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Master of Business Administration

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50

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MBA 7003

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Marketing Assignment 02

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ACQUISITION OF AMARON BATTERY BY


BROWN & COMPANY PLC

Student Name

Cardiff ID Number

ICBT ID Number

CL/Cardiff MB/

Subject

Marketing

Subject code

MBA 7003

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Table of Content
Table of Content...................................................................................................................... iv
Table of Figures......................................................................................................................vii
List of Tables ........................................................................................................................ viii
Executive Summary ................................................................................................................ ix
Abbreviations ........................................................................................................................... x
1.

Introduction ...................................................................................................................... 1
1.1

1.1.1

Vision ................................................................................................................... 2

1.1.2

Mission................................................................................................................. 3

1.1.3

Company Structure .............................................................................................. 3

1.2
2.

The Brown & Company PLC ...................................................................................... 1

Klevenberg Pvt Ltd. .................................................................................................... 4

Acquisition ........................................................................................................................ 4
2.1

Brand - AMARON ...................................................................................................... 5

2.2

Product - Battery ......................................................................................................... 5

2.3

Company - Samudhi Tyre Traders (Pvt) Ltd .............................................................. 6

3.

Objectives.......................................................................................................................... 7

4.

Overview of Battery Industry ......................................................................................... 8


4.1

Current Position of the Brand and Market size (Volume and Value) ......................... 8

4.2

Strategy Curve ........................................................................................................... 10

4.2.1

Product Life Cycle ............................................................................................. 12

4.3

Consumer Behavior ................................................................................................... 13

4.4

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

4.5

Value Propositions and Market Shares of Competitors ............................................ 15

4.6

Current Pricing .......................................................................................................... 16

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4.6.1
5.

6.

7.

Current Performances ........................................................................................ 17

Environmental Analysis ................................................................................................ 18


5.1

Value Chain Analysis ................................................................................................ 18

5.2

PESTEL Analysis ...................................................................................................... 19

5.3

Porters Five Forces Analysis ................................................................................... 21

5.4

SWOT Analysis......................................................................................................... 22

5.5

TOWS Matrix............................................................................................................ 23

Marketing Strategy ........................................................................................................ 24


6.1

Ansoff Matrix for Existing AMARON Products ...................................................... 25

6.2

Segmenting, Targeting and Positioning (STP) .......................................................... 26

6.2.1

Segmenting ........................................................................................................ 26

6.2.2

Targeting ............................................................................................................ 28

6.2.3

Positioning ......................................................................................................... 29

6.3

Strategic Market Positioning for Second Year .......................................................... 30

6.4

Positioning Statement................................................................................................ 30

6.5

Satisfy Consumer Needs ........................................................................................... 30

Marketing Mix ............................................................................................................... 31


7.1

Product ...................................................................................................................... 31

7.2

Price........................................................................................................................... 33

7.3

Place .......................................................................................................................... 34

7.4

Promotion .................................................................................................................. 36

7.5

People ........................................................................................................................ 37

7.6

Process ....................................................................................................................... 37

7.7

Physical Evidence ..................................................................................................... 38

7.8

Execution plan ........................................................................................................... 39

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8.

Projected Financial Budget ........................................................................................... 40


8.1

9.
10.

Projected Financials .................................................................................................. 41

Performance Evaluation and Monitoring .................................................................... 42


Conclusion ................................................................................................................... 43

References ............................................................................................................................... 44

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Table of Figures
Figure 1.1 - Business Sectors ..................................................................................................... 1
Figure 1.2 - Financial Highlights ............................................................................................... 2
Figure 1.3 - Company Structure................................................................................................. 3
Figure 2.1 - Steps for Acquisition .............................................................................................. 4
Figure 2.2 - Model for Acquisition ............................................................................................ 5
Figure 4.1 - Market Share of Main Two Players ....................................................................... 9
Figure 4.2 - Revenue Share of Main Two Players ..................................................................... 9
Figure 4.3 - Profit of Main Two Players .................................................................................. 10
Figure 4.4 - Strategy Curve of AMARON and EXIDE ........................................................... 10
Figure 4.5 - Perceptual Map..................................................................................................... 11
Figure 4.6 - Product Life Cycle of the AMARON and EXIDE ............................................... 12
Figure 4.7 - Competitor Analysis............................................................................................. 14
Figure 4.8 - Key Current Players of Battery Market ............................................................... 15
Figure 4.9 - Monthly Sales of the AMARON.......................................................................... 17
Figure 5.1 - SWOT Analysis ................................................................................................... 22
Figure 5.2 - TOWS Matrix....................................................................................................... 23
Figure 6.1 - Porters Generic Strategy ..................................................................................... 24
Figure 6.2 - Ansoff Matrix for Existing AMARON Products ................................................. 25
Figure 6.3 - Positioning Map ................................................................................................... 29
Figure 7.1 - Province Vice Main Dealer Points ....................................................................... 34
Figure 7.2 - Sample Advertisement in Rajagiriya Main Gantry .............................................. 36
Figure 7.3 - Summarized Marketing Mix ................................................................................ 38
Figure 9.1 - Performance Evaluation ....................................................................................... 43

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List of Tables
Table 3.1 - Future Business Forecast of AMARON .................................................................. 7
Table 4.1 - B2B and B2C Attributes of the Consumer Behavior ............................................ 13
Table 4.2 - Battery Brands and Market Share.......................................................................... 16
Table 4.3 - Market Prices Comparison of Main Three Players ............................................... 16
Table 5.1 - Value Chain Analysis of the BCP ......................................................................... 18
Table 5.2 - PESTEL Analysis .................................................................................................. 19
Table 5.3 - Porters Five Forces Analysis ................................................................................ 21
Table 6.1 - Segmentation of the AMARON Product ............................................................... 26
Table 6.2 - Sales Contribution from the Vehicle Market......................................................... 27
Table 7.1 - Available AMARON Product ............................................................................... 32
Table 7.2 - Vehicle Registration with Vehicle Types .............................................................. 33
Table 7.3 - Price Comparison and New Price for AMARON ................................................. 34
Table 8.1 - Budget and Execution Plan ................................................................................... 40
Table 8.2 Projected Profit and Loss Statement ..................................................................... 41
Table 9.1 - KPIs for the Next Two Years ................................................................................ 42

