kabir&last=http://scialert.net/asci/author.php?author=A.S.M.%20Kabir&last=http://scialert.net/asci/author.php?author=A.%20Ara&last=http://scialert.net/asci/author.php?author=M.S.%20Islam&last=http://scialert.net/asci/author.php?author=M.M.%20Rahman&last=http://scialert.net/asci/author.php?author=M.A.%20Baset&last=


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Demographic

Traditionally the industry has been dominated by the Ghosh community who collected milk from farms

and processed them into Ghee, curds, sweets and other products. Liquid milk only had informal supply

structure and in fact constituted a small portion of the total market. However with the development of

the collective model of BMPCUL, the market for milk began to expand and surplus milk made its way to

the cities as a processed package product.

There are three types of production system which has been identified by IFCN in the cattle raising

industry. In the following segments each type of farm is briefly described. More details, particularly

about the dairy production system can be found in the next page:

2 Cow Farm (BD-02)

Location: A family farm with .4 hector (ha) of irrigated land located in the rural upland.

Activities: the farm keeps two indigenous cows. Its feeding system consists of three to four hours per

day of grazing on communal land and stall feeding with some concentrates. About 63 percent of milk

produced is sold to the local milkmen. The farm raises its own heifers as replacement. Off-farm income

is minimal (6 percent of total household income).

10 Cow Farm (BD-10)

Location: A farm with 1.5 hectors of irrigated land (no land rented).

Activities: the farm keeps two indigenous and two cross-breed cows. It delivers 90 percent of the milk

produced in the nearest collection point. The feed basis is provided by crop residues and fodder, bothgrown on farm. Lactating cows are supplemented with cotton seed cake, molasses and urea. The firm

raises it own replacement heifers. No off-farm income is earned by any of the family members.

25Cow Farm (BD-25)

Location: A farm in the rural area with 1.8 hectors of irrigated land.

Activities: the farm 25 cross-bred cows. Over 97 percent of its milk is sold at the nearest milk collection

point. The feed ration consists of cereal straw, green fodder, concentrated by-product such as oil seeds

wheat bran, molasses and urea. The farm raises about 15 p0ercent of its own heifers and purchases

cows early in their location or near calving.

Behavioral

The average Bangladeshi dairy farm has 3.5 heads of cattle. Dairy is still considered a secondary

profession even for farmers with 5-10 heads of cattle. Part of the reason may be that most dairy farmers

also have another source of income. Another reason for this may be that milking and tending the cows


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has traditionally been the womens job and is therefore given less importance than farming the fields

even in households whose major source of income is dairy.5

Market Needs

Although the milk production has been continuously increased, after a sudden jump in the early 90s,milk production has registered a very gradual growth. The double digit growth between 1991 and 1996

has tapered off to an average growth rate of 1.3% between 1996 and 2004. The reproduction and meat

generating capacity has also lowered.

Our product CowShar will help the farmers with the following benefits6:

Notable improvement of the body condition of the animals,

Improved meat and milk production,

Improved animal reproduction,

Decreased feed and water intake and

Improved draft power.

Market Trends

The current market of cattle farmers now use three techniques to get the benefit that our product is

offering singlehandedly:

Breed Management

Bangladesh has some of the least productive cows in the region producing on average 206kgs/head/year

of milk compared to almost 800kgs for India and 7000 kgs for the USA.

The most common local cow, Bos Indicus, has very low productivity. Attempts have been made to create

various cross breeds to increase productivity. Common ones are Local and Bos Taurus cross, Sahiwal-

Pabna, Frissian-Pabna and Sahiwal-Frisian-Local cross. The results have improved productivity

significantly. But to poor health condition of cows, the rate of failure in fertilization is very high.

Feed Management

Poor quality feed has been one of the major reasons for the low productivity of our cattle. The low

productivity of our cattle heads in turn has also prevented our farmers from investing more in feed.

Most cows are still fed with crop residues and cereal byproducts.

