BRAC Business School

Internship Report
On

“Forecasting and product allocation process Of LG -

Butterfly Marketing Limited.”
 Submitted to:

Md. Tamzidul Islam

BRAC Business School
BRAC University

Submitted By:

Md. Mahboob Jahan Afrad

ID: 09304060
BRAC Business School
BRAC University

Date of Submission: 29th June, 2014.

To

Md. Tamzidul Islam

BRAC Business School

BRAC University

Subject: Submission of Internship Report

Dear Sir,

This is my pleasure to present my internship report entitled “Forecasting and product

allocation process of LG- Butterfly Marketing Limited.”.

It is my pleasure to inform you that I have already finished my internship in a reputed

organization in LG- Butterfly Marketing Limited. It was an interesting opportunity for me.
The main purpose of this report is to learn about importance of forecasting and allocation process
in electronics sector in Bangladesh. Forecasting and allocation system of electronic sector is very
complicated, because of abnormal demand at unexpected period and also there are environmental
and competitors issues. I have tried my best to prepare this report. This report has been prepared
based on the practical experiences and different ideas obtained during working at “LG- Butterfly
Marketing Limited”.

Therefore I sincerely hope that you will appreciate my effort and I shall be grateful if my report is
accepted for the appropriate purpose.

Yours Sincerely,

Md. Mahboob Jahan Afrad

 Acknowledgement

At first I would like to thank my honorable internship supervisor from BRAC Business School
(BBS), BRAC University, Md. Tamzidul Islam for providing me such an opportunity to prepare
an Internship Report on “forecasting and product allocation process of LG- Butterfly Marketing
Limited”.

I would like to place my gratitude to Mr. K. M Musaddeque Ullah Munna, Manager (Product,
Training & ISM) of LG- Butterfly Marketing Limited, enable me to complete my internship in their
esteemed organization.

During my preparation of the project work I have come to very supportive touch of different
individuals (respondents from LG- Butterfly Marketing Limited) & friends who lend their ideas,
time & caring guidance to amplify the report’s contents. I want to convey my heartiest gratitude
to them for their valuable responses.
 Topic Pages

1. Executive Summary 1

Chapter1 : The Organization

1.1. Overview of LG- Butterfly Marketing Limited 2-3

1.2. History 4

1.3. Management 4

1.4. Corporate vision, mission and values 5

1.5. Products offering with net price 6-8

1.6. Organgram 9

1.7. SWOT analysis 10-11

1.8. Porters five forces model 12

Chapter2 : Job Part

2.1. Description of the job 13

2.2. Specific responsibilities of the job 13-14

2.3. Critical observations and recommendations 15

Chapter3 : Project Part

3.1. Description of the project 16-17

3.1.1. Objective of the project 16

3.1.2. Methodology 16

3.1.3. Limitations 17
 3.2. What is Forecasting and Allocation? 17

3.3. Need of Forecasting and Allocation 18

3.4. Elements of Forecasting and Allocation 18-19

3.5. Key Forecasting and Allocation systems of LG- 20

Butterfly Marketing Limited

3.6. Belt wise showroom planning for product supply 20-21

3.7. Division wise and percentage wise showroom 22-29

category

3.8. Product distribution determining process 30-34

3.8.1. Monthly sales percentage 30

3.8.2. Division wise sales prediction percentage 31

3.8.3. Category wise sales prediction 32

3.9. Transportation of LG- Butterfly Marketing 34

Limited

3.10. Customer Relationship Management 35

3.10.1. Complaint Management System 35

3.10.2. In- Store Merchandising 35

3.10.3. Social Network 35

Chapter4 : Conclusion 36

Chapter7 : Recommendation 37
 Executive Summary

LG- Butterfly Marketing Limited is a one of the largest Bangladeshi industrial conglomerate. This
contributes to growth in national economy of Bangladesh. To bring efficiency and effectiveness
LG- Butterfly Marketing Limited established supply chain management department in 2011.
During that period supply chain management department only control distribution. From 2013
procurement, inventory, production, planning, distribution, depot management administer by
supply chain management department, to minimize the cost and maximize the profit. To
achieve its vision LG- Butterfly Marketing Limited gradually changes their traditional system
to upgrading system. Though it is quite difficult to adapt the new system among the employee, they
should train them in where they are lack behind. In spite of lack behind in few areas, because of
SCM they able to provide superior value to their customer. SCM department did tremendous
performance during the unstable political situation. As an example for the period of strike, they
use rail and cargo trailer to ensure smooth delivery process and instead of day they deliver
product at night to the party end from depot in 2013. Throughout the Bangladesh they established
11 depots under SCM department and increase 67 % by value through increase sales order. In
some cases if they able to adapt with the change in SCM, then LG- Butterfly Marketing Limited
SCM will be the model for Bangladeshi electronics Industry.

