RFL Best
Buy Outlet – Eliminating Intermediaries
Abstract:
RFL Plastics, a subsidiary of RFL Industries, is one of the
largest manufacturers of indoor and outdoor plastic products for domestic and
export markets. It has become a benchmark for competitors on the lines of
quality by manufacturing premium quality products to give clients excellent
services and true value for money. The unmatched products have given a big name
to the domestic market to such an extent that the name is accepted with trust,
quality and assurance in all over Bangladesh. This was only possible due to the
company being professionally managed and promoted by people who ensure that creativity
and talent is given full freedom to blossom and nurture in the organization. It
was due to this managerial community that the new era of RFL plastics in on the
way. “RFL Best Buy Outlet” is indeed the future of RFL plastics. It does not only
eliminate intermediaries but also allows more managerial control over its
product. The success of such a strategy is currently witnessed and being
optimistic about its future would not be a bad idea.
How it all began!!
RFL started its journey with Cast Iron (CI) products in
1980. The initial main objective was to ensure pure drinking water and
affordable irrigation instruments for improved rural life. Today the company
has its wide ranges of CI products like pumps, tube wells, bearings, gas stoves
etc. and has achieved the prestige as the largest cast iron foundry and light
engineering workshop in Bangladesh. With a vision to serve the common people of
Bangladesh with quality necessity products, RFL diversified its operation into
PVC category in 1996 & in Plastic Sector in 2003.At present it is market
leader in all these three sectors-Cast Iron, PVC & Plastic in the country.
Sizeable amount is also exported to different countries.
RFL Plastics Limited commenced its operation in 2003. The
vision of the company is to make molded household products and furniture made
of plastics of decorative design at an affordable price. The company's product
ranges include household items like table ware, kitchen ware, cleaning
accessories, storage containers, multipurpose ware, baby ware, hangers and
furniture items like Arm Chair, Armless Chair, Table, Stool etc. Due to its
perceived superior quality, innovative design and varying ranges, RFL has
already been established as most preferred brand in plastic category in
Bangladesh. With the expansion of its product line and capacity, the RFL
products are now being exported in various countries around the globe. Through
vigorous selection and evaluation process, best quality food grade plastics are
used as raw materials for manufacturing. The factory is located at Ghorashal,
Narshingdhi and is equipped with 70 plus injection molding machine. Around 3000
workers under the supervision of more than 100 technical experts put their
effort to give the shape of the consumer demands. Each process line of
manufacturing goes through stringent quality control process and checked against
slightest of nonconformance. The company has its own R&D laboratory which
explores about product and design innovations that can meet both expressed and
unexpressed consumer demand (RFL Group, 2012) .
Where it all began!!
RFL has a unique production facility comprising of different
machinery and segmented production line for each of its product. Production
facility is greatly secured from occupational health and hazard issue, theft
issue and environmental issue. RFL’s 600,000 square feet (55,700 square meters)
modern plastic manufacturing facility is located 30 miles (50 km) east of Dhaka
(capital of Bangladesh) and went into production in 2003. The factory is fully
equipped with state of the art injection molding, vacuum forming and blow
molding machines with a conversion capacity of over 3,300 tons (3,000 MT) of
resin per month. RFL currently utilizes 500 production molds and an in-house
mold repair shop.
The facilities are well equipped with China, Taiwanese and
Thai Technology to produce high quality flexible plastic products such as
Hanger & Garments Accessories (Moving Shirt Hanger, wall Hanger), Food
Storage Products (Food Storage Box), Household Utilities (Mug, Super Bucket),
Washroom Accessories (Square Soap Case), Beverage Products (Glass Stand, Design
Glass), Utility & Cleaning Products (Laundry Basket), Furniture (Arm Chair,
Table, Stool) etc. Covering the wide range of packaging, pouches, tubes,
garment and films of HDPE (High Density Polyethylene), LDPE (Low Density
Polyethylene), PP (Polypropylene), LLDPE (Linear Low Density Polyethylene) and
their mixes based packing materials round the clock and satisfies almost all
sort of the industry. It can produce up to 8 (Eight) colors and deliver its
products within a very short span of time with a total installed production
capacity of 3,000 MT per annum. The capacity utilization of the industry is
over 95%.The industry has the started with an installed capacity to produce
3,300 tons of plastic flexible of different sizes, colors and thickness and now
increasing their capacity to meet the growing demand (RFL Group,
2012) .