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Executive Summary
Lanka ORIX Leasing Company PLC (LOLC) has emerged as successful expanded business
entity within very short period. The company started its operation in 1980 with a partnership
of ORIX Corporation Japan. In 2010 LOLC PLC transformed as the holding company of
diversified set of companies, including financial services, information technology, fleet
management, manufacturing, trading, leisure, power generation and plantations.
In 1960 acquisitions and new beginnings as the Company acquires Hoare & Company with
Associated Battery Manufacturers (Ceylon) Ltd begins commercial production of automotive
batteries. The Non-Financial sector of the LOLC Group, led by Brown & Company PLC. The
Browns Group manufacture UK brand of EXIDE and LUCUS batteries in Sri Lanka and
Klevenberg Pvt Ltd is a subsidiary of BCP and currently selling LUCUS battery through this
company.
Sale or acquisition is a part of a business. AMARON is popular car battery brand in India.
Amara Raja Batteries Limited (ARBL), in collaboration with Johnson Controls Inc., USA.
An automotive battery is a rechargeable battery that supplies electric energy to an
automobile. In Sri Lanka, Samudhi Tyre Traders (Pvt) Ltd is selling AMARON batteries.
Due to the management dispute of the company, Browns is interested to acquire AMARON
brand to capture the huge market share with the existing market leadership.
According to the current market share analysis, 46% captured by EXIDE. Browns and
Company leads the market with EXIDE, LUCUS and DAGENITE brands. AMARON enter
in to the market with new product development and holds 22% market share from the battery
market. As per the porters generic strategy model, BCP is adopting a mass differentiation
strategy in order to gain the competitive advantage in the battery market. Ansoff matrix it is
recommended to adopt market penetration to cater existing market for next year. After one
years recommended to develop new product to cater the hybrid car market with new
development strategy.
With the perfect segmentation, targeting and positioning process and marketing mix, after the
acquisition, the company can increase market share immediately. End of two years, main
objective is to increase top-line up to Rs. 1.1 Bn and bottom line up to Rs. 152 Mn to fulfill
the final objective of the Browns Group.
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Abbreviations
ARBL

Amara Raja Batteries Limited

BCP

Brown & Company PLC

CFOR

Competitive Firm of Reference

CRM

Customer Relationship Management

DC

Dry Charge

FY

Financial Year

GDP

Gross Domestic Product

KPI

Key Performance Indicators

LOLC

Lanka ORIX Leasing Company PLC

MF

Maintenance Free

POD

Point of Different

STPL

Samudhi Tyre Traders (Pvt) Ltd

VAT

Value Added Tax

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1. Introduction
In the present dynamic business environment, only a small number of companies operate as
diversified business entities in Sri Lanka. Lanka ORIX Leasing Company PLC(LOLC) has
arisen as successful expanded business entity within very short period. The company started
its operation in 1980 with a partnership of ORIX Corporation Japan. In 2010 LOLC PLC
transformed as the holding company of diversified set of companies, including financial
services, information technology, fleet management, manufacturing, trading, leisure, power
generation and plantation. The LOLC Group comprises of 87 divisions, 19 joint venture
companies and 11 equity accounted associates. The consolidated total assets of the LOLC
Group as at 30th March 2016 were Rs.379 Bn and the total equity of the Group was Rs. 57
Bn. Figure 1.1 depicts business areas of the LOLC Group. The Brown & Company PLC is a
subsidiary of the LOLC Group with 54.54% Control holding.
Figure 1.1 - Business Sectors

LOLC Group
Financial
Services

Agriculture
&
Plantations

Renewable
Energy

Leisure

Construction

Manufacturin
g & Trading

Informatio
n Services

Source: LOLC Annual report 2014/15

1.1

The Brown & Company PLC

In 1960 the company acquires Hoare & Company with Associated Battery Manufacturers
(Ceylon) Ltd, commence commercial production of automotive batteries. The Non-Financial
sector of the LOLC Group, led by Brown & Company PLC and Browns Investment PLC,
strengthened its position by tapping into new customer segments and further diversifying its
product range post strategic restructuring in 2014. Browns group is the only battery
manufacturer in Sri Lanka. The Browns Group manufacture UK brand of EXIDE and

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LUCUS batteries in Sri Lanka. Apart from Browns brands, AMARON, Yuasa, and Inco,
Global are playing key role in the battery market. India, China, Korea and Indonesia are main
importers of foreign batteries. Figure 1.2 depicts financial highlights of the BCP. EXIDE has
more than 800 dealers Network Island wide and out of it 268 maintains exclusivity.

Figure 1.2 - Financial Highlights

Source: Brown & Company PLC, Annual Report 2015/16

1.1.1 Vision
To be a leading Sri Lankan conglomerate excelling through sunshine industries with a global
presence and cutting edge technology.

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1.1.2 Mission
With generations of trust and reliability, our aim is to continuously enhance the value
propositions to our stakeholders through innovative and customer-centric solutions.

1.1.3 Company Structure


The Browns Group is one of the most diversified conglomerate in Sri Lanka with 50 plus
subsidiaries and associates more focused on trading and strategic investments. Figure 1.3
shows broad level company structure.

Figure 1.3 - Company Structure

Source: LOLC Annual report 2015/16

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1.2

Klevenberg Pvt Ltd.

Klevenberg Pvt Ltd is a subsidiary of BCP and currently selling LUCUS battery through this
company.

2. Acquisition
Sale or acquisition is a part of a business. The acquisition can divide in to main two
categories such as brand acquisition and company acquisition. Due to various reasons,
company perform acquisitions with the intention of develop the business. Before acquire a
band or company required to evaluate three things. The first step is to incorporate a brand
assessment into the due diligence process. The main target of brand assessment is to
understand about fundamental value/potential baggage of the acquisition. Once developed a
baseline understanding of the brand and product current position, required to evaluate
tangible assets, operations, financials etc. If the evaluation stage indications to move forward
with the acquisition, need to finalize proper transition plan.