1
 The Organization

1.1 Overview of LG- Butterfly Marketing Limited:

The abbreviation of LG is Life’s Good. It is a company which is manufacturing home appliances

for years. Starting from 1987, the company was established with only four people, they have been
showing encouraging growths every year. Each year LG brought new heights to climb and 2007
was no exception. The home appliances which LG manufacturing and merchandising each year are
making peoples life from good to better to best. There business and products are also increasing
day by day. LG started its operation by the collaboration with LG-BUTTERFLY MARKETING
LTD. The founder of this company was M.A.Mannan.

LG’s home country is KOREA. It has also a fascinating market in Bangladesh. In the last year
LG’s sales was BDT 1500 crore only in BANGLADESH. In BANGLADESH LG have 125
showrooms. From which 30 showrooms are only in the capital city DHAKA which are going quite
smoothly. LG is hoping to increase the number of showrooms soon. In BANGLADESH LG is
working as a joint venture with BUTTERFLY. In the last year LG was 4th in tax paying
organization in BANGLADESH. SO, as a whole LG is working as a very profitable organization
which is maintaining the rules and regulation of BANGLADESH government.

2
GENERAL information
CORPORATE HISTORY:

Year of establishment : 1987

Chairman &Managing Director : Mr. M. A. Mannan

Year of operation : 1987

Business Lines : Marketing Home Appliances

Authorized Capital : Tk. 250 million

Paid up Capital : Tk. 100 million

Number of Employees : 2000 persons

Present No. of showrooms : 206

Business Collaboration with : LG Electronics Inc.(Korea)

: Kelon Electronics (China)

Business System : Cash & hire Purchase System

This marketing company sales consumer goods like television, fridge, air condition, DVD, oven,
rice cooker, washing machine, sound system, computer, sewing machine and other consumer goods
with the help of distributors of their own establishment of the company.

3
1.2 History:

Butterfly Group’s first venture Butterfly Marketing Limited was founded in 1987. Having started
with only 3 retail outlets, Butterfly was quick to create a strong place in the customers’ minds
through its first successful product Butterfly sewing machine – a symbol of the ‘emerging middle
class’ in the late 80s. In 1995, Butterfly went through a major rebranding initiative when LG came
into the picture as an affiliate after awarding the company with its distribution rights. In the same
year, the company was made into a public company with other major expansion taking place.
Additionally, the company studied the purchase decision making process and payment behavior of
various customer groups and found that a significant portion of the market aspires technological
advancement in their daily life, yet unable to pay for it upfront. The hire-purchase scheme was well
received with multiplying the customer base within a very short time. Since 2001 Butterfly has
been maintaining the top position in consumer electronics in Bangladesh.
Having operated in the consumer electronics retailing for 25 years as Butterfly Marketing Ltd, the
Group has opted for backward integration in 2012, through the inception of Butterfly Limited,
Butterfly Manufacturing Ltd and Butterfly Industries Ltd. These state-of-the-art manufacturing
facilities are established with the strategic alliance with LG and Hisense - two top performing
global brands. A number of models for LED TVs, Refrigerators and Air Conditioners for these
brands are produced at these facilities today.

1.3 Management

The company has in its Management a combination of highly skilled and eminent employees of
the country of varied experience and expertise successfully led by Mr. M. A. Mannan, a dynamic
person, as its Managing Director and well educated, energetic and dedicated officers working with
missionary zeal for the growth and progress of the organization.

4
1.4 Corporate Vision, Mission, and Values:

Vision:

Butterfly is building a national manufacturing & distribution company, known broadly as the
preferred choice among discriminating individuals, institutions, and key intermediaries, by creating
an environment that attracts the mass consumers in our industry.