5. A review of milk production in Bangladesh with particular emphasis on small scale producers-international farm

comparison network-T. Hemme, O.Garcia, A.R. Khan

6. PRODUCTION AND UTILISATION OF UREA-MOLASSES MINERAL BLOCK IN THE PHILIPPINES- Hemando F. Avilla


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Some cow farmers grow high yielding varieties of grass and supplement it with oilseed meals, broken

rice and other by-products. However in most cases this is done in an unscientific manner.7

Growth of Cattles

A large number of farmers involved in bull fattening just before 3 or 4 months of Eid-Ul-Azha (Muslim

festival), when they sell the animals with profitable prices. Cattle fattening for beef production havebecome an important business of the small farmers in Bangladesh. In few areas of Bangladesh a small

scale commercial beef fattening program has already been started. Straw is the important crop residue;

contribute the major portion of the fibrous part of the diet of the beef cattle. Rice straw is the basal feed

for ruminants with low nutritive value and low digestibility. Farmers use rice straw of traditional

varieties, green grass, sugarcane tops, wheat and rice bran, molasses, pulse bran and locally available

resources such as pumpkin, carrot, banana, vegetable by products, rice gruel, boiled rice bran, oil cakes

etc for beef fattening. The chemical treatment of straw is the most effective and economic method to

improving the quality. Straw is mainly treated with urea and molasses and in some cases chemical

treatment also done by the farmers. Urea molasses straw treatment in beef cattle resulted higher body

weight, dressing percentage and also in better carcass quality than untreated straw. The acute shortage

of feeds and fodder has long been identified as a serious constraint to optimum livestock production in

Bangladesh. The nutritional factor is considered a major constraint to livestock productivity. Traditional

grazing field is scarce except in some pokets in Pabna and Sylhet districts. Farmers used three years old

cattle for beef fattening and maximum growth rate between 1.1 to 1.4 years of age. Cattle fattening

period is 4.5 months in rural areas of Bangladesh.8

Market Growth

According to Bangladesh Economic Review, (2006), the growth rate in GDP in 2004-05 for livestock was

the highest of any sub-sector at 7.23%, compared to 0.15% for crops, and 3.65% for fisheries sub-sector.

These changes have been prompted by a rapid growth in demand for livestock products due to increasein income, rising population, and urban growth.

9

The livestock industry of Bangladesh a rank 12th in the international market and is 3 rd in the Asian

market. Bangladesh has a higher cattle population than any countries in the European Union and more

cattle density than any other country in south and south-east Asia.10

7. REPORT ON THE DEVELOPMENT OF DAIRY INDUSTRY IN BANGLADESH- PRAN-RFL GROUP, December,2007

8. National Livestock development policy 2007- ministry of fisheries and livestock, government of Bangladesh

9. Government of the People's Republic of Bangladesh Ministry of Fisheries and Livestock- NATIONAL LIVESTOCK

DEVELOPMENT POLICY 2007

10. Beef cattle production in Bangladesh- a review-M.A. Baset, M.M. Islam, M.M. Rahman, G.B. Das and A. Ara


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Product Offering

CowShar is a urea-molasses-mineral blocks composite which make dairy firms more efficient. CowShar

can:

Improve weight gain of cows by 20.8 percent to 21.7 percent

Increase milk yield of cows by 21%

The composite has been extensively tested in the Philippines and Bhutan and all of the benefits have

been proved at the consumer level. Use of the composite has resulted in significantly higher Average

Daily Gain in weight for growing cattle. Cattle receiving the composite supplement enjoyed better health

and increased draft power.The benefits received from using CowShar will pay off well for the farmers a

21% greater milk yield per cow alone will more than pay off for the cost of CowShar.

Value ChainThe following is a value-chain of Cow-Shar:

11. Effect of Monensin on the Performance of Cattle on Pasture or Fed Harvested Forages in Confinement:

http://jas.fass.org/cgi/content/abstract/62/3/583

CowShar will be sold in 50 kg packs and will last 10 days for a 10 cow herd. The farmers will have to mix

CowShar with regular cattle feed.12

Keys to Success

The key to success is ensure total customer satisfaction through improving efficiency of dairy farms.