Industry ~ emerging globally
Bangladesh could emerge as a global player in plastic
industry by hiking its turnover to $2 billion by 2015 and $4 billion by 2020 as
cited by a case study on Bangladesh's plastic sector conducted by the Economic
and Social Commission for Asia and the Pacific (ESCAP) of the United Nations. Plastic
is an engineered material used to manufacture a wide variety of products to
meet the domestic demand of Bangladesh and export the remaining to other
countries (Singh, 2012) .
The plastic industry has emerged as an important industrial
sector in the country during the last two decades. At present there are 3000
plastic manufacturing units, 98% of which belong to the Small-Medium
Enterprises (SMEs). Domestic market size is Tk 7,000 crore. Per capita
consumption of plastics in Bangladesh is 5 kg per year. The plastic sector
constitutes 1.0 of GDP and provides employment for half a million people. Total
export earnings for both direct and deem (RMG accessories) exports are about US
$ 337 million. An in-depth study of the plastic sector reveals
multi-dimensional constraints and an excellent prospect for future growth.
Major constraint in the plastic sector is the lack of an institutional
arrangement dedicated to this sector, in order to provide supporting services
such as skilled manpower, testing facilities for quality control, innovative
technology and consultancy services. The availability of cheap labor and the
fast developing plastic wastes recycling industry due to rising cost of
petroleum (raw material of polymers) provide Bangladesh potential advantage of
competitiveness in the global market. An expert (BUET, BCSIR, BITAC, BPGMEA)
consultation meeting held on the plastic sector organized by the SME Foundation
in 2008, has recommended setting up Bangladesh Institute of Plastic Engineering
and Technology (BIPET). Aims and activities of this institute are given in this
paper. This proposal is in the light of Indian experience. The entrepreneurs in
the plastic sector have developed the plastic industries with their own
initiative and finance. Now, considering huge potential of this sector and the
multi-dimensional nature of the constraints, the government must provide
supportive policy and institutional arrangements (Singh, 2012) .
Uses of MRP Method
To fulfill the market demands the company uses MRP. In
accordance with MRP, in the first action of the company is to forecast,
production plan and taking orders for the product. Product forecasts are needed
for each company to plan the future budget for the product, then the production
plan and takes orders from customers. All three of these things combined made
the master schedule of the company; the company has to look at their MRP so
that they prepare master production schedule to meet demand. Before making the
companies order the release to check the status of inventory to know about
their current position in the in the inventory. After make the order the
Company has to verify CRP (capacity planning requirements). If there source is
available, the company makes a purchase order, and work orders. When the
material reaches the company, they store some of the raw materials and other
parts directly load and scheduling production to produce the final product.
Introducing new strategy~ RFL BEST BUY OUTLETS
In year 2012, RFL plastic witnessed several ups and down in
the financial segment of the business. Study showed that such inconsistency
aroused due to intermediaries failing to meet up with the target sales. Even
though the market had ever booming demand, sales figures were not increasing to
the potential level. Market research showed that such inconsistency did exist due
to the competitors, who in some cases shared the same channel of intermediaries
to segment its product. Hence, relying on the intermediaries was not suitable
for RFL to meet up to its potential sales figure.
Such a dilemma led to development of new strategy by the
management to resolve such issues. Hence, RLF best buy outlets were introduced
in late 2012 through opening Mirpur, Khilgaon and other branches. At the
moment, they have 23 best buy retail outlets in all over Bangladesh. As time
goes by, they look forward to opening more in different target segments of
Bangladesh. Yet, the question lies why choose this strategy?