Mission:

Butterfly Committed to provide latest state-of-art consumer electronics, home appliances and
energy products to all consumers, their families, businesses and institutions at an affordable pricing
through nationwide distribution network effectively coupled with faster and efficient service
network

5
1.5 Products and services with net price:

LTV/ FTP (Television)

Profit
Article NO. Article Description Brand Net price
Centre
LG LED 3D Cinema
10925 LG LGFPT 59,120
32LA6130
10926 LG LED 32LN5110 LG LGFPT 39,600

10927 LG LED 42LN5110 LG LGFPT 75,295

11014 LG 55EA970T OLED LG LGFPT 885,500

11015 LG 55LA9700 UHD LG LGFPT 460,000

11016 LG 65LA9700 UHD LG LGFPT 667,000

11018 LG 84LM9600 UD LG LGFPT 1,725,000

11024 LG 32LB582B LG LGFPT 58,005

11028 ECO+19EC01 EC ECFPT 14,995

11029 ECO+24EC01 EC ECFPT 18,405

11030 ECO+32EC01 EC ECFPT 26,210

11031 ECO+32EC51 EC ECFPT 27,885

11032 ECO+39EC01 EC ECFPT 39,990

Hisense LED
10839 HS HSFPT 22,310
24K316/LEDN 24K316N

6
REF (Refrigerator)

Profit
Article No. Article Description Brand Price
Centre
10647 LG GC-B40BSSRJ LG LGREF 147,780
10765 LG GL-B282VML(NI) LG LGREF 44,200
10645 LG GR-151SU LG LGREF 19,135
10767 LG GL-B312VML(LI) LG LGREF 47,320
10769 LG GL-G392YM LG LGREF 59,225
10777 LG GC-P207BTQV LG LGREF 196,560
10799 ECO+BCD-183 L EC ECREF 32,545
10989 ECO+ BCD-261(BLUE) L EC ECREF 39,675
10628 Butterfly BD-107A BT BTREF 16,535
10629 Butterfly BD-120 BT BTREF 24,725
10626 Hisense RD-42WR4HA HS HSREF 43,055
10610 Hisense RD-33WR4SA HS HSREF 38,270
10633 Kelon FC-19DD4HA KL KLREF 25,060
10642 Kelon FC-40DD4HA KL KLREF 35,460

7
RAC (Room Air Conditioner)

Type Article No. Article Description Brand Profit share Net price
10791 LG HSU-C1264SA0 (L) LG LGRAC 52,900
Power
10792 LG HSU-C1865SA0 (L) LG LGRAC 67850
cooling
10793 LG HSU-C2465SA0 (L) LG LGRAC 79350
10867 LG BS-Q126BAX4 LG LGRAC 95,680
Inverter 10868 LG BS-Q186CAX2 LG LGRAC 161,200
10871 LG BS-Q246C4AX2 LG LGRAC 175,760
10869 LG HS-C126B4N1 LG LGRAC 59,800
Mosquito
10870 LG HS-C186C4NA LG LGRAC 78,000
away
10971 LG HSN-C1264NN8 L LG LGRAC 59,800
10992 LG HS- C126BUR1 LG LGRAC 62,400
Plasma
10993 LG HS-C186CUR4 LG LGRAC 82,160
10495 Hisense AS- 12CR4FWVNS Hisense HSRAC 46,280
10506 Hisense AS-18CR4FWVNS Hisense HSRAC 63,440
Hisense
10854 Hisense AS-18CR4FWWQ Hisense HSRAC 63,960
10519 Hisense AS-24CR4FTVVL Hisense HSRAC 81,120

MWO (Microwave Oven)

WME (Washing Machine)

Other household equipments

Burners, Rice cookers, LED lamps, Iron, Tea makers, Generators, Motorcycle.

