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Swan Mattress

A Critical Analysis of the Mattress Sector

Executive Summary

Swan Mattress

A Critical Analysis of the Mattress Sector

PREPARED FOR:

Dr. Syed Ferhat Anwar

Professor

M302: Marketing Management

PREPARED BY:

M.M. Shahnewaz Kabir Shawon (ZR-04)

Alim Md. Noor (ZR-12)

Saif Ahmed (ZR-21)

Damil Alam Prakash (ZR-34)

Khandaker Ahad Ahmed (ZR-48)

BBA – 15th Batch (A)

INSTITUTE OF BUSINESS ADMINISTRATION

UNIVERSITY OF DHAKA

June 02, 2008

June 02, 2008

Dr. Syed Ferhat Anwar

Professor

Institute of Business Administration (IBA)

University of Dhaka.

Dear Sir:

We would like to submit this report titled “Swan Mattresses: A Critical Analysis of the Mattress

Sector” prepared as a part of the requirement for the course of Marketing Management.

In the process of preparing this report we had the opportunity to practically implement our

knowledge of marketing as well as to gain insight into the mattress sector of our country. We

tried our best to follow your guidelines in every step of preparing this report.

The whole project has been a huge learning experience for us. We hope you will find this report

objective, precise and reliable. Thank you for this assignment.

Sincerely,

___________________

Damil Alam Prakash

(On behalf of the group)

CONTENTS

Executive Summary......................................................................................................................vii

1. Introduction...............................................................................................................................1

1.1 Origin of the report..............................................................................................................1

1.2 Objectives............................................................................................................................ 1

1.3 Scope................................................................................................................................... 2

1.4 Methodology....................................................................................................................... 2

1.5 Limitations........................................................................................................................... 3

2. Swan Group Overview...............................................................................................................4

2.1 History..................................................................................................................................4

2.2 Swan Group Overview......................................................................................................... 5

2.3 Organization Structure.........................................................................................................8

2.4 Management Team..............................................................................................................9

3. Market Analysis....................................................................................................................... 11

3.1 Market Shares....................................................................................................................11

3.2 Competitive Forces............................................................................................................11

3.3 Mattress Market Type........................................................................................................13

3.4 Current trends....................................................................................................................13

4. Competitor Analysis.................................................................................................................14

4.1 Coirex Company Profile......................................................................................................14

4.2 Karmo Company Profile.....................................................................................................16

4.3 Other Competitors.............................................................................................................18

5. Swan Mattress Model Analysis................................................................................................19

5.1 SWOT Analysis................................................................................................................... 19

5.2 Strengths and Weakness Analysis......................................................................................20

5.3 Opportunity and Threat Analysis.......................................................................................23

5.4 Swan Marketing Mix..........................................................................................................25

5.5 GE Model Analysis..............................................................................................................27

5.6 Extended BCG Matrix.........................................................................................................31

5.7 Porter’s Five Forces Analysis for Swan Mattress................................................................33

5.8 Conjoint Matrix..................................................................................................................35

6. Strategies................................................................................................................................. 36

6.1 Goal Setting........................................................................................................................36

6.2 Demand forecasting...........................................................................................................40

6.3 Memory foam....................................................................................................................41

6.4 Customer awareness..........................................................................................................45

6.5 Customer retention............................................................................................................46

7. Conclusion............................................................................................................................... 50

Appendix A – References.............................................................................................................51

Appendix B– Sample Questionnaire............................................................................................52

Appendix C – Sample Swan Print Ads..........................................................................................63

Appendix D – Sales Data Analysis................................................................................................66

List of Illustrations

Figure 1. Swan Group.....................................................................................................................5

Figure 2. Corporate structure of Swan Industries..........................................................................9

Figure 3. Mattress industry market shares..................................................................................11

Figure 4. Strength & Weakness Analysis......................................................................................24

Figure 5. Opportunity & Threat Analysis......................................................................................24

Figure 6. The BCG Matrix.............................................................................................................31

List of Tables

Table 1. SWOT analyis of Swan mattresses..................................................................................19

Table 2. Strength & Weakness Analysis.......................................................................................20

Table 3. GE Model Business Strength Rating...............................................................................28

Table 4. GE Market Attractiveness Rating....................................................................................29

Table 5. Yearly Forecasted Sales..................................................................................................37

Table 6. Periodic Forecasted Sales...............................................................................................37

Table 7. Rebonded Mattress Sales Analysis.................................................................................39

Table 8. Chi-Square Analysis........................................................................................................39

Table 9. WACC Calculation...........................................................................................................42

Table 10. ROI Calculation.............................................................................................................44

Table 11. ROI Calculation.............................................................................................................48

Table 12. Projected sales figures.................................................................................................49

Executive Summary

Swan Industries have been operating in Bangladesh for a long time. Although they are the clear

market leader, Swan is currently facing decreasing profits. This report attempts to identify

those problems and propose strategies to resolve those.

The report is limited to Dhaka city only. Data was collected through repeated interviews with

manufacturing company executives and surveys of both consumers and retailers.

The mattress industry of Dhaka city is oligopolistic in nature. Swan is the market leader (32%)

and the main competitors include Karmo (15%) and Coirex (5%). Swan Industries currently offer

five kinds of mattresses: foam, coir, spring, PE (tight and light) and re-bonded mattresses.

Swan Industries have a few considerable strengths which include: largest portfolio of products,

international certification, corporate structure and continuous R&D. The weaknesses include:

lowest retailer commission, higher costs and lack of information systems. Some of the biggest

threats are the headhunting of employees, powerful new entrants like Otobi, Akhter Furnishers,

etc. and specialization of niche marketing companies.

According to the GE model, Swan lies on the bottom-left grid of the GE matrix. So, the strategy

of Swan should be to ‘protect and refocus’. Also, BCG matrix analysis reveals that Swan

mattress division as a whole is a cash cow.

To resolve the problems of Swan Industries, the following strategies have been proposed: (I)

goal setting, (II) demand forecasting, (III) memory foam PR strategy, (IV) print ad modification

and (V) customer retention strategy. If Swan Industries invest in the right areas and implement

effective strategies, then they should be able to maintain their position and market share in the

long term.

Executive Summary vii

Swan Mattress

A Critical Analysis of the Mattress Sector

1. Introduction

Swan Industries have been operating in Bangladesh for a long time. Now, they are a

powerhouse in the Bangladesh foam and mattress sectors. Despite having the biggest portfolio

of products and the widest distribution channel, Swan is currently facing declining sales and

diminishing profits. This report attempts to identify those problems and propose strategies to

counter those.

1.1 Origin of the report

This report has been prepared to fulfill the partial course requirement of Marketing

Management (M302), for Dr. Syed Ferhat Anwar, Professor, Institute of Business

Administration.

1.2 Objectives

The objectives of the report are:

Identify problems of Swan Industries – to find out which issues are pressing and which

components of the business need to be focused on.

Identify the trends of the mattress industry – to recognize the patterns of the mattress

sales in this industry.

1. Introduction 1

Develop strategies for Swan Industries – after identification of the companies problems,

formulate strategies that will resolve the problems for Swan.

1.3 Scope

The information of the report is based on the data collected from retailers and the producers in

Dhaka city only. This report includes basic and relevant information that are needed to have an

overall idea of sales of mattresses and their preferences. To fulfill our objective we have

gathered information from retailers. The products offered by Swan Industries can be broadly

classified as into foams, mattresses and hometex (comforters, pillows, etc.). We have narrowed

down our study only to the mattress division. Though the mattress companies have distribution

and retail outlets in major cities like Dhaka, Chittagong, Khulna, only demand in Dhaka city has

been discussed here.

1.4 Methodology

Collection of data

To learn about the sales of mattresses, we have gathered information from various sources.

They are as follows:

I. Surveys – two types of surveys were conducted.

a. Consumer survey - a top-of-the-mind survey directed towards consumers

to find out their awareness level about the mattress industry.

b. Retailer survey – retailers were surveyed to find out more about the

value delivery network and consumer preferences. Surveys were

1. Introduction 2

conducted in the three main mattress markets in Dhaka city (Elephant

Road, Gulshan and Mirpur) and over a total of 22 retailers .

II. Interviews – management personnel from the mattress companies were

interviewed to compare between the manufacturing and delivery processes of

competitors.

Analysis of data

The data gathered from the surveys have been arranged according to their categories and

analyzed to fulfill our objectives. For better understanding, we have also included graphical

representation. Quantitative techniques like Chi-square analysis and financial measures like

Return on Investment (ROI) have been used to analyze sales trends and forecast sales.

1.5 Limitations

During the preparation of the report, various limitations were encountered. They are:

Since none of the retailers or manufacturers maintain any consumer database, too

many consumers could not contacted for an extensive survey.

Mattress is a durable product. So, one consumer use the same mattress for around

10 years, and thus might have no idea about existing products.

The scope of the report has been limited to Dhaka city only due to time and resource

constraints.

1. Introduction 3

2. Swan Group Overview

2.1 History

The journey of Swan Group started when Mr. Khabeer Uddin Khan started Khan Trading

Company. He used to buy foams and mattresses from foreign countries like China and sell them

in Bangladesh. After some years Mr. Khan recognized the potential of this sector and started his

own foam production business called Swan Foam (industrial name poly-urethane foam) in

1988. Swan Foam was a great success and eventually Khan Trading Company was absorbed.

Slowly, Swan Foam started to grow and within a few years achieved complete backward linkage

for foam products. The foam was mainly sold for sitting purposes (sofa-sets, cushions, etc.) but

also, there was a growing demand for foam mattresses. The market for mattresses was

increasing steadily.

In the meantime, Swan was already diversifying its operations. A chemical called synthetic

rubber adhesive was required for the production of foam. Sensing a demand for this product,

Swan started manufacturing it commercially. In 1994, a separate division named Swan

Chemicals was launched.