Style & Design~ RFL Best Buy Outlets
RFL Plastic Ltd. is expert in making different dices for
different items. The company gets those designs from its buyers, suppliers
according to their specifications and they have strong R&D laboratory,
which explores about product and design innovations to meet peoples demand.
They have 70 plus injection molding machine to produce those product. These
includes such as Arm Chair, Armless Chair, Table, Stool and so on (The Daily
Sun, 2012) .
RFL best buy outlets have been designed uniquely
to meet up its customer expectations and go beyond it. The stores are located
in prime location and designed to attract the particular segment of people of
that location. The interior is furnished with glossy walls so that it can
reflect light and enhance the products glossiness. The Stores are also designed
in a particular pathway so that customers can walk freely to its desired
products location. Moreover, the
RFL Products ~ Polly balls Category
HDPE is defined
by a density of greater or equal to 0.941 g/cm. HDPE has a low degree of
branching and thus stronger intermolecular forces and tensile strength. HDPE is
used in products and packaging such as milk jugs, detergent bottles, margarine
tubs, garbage containers and water pipes. One third of all toys are manufactured
from HDPE (RFL Group, 2012) .
LDPE is defined
by a density range of 0.910 – 0.940 g/cm. LDPE has a high degree of short and long
chain branching. LDPE is used for both rigid containers and plastic film
applications such as plastic bags and film wrap (RFL Group,
2012) .
LLDPE is defined by a density range of 0.915 – 0.925 g/cm. LLDPE is a
substantially linear polymer with significant numbers of short branches. It has
Lower thickness compared to LDPE. Agricultural films, saran wrap, and bubble
wrap, to multilayer and composite films.
Disintermediation- The new era of RFL plastic
In economics, disintermediation is the removal of
intermediaries in a supply chain, or "cutting out the middleman".
Instead of going through traditional distribution channels, which had some type
of intermediate (such as a distributor, wholesaler, broker, or agent);
companies may now deal with every customer directly. Disintermediation
initiated by consumers is often the result of high market transparency, in that
buyers are aware of supply prices direct from the manufacturer. Buyers bypass
the middlemen (wholesalers and retailers) to buy directly from the
manufacturer, and pay less. Buyers can alternatively elect to purchase from
wholesalers. Often, a business-to-consumer electronic commerce (B2C) company
functions as the bridge between buyer and manufacturer.
Disintermediation allowed RFL plastics to emerge in the new
era of retail business. Such a strategy was not only financially beneficial but
also in marketing its product. Several advantages were witnessed due to opening
of best buy outlets.
Benefits of RFL Best Buy Outlets:
Opening
retail outlet led RFL have a physical presence in that area. This enabled the
business to be easily identified by the target customers. It also helps in
building trust with the customers by having a physical shop. RFL
was also able to draw on the passing crowd. With high level of visibility,
regular shoppers were able to recognize the outlets after a few weeks even if it
was new. Think about it, you just started an outlet in a new area. Regular
shoppers frequent that area twice a week. In a month, they would have seen your
shop eight to ten times. By then, they will know your presence there. Retailing
is a cash business. That means all customers pay cash or credit card to
purchase the products or services. Before disintermediation, RFL used to do
business on credit terms with the intermediaries. However, at the moment they
do cash business which reduces the risks of bad debt. The
sales process in retailing is much shorter and easier. Customer comes to the shop,
staff serves them, and customer decides to buy, pay up. The process is pretty
straight forward. Hence instead of going to intermediaries where the process is
much complex due to documentation; it is time and cost beneficial to conduct
business in the retail chain.Drawbacks of RFL best buy Outlets:
Setting
up a retail outlet requires high capital cost. RFL had to purchase the
inventories, set up the shelves, renovate the shop etc. The high capital outlay
also means the business is in higher risk. Retailing
belongs to a much more passive kind of business. Instead of going out to get business,
one just basically stays in the shop waiting for customers. RFL cannot do out
and out sales that are more active in sourcing the customers. RFL
best buy outlet is not flexible to some changes that may take place in the
market. For example, the neighborhood can go into decline, parking restrictions
might be imposed, your market can 'move away', etc. Hence, RFL best buy outlet
should focus on contingency plan to avoid such regulation problems and
uncertain circumstances.Retail Marketing by RFL:
Retail marketing follows a relatively primitive, basic
function in which a reseller (sometimes referred to as a retailer) purchases a
product from a source, then resells the same product to a customer at a higher
price. In many cases, wholesalers--the source from which the retailer purchases
the goods--require large bulk purchases that are not practical for most end
users; this policy discourages consumers from buying directly from the
wholesaler at a lower cost. In some cases, the retailer may purchase the
product from the wholesaler on credit, and then pay off the financial
obligation once the product has been resold. To help facilitate the product
sale at a higher price, the retailer may circulate advertisements in print,
radio, television and Internet media offering at a temporarily discounted price (Islam, 2011) .