8
1.6. Organgram:

Chairman and Managing

Director

Board of Directors

Director Director Director

Operations Marketing & Finance
Sales

Marke Pro Product, Corporate Retail Sales

ting duct ISM Sales Sales & Supp
Training Showro ort
& oms
Develop
ment

Acco Fina Purc Audi

unts nce has t

SAP & Showroo Logistics HR & Service

IT m Admi Center
Administ HR & n & CIC
ration Administ Finan
ration ce

9
1.7 SWOT Analysis
Strength-

Well recognized brand

Market leader

Wide range of product categories

Established distribution networks

Highly innovative

Greater Customer insight

Attractive features

High product quality

Weakness-

Seasonal demand

Highly priced

Management approach of BML is somewhat unstructured

Low attention about brand building

Low brand perception by customer

Less marketing personnel

Showroom managers have got overconfidence

10
Opportunity-

High growth potential of consumer electronics in Bangladesh

Rising income level

Establishment of new plant

Rapid urbanization

Unexploited rural market

Easy availability of finance

Government has a positive attitude toward technology

More preference of technology by younger generation

Threat-

High import duty

Monsoon has a great impact on purchase

Unstable political situation

Lack of knowledge about technology

Insufficient power supply

Competitors are offering same refrigerator

Competition from Bangladeshi consumer Electronics Company

Low purchasing power of customers

11
1.8 Porter’s Five Forces Model
The porters five forces analysis of LG are:

Bargaining Power of Supplier: bargaining power of supplier is low because LG brings raw
materials from various suppliers.

Bargaining Power of Buyer: There are many competitors in the refrigerators market. But bargaining
power of buyer is moderate because LG uses differentiation strategy and the refrigerators are
technologically advanced.

Threats of New Entrants: Threats of new entrants is low because there is well known existing
competitors in the markets. Fixed cost is higher and has to pay high tax incentives to Government.

Threats of Substitutes: Threats of substitutes is also very low. Because there is hardly any substitute
products of refrigerators. And LG is technologically advanced which also reduces threats of
substitutes.

Competitive Rivalry: Competitive rivalry is high because there are many strong competitors in the
refrigerators market. Samsung is also focusing on technology and fighting with LG to become the
market leader. Walton is doing very well by targeting middle class segment and using emotions of
using country’s product.

12
 Job Part

2.1. Description of the job

Time to time visit the showrooms inside and outside of Dhaka, reporting to the top level management
about their sales, showroom condition, statements of the managers and showroom sales persons,
reporting about competitor’s working.

2.2. Specific responsibilities of the job

- Planning product ranges and preparing sales and stock plans in conjunction with buyers;

- Maintaining a comprehensive library of appropriate data;

- Working closely with visual display staff and department heads to decide how goods should
be displayed to maximize customer interest and sales;

- Producing layout plans for stores;

- Forecasting profits and sales, and optimizing the sales volume and profitability of designated
product areas;

- Using specialist computer software, for example to handle sales statistics, produce sales
projections and present spreadsheets and graphs;

- Analyzing every aspect of bestsellers (for example, the bestselling price points, colors or
styles) and ensuring that bestsellers reach their full potential;

- Maintaining awareness of competitors' performance;

- Monitoring slow sellers and taking action to reduce prices or set promotions as necessary;

- Gathering information on customers' reactions to products;

- Analyzing previous season's sales and reporting on the current season's lines;

13
 - Meeting with suppliers and managing the distribution of stock, by negotiating cost prices,
ordering stock, agreeing timescales and delivery dates, and completing the necessary paperwork(if
needed);

- Identifying production and supply difficulties and dealing with any problems or delays as
they arise; managing, training and supervising junior staff;

- Merchandising of products, furniture, staff, attitude, promotional technique, promotional

materials & other related jobs;

- Creative ideas generation for attracting customers about the product;

- Implementation of ideas to improve the display condition of showroom;

- Continuously preparation of planning how to improve the ISM process;

- Competitor’s showroom visit & update the line manager about their ISM works, showroom
renovation, POP installation & other things which are better than Butterfly;

- BML showroom visit, update staffs’ modification of display & in-house all merchandising;

ISM & Training

- All above & followings….

- Arrange training about Customer Care & Product to increase the performance of overall
sales staffs;

- Plan making for training arrangement;

- MODULE preparation for sales staff’s training;

- Plan making to upgrade every individual of sales about their behavior & product knowledge.

14
2.3 Critical observation and recommendation
After working with LG-Butterfly Marketing Limited my observations are:

 Adequate training for Showroom Staffs

 Salary structure and government holiday
 Inadequate HR policy

As SCM (Supply Chain Management) concept is new for Bangladeshi industry, so most of the
employee does not have proper knowledge about SCM but still the company has its forecasting
and allocation process in their company, they are working in this department. Adequate training
on SCM is very much essential for the Industry because Company can swim or sink with SCM.
There is no standard salary structure in LG- Butterfly Marketing Limited, so some employee get
very poor salary compare to other. It should be structured to motivate employee. During most of
the government holiday employee has to do their office and they do not get any extra benefit. If
company need to open during holiday they should provide proper compensation. In LG- Butterfly
Marketing Limited, they should practice good HR policy for their future growth.