Figure 2.1 - Steps for Acquisition

Source: CMG, 2015

Following model can be used for brand acquisition and AMARON acquisition falling under
Segment and attractive brand category. Main target is to increase the profit share of the
company from the battery segment.

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Figure 2.2 - Model for Acquisition

Source: CMG, 2015

2.1

Brand - AMARON

AMARON is popular car battery brand in India and Amara Raja Batteries Limited (ARBL),
in collaboration with Johnson Controls Inc. United States. ARBL is the largest manufacturer
of batteries in the Indian Ocean Rim region.

2.2

Product - Battery

An automotive battery is a rechargeable battery that supplies electric energy. Automotive


batteries can categorize as commercial vehicles, passenger vehicles, two wheelers and farm
vehicles. In addition to vehicles, batteries are using for solar power systems, generators,
invertors, etc. As a result of 6.5 Mn registered vehicles in Sri Lanka, there is a huge demand
for vehicle batteries.

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2.3

Company - Samudhi Tyre Traders (Pvt) Ltd

In Sri Lanka, Samudhi Tyre Traders (Pvt) Ltd is selling AMARON batteries. Samudhi Tyre
Traders (Pvt) Ltd is a small company in Colombo, Sri Lanka and import AMARON batteries
from India. They have only 15 main dealers in Central Province, Noth Western Province,
Southern Province, Sabaragamuwa Province and Western province.

Due to the management dispute of the company, Indian manufacture ARBL is looking for
another company to continue future imports and business. The management of the Samudhi
Tyre Traders (Pvt) Ltd also offering to sell AMARON brand for Sri Lankan company. BCP is
interested to acquire AMARON brand to capture the huge market share with the existing
market leadership.
Due to the agreement sign by Browns and EXIDE, BCP cannot acquire AMARON brand
directly from the STPL. Therefore, recommended to acquire AMARON brand through the
Klevenberg Pvt Ltd.

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3. Objectives
Objective is to provide marketing perspective to the consultation team with two years of
future cash flows via a well-constructed marketing plan. This marketing plan is given to
achieve 29% market share with Rs. 1 Bn turnover within next two years. Table 3.1 shows
future forecast with units, market share, revenue and profit.

Table 3.1 - Future Business Forecast of AMARON


Details

FY

Units

Market
Share

Revenue
(Rs.Mn)

Profit
(Rs.Mn)

Previous
Year

2015/16

143,916

22%

814

116

This Year

2016/17

156,999

24%

912

125

1st Year

2017/18

170,083

26%

1,003

138

2nd Year

2018/19

189,707

29%

1,103

152

Source: The Author

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4. Overview of Battery Industry


The battery market is divided in the main into two categories such as imported batteries and
locally manufactured batteries. EXIDE, LUCUS, AMARON and PANASONIC batteries are
playing key role in the battery market. Batteries can be further divided into two sub
categories based on the battery technology such as Maintenance Free (MF) and Dry Charge
(DC). MF batteries are imported ones and currently 80% of the demand in Sri Lanka is for
MF batteries. Initially PANASONIC and AMARON grab the market share with MF batteries.
At that time, EXIDE was a market leader and with the MF battery technology, AMARON
grab the market share. Browns also produce EXIDE and LUCUS maintenance free batteries
to cater Sri Lankan market. With the financial strengths of the Browns Group, EXIDE remain
market leadership with the 46% market share.

4.1

Current Position of the Brand and Market size (Volume and Value)

The current market can divide into few sections of automotive, non-automotive and
motorcycle batteries. Approx. 60,000 batteries are being replaced every month in Sri Lanka.

Total Market size

720,000 units p.a.

Total no. of registered vehicles in the country

6.5 Mn

Average market growth

10%

Current market leader holds 46% of the market share and AMARON holds 22% market share
of the battery industry. 1 in 2 households have motorized transport of the country. With the
acquisition of the AMARON brand Browns will hold 75% of the market with the 7% market
share of the LUCUS battery. Figure 4.1 depicts the market share analysis of main two
players. Figure 4.2 depicts the revenue share of EXIDE and AMARON. Figure 4.3 shows
profit distribution from 2011 to 2016. According to the current situation analysis, AMARAN
grab the market share very fast and decreasing from 2015. comparing to the 2011, AMARON
captured huge market share from the existing market.

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Figure 4.1 - Market Share of Main Two Players

Market Share of EXIDE vs AMARON


60.00%
50.50%

50.50%
46.00%

50.00%

46.00%
42.00%
37.00%

EXIDE

40.00%

Market Share
Volume (Exide)

30.00%
30.00%
20.00%

23.00%

22.00%

17.00%

10.00%
10.00%

8.00%

0.00%

2010/11

2011/12

2012/13 2013/14
Year

2014/15

2015/16

Source: Browns Group internal resource

Figure 4.2 - Revenue Share of Main Two Players

Revenue Share of EXIDE vs AMARON


2500

2000

1961

1923
1703

1500

1702
1400

1295

1000
1,050
500

629
311
2010/11

814

767

381
2011/12

2012/13

EXIDE - Revenue Share (Mn)

2013/14

2014/15

2015/16

AMARON - Revenue Share (Mn)

Source: Browns Group internal resource


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Figure 4.3 - Profit of Main Two Players

Profit of EXIDE vs AMARON


450
400

381

350

366

300

277

260

250

205

200
150

100
50

96

60

72

2010/11

2011/12

218
177
132

112

2012/13

EXIDE - Profit (Mn)

2013/14

2014/15

2015/16

AMARON - Profit (Mn)

Source: Browns Group internal resource

4.2

Strategy Curve

According to the strategic cove of main two players in the industry, the management can fine
tune values accordingly. Need to improve after sales service of the AMARON battery. Those
are the key area to focus in future business. Figure 4.4 shows strategy cove of main players.
Figure 4.4 - Strategy Curve of AMARON and EXIDE

Source: Browns Group internal resource

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Customer perception on after sales, delivery reliance, price and technical quality were
measured for EXIDE and its main competitor AMARON. Customers recognize EXIDEs
name, it is after sales service and delivery reliance above AMARON, but in quality and price
are higher in AMARON than EXIDE.Figure 4.5 dipects perceptual map for baterry industry.