By this time, the mattress industry had grown in size. There were importers who brought

different types of mattresses like spring, felt, etc. to the country. Finding that a sizeable demand

existed, Swan group started making spring mattresses in 2001-02. Thus, Swan Mattresses was

born. Its first product was Spring Mattress which was a huge success.

Building on the success of the mattress division, Swan went for complementary products and

created Swan Hometex. As a result Swan’s costs came down for mattress production and profit

went up. These surviving industries now create the modern Swan Group.

1. Introduction 4

The latest addition to the Swan Group is the introduction of a real estate business named Swan

Properties. It is a completely separate entity and has a different managerial staff for the running

of the business.

2.2 Swan Group Overview

Swan Group is divided into three main divisions. The divisions are largely independent of each

other, though at times the same resources are used by multiple departments. For example, the

research and development facilities of both the Swan Chemicals division and the Swan

Industries are overlapping.

Figure 1. Swan Group

Swan Industries

Swan industries is comprised of three strategic business units (SBUs). They are:

1. Introduction 5

SWAN Group

SWAN Industries

SWAN Foam

SWAN Mattress

SWAN Hometex

SWAN Chemicals

LA

UPR

SR

PU

SWAN Properties

Swan Foam

Swan Mattress

Swan Hometex

Though the management shows these three as being separate operations, the boundaries of

the departments are blurred. One operation might use assets from another when the need

arises. For example, the same people who package the foam also package the mattresses.

Even though management recognized three SBUs, actually the foam and the mattress

operations are very much related. For example, to manufacture a foam mattress, the same

machinery and the human resources are used who produce foam cushions and other foam

products.

Swan Foam

Swan Foam mainly produces foams of four grades. The three main grades in terms of quality

are Swan (Regular Quality), Comfort (Better Quality) and Super (Best Quality). There is also

another thin type of foam called YS grade.

Currently Swan Supplies to both consumers and business buyers. Business buyers use various

types of foam as Raw Materials for their products. Some business buyers sectors where Swan

delivers are Furniture, Transportation, Footwear, Toy Sector, Luggage etc.

Swan Mattress

Swan is the pioneer mattress manufacturing company in Bangladesh. Their initial product was

the Spring Mattress. Now, they create five types of Mattresses. These are:

1. Introduction 6

Foam Mattress

Coir Mattress

Spring Mattress

PE Mattress (tight and light)

Re-bonded Mattress

They are the current market leaders and they try to keep their leadership through superior

product quality and service.

Swan Hometex

Swan Hometex division makes a variety of products which includes comforter, pillow, oven

mitts, etc.

Swan Industries Ltd. has produced quality product for its customer for the last 21 years. It

currently has 12 showrooms and almost 700 retail outlets.

Swan Chemicals

The initial product of Swan Chemicals was Synthetic Rubber Adhesive (SRA), more commonly

known in the market as “Solution”. Currently, they create four types of Adhesives. They are

Lamination Adhesive (LA)

Unsaturated Polyester Regine (UPR)

Synthetic Rubber Adhesive (SRA)

Poly Urethane Adhesive(PUA)

1. Introduction 7

They are the market leaders in SR adhesive but they are still developing their UPR, PUA and LA.

Bu they still cannot achieve the target sales. The manufacturing plant of Swan Chemicals is

located in Gazipur.

Swan Properties

Recently, Swan Industries Limited Started this developers business. For that purpose they have

taken a director who has 12 years of professional experience in this field. Swan Properties office

is situated in Prime View, Gulshan Avenue.

2.3 Organization Structure

The organizational Hierarchy is blurred in SWAN Group. But broadly Its head is the owners

which is the Mr. Khabeer Uddin Khan’s family. Under them there is the General Manager

(Corporate). This post is equivalent of CEO. Then there are several posts. They are

General Manager (Marketing)

Head of Accounts

Head of Commercial

Head of VAT

General Manager Production

1. Introduction 8

Figure 2. Corporate structure of Swan Industries

(Marketing) All these post report to both the head of Accounts and the General Manager

(Corporate). Under each of the divisions, they have Assistant General Managers and under

them there are Deputy General Managers.

The Dhaka Corporate Office is in 23-24, Tejgaon Industrial Area, Dhaka.

2.4 Management Team

Mr. Khabeer Uddin Khan - MD and CEO

Mr. Khabeer Uddin Khan has passed his Honors and Masters from the Accounting Department

of Dhaka University. After graduation he did not attempt to go into a job. He began Khan

Trading Company which eventually gave birth to Swan group of Industries Ltd.

1. Introduction 9

Owner

GMC

GMMHead of

Commercial

Head of VAT

GMProductio

n

Head of Accounts

Mr. Zinnat A. Montu - General Manager (Corporate)

Mr. Montu has been with Swan Group of Industries for the last 30 years. He is an expert in all

the sectors that swan operate in e.g. Servicing, Customs, Income Tax, Financial Institutions etc.

He is supporting other executives to perform their activities smoothly.

Mr. Mozibur Rahman - General Manager (Production)

Mr. Mozibur has been with Swan for more than 20 years. He ensures timely production and

supply of Swan Products. He also ensures quality of the products produced. He is also an expert

in related sectors like local procurement of Raw Materials, transportation of Raw Material and

transporting finished goods to valued customers. He also ensures proper storage of Raw

Materials and finished goods.

Mr. Ali Ahmed - General Manager (Marketing)

Mr. Ali has completed his Honors and Masters from the Marketing Department of Dhaka

University. He started his career with Singer Company.

Mr. Zinder Ali - Assistant General Manager (Marketing)

Mr. Zinder has worked with Swan for more than 16 years. He has personally sat with many

customers and his liaison skills are irreplaceable.

1. Introduction 10

3. Market Analysis

3.1 Market Shares

Unfortunately, no statistical information about the market shares could be found from any

sources. According Swan Industries, the market shares are something like this:

32%

15%

5%5%5%

10%

7%

21%

Mattress Industry Market Shares

Swan Karmo

Coirex Tiger

Eagle Bengal

Imported Others

Figure 3. Mattress industry market shares

3.2 Competitive Forces

Michael Porter has identified five forces that determine the intrinsic long-run attractiveness of a

market, the threats from the five forces of industry competitors, potential competitors, buyers

and suppliers are the following:

1. Threat of Segment Rivalry:

Currently the Mattress market contains numerous competitors. There are many small players

in the market both local and foreign. The market currently is undergoing fierce competition, Big

1. Introduction 11

players like Swan and Karmo has lost significant market shares to many small local and foreign

brands.

2. Threat of new entrants

Some mattress products like Foam and spring mattress requires expensive equipments and

technological expertise.

It is also difficult for new entrant to establish a functional network system of dealership and

retails to reach customer all over Bangladesh. Only Swan and Karmo have managed to develop

an extensive network all over the country

Because of heavy investment required in equipment and production expertise the industry has

high entry and exit barriers.

3. Threat of Substitute Products

In Bangladesh local made Quilt mattress (Zajim) is the most popular. Quilt mattress are more

widely available than branded factory produced ones. Quilt mattresses are 3 times cheaper

than most Foam and Coir mattresses.

4. Threat of buyers’ growing bargaining power

Buyers don’t have lot of bargaining power in the mattress market. Prices are fixed by retailers

and the companies have not focused on any other channels. Through our surveys of retail

markets we have seen that retailers charge varying prices in different retail locations, and

customers are not sensitive to such price variance.

5. Threat of suppliers’ growing power

Swan has most extensive backward linkages of all companies. Swan itself procures most of its

raw materials required for Mattress production; therefore only international price changes on

1. Introduction 12

raw materials can affect its profitability. However other companies don’t have a strong

backward linkage and has to depend on Swan for many raw material imports.

3.3 Mattress Market Type

A small number of large firms control more than half of the market share this includes Swan,

Karmo and Bengal. All the companies find it hard to charge significantly higher as their products

in each category are homogenous. The competitors match on prices and services the only way

to gain competitive advantage is by lowering costs. So, the market type can be assumed to be

an oligopoly.

3.4 Current trends

Sufficient data could not found on the mattress industry. This was mainly because of two

factors; firstly, none of the statistics bureaus consist of data focused fully on the mattress

industry, and secondly, none of the companies have any customer database which could be

used for survey purposes. Based on interviews of retailers and executives, they admitted the

following trends:

Foam mattress sales are extremely low in summer, but very high in winter.

General decline in coir mattress sales.

Growing demand of rebonded mattresses.

Specialized firms making more profits.

1. Introduction 13

4. Competitor Analysis

4.1 Coirex Company Profile

Established: 2002 Managing Director: Mr. Mahbubul Alam

Ownership: Partnership Head Office: Elephant Road, Dhaka

Products: Coir Mattresses

Coirex Mattress Company focuses on a single product category only. The company produces

and markets its sole product, Coir Mattress.

The company was established by a group of 4 business partners in 2002, the founders were all

previously involved in mattress retailing in Elephant Road Market, Dhaka. Currently the

managing director of Coirex is Mr. Mahbubul Alam.

Coirex only produces coir mattresses. The coir is procured through suppliers who import it

from different countries like Malaysia. Coir has a factory where mattresses are stitched. Quality

control is very high the owners themselves are responsible for quality checks as inspection.

Due to its superior quality and niche marketing, Coirex has become very reputed brand among

customers in Dhaka Metro region. Coirex has very well after sales services; it has prompt

response time to customer complaints.

Coirex has very high variable costs compared to competitors like Swan and Karmo, therefore

Coirex has lower profit margins that its competitors. Due to high variable costs and low profit

margins Coirex can only give its retailers a commission of 10%-15%, the lowest among its

competitors.

1. Introduction 14

Coirex is facing many problems in the market, its competitors are moving very fast in the Coirex

mattress category, making Coirex lose its niche in the market.