15
 Project Part

3.1 Description of the project

3.1.1 Objectives of the project

The main objective of this project is to have a clear idea about Marketing strategies and product
forecasting and allocation systems.

Understanding the environment, functions and management of the organization for my case it is
LG- Butterfly Marketing Limited.

 Narrating experience in working in LG- Butterfly Marketing Limited.

 To apply theoretical knowledge and relate it with the practical content.
 To learn about forecasting and allocations of LG- Butterfly Marketing Limited.
 To identify the employees attitude towards the customers.

3.1.2 Methodology

Some simple and common methods have been used to carry out in making the report.

Sources of information:

The primary sources are:

 Practical observation
 Face to face conversation with the officers

The secondary sources are:

 Annual report of Butterfly Marketing Limited.

 Companies internal records and data.
 Web site of Butterfly Marketing Limited.

16
3.1.3 Limitations:

The major limitations of this report are as follows:

 Large-scale analysis was not possible due to time constraints.

 Relevant date and document collection were difficult due to the organization confidentiality.

3.2. What is Forecasting and Allocation?

Forecasting and Allocation system is an important part of a company. In order to meet

expectations or target every company need to do these things.

Forecasting: In order to target return on investment (ROI) each and every company need to
do forecasting. It is a systematic way, how the company firstly analysis the product demand, seasonal
demand, customers income factors, living factors and then depending upon these variables fixing a
target of sales, which can be also said as sales prediction.

Allocation: After forecasting process, there are some things to be done to get the forecasted
result or the ROI. In that case company need to do proper allocation of the products. Such as: LG-
Butterfly Marketing Limited has its 206 showrooms. Some are in Dhaka and also some are outside of
Dhaka. A completely new 3D SMART TV launched, the price is near 9, 00,000 BDT. If this product
gave to the showrooms in a village area that would not be a good allocation. This TV should be given
to the Gulshan showroom. Where this type TV customers frequently visit. Here transportation is also
important.

17
3.3 The need for Forecasting and Allocation

In the past, most organizations did little to e v a l u a t e a c t u a l f o r e c a s t i n g a n d a l l o c a t i o n .

Instead, they tended to concentrate on their own operations and on their immediate suppliers.
However, a number of factors make it desirable for business organizations to actively manage
their forecasting and allocation.

The major factors are:

• The need to improve operations

• Increasing levels of outsourcing
• Increasing transportation costs
• Competitive pressures
• Increasing globalization
• Increasing importance of e-commerce
• The complexity of supply chains
• The need to manage inventories

3.4 Elements of Forecasting and Allocation

Supply chain management involves coordinating activities across the forecasting and allocation
process. Central to this is taking customer demand and translating it into corresponding activities at
each level of the forecasting and allocation process. The key elements of forecasting and allocation
process are listed in the following table

Element Typical Issues

Customers Determining what products and / or services customers want.

Forecasting Predicting the quantity and timing of customer demand.

Design Incorporating customers, wants, manufacturability, and time to

market.

18
Capacity Matching supply and demand.
Planning
Processing Controlling quality, scheduling work.

Inventory Meeting demand requirements while managing the

costs of holding inventory.

Purchasing Evaluating potential suppliers, supporting the needs of

Operations on purchased goods and services.

Suppliers Monitoring suppliers quality, on time delivery, and flexibility,

Maintaining supplier relations.

Location Determining the ___location of facilities.

Logistics Deciding how to best move information and materials.

19
3.5 Key forecasting and Allocation systems of LG- Butterfly Marketing
Limited:
Drivers of Supply Chain at LG

Planning: The decision of which model of which product is distributed to the showroom
and how many refrigerators a showroom can get depends on:

Demand Forecast: LG with Butterfly Marketing Limited forecast demand about which
model are needed by the customers.

Sales Forecast: LG Electronics with BML do monthly sales analysis of LG refrigerators

and take a snap of which refrigerators models are selling more.