Figure 4.5 - Perceptual Map

Source: Browns Group internal resource


Figure 4.5 reveals key main battery brands positions against price and quality parameters. It
clearly shows that there are few brands ahead of EXIDE in quality. AMARON shows high
position in price and quality because of the maintenance free technology.

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4.2.1 Product Life Cycle


Under product life cycle, market leader (EXIDE) is in the maturity stage and AMARON in
the growth stage. After the acquisition, need to grow AMARAN product as well. Figure 4.6
shows product life cycle of the AMARON and EXIDE batteries in Sri Lanka.

Figure 4.6 - Product Life Cycle of the AMARON and EXIDE

EXIDE

AMARON

Source: Browns Group internal resource

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4.3

Consumer Behavior

As a business very important to understand the consumer behavior of the business, it will
help to meet consumer needs effectively. Table 4.1 depicts the B2B and B2C attributes of the
consumer behavior.

Table 4.1 - B2B and B2C Attributes of the Consumer Behavior


Attributes

Business to Consumer (B2C)

Business to Business (B2B)

Who are the customers

Vehicle owners, individuals


who do not have an electricity

Garages, vehicle service


centers and workshops

Which Product they


expect

Quality product with warranty,


reputed brand and company

Fast & quality product with


good client management.

Why they want

For vehicles, generators

To fulfill their customer


needs

When they obtain

When death the vehicle battery Based on the business


or generator battery
requirement

Where does they buy

Dealer points and special


outlets

Deliver it to the place

Source: The Author

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4.4

Competitor Analysis

There are few main players in the battery industry. BCP plays major role in the market. They
have already captured huge market through the EXIDE and LUCUS brands. With the
acquisition of the AMARON brand no major players to compete with them. Figure 4.7
shows, direct and indirect competitors of the market.

Figure 4.7 - Competitor Analysis


Direct Competition

Indirect Competition
\

Source: The Author

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4.5

Value Propositions and Market Shares of Competitors

According to the current market share analysis, 46% holds by EXIDE and Browns leads the
market with EXIDE, LUCUS and DAGENITE brands. AMARON enter in to the market with
new product development and holds 22% market share from the battery market. Figure 4.8
and Table 4.2 shows key current players of the battery market with their market share.

Figure 4.8 - Key Current Players of Battery Market

Key Current Players of Battery Industry


Global
3% Inco
4%

Dagenit Others
2%
3%
Yuasa
5%

Lucas
7%

Exide
46%

Panasonic
8%
Amaron
22%

Source: Browns Group internal resource

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Table 4.2 - Battery Brands and Market Share


Brand
Country of Origin
Sri Lanka (UK brand)
EXIDE
AMARON
India
Panasonic
Japan
Lucas
Sri Lanka (UK brand)
Yuasa
Indonesia
China/Indonesia
Inco
Global
Korea
Dagenit
Sri Lanka
Others
China
Source: Browns Group internal resource

Market Share
46%
22%
8%
7%
5%
4%
3%
2%
3%

According to the table BCP provides UK brands from Sri Lanka. They import only 30% of
raw materials and manufactured in Sri Lanka.

4.6

Current Pricing

Due to the government taxes, imported batteries are more expensive than the local batteries.
Table 4.3 depicts the current market prices of main three players in the industry.

Table 4.3 - Market Prices Comparison of Main Three Players


Battery

EXIDE

12V 100Ah
12V 150Ah
12V 100Ah
12V 40Ah
12V 140Ah
12V 140Ah
12V 74Ah
12V 75Ah
12V 85Ah
12V 70Ah
12V 45Ah
12V 35Ah
12V 9Ah
Source: Industry Date

53,191
33,316
33,232
26,752
26,735
26,735
26,248
19,940
19,940
18,960
11,820
10,560
4,945

LUCUS
54,255
33,982
33,897
27,287
27,270
27,270
26,773
20,339
20,339
19,339
12,056
10,771
5,044

AMARON
55,851
34,982
34,894
28,090
28,072
28,072
27,560
20,937
20,937
19,908
12,411
11,088
5,192

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4.6.1 Current Performances


With the maintanance free browns product of EXIDE and LUCUS, in February and July
there is a sales drop. Figure 4.9 shows current performance of the comay via monthlly sales
of the AMARON.

Figure 4.9 - Monthly Sales of the AMARON

Monthly Sales by AMARON


For the year 2016
20,000
17,250
15,800

15,000

16,000

14,800
13,000

12,000
12,000

7,500

8,000

4,000

Jan-16

Feb-16

Mar-16

Apr-16

May-16

Jun-16

Jul-16

Source: STPL Internal Source

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5. Environmental Analysis
To prepare a good marketing plan, required to analysis internal and external environment of
the company and the product. Recommended to use value chain analysis, PESTEL model
and Porters Five Forces Analysis for environmental analysis.

5.1

Value Chain Analysis

Value chain analysis is used to analyses the internal environment of the business, Table 5.1
shows value chain analysis of the BCP.

Table 5.1 - Value Chain Analysis of the BCP


Factors

Inbound Logistics

Operations

Details

Base station with latest technologies and store facilities. Strong


management and support from the LOLC Group.

Well distribution network with more than 800 distributors.

All HR activities were handled by LOLC group HR team.


Outbound Logistics

System support obtain from the LOLC Technologies (internal


company)
Marketing and sales activities are controlled by the marketing

Marketing and sales

department. Advertising and related promotions are handled by


LOLC group Marcom department.

Service

Have a well-trained service team throughout the country.

Source: LOLC Group Internal Source

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5.2

PESTEL Analysis

PESTEL stands for political, economical, social, technological, environmental and legal and
forms of analysis of the macro-environment of the organization (Thomas, 2007). Table 5.2
depicts PESTEL Analysis of the BCP.