7 P Analysis of Coirex

Product

Coirex from its inception has produced and market only one category of mattress, which the

Coir Mattress. Coirex focus on a single product category has enabled it to specialize in

producing the highest quality coir mattress in the company.

Price

Prices the customer pay for mattresses is not fixed and depends upon the retailers. The price of

Coirex in any retail location should vary little when compared with another brand.

Coirex pays a commission of 10-15% to the retailers; they pay the lowest in the market because

they have the higher production cost compared to their competitors Swan and Karmo

Place

Coirex does not distribute outside Dhaka Metro. Its retail is limited to only Dhaka City. Coirex

has a small production capacity. Coirex entered the mattress market in 2002 therefore it has

not built a distribution network outside Dhaka City.

Promotion

Coirex till now has not undertaken any promotional activities. The reasons are high variable

cost per unit in the production process, Coirex rivals due their bigger size have scale of

economy which brings their per unit variable costs down

1. Introduction 15

Coirex Strategies

Coirex focused on single product category, Coir Mattress, because it easy to setup up

production plants and completion was very little in coir mattress category.

Focusing on single product category enables Coirex to produce higher quality products

than rivals Swan and Karmo. Quality control checks and supervision is done by the

Coirex owners themselves.

Single product focus has helped Coirex to stay closer to retailers and customers than

rivals Swan and Karmo. Coirex has maintained good relations with retailers all over

Dhaka City, who despite Coirex’s least commission percentage are more than willing to

sell Coirex Mattress.

Coirex has better after sales service than its rivals Swan and Karmo. It promptly

responds to any customer complaints.

4.2 Karmo Company Profile

Established: 1965 Managing Director: Md. Hafizur Rahman

Ownership: BTL group Head Office: Elephant Road, Dhaka

Products: Spring, Foam, Coir, and Rebonded Mattresses

Karmo was established in 1965 at a time when Bangladesh was part of Pakistan. The company

has been pioneer in Foam market; Karmo was the first company to manufacture foams for

furniture. Karmo later lost its market leader position to Swan, but still it holds a competitive

position in the market as of fiscal year 2008 Karmo had 15% share in the mattress market.

1. Introduction 16

The company maintains good relations with dealers and retailers by giving the highest

commission in the market commission of 15-20%(exact amount with held). The company’s

main strength in the market is its brand reputation, claimed by the company officials because

they being the oldest in the mattress market.

Karmo is also has another division, Karmo Chemicals which mostly produced adhesives,

because the raw material for Foam petro chemicals is complementary for adhesive making.

7 P Analysis of Karmo

Product

Karmo foam produces three different types of mattresses currently. Those are foam, coir, and

spring mattress. They have done quite good but are not market leader in any of the categories.

Recently Karmo is trying to start producing rebounded mattress.

Price

Prices the customer pay for mattresses is not fixed and depends upon the retailers. The price of

Karmo in any retail location should vary little when compared with another brand. Karmo pays

the maximum amount of commission to the retailers in the market. They have very good

retailer relationship and satisfaction.

Place

Karmo has a very good distribution channel throughout the country. They have sufficient

number of retail outlets. These outlets are located in convenient locations in both Dhaka city

and other areas. And they are very fast at delivering on time.

1. Introduction 17

Promotion

Karmo stresses on advertisement for promotional activities. They run TV commercials on a

seasonal basis. They have billboards on different spots of Dhaka city and highways. Karmo also

gives advertisement in print media. They do not apply other promotional tools like sales

promotion, PR etc.

Karmo Strategies

Karmo is the oldest in the market and has sufficient brand reputation.

Karmo because the oldest in the market, they have developed an extensive dealer and

retailer network throughout Bangladesh.

Karmo has good relationship with channel members. They rely on high commission to

win retailers who influence customers to buy their products.

4.3 Other Competitors

Among the other competitors, currently the most prominent is Eurasia. They only produce felt

mattresses which has an increasing demand right now. However, they have been in business for

a very short time and so data is insufficient to determine whether felt mattress is riding on a fad

or a trend.

1. Introduction 18

5. Swan Mattress Model Analysis

5.1 SWOT Analysis

The following SWOT analysis captures the key strengths and weaknesses within the company,

and describes the opportunities and threats facing Swan Mattresses.

Strength

Maximum type of Products Strong Brand Image Better certification Organizational Structure R&D Technology

Weakness

Falling Coir Quality Lowest retailer commission Distribution lag time Higher Costs Limited production capacity Absence of proper information

management systems

Opportunities

Customer Retention Strategy Memory Foam Mattress Quality Awareness Program

Threat

New heavyweight Entrants (Bengal, Akhter Furniture, OTOBI, Kurl-on)

Specialization (Coirex in Coir Mattress) Head-hunting of employees Market Cannibalism of Re-bonded

Mattress Excess Durability of Re-bonded Mattress New technology such as Natural Latex

mattress, Air Mattress, etc.

Table 1. SWOT analyis of Swan mattresses

1. Introduction 19

5.2 Strengths and Weakness Analysis

Criterion Swan Mattress Karmo Mattress Coirex

Product Quality ? ? 5

Type of Product 4 3 1

Commission 3 4 2

Reach 5 5 1

Distribution 3 4 2

Awareness 5 3 2

TV Advertisement 5 4 0

Print Advertisement ? ? 0

Other Advertisement ? ? 0

Certification 5 4 0

Organization Structure 4 2 4

Capital ? ? 2

R&D 4 3 3

Cost 3 4 2

Technology 5 3 4

Table 2. Strength & Weakness Analysis

Product Quality: Quality of different mattresses?

o Swan claims they have the best quality but market survey shows that their Coire

mattresses have complaint. Different sources had similar complains that the coire

mattresses get puddles in them after 1-1.5 years of use. Also foreign brands had

higher rating in spring mattresses. Coirex has higher ratings in Coire Mattress. 1. Introduction 20

Most users are indifferent about the foam Mattresses quality. Swan is the only

producer of Re-bonded mattress, so it is difficult to evaluate.

Type of Product: How many types of mattresses?

o Swan has the largest range of product. The Mattress types are Foam, spring,

Coire, Re-bonded, PE (Tight and Light). The market also has Felt Mattresses by

Eurasia but no single brand hold 5 types of products. It also has three different

types of Foam Mattresses.

Commission: How much sales commission do the retailers get?

o Swan gives a commission of 15% as claimed by Swan, one retailer backed this

claim. Swan has distributor between them and the retailers. Because of this

distributors commission, the profit margin of the retailers is the least of all

brands.

o There is a bidding culture about commission in the market. Companies try to

outbid their competitors. Swan always keeps their commission fixed.

(Information from the Swan.)

Reach: Where can we find it?

o Almost all independent retailers sell both Swan and Karmo.

o Karmo dealers sell Swan Mattresses but Swan dealers only sell Swan Mattress.

Distribution: Do we find it on time?

o Some retailers claimed that Swan foam does not deliver on time.

Awareness: Are people aware of it in different places?

o From limited surveys, we have found that almost everyone knows about Swan

because it has given TV Advertisement consistently for long period of time. We

have not conducted the customer survey to confirm.

1. Introduction 21

TV Advertisement

o Swan focuses their promotion in TV advertisements. They claim that they hold

the maximum airtime. Now, Karmo also gives TV advertisements in BTV. We also

heard that some other company started giving TV advertisement. We still do not

know its name.

Print Advertisement

o Almost all mattresses give advertisements in different Magazines. Also Karmo

gives print advertisements in famous Bangla Dailies. Swan claimed that they also

gives print advertisements in dailies but we got no proof.

Other Advertisement

o All companies use wall writings. Also they use stickers and Karmo has given

billboard advertisements.

Certification

o Swan and Karmo have ISO 9001. Only Swan has HACCP.

Organization Structure

Swan is the only company with organization structure. We went to Karmo and it had very blurred organizational structure. Its positions were not defined and the roles were not assigned.

R&D

Among the existing companies, Swan claims to be the pioneers of R&D. They said that they were the first to produce spring and re-bonded mattresses. Retailers confirmed that they are the only producer of re-bonded Mattresses.

1. Introduction 22

Strengths

Cost

Swan claimed that they have higher costs because they maintain organizational structure and they do R&D.

Technology

Swan claims to be the most technologically advanced. Other companies come to Swan for stitching because of their better equipment.

5.3 Opportunity and Threat Analysis

Opportunities

Retention Strategies: Swan has a lot of user but no retention strategy. If they give some incentives for re-buying then their sales may go up.

They can produce memory foam. They have all the necessary technology. It can be a great opportunity since it has a huge market abroad.

Threats

New Entrants: There are a 3 new local competitors (OTOBI, Akhter Furniture, Bengal Group) and 1 foreign competitor (Kurl-on).

Specialization: Coirex are becoming distant leaders in Coire Mattress because they specialize in coire mattress.

Head-hunting: Swans employees are lured away with better salaries from other competitors.

Cannibalism: Re-bonded Mattress is eating away other product’s market share due to cheaper price and superior quality and longevity.

Durability: Re-bonded mattress is tested to be much more durable than the other mattresses, as claimed by Swan. This may extend the re-buying time too much.

Newer Technology: There are a number of new technologies in the foreign market such as Natural Latex mattress, Air Mattress and Water Mattress.

1. Introduction 23

Threats

Opportunity

Figure 4. Strength & Weakness Analysis

Qualitatively, Swan falls in the upper right region because its strengths greatly outweigh the

weakness, as compared to the competitors.

Figure 5. Opportunity & Threat Analysis

Qualitatively, it falls in the lower left region since the threat greatly outweighs the opportunities.

1. Introduction 24

5.4 Swan Marketing Mix

Product

This includes the variety, quality, design, features, brand reputation, packaging, sizes, services

and warranties of the products sold.

Swan is has the most variety of mattresses in the market, this includes Foam, Coir,

Spring, Re-bonded, tight and light and memory (health) mattress.