Sourcing: Only Butterfly Marketing Limited has the exclusive right to distribute product
of LG. BML uses both direct and indirect network to distribute refrigerators.

Direct Network: BML has 206 showrooms all over the Bangladesh to distribute LG
products

Indirect Network: BML has 300+ mixed dealers and many other sub dealers.

Delivery and Transportation: BML has own pick up van to ship refrigerators to
customer house. When refrigerators demand is high, BML has to rent pick up van to transport
LG refrigerator to customer.

Information Technology: LG has a robust information technology infrastructure which

provides critically important support services to all the departments. For example: by using SAP,
company is getting the sales information, product information, inventory information and can
communicate with all the employees of the company.

3.6 Belt wise showroom planning for product supply:

Belt1 Belt- 2 Belt- 3 Belt- 4

Gazipur 12 Manikgonj- 1 Kishorgonj- 2 Madaripur- 1

Munshigonj- 1 Narsingdi- 2 Gopalgonj-1

Narayangonj-5 B. Baria- 2 Shariatpur- 1

20
 Belt- 5 Belt-6 Belt- 7 Belt-8 Belt-9

Rajbari- 1 Tangail-3 Sherpur1 Rangpur3 Gaibandha3

Faridpur-2 Shirajgonj-3 Jamalpur1 Dinajpur6 Joypurhat1

Pabna-3 Mymensing4 Lalmonirhat1 Naogaon2

Netrokona1 Kurigram1 Chapainowabgonj1

Nilfamari-2 Rajshahi5

Thakurgaon-
Natore2
1

Ponchogor-1 Bogra7

Belt-10 Belt- 11 Belt 12 Belt 13

Barishal-2
Shatkhira2 Kushtia- 2 Jessore- 5
Jhalakathi- 1

Khulna6 Meherpur- 1 Narail- 1 Pirojpur- 1

Bagerhat1 Chuadanga- 1 Magura- 1

Potuakhali- 1
Jhinaidah- 4 Bhola- 1

Belt 14 Belt 15 Belt 16 Belt-17

Comilla- 6 Feni- 1 Cox’s Bazar- 3 Sylhet- 4

Chandpur- 2 Noakhali- 2 Chittagong- 11 Moulovibazar-3

Laxmipur- 1 Rangamati- 1 Hobigonj- 2

Khagrachori- 1
Shunamgonj-1

21
3.7 Division wise and Percentage wise of showrooms categorized:

Total Showrooms
60

50

40

30

20 Series 1

10

0
Diamond- Platinum- Gold-29 Silver- 31 Bronze- 33 Copper- 53 No
20 30 category-
10

Category Quantity Percentage

Diamond 20 0.097087379
Platinum 30 0.145631068
Gold 29 0.140776699
Silver 31 0.150485437
Bronze 33 0.160194175
Copper 53 0.257281553
No category 10 0.048543689
Total 206 100%

22
25
Dhaka Division Copper, 22

20
Bronze, 17
Platinum, 16
15 Silver, 14
Gold, 12

10 Diamond, 9

5
No category, 2

0
Diamond Platinum Gold Silver Bronze Copper No category

Category Quantity Percentage

Diamond 9 10%
Platinum 16 17%
Gold 12 13%
Silver 14 15%
Bronze 17 18%
Copper 22 24%
No category 2 2%
Total 92 100%

23
7
Rajshahi Division
Platinum, 6
6
Copper, 5
5
Diamond, 4
4
Gold, 3 Bronze, 3
3
Silver, 2
2
No category, 1
1

0
Diamond Platinum Gold Silver Bronze Copper No category

Category Quantity Percentage

Diamond 4 17%
Platinum 6 25%
Gold 3 13%
Silver 2 8%
Bronze 3 13%
Copper 5 21%
No category 1 4%
Total 24 100%

24
12
Chittagong Division
Copper, 10
10

8
Silver, 7

4
Diamond, 3 Platinum, 3 No category, 3
Gold, 2 Bronze, 2
2

0
Diamond Platinum Gold Silver Bronze Copper No category

Category Quantity Percentage

Diamond 3 10%
Platinum 3 10%
Gold 2 7%
Silver 7 23%
Bronze 2 7%
Copper 10 33%
No category 3 10%
Total 30 100%