Table 5.2 - PESTEL Analysis


Factors

Impact to the product/ Organization


Inflation rate has come down to a single digit for Agriculture, Industry &
Services

Political

GDP growth rate is decreasing


With the new government it is expected to improve International relations.
India and China will continue to support and will provide funds for
infrastructure improvements.
Import tax rates and Value Added Tax (VAT) fluctuations also impact to the
business.
Countrys inflation rate has reduced to 6% to 7%

Economical

Recently and peoples buying power increased and economy is expected to


recover and GDP growth
North and East, significant business can be expected and will increase future
developments in manufacturing.
Reducing manufacturing costs and increasing income.
Different income distribution among the people
What people believes in values and attitudes makes a big difference of the

Social

purchasing patterns of consumers.


Marketing people need to identify these kind of changing patterns to increase
demand.
With time population is ageing in Sri Lanka and will gradually decline after
peaking in 2025 whereas India and Pakistan have younger population.

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With the progression of technology, such as Customer Relationship

Technological

Management (CRM), Enterprise Resource Planning, distributing products via


internet and online shopping and so on, enable the companies to increase and
gain competitive advantage over their competitors.
Use of new technology generates new products and also creates new market
opportunities.
Technology is a great asset which can reduce costs, improve quality and lead to
invention.
Depletion of natural resources is a major concern because they were used to
develop Materials and manufacture products.

Environmental

Marketing of certain products which will harmful to nature, using harmful


packaging products will lead to environmental pollution.
It is important to protect a countrys own environment, the growing desire of
this is having an important impact on the industries and moving towards more
environmentally pleasant products affect demand patterns and business
opportunities for companies.
Recycling of used batteries is a good effective solution to environmental
pollution which can cause due to releasing waste to environment.
Companies should be clear on the impact of legal environment because of new
laws that has been introduced worldwide.
Legal

Legal changes can affect a firms costs such as if new structures and procedures
have to be developed, the firms cost can be increased.
Sometimes laws effect on the customers. In those cases, buying decision of
goods, the demand of a product may change significantly. Because in the end
its the customer who decide to buy or reject.

Source: The Author

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5.3

Porters Five Forces Analysis

Porter's five forces analysis is a framework that can be used to analyze the level of
competition within an industry/market and business strategy development. Table 5.3 shows
ranking of the porters five forces analysis.

Table 5.3 - Porters Five Forces Analysis


Force

Rank

Threat of new entrance

High

Threat of substitutes

High

Bargaining power of customers

Medium

Bargaining power of supplier

Medium
High

Industry Rivalry
Source: External Analysis

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5.4

SWOT Analysis

Through this model the management can understand strength, weaknesses, opportunities and
threats as an outcome of internal and external analysis. This model will help to identify the
current position of the organization and attention required area to sustain the future business.
Further it will help to improve the future forecast and business. Figure 5.1 shows SWOT
analysis.

Figure 5.1 - SWOT Analysis


Strengths

Weaknesses

Reputed company with over 137 years of


existence
Financially very strong
Management capabilities
24x7 after sale service provider
Islandwide
dealer and distributor
network
Brand awareness
Market Leader
Three reputed brands: EXIDE, Lucas and
Daganite

Compared to international brands (Yuasa,


AMARON) EXIDE is Medium Quality.
No competition in niche markets and Value
for Money category
Comparatively Lower warranty period
given for Browns batteries.
Batteries are not available for hybrid
vehicles
No exclusive contract with the car
manufacturers

Opportunities

Threats

Growth in automobile industry is very


fast
To penetrate into low cost and premium
market (Product diversification)
No one produce batteries for hybrid
market in Sri Lanka
Recycling old battery is huge opportunity
Expansion of after sales service centers
for all over the country
With the increase green energy usage,
opportunity to provide batteries for solar
panels.

Entrance of new importers


Change in battery prices according to the
government regulations
Local brand perception of people
Competitors product more focus in better
quality/technology
E-marketing campaigns may attract
international brands
Hybrid car battery life is higher than the
normal battery.

Source : The Author

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5.5

TOWS Matrix

This tool helps to convert the weaknesses to strengths, threats to opportunities and grab the
opportunities by using current strengths. S-O strategies use to grab the opportunities by using
current strength of the company. W-O strategies use to overcome weaknesses via
opportunities. S-T strategies classify possible ways to use company strengths to decrease
vulnerability to external threats and finally, W-T strategies make a defensive plan to prevent
the firms weaknesses from marking it susceptible to external threats. Figure 5.2 depicts
TWOS matrix.

Figure 5.2 - TOWS Matrix


Strengths

TOWS

SO(Strategies)
Opportunities

Browns

WO(Strategies)

import/manufacture Acquisition of AMARON, quality


factor will increase automatically.
battery for hybrid market.
Company can grant AMARON
Expansion of after sales service
warranty and Browns can
centers for all over the country
maintain company reputation.
LOLC can create contact with
Provide batteries for solar panels.
David Pieris Motor Company
can

ST(Strategies)

Threats

Weaknesses

WT(Strategies)

With the huge market share of the Diversify the business for energy
company, competitors cannot attack
sector as defensive strategy for
hybrid vehicle battery life time.
Increase the awareness of the
Browns products
Protect the new market entrance
with the huge market share
With Group, IT company support
will help to increase the electronic Increase local manufacturing to
marketing
remove the import tax as long run

Source: The Author

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6. Marketing Strategy
After the acquisition with the strong dealer network of the Browns, required to develop good
marketing strategy to increase the top line, bottom line and market share of the product.
Porters Generic Strategy used for marketing strategy. Figure 6.1 shows Porters Generic
Strategy model for AMARON.

Figure 6.1 - Porters Generic Strategy

Source: Porters Generic Strategy Theory

As per the porters generic strategy model, BCP is adopting a mass differentiation strategy in
order to gain the competitive advantage in the battery market. AMARON is a result of mass
differentiation in the technology and it will grab the market with the maintenance free
concept. Therefor it is recommended to continue the same differentiation strategy for the next
two years in the market.

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6.1

Ansoff Matrix for Existing AMARON Products

Ansoff matrix use to analysis the market with products. The company can choose market
penetration, product development, market development or diversification for marketing
strategy. Figure 6.2 depicts Ansoff matrix for MARON product.