Swan has good quality in most mattresses, market leaders for quality in Coir mattress is

Coirex and Spring mattress is imported Chinese brand Prance Dragon.

All the mattresses in the market have similar design and features

Swan has the best brand reputation in the market

Swan has excellent after sales services regarding customer complaints, responses to

customer complaints are prompt

Warranties on all categories of mattresses are same for all brands.

Price

List prices of products, discounts and sales, payment periods and Credit terms

Prices of products vary according to location and retailer’s bargaining, the market price

for each mattress category varies very little for all local brands. Imported brands are

charged a bit higher by retailers.

Swan never offers any discounts on sales price to customer, the sales discount practice

is almost absent in the mattress market

Swan gives a commission of 15% as claimed by Swan, one retailer backed this claim. Swan has distributor between them and the retailers. Because of this distributors commission, the profit margin of the retailers is the least of all brands.

There is a bidding culture about commission in the market. Companies try to outbid their competitors. Swan always keeps their commission fixed. (Information from the Swan.)

1. Introduction 25

Promotion

This includes promotional activities such as sales promotion, advertising, sales force, public

relations, Direct Marketing.

Swan has now yet undertaken any sales promotion. The practice of sales promotion is

absent in the market.

Swan regularly advertises in Newspapers and magazines. It also advertises in T.V but less

frequently than its competitors like Karmo and Bengal.

Swan has a dedicated sales force of 33 marketing executives who are actively involved

distribution and selling process.

Swan is doing Direct Marketing with Business buyers, direct marketing with consumer

buyer is still at experimental stage.

Place

This includes the channels of distribution, geographical coverage, available locations, and

inventory management.

Currently, Swan has the largest distribution network with around 700 retailers spread

throughout the country.

People

All people involved in the consumption of a service or a good.

Regarding technical expertise, Swan is the market leader. Swan Industries have highly trained

workers and a functional R&D department. Also, they have the highest number of employees

among other mattress companies and the largest sales force.

Among the mattress companies, only Swan Industries have an organized corporate structure.

However, the responsibilities of each position are not always clearly defined.

1. Introduction 26

Process

Procedure, mechanism and flow of activities by which goods or services are consumed.

Swan Industries is the clear technological leader in the market. Most of the new mattress types

have been pioneered by Swan in the market. Consumers can buy their products from any of

three existing mechanisms: Swan office, distributors and retailers.

Also, Swan has 33 marketing executives who roam around the country to identify sales

opportunities and provide after-sales service. Swan readily repairs any mattress brought by a

customer and also, has an easily accessible help service.

Physical Evidence

The ability and the environment in which the service or good is delivered.

Since all types of mattresses are sold at the same retail outlets, the tangible experience is

largely the same for all the companies. Also, since the retailers are the sales people here, the

intangible aspect is also irrelevant.

5.5 GE Model Analysis

The GE model takes into consideration two major variables, the business strength of the

company and its market attractiveness. Both these variable account for quantitative as well as

qualitative variables.

1. Introduction 27

Business Strength

Table 3. GE Model Business Strength Rating

Serial no. Factors Weight Rating (1 to

5)

Value

1 Company Reputation 0.20 5 1.00

2 Retailer Commission 0.15 3 0.45

3 Market Share 0.10 4 0.40

4 Advertisement 0.15 5 0.75

5 Push Sales 0.15 3 0.45

6 Cost 0.10 1 0.10

7 R & D 0.05 5 0.25

8 Availability 0.05 4 0.20

9 Capacity 0.05 4 0.20

Total 1.00 3.80

Explanation:

1. Swan has been selling a diverse range of products for a long time. They also have high

availability and a long running TV advertisements.

2. Swan gives a moderate commission to its retailers. Some of the competitors like Karmo

give more commission while other companies like Tiger/Sleepwell give less.

3. According to Swan and the retailers, Swan and Karmo have almost similar market share.

Each company claimed to be the market leader. Almost half the retailers claim that Swan

is the market leader while the other half claim that Karmo is the market leader.

4. Swan gives more advertisement compared to its competitors. Also its ads have been here

for a long time. It gives ads in TV, newspaper, billboards and frescoes.

5. Mattress sales are largely dependent on retailer push sales. Among the retailers surveyed,

most of them preferred pushing other brands in comparison to Swan.

6. Swan admitted that compared to other companies, they had the highest cost.

1. Introduction 28

7. Among the local mattress companies, only Swan has an organized R & D department.

Most types of mattresses were pioneered by Swan in Bangladesh.

8. All retailers sell Swan. Swan is available in the maximum number of places.

9. Swan has a very large production capacity. However, they fail to deliver their products to

their customers on time.

Market AttractivenessSerial no. Factors Weight Rating (1

to 5)

Value

1 Target Market Size 0.15 3 0.45

2 Sales Promotion Requirement 0.15 1 0.15

3 Dependency on Retailer 0.15 1 0.15

4 Annual Market Growth Rate 0.10 2 0.20

5 Competitive Intensity 0.10 1 0.10

6 Consumer Income Level 0.10 3 0.30

7 Substitutes 0.05 4 0.20

8 Complementary Products Sales 0.05 4 0.20

9 Consumer Awareness 0.10 4 0.40

10 Entry/Exit Barrier 0.05 2 0.10

Total 1.00 2.25

Table 4. GE Market Attractiveness Rating

Explanation:

1. Swan claims that their target market starts from the middle class and moves upwards.

Also they said that they focus on urban areas and upper class buyers of towns. They did

not define the income range of a middle class. New entrant’s interest in entering into this

market hints toward a huge market potential.

1. Introduction 29

2. Consumers generally have very little information about mattresses. Swan claimed that

promotion is directly related to increasing sales. So, companies are extremely dependent

promotion on sales.

3. All retailers claimed that sales were completely dependent on them. Also, Swan and

Karmo admitted that retailers were vital for sales.

4. The market for mattresses is very small.

5. The number of competing companies in the market is very large. Also, the market is

heading towards specialization. For example, Coirex is the leader for coir mattresses,

while Eurasia is the leader for felt mattresses. Also there are a number of new entrants.

6. We could not reach any conclusions since it requires extensive customer survey. Swan

claimed that there is still enough money in the consumer’s hand but it is shrinking day by

day.

7. There is an only one major substitute product namely local felt mattress (Jajim).

8. Bed is Mattresses complementary product. Currently, beds are being sold with mattresses

in Mirpur - Shawrapara region.

9. Consumers are aware of mattresses. In general mattress is a symbol of social class. But

there is a lack of awareness about product quality and product type.

10. There is some entry/exit barriers but still there 4 big new entrants.

Strategy for Swan Mattress

A total of 3.80 on business strength and 2.25 on market attractiveness puts Swan mattress on

Protect and refocus strategy

Protect and Refocus Manage for current earnings Concentrate on attractive segment Defend strength

1. Introduction 30

Relative Market Share

Market Growth Rate

High Growth Rate

Low Growth Rate

Negative Growth Rate

Star Question Mark

Cash Cow Under-developed

Orphan Dead

Low Market ShareHigh Market Share

5.6 Extended BCG Matrix

Swan Mattresses

Market Growth Rate : Low

Market Share : High

Position : Cash Cow

Explanation : Swan Mattress as a whole is facing low growth because its spring and

foam mattress markets are falling. However it is booming in the re-bonded mattress section. It

has very high market share.

1. Introduction 31Figure 6. The BCG Matrix

Swan Spring Mattresses:

Market Growth Rate : Negative

Market Share : High

Position : Orphan

Explanation : Retailers as well as Swan said that the demand for Spring Mattress has

fallen but they both said that it still has one of the biggest market shares.

Swan Coir Mattresses:

Market Growth Rate : Negative

Market Share : Data Insufficient

Position : Data Insufficient

Explanation : Retailers said that the market share of Swan Coir Mattress is falling but

Swan said that their sales are rising. Swan has not been able to give a proper estimate of their

market share.

Swan Re-bonded Mattresses:

Market Growth Rate : High

Market Share : High

1. Introduction 32

Position : Star

Explanation : Swan as well as their distributor’s claims that re-bonded mattress is

their star product. They are the only producer in Bangladesh and thus hold almost all of the

market share.

Swan Foam Mattresses:

Market Growth Rate : Negative

Market Share : High

Position : Orphan

Explanation : Sales of Foam mattress is very low in the summer, so appropriate data

was hard to get. Overall growth rate is negative because of the introduction of new products.

Swan still holds the highest market share in the foam mattress market.

5.7 Porter’s Five Forces Analysis for Swan Mattress

New Market Entrants

Entry ease/barrier: The initial investment is very high but the market is very big. So, this

market attracts big investment players such as Akhter Furniture, Bengal Group, OTOBI, and

Curl-on Mattress.

Geographical Factors: The recent entrants have some form of geographical specialization.

For instance, LOCO coir Mattress Company specializes in selling in the Chittagong region.

Only Swan and Karmo has extensive network in most of Bangladesh. Most other companies

1. Introduction 33

still have untapped areas. Eurasia has mattresses in Dhaka and Khulna. There network in the

other divisions are not that strong.

New Entrant Strategy: The last big new entrant was Coirex. They focused on Specialization

into coir mattresses. Currently they have a very good image about their coir mattresses in the

market.

Routes to Market: Swan uses three routes to the market.

1. For corporate buyers, they sell directly via personal negotiation. This includes their

sales with OTOBI.

2. For Distributors, they sell their mattress to their distributors who sell to the retailers.

3. They also have 33 Marketing executives roaming around Bangladesh. They find

potential distributors or retailers.

These are three potential routes to market that the new entrants can avail.

Buyer Power

Buyer size/number: Since mattress is a luxury product, the number of buyers is very limited

in Bangladesh as it is costly compared to the available substitutes.

Bargaining leverage: In a particular market, there is very little option for bargaining.