25
3.5
Sylhet Division
Bronze, 3 Copper, 3
3

2.5

1.5
Gold, 1 Silver, 1 No Category, 1
1

0.5
Diamond, 0 Platinum, 0
0
Diamond Platinum Gold Silver Bronze Copper No Category

Category Quantity Percentage

Diamond 0 0%
Platinum 0 0%
Gold 1 11%
Silver 1 11%
Bronze 3 33%
Copper 3 33%
No category 1 11%
Total 9 100%

26
3.5
Barishal Division
Copper, 3
3

2.5

1.5
Diamond, 1 Silver, 1 Bronze, 1
1

0.5
Platinum, 0 Gold, 0 No category, 0
0
Diamond Platinum Gold Silver Bronze Copper No category

Category Quantity Percentage

Diamond 1 17%
Platinum 0 0%
Gold 0 0%
Silver 1 17%
Bronze 1 17%
Copper 3 50%
No category 0 0%
Total 6 100%

27
8
Gold, 7 Khulna Division
7
Copper, 6
6

4
Platinum, 3 Silver, 3
3
diamond, 2 Bronze, 2
2
No category, 1
1

0
diamond Platinum Gold Silver Bronze Copper No category

Category Quantity Percentage

Diamond 2 8%
platinum 3 13%
Gold 7 29%
Silver 3 13%
Bronze 2 8%
Copper 6 25%
No category 1 4%
Total 24 100%

28
6
Rangpur Division
Bronze, 5
5

Gold, 4 Copper, 4
4

Silver, 3
3

Platinum, 1 No category, 1
1

Diamond , 0
0
Diamond Platinum Gold Silver Bronze Copper No category

Category Quantity Percentage

Diamond 0 0%
Platinum 1 6%
Gold 4 22%
Silver 3 17%
Bronze 5 28%
Copper 4 22%
No category 1 6%
Total 18 100%

29
 3.8 Product distribution determining process:
Company distributes the products time to time and at approximate estimation. This assumption
prepared based on some variables. As Butterfly has 206 showrooms so it is little bit complex to
estimate that which product will be given to whom and how many quantities. Though the total
process occurred on assumption but there are some forecasting processes:

For latest RAC (Room Air- Conditioner):

3.8.1 Monthly sales percentage:

Total units to be sold 20000

Month Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Total

% of
1% 3% 15% 15% 16% 18% 15% 5% 5% 4% 2% 1% 100%
prediction

Unit 200 600 3000 3000 3200 3600 3000 1000 1000 800 400 200 20000

4000
3600
3500 3200
3000 3000 3000
3000

2500

2000

1500
1000 1000
1000 800
600
400
500 200 200
0
Jan Feb March April May June July August Sept Oct Nov Dec

Monthly Sales target

30
3.8.2 Division wise sales prediction percentage:

Total units to be sold 20000

DHK
Divisions BSL CTG DHK City KHL RAJ RNG SYL Total

% of
1.23% 9.05% 14.21% 50.60% 6.93% 11.53% 3.77% 2.68% 100.00%
prediction

Unit 246 1810 2842 10120 1386 2306 754 536 20000

12000
10120
10000

8000

6000

4000
2842
2306
1810
2000 1386
754 536
246
0
Barishal Chittagong Dhaka Dhaka City Khulna Rajshahi Rangpur Sylhet

District wise % of sales

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3.7.3 Category wise sales prediction:

Total units to be sold 20000

Category Diamond Plati Gold Silver Copper Bronze Iron Total

% of
prediction 27.87% 19.67% 17.86% 13.67% 10.26% 5.69% 4.98% 100.00%

Unit 5574 3934 3572 2734 2052 1138 996 20000

Category wise
6000 5574

5000
3934
4000 3572

3000 2734
2052
2000
1138 996
1000

0
Diamond Platinum Gold Silver Copper Bronze Iron

Category wise

Above mentioned system show how the products be classified in the time of allocation. Here
shown that the huge sales occurred in Dhaka city and Diamond category showrooms. It also
varies from area to area. As an example, about RAC and Smart TV’s allocation process most
preference will give to Dhaka cities platinum showrooms. Because the purchasing power and the
population is increasing. But in the other hand, in Bogra or Mymensing there are also Diamond

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and Platinum showrooms but there purchasing power of customers for RAC is low, but it is high
for REF(Refrigerator) or for LED TVs.