Figure 6.2 - Ansoff Matrix for Existing AMARON Products

Year 1

Year 2

AMARON is a new product with MF technology introduced to the existing market.


Therefore, based on Ansoff matrix it is recommended to adopt market penetration to cater
existing market for next year. After one years recommended to develop new product to cater
the hybrid car market with new development strategy.

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6.2

Segmenting, Targeting and Positioning (STP)

6.2.1 Segmenting
Table 6.1 depicts segmentation of the AMARON product market is depicted in table
Table 6.1 - Segmentation of the AMARON Product
Segment-1

Segment-2

Segment-3

Segment-4

Segment-5

Vehicles
including
hybrids

Energy(Solar
power)

Generators

Garages /
vehicle service
centers

Invertors

Geographic
Area

All provinces
of Sri Lanka

All provinces
of Sri Lanka

Western
province,
North western
province,
Central &
Southern
provinces

Climate

All

Dry zone

All

All

All

above 20 to
55

above 35 to
65

N/A

N/A

N/A

Male &
Female

Male &
Female

Limited
Liabilities /
Partnerships

Limited
Liabilities /
Partnerships

N/A

Above
30,000/-

Above
100,000

Above
1,00,000/-

1,000,000/and above

25,000 and
above

All

Upper and
Upper Middle
Class

Upper and
Upper Middle
Class

N/A

Middle Class
and Low Class

Strivers /
Achievers

Achievers

Achievers

N/A

Strivers /
Achievers

All provinces
of Sri Lanka

North Central
province,
Eastern
province and
northern
province

Demographic
Age

Gender
Nature

Monthly Gross
Income
/
Turnover
Psychographic

Social class

Life Style

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All

Ambitious

Aggressive

Very
Aggressive

Ambitious

Convenience

Convenience

Convenience

Reliability

Convenience

User Status

Regular

Regular

Regular

Regular

Regular

Readiness

Cautious &
Aware

Aware

Aware &
Interested

Informed &
Aware

Cautious and
Aware

Personality
Behavioral
Benefits

Under segment 1 mention in the above table 6.1, vehicle market can categorize further
according to the vehicle categories. Table 6.2 shows sales contribution against each vehicle
segment.

Table 6.2 - Sales Contribution from the Vehicle Market


Vehicle Segment

Sales Contribution

Cars

14%

Sports Utility Vehicles (SUV)

14%

Commercial vehicles

18%

3-wheelers

20%

Heavy vehicles/ machineries segment

8%

Marine

4%

Motor cycles

12%

Generators

2%

Domestic use Inverts/Solar

2%

Farm Vehicles

6%

Source: Browns Group internal resource

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6.2.2 Targeting
Based on the current developments and trends in the market segment 3 indicates the highest
attractiveness to the AMARON, MF batteries in the current market. However due to the
financial position of the STPL, unable to grow their business. With acquisition of BCP can
grow further with the financial strength of the Group. AMARON can be focused to segment
2, segment 3 and segment 5 as well. It is recommended to select the segment 1 (vehicle
market) and Segment 4 (business sector) as the target market for AMARON.

Targeting Approach
Undifferentiated
Marketing

Differentiated Marketing

Concentrated Marketing

AMARON has to focus two marketing segments at once as the target market for AMARON
and recommended to adopt penetration approach sine AMORON has the MF quality product
to serving needs of selected segments a short term and medium term Working Capital
solution. After one-year company can target new AMARON HYBRID product to cater the
battery requirement of hybrid vehicles.

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6.2.3 Positioning
According to the segmentation and positioning, figure 6.3 depicts positioning map. Through
the differentiation method target the above segments and position the quality and price high
area.

Figure 6.3 - Positioning Map

Source: Mind Tools, 2014


EXIDE aim to cater lower price and offering benefits to low income level. Rest of the market
will capture via AMARON MF baterry product in the first year. With the new product
deveopment for hybrind car battery market, capture the market via AMARON HYBRID
product. This product also possition to the price and quality high range.

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6.3

Strategic Market Positioning for Second Year

Competitive Firm Of Reference

Point of Different (POD)

(CFOR)
Maintenance free battery
Old

Maintenance free battery


AMARON

New

Maintenance free hybrid battery

The fastest solution for your vehicle battery


AMARON HYBRID

6.4

Positioning Statement

To all vehicle users who need fast solution for vehicle battery,
Browns provide the fastest solution for your requirement

6.5

Satisfy Consumer Needs

Consumers who are with Browns, you can enjoy superior experienced and reliable service
form the Browns outlet all over the country. Majority of the AMARON customers are from
Colombo and Gampaha district. Browns will cover entire country with the strong dealer
network of the Browns group.

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7. Marketing Mix
Required to implement marketing plan with good marketing MIX. Through this section
further describe about product, price, place, promotion, people, process and physical evidence
of the AMARON brand.

7.1

Product

Browns can market AMARON, EXIDE and LUCUS for entire battery market. EXIDE and
LUCUS more familiar for DC or Lithium Cadmium battery. AMARON is more famous for
MF batteries. To take more advantages, recommended to provide all range of batteries to
cater the market for same voltage with different amperes. Currently more focus to provide
high ampere range batteries for heavy vehicles. Will focus two wheelers and three-wheelers
as well. Recommended to import 2.5 Ah, 5.0 Ah and 9Ah for two wheelers and 35 Ah for
three wheelers. Recommended to release battery testers free of charge for main dealers.
Among vehicle segments of batteries, sales of marine segment and motor bike segment can
be further improved. Marine segment contributes only 4% of total sales. Approximately
51,000 registered boats are there. Price of boat batteries varies from Rs.20,000 Rs. 50,000,
price high, profit margin also high. There are 437 fisheries co-operative societies and twelve
fishing harbors are located island wide. Proposes to promote boat batteries via fisheries coop
societies with installment payment plan. Table 7.1 shows, available AMARON product in the
market.

