Thesis on Pricing Strategy Analysis of Vegetable Seeds

Thesis on Pricing Strategy Analysis of Vegetable Seeds- A Study on Lal Teer Seed Limited

The seed industry in Bangladesh comprises of both public and private sector initiatives. Government agencies involved in this sector include Bangladesh Agricultural Development Corporation (BADC), Bangladesh Agricultural Research institute (BARI), Bangladesh Rice Research Institute (BRRI), Bangladesh Jute Research Institute (BJRI), and Department of Agriculture Extension (DAE). The Government has recently given the seed sector a “priority” status. In the private sector, there are more than 100 companies involved, with over 5000 registered seed dealers operating across the country. The recent expansion of the private sector seed companies has resulted in the engagement of thousands of contract farmers into the formal seed production chain, leading to improved livelihoods amongst the rural community.
Of the locally produced vegetable seeds, nearly 92% is accounted for by the private sector. The government agency most actively involved in seed production is BADC. As per Table-3 stated below, in the year 2005-06 total seed requirement on Bangladesh was 9,32,250 ton whereas the supply was only 1,17,526 ton ( only 12.61% of demand) including a higher demand gap in the seed industry in Bangladesh. However, only 11% of the total supply of seed made by the private companies and the NGO’s. But the scenario drastically changes in the vegetable seed industry. Total vegetable seed demand is 2,700 ton whereas the supply is 791.2 ton (only 29.3% of the demand). It is quite noticeable that 92 % of the vegetable seed supply is provided by the private sector and the NGO’s. Still there is a 71% market gap in the vegetable seed industry, so there is a huge business potential for the private sectors to expand their business in vegetable seed industry.

Lal Teer Seed Limited is the Leading vegetable seed producing private company. Most of the hybrid variety seed has earned reputation of best quality seed in the market. Thus the company is experiencing large sales volumes. Vegetable seed industry of Bangladesh is such a industry where market gap is near about 71%. But the industry is still in growth stage. Half of the demand is fulfilled by the farmer’s seed., which is cheap,but of substandard quality. The farmer’s seed are the most powerful competitor of Lal Teer. Till now the private competitors do not pose that much competition for Lal Teer because Lal Teer seed are most reliable in the market. It is difficult to set a marketing Strategy and marketing mix decision for product of such high demand gap but still in growth stage. Setting too high prices to capitalize the high demand will also show down the growth of the industry. On the other hand, setting low prices to boost the market growth will result in not capitalizing short-term benefit. So setting a price that will keep the market growth at a satisfactory high rate still generating huge profit for the seed companies so that they can invest the profit to increase their production capacity continuously to minimize the demand gap.

While there is no single recipe to determine Marketing strategy and marketing mix decisions, the following is a general sequence of steps that might be followed for developing the pricing of a new product or analyzing the pricing strategy of an already established product are develop marketing strategy, make marketing mix decisions, Estimate the demand curve, Calculate cost, Understand environmental factors (Analyzing competitors), set an objective marketing strategy and finally determine marketing mix decisions.