However, the prices vary from area to area. Such as, elephant road markets sell at a lower

price than the gulshan markets.

Product differentiation: Consumers have more than one choice for mattress types.

Buyer incentives: None of the companies provide any incentives for returning customers.

Price sensitivity: In a retail market in a particular area, the prices of the different brands of

mattresses are the same. So, there is no option for price sensitivity in relation to brands.

Substitutes available: There is only one significant substitute, which are the local felt

mattresses.

Product/Technology Development

1. Introduction 34

Alternatives’ price/quality: The local felt mattresses are very cheap compared to the factory

mattresses. However, they are not as long lasting as the factory ones.

Fashion and trends: Coir mattresses are becoming very popular with older customers. Also,

foam mattresses are rapidly declining in demand due to health hazards.

Potential alternatives: There are many different types of mattresses in other countries not

sold in Bangladesh.

Supplier Power

Supplier concentration: There are only two suppliers of coir mattresses in Bangladesh. For

the other types, most of the raw materials are imported from China.

Geographical coverage: Since communication in Bangladesh is sufficient, so coverage is

not an issue in this regard. Most of the raw materials are imported in Chittagong port, so the

coverage is similar for all the competitors.

Competitive Rivalry

Number and size of firms: There are many small and big players in the market.

Industry size and trend: The market is not that big. The industry is growing but at a very

low rate.

Costs: There is a huge establishment cost, but unit costs are not very high.

Products ranges: There are many different types of products like spring, coir, felt, re-

bonded, foam, etc.

Differentiation: The perceived differences are made by the retailers and the advertisements.

The companies claim quality differentiation but customers are largely unaffected by it

according to retailers.

1. Introduction 35

5.8 Conjoint Matrix

The data for the conjoint matrix could not be collected because the customers could not be

identified. The retailers did not have any database and because the product has a huge lifetime

so one customer could tell us about one brand at a time.

6. Strategies

6.1 Goal Setting

There are problems with the organization goals of Swan Industries. They subjectively set the

targets for each month. They have incentives for people who achieve their targets and

punishment systems if they fail to reach 80% of their target mark. However, the goals are

largely unrealistic and seldom met. Also, the company does not take into account the

variability of sales on a per month basis, even though the management recognizes that there

are some off-seasons. As a result, the employees are not motivated enough to achieve the

organization targets.

Also, they assign sales quotas on retailers and dealers. They have 15% commission on sales

below target and extra commissions for every unit sold above target. This sales quota is often

1. Introduction 36

Problem Identification:

Unrealistic periodic targets

Limited production capacity

Retailer Dissatisfaction

Proposed Strategy:

Goal Setting

very unrealistic to attain. Also, the 15% commission is the lowest amongst all the other

competitors. So, the retailers are largely de-motivated to sell Swan products. So, retailers try to

push brands with higher commission rates.

So, realistic goals need to be defined. This will not only help improve employee performance

but also serve as the benchmark against which employee performance can be evaluated. For

this purpose, sales forecasting needs to be done. If sales are predicted accurately, then realistic

targets can be set for the firm, retailers and the employees will be motivated to work harder.

Also, if employees can actually achieve their targets and get the associated benefits, the

turnover rate of employees will also decrease.

From the retailers, realistic targets will ensure achievement of goal if they give proper effort.

Then they can get the extra incentive regularly. This will motivate them to sell Swan products.

Survey on 22 retail outlets has shown that almost all retailers have dissatisfaction over Swan’s

commission. But, the commission cannot be changed because the price of the market is set

according to Swan’s product prices. If, Swan cut down their price, the competitors immediately

respond to place themselves below Swan’s price.

‘Proposed Goal Setting Method

Table 5. Yearly Forecasted Sales

Table 6. Periodic Forecasted Sales

1. Introduction 37

Period Beginning of the year Forecasting

January-March 120% of actual sales of the last period of previous year

April-June 80% of projected sales of the first period this year

July-September 90% of projected sales of the first period this year

October-December 95% of projected sales of the first period this year

Period Per Period Forecasting

January-March 120% of actual sales previous period

April-June 80% of Actual sales of the previous period

July-September 115% of Actual sales of the previous period

October-December 105% of Actual sales of the previous period

We are proposing to implement a quarterly Goal Setting strategy. In their sales graph, we can

see a vague cyclic pattern. There are two rises in the sales graph of most of their products. One

starts from around November and goes downhill towards the February. Then there is a spike of

sales during June-July. To broadly incorporate these changes, we propose a quarterly sales

target setting. For each quarter, the per-month target should be fixed. For that purpose, we

have analyzed the re-bonded mattresses sales data and came up with these ratios. Some of the

actual analysis is given below

1. Introduction 38

Month Actual Sales(in Thousand CFT)

AverageQuarterly Sales

(In Thousand CFT)

Projected Quarterly Sales(In Thousand CFT)

2007January 1.22 February 1.77 3.05 Base YearMarch 3.05 April 3.13 May 2.89 2.66 2.44June 1.96 July 2.97 August 2.78 2.78 2.74September 2.59 October 2.97 November 3.04 3.11 2.90December 3.30

2008January 3.60 February 4.02 3.66 3.73March 3.36 April 2.59 May 2.47 2.56 2.98June 2.63 July 3.71 August 3.32 3.41 3.35September 3.20 October 2.67 November 3.24 3.27 3.54December 3.88

2009January 4.33 February 3.82 4.03 3.92March 3.95 April 3.20 May 3.42 3.31 3.14

Table 7. Rebonded Mattress Sales Analysis

We have also conducted the chi-square analysis for this data.

ω2=( f o−f e)

2

f e

Degree of Freedom ω2 from the ω2 table at

95% confidence interval

Result

2.04 8 2.73 Accepted

Table 8. Chi-Square Analysis

Currently, Swan Industries have a lot of pending orders for business buyer in both the foam and

the mattress divisions. The negative implications of this scenario are two-fold; firstly, existing

buyers become unhappy, thus hampering future relationships and secondly, Swan Industries

loses out on a lot of potential buyers and orders.

With a proper method of forecasting demand, Swan can find a value of expected sales and thus

adjust their production capacity accordingly.

1. Introduction 39

6.2 Demand forecasting

Mattress is a product which is bought most by people when they are starting a family or moving

into a new home. According to retailers and manufacturers, people buy mattresses mostly

when a wedding is about to take place sometime in the near future.

(See appendix for sales data and histograms)

So, if data can be found which foretells during which months most weddings take place, then

promotional activities can be directed to hit those opportunities. Sales Data shows huge sales in

June-July and in December-January. Interestingly, these are the times when wedding usually

take place.

For this purpose, the propose strategy is to elicit wedding cycle trends by collecting information

from different community centers. Data will be collected from different community centers and

the collective trends will be analyzed to find out the most appropriate time for the promotional

activities. Since people start shopping for weddings a months prior to the event, so promotion

should be highest around that time.

Also, there is a problem that data is not recorded about those orders which are not accepted.

So, the actual demand cannot be fully understood. Swan already employs an operator service.

1. Introduction 40

Opportunity Identification:

High demand seasons

Proposed Strategy:

Demand forecasting of occasions

Change in order receiving method

What we propose is that the operator records every order data before diverting the call to the

sales executive. This way every order data will be recorded even if the executives do not record

it. This will help forecast future demands and prepare production capacities accordingly.

6.3 Memory foam

Swan Industries has the technology and the capacity to manufacture a special type of foam

named Memory Foam (industrial name Visco-elastic foam). The uniqueness of this foam is that

it has therapeutic qualities. People who have orthopedic problems can use this foam to relieve

pain. Since Swan Industries is the only company who produces this product in Bangladesh, this

product has enormous market potential.

To promote this product, Swan should use Public Relations (PR) as the initial marketing

strategy. Doctors who specialize in orthopedics should be provided free samples so that they

can see the beneficial effects of this foam. If the product gives significant benefits to the ailing

patients, then this product could be recommended by doctors to patients, thus increasing

demand and subsequently, sales.

Since Swan already has the machineries for manufacturing memory foam, no extra fixed costs

will be incurred.

1. Introduction 41

Opportunity Identification:

Blue Ocean for therapeutic foam

Proposed Strategy:

Marketing public relations

Project Evaluation

We have analyzed the Project of taking Memory Foam Mattresses. For that we had to calculate

Weighted Average cost of capital = WACC. For Swan Mattresses the WACC=23.52%. The

Calculation is shown below:

Return on Debt rd=14 % Return on Equity re=30 %

Debt/Value d / v=30 % Equity/Value e /v=70 %

Tax Rate t=40 %

Weighted Average

Cost of CapitalWACC=

r d∗(1−t )∗d

v+

r e∗e

v

WACC=23.52 %

Table 9. WACC Calculation

In this project, there are three main cash flows.

1. Cash Inflow = Contribution Margin generated through seller

2. Cash Outflow = Initial Investment

3. Cash Outflow = Tax Effects of All related cash flows

4. Cash Inflow = Tax Benefits of Additional Strategy

5. Cash Outflow = Erosion Effect of Swan Foam

After Calculation, Net return for Memory Foam for two year in Swan is 26.25 Lac. Here, we have

assumed that Memory-foam Mattress will follow the same promotional pattern as their re-

bonded mattress. Also, we took Contribution Margin to incorporate cost into revenues. Total

project evaluation is shown in the next page.