RFL entrance in retail marketing allowed it to enjoy the
advantages of retail marketing. Introducing itself to retail marketing through
best buy outlets has led to several financial and market oriented advantages. Opening
retail outlet led RFL have a physical presence in that area which enabled the
business to be easily identified by the target customers. Moreover, RFL was
able to draw on the passing crowd. As a result with high level of visibility,
regular shoppers were able to recognize the outlets. However, these are not the
only benefits derived by RFL going retail marketing. Major benefits are
highlighted in the following section.
Benefits of Retail Marketing by RFL:
Awareness:
The primary benefit of retail marketing for RFL is to bring
awareness to the consumer that the product exists to fill a need or a want that
the consumer has. For example, if a retail marketing campaign is promoting a
product that gets rid of nail fungus; someone with nail fungus now knows that
an over-the-counter product is available to help resolve their nail fungus
problem. In return, this marketing helps to boost sales for the nail fungus
remover. In essence, potential customers of RFL products have to know that the
product exists for the sales of the product to be successful. Retail marketing creates
a bridge between a RFL’s product and its potential customer target market.
Boosts
Profits:
RFL retail marketing also has the advantage of boosting
business profits. Whether it's announcing the launch of a new product or
offering a special sale or coupon on an existing product, this type of retail
marketing through best buy outlets can attract larger crowds to the retail
location. The more potential customers who walk through the door provide a
potential for higher sales, and a larger sales volume brings increased
profitability to the retail establishment.
Creates
a Competitive Environment:
Retail marketing creates a healthy competitive environment
between retailers. This benefits consumers because it helps to keep their costs
down when purchasing products. Retail marketing also helps keep competitors
aware of what the other is charging for the same product, so it allows
retailers to adjust prices as necessary to stay competitive in the market.
Creates Jobs
A direct positive effect of retail marketing is that it
draws more customers to the retail stores. An indirect effect of retail
marketing, however, is it creates jobs. Day by day RFL best buy outlets has
witnessed increasing business. Hence, it needs more employees to help with the
volume of business. For potential employees that have experience in the retail
industry or who are looking to break into retail work, RFL best buy outlets has
open up many new job opportunities.
Critics Viewpoint
Despite its numerous benefits, going retail is not without
its considerations. Critics blame manufacturing companies going retail for
encouraging a consumer-minded society in which valuable items are quickly
discarded as newer versions become available. This practice is also detrimental
to the environment, as the constant shipment of new products to distribution
centers and retail stores creates large volumes of carbon gasses. Finally,
retail marketing is credited with driving consumers deep into debt as they
strive to constantly purchase newer and better products. Hence it is considered
by critics as environmentally and socially unhealthy strategy to be initiated.
Looking Ahead to Future:
RFL strives to be recognized as a world class retailer of choice
and a brand in Asia Pacific in the plastic business. Pursuing this vision, RFL
management has brought in world class business processes to ensure their
success. Moreover massive commercialization strategy has already been underway
to look for promising prospect for future business. Programs such as reality
shows “RFL home make of the Year” is a modern way of marketing its products and
a step towards the future. Executive Director of Channel-24, Hasnain Khorshed
said, “We are highly pleased to get involved
with such a different kind of Reality Show. Half of our population is women; we
congratulate RFL for their initiative to honor women.”