Year Variables Amount (Pieces)

2011 Sales 13500
2012 Sales 13800
2013 Sales 8000
2014 Prediction 20000

Reasons:

2011 & 2012:

In these years sales were increasing, because of the living standard is increasing. That time
political condition was stable etc.

2013:

A delay shipment occurred and company couldn’t make its customers product demand. That time
also political condition was also unstable and people didn’t want to spend money.

2014:

In this year company took so many variables and upon these variables it estimated a target of
20000 units. These variables are political condition became good, demand of last year’s
fulfillment, environment prediction (March, April, May, June, July, August)- in this time periods
temperature will be so hot. And most importantly this year the shipment occurred at the perfect
time.

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 25000

20000
20000

15000 13500 13800

12000

10000 8000

5000

0
2010 2011 2012 2013 2014

Sales/year

Though Butterfly made a sales above in 2011, 2012, 2013 and it was decreasing, but sill it took a
target of selling 20000 pieces RAC in 2014. Because company found that in 2013 the sale of
8000 quantity occurred because of having late receiving of stocks and they couldn’t reach to
their target. So in this year they targeted 20000 because of the summer duration, they mainly
targeted for the months of April, May, June, July, August. And they achieved their target within
June.

3.9 Transportation Network of LG

Transportation network of LG refrigerators is retail Storage with customer pickup. In this
network customers are came to the showroom of LG Butterfly, choose refrigerator type and
model, and finally place an order to buy. Refrigerators are then sent to customer’s house with the
pickup van of LG Butterfly or arranging external pickup van. Customers have to bear the
transportation cost.

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3.10 Customer Relationship Management

3.10.1 Complaint Management System

The ISM team of Butterfly Marketing Limited has its own complaint management system. The
customers or expected customers can know their answers and queries by calling the CIC
department. And the internal problems of the showrooms, complains and queries of the Floor
Sales Persons and Managers are solved by the ISM team. And those data’s collected and noted
down and further those are informed to the management.

3.10.2 In- Store Merchandising

After entering at LG-Butterfly showroom, customers get a charm feeling. This is because
showroom is decorated in a way that gives customers happy feeling. The merchandizing at LG-
Butterfly showroom done by two ways:

Product Merchandizing: In the showroom, there is different section for each product category.
For example: Refrigerators are kept in the area of refrigerator section. Product information and
price tag are placed on the each product. As a result, customers can get quick idea about
products. Products are kept in the showroom is free from dust.

Manpower: The sales forces of the showroom are well trained and well mannered. They are
always there to help customers. They always welcome customers and brief the product facility
and show usage instruction to customers. They have to maintain a dress code (Brown, Off white,
Blue) to show the unity of the company.

3.10.3 Social Network

LG uses social network to reach customers. It has a facebook fan page, in which customer can
get the product, price and company information, can know about the new promotional campaign,
can comment about the functions of the LG refrigerators, can share feelings and can also
comment.

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 Conclusion
LG is a dominant player in the consumer refrigerator market in Bangladesh. LG is known as a
people company, which concentrates to create value for customers as well as people. It provides
customized products and creative solution through smart technology that creates a perfect
harmony to the life of customers. In Bangladesh, LG has low brand awareness than other
countries. So, LG is now concentrating on brand building activities to raise its brand awareness
and is focusing more on innovative marketing strategies rather than aggressive selling. LG has
started to follow the ERRC (Eliminate, Reduce, Raise and Create) rule. This means eliminating
unnecessary things, reducing existing standards that is below industry standards, raising existing
standards that is above industry standards, and creating something by following blue ocean
strategy. It has established a factory with its distributor BML in Valuka, which will contribute a
lot in the economy of Bangladesh and customer will also get customized and localized products
at a lower cost. So, at last it can be mentioned that LG has a greater future in Bangladesh.

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 Recommendation:

Forecasting and Allocation process in LG- Butterfly Marketing Limited should be approached
in a more systematic manner based on integrated and documented processes. The various
supply chain components like suppliers, manufacturers, warehouses and stores should be
integrated in a single system, which will makes forecasting and allocation system more
effective. The team involved in the operational side on handling the supply chain should be
highly trained in supply chain management function.

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