1. Introduction 42

Calculation of Return on Investment for two years

0 Q1-Y1 Q2-Y1 Q3-Y1 Q4-Y1 Q1-Y2 Q2-Y2 Q3-Y2 Q4-Y2

Cost to provide Sample

foams to Doctors

৳

(105,000)

Misc. Cost for Initial

Promotion

৳

(100,000)

Tax Benefits of Cost ৳

82,000

Projected Profits ৳

30,043

৳

525,193

৳

810,164

৳

676,880

৳

898,099

৳

1,187,406

৳

1,240,455

৳

1,385,679

Discounted Profits ৳

5,088,972

৳

28,527

৳

473,543

৳

693,638

৳

550,291

৳

693,305

৳

870,402

৳

863,419

৳

915,847

Tax (40%) ৳

(12,017)

৳

(210,077)

৳

(324,066)

৳

(270,752)

৳

(359,239)

৳

(474,962)

৳

(496,182)

৳

(554,271)

Discounted Taxation ৳

(2,035,589)

৳

(11,411)

৳

(189,417)

৳

(277,455)

৳

(220,116)

৳

(277,322)

৳

(348,161)

৳

(345,368)

৳

(366,339)

10% Erosion Effect on

Swan Super

৳

3,004

৳

52,519

৳

81,016

৳

67,688

৳

89,810

৳

118,741

৳

124,046

৳

138,568

Discounted Erosion

Effect

৳ ৳

2,853

৳

47,354

৳

69,364

৳

55,029

৳

69,331

৳

87,040

৳

86,342

৳

91,585

1. Introduction 43

508,897

Tax Advantage Erosion

(40%)

৳

1,202

৳

21,008

৳

32,407

৳

27,075

৳

35,924

৳

47,496

৳

49,618

৳

55,427

Discounted Tax

Advantage

৳

203,559

৳

1,141

৳

18,942

৳

27,746

৳

22,012

৳

27,732

৳

34,816

৳

34,537

৳

36,634

NPV (Dollar ROI) ৳

2,625,045

Percentage ROI 1380.51%

Table 10. ROI Calculation

NPV =∑ PV of allCashFlows=−105000−100000+82000+5088972−2035589+508897+203559=BDT 2,625,045

Percentage Return on Investment=∑ PV of allCashFlows related ¿ project except initial investment ¿∑ Initial Investments

=82000+5088972−2035589+508897+203559105000+100000

=1380.51 %

1. Introduction 44

6.4 Customer awareness

From the people interviewed and consumer surveys conducted, it was found out that most

consumers know little or almost nothing about mattresses. They are unaware of the types of

mattresses and their qualities and most of the time; their purchase decision is affected by the

retailers who tend to push sale other brands for more profit.

Swan has the biggest portfolio of products. They are the pioneers of most of the different types

of mattresses in Bangladesh. Also, Swan Industries is the only organization which organizes

periodic consumer-manufacturer forums. The most recent of them was held on May 24, 2009.

In these forums, the views and suggestions of the consumers are noted so that they can be

used to improve the quality of the products. Also they supply to various manufacturing giants

such as OTOBI and Akhter Furniture. Swan can use these companies Brand Equity by

mentioning this information in their advertisements. It will be a win-win situation for all of the

companies as Swan itself has a large Brand Equity.

Swan’s advertisements do not reflect their strengths. (See appendix for sample print ad). Most

consumers do not have any knowledge about their consumer-manufacturer forums. For this

reason, our proposed strategy is to redesign their advertisements. If consumers are made

aware of Swan’s advantages over other companies, this can significantly improve their brand

image.

1. Introduction 45

Problem Identification:

Low consumer knowledge

Proposed Strategy:

Revamping advertisements

We also propose that they make specialized advertisements for different product divisions.

Currently, all their advertisements are focused on mass marketing. They try to sell adhesives to

woodworkers with the same advertisement which tells modern high range income group to buy

Swan’s mattresses. This strategy is very unlikely to work.

Proposed Swan Advertisement

Swan Mattresses

Catch Phrase

How far can you go for your best nap? It pays to sleep well. Good sleep, great day.

Supporting Data

Certification related data (Swan has ISO-9001) Famous Suppliers of Swan (Akhter Furniture, Bengal etc) Quality Ensuring data Warranty Information about Forum

Since Swan mattresses already give print ads in newspapers regularly, the new ads will not cause any additional costs.

6.5 Customer retention

1. Introduction 46

Opportunity Identification:

No retention strategies offered by any company

Proposed Strategy:

Exchange offer

Swan Industries is the pioneer in the mattress industry. Although quantitative market share

data could not be determined, according to retailers Swan has the highest market share and

the largest base of existing customers.

Currently, none of the mattress companies have any sort of retention strategy for the

consumers. The old mattresses are made of materials that can be reused and incorporated into

new mattresses.

So, our proposed strategy is introducing an exchange offer for the consumers. They can give

their old mattresses back to Swan and take new mattresses in exchange. This will help retain

old consumers and improve sales.

To develop this strategy, we need the price of the old foam mattress which Swan buys from

others. Also we need the demand state of re-bonded mattress so that we can assess the

amount of leverage we can attain. We have used project analysis to assess the NPV and the

Percentage ROI from this campaign for rebounded Mattress. We only assessed the effect of

retaining foams and selling re-bonded mattresses at a discount. The actual project can retain

foam, rebounded and spring mattresses and sell any mattresses. The discount will be in the

form of a buy-back offer. Discount will be equal to the buy-back rate of the mattress.

This will also have some retailer benefits which will exceed their cost for retaining one of these

old mattresses. This will further motivate them to sell Swan products.

Since almost all competitors still cannot produce Re-bonded mattresses themselves. So, this

move will be hard to mirror for the competitors.

(See overleaf for calculations) Assumptions include:

1. 20% of the required foam for rebounded mattress will come from this retention campaign.

2. Re-bonded mattress price will be fixed at BDT 790 till the second quarter of 2011.3. There will be a 10% synergy effect on sales of mattresses for this campaign.

1. Introduction 47

Table 11. ROI Calculation

0 Q3-Y2009

Q4-Y2009

Q1-Y2010 Q2-Y2010

Q3-Y2010 Q4-Y2010

Q1-Y2011

Q2-Y2011

Cost Retailer advertising ৳(300,000)

Tax Benefit on Cost ৳120,000

Value of Foam Acquired (Cost Saving)

৳359,254

৳ 379,212

৳ 455,055

৳ 364,044

৳ 409,549

৳ 432,302

৳ 518,763

৳ 415,010

Commission ৳(119,751)

৳(126,404)

৳ (151,685)

৳ (121,348)

৳ (136,516)

৳ (144,101)

৳ (172,921)

৳ (138,337)

Cost of Acquisition ৳ (71,851)

৳ (75,842)

৳ (91,011)

৳ (72,809)

৳ (81,910)

৳ (86,460)

৳ (103,753)

৳ (83,002)

Benefits from Campeign ৳ 167,652

৳ 176,966

৳ 212,359

৳ 169,887

৳ 191,123

৳ 201,741

৳ 242,089

৳ 193,671

Discounted Benefits ৳ 1,230,621

৳ 159,195

৳ 159,562

৳ 181,815

৳ 138,115

৳ 147,541

৳ 147,882

৳ 168,506

৳ 128,005

Tax on Benefits ৳ (67,061)

৳ (70,786)

৳ (84,944)

৳ (67,955)

৳ (76,449)

৳ (80,696)

৳ (96,836)

৳ (77,469)

Discounted Tax ৳(492,248)

৳(63,678)

৳ (63,825)

৳ (72,726)

৳ (55,246)

৳ (59,017)

৳ (59,153)

৳ (67,402)

৳ (51,202)

Synergy Contribution Margin

৳ 182,757

৳ 192,910

৳ 231,492

৳ 185,194

৳ 208,343

৳ 219,917

৳ 263,901

৳ 211,121

Discounted Synergy ৳ 1,341,497

৳ 173,538

৳ 173,938

৳ 198,197

৳ 150,559

৳ 160,834

৳ 161,206

৳ 183,688

৳ 139,538

Tax on Synergy ৳ (73,103)

৳ (77,164)

৳ (92,597)

৳ (74,077)

৳ (83,337)

৳ (87,967)

৳ (105,560)

৳ (84,448)

Discounted Tax ৳(536,599)

৳ (69,415)

৳ (69,575)

৳ (79,279)

৳ (60,224)

৳ (64,334)

৳ (64,482)

৳ (73,475)

৳ (55,815)

NPV (Doller return on Investment)

৳ 1,363,271

1. Introduction 48

Percentage ROI 554.42%

NPV =∑ PV of allCashFlows for 2 years=−300000+120000+1230621−492248+1341497−536599=BDT 1,363,271

P ercentage Return on Investment=∑ PV of allCashFlows related t o project except initial investment

∑ Initial Investments=

120000+1230621−492248+1341497−536599300000

=554.42 %

Projected

Quantity

Projected Sales

Volume

Quantity after

Synergy

Sales Volume

after Synergy

Value of Foam

Required

Value of Foam

Acquired

Synergy Quantity

Synergy Sales

Volume

Synergy CM

Q3 -Y2009

10886.48 ৳ 8,600,320

11975.13

৳ 9,460,352

৳ 1,796,269

৳ 359,254

1088.65 ৳ 860,032

৳ 182,757

Q4-Y2009

11491.29 ৳ 9,078,116

12640.41

৳ 9,985,927

৳ 1,896,062

৳ 379,212

1149.13 ৳ 907,812

৳ 192,910

Q1-Y2010

13789.54 ৳ 10,893,739

15168.50

৳ 11,983,113

৳ 2,275,275

৳ 455,055

1378.95 ৳ 1,089,374

৳ 231,492

Q2-Y2010

11031.63 ৳ 8,714,991

12134.80

৳ 9,586,490

৳ 1,820,220

৳ 364,044

1103.16 ৳ 871,499

৳ 185,194

Q3-Y2010

12410.59 ৳ 9,804,365

13651.65

৳ 10,784,801

৳ 2,047,747

৳ 409,549

1241.06 ৳ 980,436

৳ 208,343

Q4-Y2010

13100.07 ৳ 10,349,052

14410.07

৳ 11,383,957

৳ 2,161,511

৳ 432,302

1310.01 ৳ 1,034,905

৳ 219,917

Q1-Y2011

15720.08 ৳ 12,418,86

17292.09

৳ 13,660,74

৳ 2,593,81

৳ 518,763

1572.01 ৳ 1,241,886

৳ 263,901

1. Introduction 49

2 8 3 Q2-

Y201112576.06 ৳

9,935,090 13833.6

7 ৳ 10,928,599

৳ 2,075,050

৳ 415,010

1257.61 ৳ 993,509

৳ 211,121

Table 12. Projected sales figures

1. Introduction 50

7. Conclusion

The market for mattresses is growing at a very slow rate. Recent trends indicate that firms that

specialize in a single type are making profit than larger firms with more diverse portfolios. Also,

the high rate of imitation among competitors is a detriment towards the introduction of new

products. This is because the firms that bear the cost of R&D cannot recover their investment if

their technology is adapted by competitors too quickly. So, the government needs to impose

certain restrictions in this regard.