They need more milk production, better health of the cows, savings on feed and water intake, and

improved fertility, and strive to meet those needs. Achieving these keys will make the venture profitable

and sustainable over the long term.

InboundLogistics

RawMaterials

Sacks

Operations

Mixing

Packaging

OutboundLogistics

50 kgSacks ofCow-Shar

Marketingand Sales

Advertising

Promotional

Events

Service

Trainingtoretailers


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Critical Issues

KFL is a start-up business and the critical issues they would face are:

Establishing a demand for CowShar in the market by educating the farmers about the long term

benefits of CowShar.

Establishing itself as the pioneer cattle feed supplement manufacturer.

SWOT analysis

Strength Low Product Price

Low transportation cost due toclose proximity with targetmarket.

First movers advantage.

Opportunity Growing market

Low raw material cost

Availability of raw material

Tax holiday due to agriculturalinvestment

Low bargaining power of supplier

Weakness

Threat

Low profit margin.

Low barrier to entry

Better technologic product


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Competition

This is a new-to-the-market product, so there are no existing competitors. However, Monensin could be

a potential competition but the huge difference in price range (in CowShars favour) makes it unique in

the market. Monensin is not possible to be produced locally and has a high price tag, making Monensin

completely unfavorable for the local market.11

CowShar will be affordable for the farmers, and the price

they would pay for CowShar will be paid off well in forms of increased milk production, reduced feed

and water intake, improved fertility and better cattle health. And of course we get lower green house

gas emission too.

Marketing Strategy

The market strategy focuses on the possibility of raising profitability and sustainability of dairy firms by

making them subscribe to the idea of CowShar. We are specifically targeting dairy farms which produce

milk, and have got 10 cows at the least. KFL does not cover the whole market, as being a startup

company, CowShar needs to be focused and target the segment which is easier to access and

communicate and accounts for the larger chunk of the whole industry.

Mission

CowShars mission is to provide its customers with means to make them more profitable and

sustainable. We intend to attract customers by making them educated about the benefits of CowShar,

and maintain them over the long run by making them realize the higher revenue and lower cost in dairy

farming on using CowShar. We strictly believe that the profitability and sustainability of the dairy

industry dictates our own potential, and thus we strive to keep exceeding expectations of our

customers.

Marketing Objectives Maintain a positive, strong growth each quarter.

Achieve a steady increase in market awareness.

Maintain a high rate of retention.

Financial Objectives

Increase the profit margin each year by 1-2% by increasing efficiency and economies of scale.

Achieve a double to triple digit growth rate each year.

12. Production and Utilisation of Urea-Molasses mineral blocks in the Phillipines (pdf)


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Segmenting, Targeting and Positioning

Segmenting

The markets have been segmented in multiple stages. First, it has been divided into

geographical segments. In our case these segments are the districts. The geographical markets

are then segmented into people who rear cattle for the different purposes. These purposes are:

1. Micro producers who rear one or two cattle to supplement their incomes

2. People who rear cattle for their own milk supplies

3. Farmers who rear cattle for the meat market

4. Farmers who own 10 or more cattle for production of milk for selling to dairy product

makers

Targeting

Among the 6.7 million cattle farmers in our country 10% own ten or more cows. We target to

capture 30% of this market.

The micro producers generally procure their feed mainly from their own fields. Therefore, since

they do not come into contact with the cattle feed market frequently, it would be difficult to

change their habits and make them purchase feed.

The second segment consists of customers who rear cattle at their own home for their milk

consumption. Since their utility of increasing milk production diminishes, they would probably

not be very interested in our product.

The third segment of customers is highly seasonal. They rear a large number of cattle for the

Korbani cattle market. The majority of these cattle producers raise cattle for a short period of

time. Since this market is short-lived, we will not target this market at the start.

Our principal target market is the final segment. This group is the principal buyers of cattle feed

in the country. These farms are located mainly in the northern part of Bangladesh. If we target

this market, we can start out with a smaller and concentrated distribution system in the most

profitable market segment.