Realities show ‘RFL home maker of the year’ ~ a step towards future:
PRAN RFL, the largest plastics home appliances producing
company in Bangladesh, is going to hunt talent housewives through a reality
show ‘RFL home maker of the year’. Any housewife who is age of 18-40 years in
Bangladesh can join this reality show. A flat will be awarded as First Prize
and a brand new car and cash Tk 150,000 along with a family tour in Nepal will
be given as second and third prize respectively.
Director of RFL RN Paul announced the launching of the
reality show at a convention center in capital on Wednesday. Executive director
of channel-24, Hasnain Khurshed, brand manager of RFL plastics, Mrinmoy Kanti
Das, Sr Manager of event SM Adil Khan and other top executive were present on
the occasion. Winning the crown of ‘RFL home maker of the year’ participant
needs not only to be necessarily adept in cooking and household work but also
she has to be caring and respective to her family (Hossain, 09) .
“The RFL Plastics is
being used more or less in almost every family in our country. Today’s women are not only keeping themselves
busy with their household works, but also looking forward in workplace in a
same way as men. In order to honor
those Bangladeshi housewives, RFL is going to arrange the Reality Show.
We would be able to entertain to all kinds of viewers through this different
kind of Reality Show. Viewers can enjoy this Reality Show on Channel 24
screen.” (Hossain, 09)
Director
of RFL, R.N Paul; Interview with Channel 24
From 15th January 2013 the registration will start in 31
different venues in the country which will continue till 15th February. Besides
the preliminary and audition round will be running in 9 zones. In the selection
round there will be arranged some funny games like cutting vegetables, making
quick breakfast, puzzling and quizzes (Hossain, 09) . In the next phase
there will be some attractive arrangements. 100 housewives will be selected
from preliminary selection and they will be brought in main venue in Dhaka. Special arrangements for accommodation and
food will be provided for those selected housewives. For participating the
program ‘RFL home maker of the year’ the contestant can register by sending sms
from any mobile or by log in through the website.
World Tour Program
RFL plastics Ltd would arrange a world tour program in the
upcoming year for the best performing dealer of 2014 in all around the country.
The tour includes USA, UK, Singapore Malaysia, Thailand, Nepal & India.
Reaching new heights:
RFL is driving the company in a new height. The introduction
of new strategies such as best buy outlets has resulted in benefits that far
outweigh the cost. Moreover, it also highlights the novel concept with full
orchestration and business strategies formulated by the management through the
implementation of the growth strategy of the business. Disintermediation also allowed
RFL plastics to emerge in the new era of retail business. The strategy was not
only financially beneficial but was also beneficial in marketing its product. The
strategy itself has worked better than the expected level.
References
Hossain, A. (09, January 2013). Reality show ‘RFL
home maker of the year’ begins. Retrieved May 2013, 3, from Bangla News
24: http://www.banglanews24.com/English/detailsnews.php?nssl=0a8599226ad83944f0defc7496fd5166&nttl=2013011161663
Islam, M. S. (2011). Prospects
And Challenges Of Plastic Industries In Bangladesh. Retrieved May 3,
2013, from Bangladesh Journals Online: http://www.banglajol.info/index.php/JCE/article/view/10176
RFL Group. (2012). rfl
plastics. Retrieved May 3, 2013, from www.rflplastics.com:
http://www.rflplastics.com/rfl-exclusive-dealers-outlet/
Singh, S. (2012, July 26). Bangladesh
plastic industry to reach $4 billion by 2020. Retrieved May 4, 2013, from
Plastics News:
http://www.plasticsnews.com/article/20120726/NEWS/307269986/bangladesh-plastic-industry-to-reach-4-billion-by-2020
The Daily Sun. (2012). RFL
best buy outlet opens at Mirpur. Retrieved May 3, 2013, from Daily Sun:
http://www.daily-sun.com/details_yes_01-03-2012_RFL-best-buy-outlet-opens-at-Mirpur_71_1_3_1_23.html
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