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Table 7.1 - Available AMARON Product


Type

Details

Labels

Passenger Vehicles
(2 1/2 Yrs FULL WARRANTY
+ 2 1/2 Yrs PRO RATA BASIS)
(2 Yrs FULL WARRANTY
+ 2 Yrs PRO RATA BASIS)
(2 Yrs FULL WARRANTY
+ 1 Yrs PRO RATA BASIS)
(1 1/2 Yr FULL WARRANTY)
(1 Yr FULL WARRANTY)
Commercial Vehicles
(1 1/2 Yrs FULL WARRANTY
+ 6 Months PRO RATA BASIS)
Farm Vehicles
1 1/2 Yrs FULL WARRANTY +
6 Months PRO RATA BASIS
Two Wheelers
2 Yrs FULL WARRANTY
Source: Internet

Currently motor bike batteries are marketed via distribution channel. The company grant 2025% margin for distributor and dealer get only 5-10%. Dealers are not motivated to sell
batteries with small discount rate. Proposed to increase motor bike battery sales is directly
supply to dealers with 30% discount. Figure 7.2 shows total vehicle registration with vehicle
types. Highest number of vehicle on roads are motor bike. Therefore, with the above
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mentioned percentages, expected revenue growth is 25% from the total sales. Considering
battery replacements after three years, captured only up to 2013 vehicle registrations. This is
the actual target market for batteries.

Table 7.2 - Vehicle Registration with Vehicle Types

Source: Department of Motor Traffic (2014)

7.2

Price

Compare to the market prices EXIDE maintains low price. AMARON more than 5% - 7%
increase of their prices. Recommended to reduce prices from 1% and market it with
AMARON and browns brand name. With the two year and three-year warranty feature,
distributers can market AMARON batteries for their consumers. Figure 7.3 depicts price
comparison and new price for AMARON

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Table 7.3 - Price Comparison and New Price for AMARON


Battery
12V 100Ah
12V 150Ah
12V 100Ah
12V 40Ah
12V 140Ah
12V 140Ah
12V 74Ah
12V 75Ah
12V 85Ah
12V 70Ah
12V 45Ah
12V 35Ah
12V 9Ah

7.3

EXIDE
53,191
33,316
33,232
26,752
26,735
26,735
26,248
19,940
19,940
18,960
11,820
10,560
4,945

LUCUS
54,255
33,982
33,897
27,287
27,270
27,270
26,773
20,339
20,339
19,339
12,056
10,771
5,044

AMARON
55,851
34,982
34,894
28,090
28,072
28,072
27,560
20,937
20,937
19,908
12,411
11,088
5,192

NEW AMARON PRICE


55,292
34,632
34,545
27,809
27,791
27,791
27,285
20,728
20,728
19,709
12,287
10,977
5,140

Place

With more than 800 dealer network, proposed to market AMARON battery for entire market.
If the market captured by the EXIDE, not going to sell AMARON brand for these locations.
All province will be captured for vehicles, solar and vehicle service centers including
garages. Western province, North Western province, Central & Southern provinces will be
captured for generator batteries and North Central province, Eastern province and Northern
province captured for invertor battery market. Figure 7.1 shows, province vice main dealer
points.

Figure 7.1 - Province Vice Main Dealer Points


Northern Province

North Western Province

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North Central Province

Central Province

Sabaragamuwa Province

Uwa Province

Eastern Province

Western Province

Southern Province

Source: Browns Group Internal Source

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7.4

Promotion

EXIDE promote more than the LUCUS, recommended to promote AMARON with Browns
name to aware the acquisition for the entire country. STPL promote their brand with 250
distribution channel but with the Browns distributor network, BCP can cover huge
geographical area than STPL. Recommended to use ATL marketing through Television,
radio (Gold FM, EFM, Sha and Sirasa FM) and other electronic media such as Facebook and
twitter. BTL through Handouts, Broachers, leaflets, Branch Displays and e-Fliers. In addition
to that recommended to use direct marketing, public promotions, sales promotions during
first three months and reduce to once in two-week basis. Important to promote AMARON
name with the Browns name to grab the attraction of the people. There are three main gantry
points in Colombo. Recommended to advertise on those boards (Dehiwala, Paliyagoda and
Rajagiriya) to grab attention. Figure 7.2 shows, sample advertisement in Rajagiriya main
gantry.

Figure 7.2 - Sample Advertisement in Rajagiriya Main Gantry

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7.5

People

All people can directly or indirectly influence for the product or service, including knowledge
workers, management, employees and consumers. Recommended to arrange large workshop
for all distributers and employees to share the product details and future progress of the
product. Increase the incentives for dealers and distributors. Arrange awareness session for
consumers as well.

7.6

Process

Well monitored process needed with proper quality control. Required to increase quality
control parameters, replace old equipments such as voltage meters and ampere meters.
Increase the efficiency via proper stock management system. Recommended to obtain ISO
quality endorsements for Browns products. Need to increase after sales service through
BATT mobile process enhancements.

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7.7

Physical Evidence

The direct physical experience of a product that permits customer to measure whether
customer has established the value. With the battery recommended to handover information
booklet to improve the awareness about the product. Specially charging and vehicle alternate
outputs.
Figure 7.3 shows the sumarized marketing mix importantlly with 3Ps.

Figure 7.3 - Summarized Marketing Mix

Source: The Author

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7.8

Execution plan

With 46 % current market share and 22% AMARON market share BCP holds major share
from the battery market. Last two to three years Sri Lanka imports vehicle from Japan and
India. At the moment 6.5 Mn registered vehicles are available in the country and more than 5
Mn vehicles were available in 2013. After 2-3 years, required to replace vehicle battery. Main
objective is to target that market and enhance the business.
1. Required to conduct massive marketing camping to spread the acquisition awareness
2. Add all AMARON brands to Browns web site and relevant e-business sites such as
wow.lk, ikman.lk, etc.
3. Educate dealers and distributors
4. Reduce the AMARON current market price from 1%
5. Target to spread AMARON for all over the country
6. Promote AMARON batteries via TV and Radio advertisements
7. Conduct hand bill campaigns and conduct the battery clinic workshops
8. Display Browns battery boards in spare part shops
9. Import new product after one-year time to fulfill the hybrid battery requirement.
10. Advertise new product with new name AMARON HYBRID for Sri Lankan market
11. Provide battery testers free of charge for main dealers
12. Arrange dealer convention of the year end
13. Conduct CSR activates in third equator of each year
14. Arrange handbill distribution campaign continuously
15. Target the vehicle registration offices to obtain the statistic and identify vehicle
registrations to conduct the promotions.