Positioning

We want to position ourselves as the pioneer in the cattle feed additives market as a source for

reducing cattle feed costs, increasing milk production and improving the health of cattle. We

are trying to position our product as a part of everyday cattle feed market.


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Marketing Plan

The main objective of our marketing campaign is to create a market in Bangladesh for cattle

feed additives. As such an industry does not exist in Bangladesh, we want to become the

pioneer and use the first mover advantage to become the market leader. To sum up, we want

our product to become synonymous with cattle food additives which produce healthy, livelycattle that produce more milk while cutting down on food consumption. The message we want

to give to buyers is that we will reduce their feed costs by 20 per cent and increase their milk

production by up to 20%.

To pursue our objective, we will follow a multistage awareness program. As our product is to

appeal to a mass market, we must create campaigns that reach this mass audience. In the first

stage, we would feature our product in agricultural television shows on national television.

These shows include Mati o Manush on Bangladesh Television and Hridoy e Mati o Manush.

These programs would be specifically selected because they feature innovations and innovative

products that are a part of rural Bangladesh. They have a large regular audience in rural

Bangladesh, especially in the agricultural sectors. This medium will help us spread the message

to our target audience effectively and efficiently.

The second stage in our awareness campaign is television advertising during airings of Bengali

movies in the various television channels. As audience for these movies are based mainly in

villages, this would also be quite well targeted.

Another way of creating awareness is through retailers of cattle feed. These retailers are

generally located at the central market in each village community. We can make banners which

portray the availability of our product. As we will give the retailers an attractive commission,

they would be able to provide information to customers about the benefits of our product to

prospective customers.

There are some traditional events such as stick fighting, horse races, etc. that are very popular.

As the prizes in these events are very cheap, we can gain cost effective awareness building

among potential customers. This would be helpful in creating word-of-mouth generation.

Marketing Mix

As our product is a good, we use four Ps framework to produce the desired effect in our

customers.


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Product

Our core product is a food supplement that reduces the feeding cost for cattle farmers. It does

this by reducing the action of bacteria in the cattles digestive system which result in lesser

emission of gases through flatulence and belching. As a result, more of the food is converted to

milk production and keeps the cows healthy too. The farmer adds the mix to the hay or grass.About 500gm per day per cow is required. The product would be available in 50kg sacks.

Price

Since our selling point is to reduce food costs, we have to keep the price at a level which should

be less than the cost savings it provides. As most of our inputs come from byproducts of other

industries, our cost of raw materials would be quite low. This helps us to sell the product at Tk.

600tk per 50kg bag.

Place

Customers can avail our product at cattle feed outlets. These are located within proximity of

farms and hence the carriage costs to customers would be low and carriage convenient.

Promotion

The promotional strategies are outlined above in the marketing strategies section.

Market ResearchExtensive studies on the dairy cattle industry in Bangladesh has been carried out by the

Bangladesh Agricultural University and the statistics available from Bangladesh Bureau of

Statistics provides us information about the location of our target markets. This significantly

cuts down our research costs.

We choose a handful of areas to test market our product. We would use information from this

source to find the shortcomings, if any, of the product and distribution network. Findings from

this research would be used to iron out the problems in the product.

Further market research would be conducted about the viability of international markets for

our products and the modifications necessary to meet the local legislation requirements.

In addition, a firm in the UK is planning on selling carbon credits to industries in developed

countries. The carbon emissions reduced by our products could therefore act as a second

source of revenue for our firm. The viability and marketing resource requirements for such a

venture would also be evaluated from our market research findings.


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The funding needs for our market research are shown in the pro-forma financial statements

attached.

Competitive strategy:

Competitive forces: We identify the competitive forces according to the Porters Five Force

model:

1. Threat of intense segment rivalry: a segments attractiveness decreases with the

increase of the number of competitors in that segment. There is no other company that

offers the same product as ours. So there is practically no threat of rivalry in our target

market segment. Thus the attractiveness of our target market is very high regarding this

particular aspect.

