Poor market research and other issues
Tuesday, 31 March 2009
Ferdous Alam
Market studies or research to establish demand pattern of products are essential preconditions for the establishment of industries. Private sector can initiate their own such research. The government can also play a valuable role in this regard by collecting and disseminating such information. But cases are noted in Bangladesh where entrepreneurs rush to invest in a particular sector to produce in excess of demand. This is the outcome of lack of market research on their part or the inability of the relevant government departments to supply data on the demand situation. This renders many industries in such a sector not viable even in the short term.
Before a product is launched, a lot of pre-launch activities should go into its designing, innovation in relation to products from rival producers-especially foreign ones-- and adding of new features to create customer appeal. Even packaging of a local product can cause more attraction for it in relation to its imported or smuggled versions. But industries in Bangladesh, in varying degrees, are still seen lagging behind in many cases in following these standard procedures to remain competitive in the market. Thus it is no surprise that the local industries in many cases go down in the competition vis-à-vis foreign products that seem to offer greater advantages to customers in terms of price, quality or innovative features.
Even in the areas of marketing, there are scientific promotional policies to be followed. There are many companies in Bangladesh that start off without feeling the need of having an adequate marketing plan in the first place. For such enterprises, the maintenance of a properly staffed and equipped marketing department, thus, is of secondary importance. Ensuring of product quality or quality control also figures poorly in the operation of some enterprises. But success in businesses these days, aiming for either the local or the international market, involves having streamlined policies and sufficient capacities for new product development, market research, quality control and sound marketing plans.
Bangladeshi entrepreneurs would do well to start giving very serious thoughts from now on to these issues and doing whatever things need to be done to remain and flourish in business on a sustainable basis.
The weaker performance of the manufacturing sectors is also the consequences of lack of attention to many other factors which have nothing to do with the existing entrepreneurs or intending ones. The most prominent among these factors is the high cost of funds. The lending rates of banks and other financial institutions are exceptionally high in Bangladesh. The same must be decreased to create a major stimulus for businesses. Frequent policy changes are never good for industrial investment. Investments in industries occur from assurances of stability or continuity in favourable official policies.
The existing manufacturing units are hard-pressed as it is to sustain viably in operation in many cases due to the unreliability and insufficiency of power and gas and other infrastructural weaknesses and bottlenecks. Fiscal policies that in many cases facilitate marketing of foreign products here at the cost of locally produced ones, the law and order conditions with extortionist activities against mainly business or manufacturing enterprises, low labour and capital productivity, bureaucratic obstructions, corruption, etc., form the list of disincentives to manufacturing in the country. The presence of a huge and ever-growing black economy-- or smuggling--is another formidable impediment to local manufacturing activities.
Clearly, ad-hoc governmental policies or uncoordinated steps will not lead to a revival of, or improvement in, conditions for local manufacturing. Each factor linked to underperformance of the manufacturing sector needs to be analysed and acted upon thoroughly. Only then, an overall improvement in the performance of the manufacturing sector can be expected and many more jobs will be created to ease the pressure of unemployment.
Market studies or research to establish demand pattern of products are essential preconditions for the establishment of industries. Private sector can initiate their own such research. The government can also play a valuable role in this regard by collecting and disseminating such information. But cases are noted in Bangladesh where entrepreneurs rush to invest in a particular sector to produce in excess of demand. This is the outcome of lack of market research on their part or the inability of the relevant government departments to supply data on the demand situation. This renders many industries in such a sector not viable even in the short term.
Before a product is launched, a lot of pre-launch activities should go into its designing, innovation in relation to products from rival producers-especially foreign ones-- and adding of new features to create customer appeal. Even packaging of a local product can cause more attraction for it in relation to its imported or smuggled versions. But industries in Bangladesh, in varying degrees, are still seen lagging behind in many cases in following these standard procedures to remain competitive in the market. Thus it is no surprise that the local industries in many cases go down in the competition vis-à-vis foreign products that seem to offer greater advantages to customers in terms of price, quality or innovative features.
Even in the areas of marketing, there are scientific promotional policies to be followed. There are many companies in Bangladesh that start off without feeling the need of having an adequate marketing plan in the first place. For such enterprises, the maintenance of a properly staffed and equipped marketing department, thus, is of secondary importance. Ensuring of product quality or quality control also figures poorly in the operation of some enterprises. But success in businesses these days, aiming for either the local or the international market, involves having streamlined policies and sufficient capacities for new product development, market research, quality control and sound marketing plans.
Bangladeshi entrepreneurs would do well to start giving very serious thoughts from now on to these issues and doing whatever things need to be done to remain and flourish in business on a sustainable basis.
The weaker performance of the manufacturing sectors is also the consequences of lack of attention to many other factors which have nothing to do with the existing entrepreneurs or intending ones. The most prominent among these factors is the high cost of funds. The lending rates of banks and other financial institutions are exceptionally high in Bangladesh. The same must be decreased to create a major stimulus for businesses. Frequent policy changes are never good for industrial investment. Investments in industries occur from assurances of stability or continuity in favourable official policies.
The existing manufacturing units are hard-pressed as it is to sustain viably in operation in many cases due to the unreliability and insufficiency of power and gas and other infrastructural weaknesses and bottlenecks. Fiscal policies that in many cases facilitate marketing of foreign products here at the cost of locally produced ones, the law and order conditions with extortionist activities against mainly business or manufacturing enterprises, low labour and capital productivity, bureaucratic obstructions, corruption, etc., form the list of disincentives to manufacturing in the country. The presence of a huge and ever-growing black economy-- or smuggling--is another formidable impediment to local manufacturing activities.
Clearly, ad-hoc governmental policies or uncoordinated steps will not lead to a revival of, or improvement in, conditions for local manufacturing. Each factor linked to underperformance of the manufacturing sector needs to be analysed and acted upon thoroughly. Only then, an overall improvement in the performance of the manufacturing sector can be expected and many more jobs will be created to ease the pressure of unemployment.