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8. Projected Financial Budget


That will set this brand apart from competition and grow top-line, bottom-line and provide
superior value proposition which would influence acquisition decision. Table 8.1 shows
budgeted expenses for marketing advertisements and execution plan of the budget for next
two years.

Table 8.1 - Budget and Execution Plan


Activities (Rs.)
Brand acquisition campaign
ATL 5 Second advertisements
Advertising on gantry points
CSR campaing
Warranty extensions
Delar Convention
online advertising
Hybrid battery promotion
Handouts
Broachers
Banners for spare part shops
Leaflets
Public promotions

Total

Budget
2017/18
10,000,000,000
15,000,000,000
6,000,000,000
500,000
3,000,000,000
5,000,000,000
1,000,000,000
3,000,000,000
2,000,000,000
3,000,000,000
2,500,000,000
1,000,000,000
51,500,500,000

2017/18
2018/19
Budget
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2018/19
1,000,000,000
20,000,000,000
7,000,000,000
700,000
4,000,000,000
7,500,000,000
2,000,000,000
5,000,000,000
4,000,000,000
2,000,000,000
3,000,000,000
3,000,000,000
2,000,000,000
60,500,700,000

Source: The Author

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8.1

Projected Financials

Table 8.2 depicts the projected profit and loss statement for AMARON batteries for next two
financial years.

Table 8.2 Projected Profit and Loss Statement


Budgeted Profit and Loss Statement
Amount in Rs. '000,000.00
2017/18
2018/19
Revenue
Less : Returns
Less : Cost of Sales
Gross Profit

1,003.00
(20.06)
(787.36)
195.59

1,103.00
(22.06)
(860.34)
220.60

Expenses
Brand acquisition campaign
ATL 5 Second advertisements
Advertising on gantry points
CSR campaign
Warranty extensions
Dealer Convention
online advertising
Hybrid battery promotion
Handouts
Broachers
Banners for spare part shops
Leaflets
Public promotions
Utility Expenses
Statuary payments
Total Expenses

(10.00)
(15.00)
(6.00)
(0.001)
(3.00)
(5.00)
(1.00)
(3.00)
(2.00)
(3.00)
(2.50)
(1.00)
(2.00)
(4.00)
(57.50)

(1.00)
(20.00)
(7.00)
(0.001)
(4.00)
(7.50)
(2.00)
(5.00)
(4.00)
(2.00)
(3.00)
(3.00)
(2.00)
(3.00)
(5.10)
(68.60)

Profit Before Tax

138.08

152.00

Source: The Author


Notes:
1.

It is assumed that 2% of battery returns and 78% of cost of sales

2.

Inflation will not be considered.

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9. Performance Evaluation and Monitoring


Performance will be evaluated mainly by the Key Performance Indicators(KPI) set in the
Objectives. Table 9.1 shows KPIs for the next two years.
Table 9.1 - KPIs for the Next Two Years
KPI

As at 31/03/2018

As at 31/03/2019

Rs.1 Billion

Rs.1.1 Billion

138 MN

150 Mn

2 % increase

3% increase

Brand awareness

50%

75%

Distributor Network

950

1,100

Turnover
Profit
Market Share

Source: The Author

Performance of AMARON will be continuously monitored during the two years.


Performance evaluations of AMARON will be done quarterly, semiannually and annually. In
addition to the KPI, performance will be monitored and evaluated through variance analysis
such as sales volume analysis, marketing cost analysis, etc. Argumentative variances in
performance will be taken in to action immediately and take corrective actions before the
year end. Marketing audit will be conduct once in every six months on following arrears,
1. Organization audit
2. Marketing environment audit
3. Marketing strategy audit
4. Productivity audits
5. Marketing system audit

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Figure 9.1 - Performance Evaluation

According to the figure 9.1 the management can evaluate the performance of the AMARON
and identify the achievement of the company objectives.

10. Conclusion
Two years marketing plan is prepared to increase company profit which is generated from the
battery market. After the acquisition, company market share increased up to 68%. End of two
years, main target is increase top-line up to Rs. 1.1 Bn and bottom line Rs. 152 Mn. Strategic
decision is incorporated for differentiation strategy in the Ansoff matrix to successful the
acquisition.

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Amararaja.co.in.

(2016). Amara

Raja

Batteries

Limited.

[online]

Available

at:

https://www.amararaja.co.in/ [Accessed 10 Jul. 2016].


Brownsgroup.com.

(2016).

[online]

Available

at:

http://www.brownsgroup.com/products/product_search.php [Accessed 14 Aug. 2016].


CMG. (2015). Brand Transition and Acquisition Strategy | Brand Assessment |CMG. [online]
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Cse.lk. (2016). CSE :. Colombo Stock Exchange. [online] Available at: http://cse.lk/home.do
[Accessed 28 Aug. 2016].
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(2016).

[online]

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at:

http://www.efos.unios.hr/repec/osi/journl/PDF/InterdisciplinaryManagementResearchIX
/IMR9a24 [Accessed 4 Aug. 2016].
Lolc.com. (2016). LOLC|Lanka Orix Leasing Company|Insurance Company in Sri
Lanka|Leasingin Sri Lanka|Leasing Company in Sri Lanka. [online] Available at:
http://www.lolc.com/ [Accessed 28 Jul. 2016].
PROCTOR, T. (1997). ESSENTIALS OF MARKETING RESEARCH. 4th ed. Harlow:
Pearson Education Limited, pp.210-350.
Samudhi.lk. (2016). Home. [online] Available at: http://www.samudhi.lk/ [Accessed 1 Aug.
2016].
Strategic Marketing Management. (1992). 3rd ed. Burlington: Elsevier ButterworthHeinemann, pp.730-802.
The EMIL GREINER Co. (1959). Analytical Chemistry, 31(5), pp.3A-3A.

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