Swan Industries have the largest resources among the manufacturing firms. If they invest in the

right areas and implement effective strategies, then they should be able to maintain their

position and market share in the long term.

1. Introduction 50

Appendix A – References

Bibliography

Principles of Marketing 10th edition by Philip Kotler and Gary Armstrong

Marketing Management 12th edition by Philip Kotler and Kevin Lane Keller

Foundations of Marketing Theory (2002) Shelby D. Hunt

Bangladesh Bureau of Statistics Year book 2006

Blue Ocean Strategy by W.Chan Kim & Renee Mauborgne

Jack Trout & Steve Rivkin “Differentiate or Die”

John P Maggard“Positioning Revisited”, Journal of Marketing, vol.40 1976

Syed Ferhat Anwar, Sharif RayhanSiddique, Shakil Huda, “ Extending the BCG matrix:

strengthening the Portfolio Analysis, Journal of Business Adminstration, 1998

www.marketingpower.com

www.wikipedia.com

www.valuebasedmanagment.com

List of People Interviewed

Mr. Khabeer Uddin Khan – CEO (Swan Industries)

Mr. Tarin Khan – MD (Swan Industries)

Mr. Ali Ahmed - General Manager Marketing (Swan Industries)

Mr. Md. Hafizur Rahman – MD (Karmo Mattresses)

Mr. Mahbubul Alam – MD (Coirex Mattress Company)

1. Introduction 51

Appendix B– Sample Questionnaire

Company Analysis Questionnaire 1

Mattress Industry Analysis

1. When was the last time you modified your product?

-------------------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------------------

2. What technologies do you use?

-------------------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------------------

3. How long does your product last?

-------------------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------------------

4. Where does the Raw Material (Coir, Fabrics etc) come from?

-------------------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------------------

1. Introduction 52

Important: This survey is being conducted by students of the University of Dhaka for the

course Marketing Management. The data collected will be used solely for educational

purposes.

5. Who are your competitors? Rank Them according to their competitiveness.

-------------------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------------------

6. What type of products do you have?

-------------------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------------------

7. What are their prices?

-------------------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------------------

8. Do you have any control over market prices?

-------------------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------------------

9. Rate your commission in terms of competitors?

-------------------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------------------

10. Rate your dealership network and distribution channels in comparison to your

competitors.

-------------------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------------------

1. Introduction 53

11. What are the Sales Method you employ (check the appropriate box):

Do you sell to Distributors

Do you sell to Dealers Directly

Do you sell to Corporate Buyers

12. Do you sell on Credit?

-------------------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------------------

13. Are you advertising using any form of media? If yes what are the medias, Do you have

any advertising campaign or Media?

-------------------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------------------

14. What is overall company image you want to create in the market?

-------------------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------------------

1. Introduction 54

Company Analysis Questionnaire 2

Mattress Industry Analysis

1. Sort the following factors in terms of your company performance.

Factor Strength Weakness

Company reputation

Market share

Customer service

Customer retention

Product quality

Availability

Sales force

Innovation

Cost

Type of products

Delivery time

Administration

Promotion

1. Introduction 55

Important: This survey is being conducted by students of the University of Dhaka for the

course Marketing Management. The data collected will be used solely for educational

purposes.

2. What are opportunities could your company avail in the future?

-------------------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------------------

3. What factors could become threats to your business in the future?

-------------------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------------------

1. Introduction 56

Consumer Top-of-the-Mind Awareness Survey Questionnaire

Mattress Industry Analysis

1. Name a mattress company.

-------------------------------------------------------------------------------------------------------------------------------

2. What types of mattresses are available in Bangladesh?

-------------------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------------------

1. Introduction 57

Important: This survey is being conducted by students of the University of Dhaka for the

course Marketing Management. The data collected will be used solely for educational

purposes.

Retailer Questionnaire

Mattress Industry Analysis

1. Which do you think is the best mattress brand?

-------------------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------------------

2. If you sell 10 mattresses, what would be ratio of each brand?

-------------------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------------------

3. Do you have any regrets about any brand?

-------------------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------------------

1. Introduction 58

Important: This survey is being conducted by students of the University of Dhaka for the

course Marketing Management. The data collected will be used solely for educational

purposes.

4. Rate the brands?

-------------------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------------------

5. What do the customers ask?

-------------------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------------------

6. In case of commission, rate the brand?

-------------------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------------------

7. In case of sales volume, rate the brand?

-------------------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------------------

8. What brands do you have?

-------------------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------------------

9. What are the new companies?

1. Introduction 59

-------------------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------------------

10. What are the new technologies available?

-------------------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------------------

11. Who gives what benefits?

-------------------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------------------

1. Introduction 60

Extensive Questionnaire for Swan Industries

Mattress Industry Analysis

1. Company profile

a. When did Swan Mattress Start?

b. What products were offered initially?

c. How was each product introduced?

d. What is your organizational hierarchy?

e. How many products do they currently offer?

f. How many employees do you have?(Corporate, Factory, Sales)

2. Product

a. What measures do you take to ensure quality from production to sales?

b. What services do you offer with the product?

c. How do you differentiate your products to customers?

3. Pricing

a. What is Swan Mattresses sales volume? Can we have the data for the past year

b. Can we get a cost breakdown for each type of mattress?

c. What type of market research does Swan Mattress do?

d. How do you decide on the price?

4. Distribution

a. What is your distribution channel (Forward Linkage)?

b. How good is your backward linkage?

c. How much does it cost Swan to distribute?

1. Introduction 61

Important: This survey is being conducted by students of the University of Dhaka for the

course Marketing Management. The data collected will be used solely for educational

purposes.

d. What is your incentive plan?

5. Promotion

a. What Promotional activities to do you have? (Sponsorship, trade fair,

advertisement etc)

b. What packaging do you have?

c. Is your sales force effective? What kind of motivation do you offer for them?

d. What customer retention strategies do you have?

6. Branding

a. How do rate your competitor brands?

b. What measures do you take to ensure brand position?

c. What benefits do you get for your brand?

d. What do you provide for your brand?

7. Competitor Analysis

a. Who are your competitors?

b. Do you know about the competitor’s price and cost?

c. What distribution channels do your competitors use?

d. Who are the new entrants that you know of?

e. What promotional activities do your competitors do?

f. Evaluate the competitor’s product quality in comparison to yours.

g. Do you have company’s sales information?

8. Market situation

a. Did you get hit by global recession?

b. Can you describe your customers in terms of knowledge, buying pattern, taste

etc?

c. What are the characteristics of customers you target(Income, demographics)

d. What are the market trends,(How has customer preferences changed).

1. Introduction 62

Appendix C – Sample Swan Print Ads

1. Introduction 63

1. Introduction 64

1. Introduction 65

Appendix D – Sales Data Analysis

Total Mattress Sales Histogram

1. Introduction 66

January

"07

Febru

aryMarc

hApril

MayJune

July

August

Septem

ber

October

November

December

January

"08

Febru

aryMarc

hApril

MayJune

July

August

Septem

ber

October

November

December

0

1000000

2000000

3000000

4000000

5000000

6000000

7000000

1. Introduction 67

Total Mattress Sales Data

  Sales Of Rebonded Mattress Sales Of T&L Sales Of Spring Mattress Sales Of Coir Mattress Total

  Units Rate Value Units Rate Value Units Rate Value Units Rate Value

January"06 0 650   207.7794 825 171418 6630.582 325 2154939 2821.389 650 1833903

February 0 650   286.1879 825 236105 4430.96 325 1440062 2235.377 650 1452995

March 218 650 141378 169.1806 825 139574 6193.662 325 2012940 2831.852 650 1840704

April 940 650 611265 194.1467 825 160171 5122.932 325 1664953 1855.762 650 1206245

May 1176 650 764445 190.7564 825 157374 6608.874 325 2147884 1336.038 650 868425

June 1686 650 1095786 127.2267 825 104962 3775.16 325 1226927 730.8431 650 475048

July 1907 650 1239327 127.7891 825 105426 5394.828 325 1753319 1601.766 650 1041148

August 2328 650 1513460 124.0315 825 102326 4693.068 325 1525247 1529.245 650 994009

September 1630 650 1059749 125.3358 825 103402 4509.551 325 1465604 1094.003 650 711102

October 1548 650 1006073 68.28121 825 56332 3670.892 325 1193040 1044.452 650 678894

November 1581 650 1027329 205.6788 825 169685 6419.105 325 2086209 1293.885 650 841025

December 1772 650 1151916 223.9442 825 184754 4787.951 325 1556084 2053.64 650 1334866

January"07 1217 700 851875 228.0582 825 188148 4125.197 375 1546949 1602.273 700 1121591 3708563

February 1772 700 1240327 232.7879 825 192050 3542.888 375 1328583 1716.854 700 1201798 3962758

March 3049 700 2134145 213.377 825 176036 3213.955 375 1205233 9.647143 700 6753 3522167