2. Threat of new entrants: The production process of CowShar is quite simple. That offers a

low entry barrier for other companies to enter the market. The exit barrier for themarket is also low since there is no need for a large investment in machinery and other

such manufacturing units. So the attractiveness of the market is low considering this

particular force.

3. Threat of substitute products: As of now there is no perfect substitute for CowShar. The

only product currently existing in the market that can be considered as a substitute is

urea. But urea only stimulates growth of cows and thus only benefits farmers rearing

cows for the meat market. Our main target is farmers rearing cows for milk. Considering

this force the attractiveness of the market is quite high.

4. Bargaining power of buyers: Bargaining power of buyers increase as they become moreconcentrated or organized. Our target market is not much concentrated since we are

supplying to individual customers. So bargaining power of buyers is low and the

attractiveness is high.

5. Bargaining power of suppliers: Our raw material involves different types of unrelated

products. So we will not be dependent upon any particular group of suppliers. Moreover

our suppliers are not concentrated or organized for that matter. So their bargaing power

is likely to be low, therefore increasing the market attractiveness.

Our product is going to be the first of its kind in the Bangladesh market. That makes us the

pioneer in this product category. As the first mover we are going to adopt the following

competitive strategies:

Capturing the largest potential market: After launching the product we are going to exert

extensive promotional efforts to create maximum awareness in our target market and capture

as much market share as possible.


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Expanding the total market: After the initial launching of CowShar we will put in continuous

effort to expand our market. Our first area of operation will be the North Bengal but we will

gradually expand the market to cover the whole country. We will also be able to export our

product to countries such as India and Pakistan. There are no similar products in these

countries as of yet.

Position defense: Our positioning is going to be based on a strong value that is to substantially

increase the milk production of cows for an affordable price.

Preemptive defense: Our market has a low entry barrier. So it will attract a large number of

competitors. Our low price will act as a preemptive defense strategy against this host of

competitors. This low price wont allow them to make significant price cuts. If they want to

offer their product at a significantly lower price than us they will suffer heavy losses.

FinanceThere are about 23.7 million cattle reared in Bangladesh. Of these cattle about 10% are kept in firms

which are considered to be in medium size farms (more than 10 cattle). We aim to capture about 30% of

this market. This gives us about 711,000 in our target market. As each cow requires about 500gm per

day, we would sell about 2,595,150 bags of 50 kg per year.

The following table shows the cost per kg of producing 1 kg of CowShar

Input Cost Per Kg (Tk.) Amount Needed(Kg) Total Cost(Tk.)

Molasses 6.65 0.36 6.65

Rice bran 6.3 0.38 6.3

Urea 28.84 0.1 28.84

Cement 5.6 0.08 5.6

Salt 12.6 0.019 12.6

Dicalcium Phosphate 29.75 0.02 29.75

Trace minerals 630 0.001 630

Water 0.35 0.04 0.35

Labor 0.50

Total10.0984


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The price of the CowShar is set at TK. 600 for 50 kg sacks. The cost of the sack is Tk. 504.92. This gives us

a margin of Tk. 95.08 per sack. At this margin, breakeven quantity is 22087 bags.

The following page shows a summarized pro-forma financial statement of our firm for the first year.

Tk.Revenue 1,557,090,000

Cost of Goods Sold 1,310,343,138

Gross Profit 246,746,862

Selling and Administration

Expenses

Commissions 77,854,500

Administrative Expenses 600,000

Depreciation 200,000

Advertising 1,000,000

Promotion 500,000

Profit 166,592,362


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ANNEX Detailed demographics of dairy enterprises of Bangladesh

Source - a review of milk production in Bangladesh with particular emphasis on small scale producers-

international farm comparison network-T. Hemme, O.Garcia, A.R. Khan


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ANNEX - Extension Recommendations for Preparation of Urea-Molasses-

Mineral Block (UMMB), and feeding to cattle as a supplement

CowShar MKT II

Documents

Transcript of CowShar MKT II