April 3126 700 2188435 302.84 825 249843 3332.968 375 1249863 51.40714 700 35985 3724126

May 2892 700 2024567 242.5042 825 200066 3118.84 375 1169565 685.8829 700 480118 3874316

June 1964 700 1374792 183.8788 825 151700 3046.459 375 1142422 1365.09 700 955563 3624477

1. Introduction 67

July 2966 700 2075912 246.5612 825 203413 4156.144 375 1558554 1714.446 700 1200112 5037991

August 2783 700 1947953 286.857 825 236657 4039.416 375 1514781 1392.156 700 974509 4673900

September 2591 700 1813572 300.3552 825 247793 4097.891 375 1536709 1640.75 700 1148525 4746599

October 2972 700 2080713 258.7733 825 213488 3806.237 375 1427339 1105.473 700 773831 4495371

November 3042 700 2129051 294.4279 825 242903 4845.643 375 1817116 962.7629 700 673934 4863004

December 3302 700 2311077 488.657 825 403142 5402.485 375 2025932 1098.914 700 769240 5509391

January"08 3604 790 2846822 343.0551 925 317326 4986.515 390 1944741 1607.023 815 1309724 6418613

February 4025 790 3179680 274.7762 925 254168 3879.181 390 1512881 1727.125 815 1407607 6354336

March 3362 790 2656189 274.5741 925 253981 4590.656 390 1790356 1415.087 815 1153296 5853822

April 2589 790 2045145 299.9168 925 277423 3534.482 390 1378448 2160.558 815 1760855 5461871

May 2465 790 1947703 248.7232 925 230069 3805.815 390 1484268 1350.75 815 1100861 4762901

June 2632 790 2079107 177.5589 925 164242 3684.821 390 1437080 1384.013 815 1127971 4808400

July 3711 790 2932070 417.2314 925 385939 4548.797 390 1774031 1620.844 815 1320988 6413028

August 3317 790 2620278 236.8768 925 219111 4153.133 390 1619722 1474.917 815 1202057 5661168

September 3204 790 2531293 337.9892 925 312640 4522.659 390 1763837 1762.402 815 1436358 6044128

October 2673 790 2111762 194.1254 925 179566 2420.331 390 943929 1253.499 815 1021602 4256859

November 3241 790 2560463 346.5429 925 320552.2 4868.921 390 1898879 1174.585 815 957287 5737181

December 3884 790 3068270 277.947 925 257101 3310.31 390 1291021 929.173 815 757276 5373668

      62361929     7568886     56589447     37176205

1. Introduction 68

Re-bonded Mattress Sales Histogram

March

May July

Septem

ber

November

January

"07

March

May July

Septem

ber

November

January

"08

March

May July

Septem

ber

November

January

March

May0.00

500.00

1000.00

1500.00

2000.00

2500.00

3000.00

3500.00

4000.00

4500.00

5000.00

Sales Quantity

Re-bonded Mattress Sales Data

  Sales Of Rebonded Mattress Quarter Average (Overall)  Units Rate Value January"06 0.00 650   February 0.00 650   March 217.50 650 141378 April 940.41 650 611265 May 1176.07 650 764445 1267.43 June 1685.82 650 1095786 July 1906.66 650 1239327 August 2328.40 650 1513460 1955.15 September 1630.38 650 1059749

Appendix D – Sales Data Analysis 69

October 1547.80 650 1006073 November 1580.51 650 1027329 1633.50 December 1772.18 650 1151916 January"07 1216.96 700 851875 February 1771.90 700 1240327 2012.55 March 3048.78 700 2134145 April 3126.34 700 2188435 May 2892.24 700 2024567 2660.85 June 1963.99 700 1374792 July 2965.59 700 2075912 August 2782.79 700 1947953 2779.73 104.47%September 2590.82 700 1813572 October 2972.45 700 2080713 November 3041.50 700 2129051 3105.16 111.71%December 3301.54 700 2311077 January"08 3603.57 790 2846822 February 4024.91 790 3179680 3663.58 117.98%March 3362.26 790 2656189 April 2588.79 790 2045145 May 2465.45 790 1947703 2562.01 69.93%June 2631.78 790 2079107 July 3711.48 790 2932070 August 3316.81 790 2620278 3410.82 133.13%September 3204.17 790 2531293 October 2673.12 790 2111762 November 3241.09 790 2560463 3266.03 95.76%December 3883.89 790 3068270 January 4330.40 790 3421016 February 3817.52 790 3015841 4032.03 123.45%March 3948.18 790 3119062 April 3199.62 790 2527700 May 3417.22 790 2699604 3300.00 81.84%

Appendix D – Sales Data Analysis 70

Spring Mattress Sales Histogram

January

"06

March

May July

Septem

ber

November

January

"07

March

May July

Septem

ber

November

January

"08

March

May July

Septem

ber

November

January

"09

March

May0.00

1000.00

2000.00

3000.00

4000.00

5000.00

6000.00

7000.00

Spring Mattress Sales Data

Date Actual Quantit

y

Quarterly

Data

Projected Quantity

E=(fo-fe)^2

E/fe

January"06

6630.58 5460.36 Base Period

February 4430.96March 6193.66April 5122.93May 6608.87June 3775.16July 5394.83 4912.57 5648.56 541692.87 95.8992

3August 4693.07September

4509.55

October 3670.89Novembe 6419.10

Appendix D – Sales Data Analysis 71

rDecember

4787.95

January"07

4125.20 3396.72 4629.57 1519918.94

328.3069

February 3542.89March 3213.95April 3332.97May 3118.84June 3046.46July 4156.14 4391.30 3513.79 770024.69 219.143

5August 4039.42September

4097.89

October 3806.24November

4845.64

December

5402.49

January"08

4986.52 4080.25 4138.33 3374.23 0.815359

February 3879.18March 4590.66April 3534.48May 3805.82June 3684.82July 4548.80 3970.69 4280.97 96271.83 22.4883

3August 4153.13September

4522.66

October 2420.33November

4868.92

December

3310.31

January"09

5855.87 4966.88 3741.95 1500447.58

400.9799

February 4601.59March 4336.92April 5491.55May 4548.47

Appendix D – Sales Data Analysis 72

Coir Mattress Sales Histogram

January

"06

March

May July

Septem

ber

November

January

"07

March

May July

Septem

ber

November

January

"08

March

May July

Septem

ber

November

January

"09

March

May0

500

1000

1500

2000

2500

3000

Coir Mattress Sales Data

Date Actual Quantit

y

Quarterly

Data

Projected

Quantity

E=(fo-fe)^2

E/fe

January"06

2821.389

February 2235.377

2629.54 Base Year

Appendix D – Sales Data Analysis 73

March 2831.852

April 1855.762

250.1208

May 1336.038

1307.55 2018.00 504744.14

June 730.8431

July 1601.766

61.4634

August 1529.245

1408.34 1734.88 106631.83

September

1094.003

October 1044.452

8.024536

November

1293.885

1463.99 1359.54 10909.70

December

2053.64

January"07

1602.273

348.6503

February 1716.854

1659.56 2614.27 911466.26

March 9.647143

April 51.40714

204.9208

May 685.8829

1365.09 2006.28 411129.22

June 1365.09 July 1714.44

6 11.7497

7August 1392.15

61582.45 1724.81 20266.12

September

1640.75

October 1105.473

64.79176

November

962.7629

1055.72 1351.65 87575.69

December

1098.914

January"08

1607.023

48.42013

Appendix D – Sales Data Analysis 74

February 1727.125

1583.08 1885.21 91281.99

March 1415.087

April 2160.558

23.65584

May 1350.75 1631.77 1446.77 34224.68June 1384.01

3

July 1620.844

113.4171

August 1474.917

1619.39 1243.80 141067.89

September

1762.402

October 1253.499

21.38741

November

1174.585

1119.09 974.70 20846.37

December

929.173

January"09

1808.27 35.8439

February 2339.54 2266.00 1998.37 71629.26March 2650.20 April 2380.22 362.788

5May 2178.83 2279.53 1533.62 556378.58

PE Mattress Sales Histogram

Appendix D – Sales Data Analysis 75

January

"06

March

May July

Septem

ber

November

January

"07

March

May July

Septem

ber

November

January

"08

March

May July

Septem

ber

November

January

"09

March

May0

100

200

300

400

500

600

PE Mattress Sales Data

Date Actual Quantit

y

Quarterly

Data

Projected

Quantity

E=(fo-fe)^2

E/fe

January"06

207.7794

February 286.1879

221.05 Base Year

March 169.1806

April 194.1467

8.100178

May 190.7564

170.71 212.17 1718.58

June 127.2267

July 127.7891

44.07372

August 124.031 125.72 225.39 9933.61

Appendix D – Sales Data Analysis 76

5September

125.3358

October 68.28121

24.7231

November

205.6788

165.97 243.57 6021.76

December 223.9442

January"07

228.0582

44.83676

February 232.7879

224.74 144.30 6470.12

March 213.377 April 302.84 3.47162

9May 242.5042

243.07 215.71 748.86

June 183.8788

July 246.5612

10.3814

August 286.857 277.92 229.15 2378.90September

300.3552

October 258.7733

40.09986

November

294.4279

347.29 247.64 9930.16

December 488.657 January"08

343.0551

0.066637

February 274.7762

297.47 301.95 20.12

March 274.5741

April 299.9168

7.8681

May 248.7232

242.07 289.82 2280.33

June 177.5589

July 417.2314

1.691509

August 236.8768

330.70 307.88 520.78

Appendix D – Sales Data Analysis 77

September

337.9892

October 194.1254

10.76356

November

346.5429

272.87 332.71 3581.20

December 277.947 January"09

186.00 37.94877

February 113.51 142.37 237.25 9003.47March 127.59 April 286.08 9.79432

5May 263.81 274.95 227.72 2230.35

Appendix D – Sales Data Analysis 78