North South University

Assignment on Tiles industry of Bangladesh

Course: MGT314

Name ID
Tanzil Tahseen 1620052030
Fatema Tuz Zohra 1521259630
Nazia Nusrat Antora 1430559030
Alif Muahaimenul Haq 1521951630
Sabrina Mohsin 1321286030
Tanvir Ahmed 1531363630
Delower Hossain Dipo 1721126630

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Contents
History of ceramic industry of Bangladesh:.................................................................................................4
Background of Rak Ceramics.......................................................................................................................4
Market Demand of ceramic tiles:................................................................................................................5
Market Segmentation:.............................................................................................................................5
Target Market:.........................................................................................................................................6
Major Players of the Industry......................................................................................................................6
Major competitiveness of Rak Ceramics......................................................................................................8
Competition level in the industry................................................................................................................9
Challenges/Shortcomings of the industry..............................................................................................10
Public Relation Evaluation (PR Evaluation)................................................................................................11
Future RAK Ceramic:..................................................................................................................................11

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History of ceramic industry of Bangladesh:
In 19th century, Ceramic Industry started in Bangladesh. The first established industry was MCI
and national ceramic industry. Then in 1958, another two ceramic industry named Tajma and
Dhaka ceramic were introduced themselves as a ceramic industry. Before our freedom war
in1962 another industry was also established but it changed its name after Bangladesh became
independent. Today, Bangladesh has more than 60 ceramic manufactures industry. Among
them Munnu Ceramic is the first nongovernment industry that started their journey in 1985.
Nowadays ceramic industry is more than 5lakh people are corking at this sector related industry
and every year almost three thousands crore money are collected as income tax from this
ceramic industries. This business are growing very high because of getting gases in a cheap rate
and availableness and cheap labor cost. Nowadays, local ceramic manufactures are producing
tiles, tableware, sanitary products. It’s a great opportunity to gain priority in international
market because of the tread war between us and China. Popular Bangladeshi ceramic industry
are Shine pukur, RAK, Farr, DBL, Akij stella, Star, etc.

Background of Rak Ceramics

RAK is an ISO 9001; 2008 certified company, it is a UAE-Bangladesh joint venture of RAK
Ceramics Ltd. The factory of RAK is situated near Dhaka, Bangladesh. It is well recognized
enough to make its brand name. RAK the number one ceramic manufacturer in the world
(2018). RAK ceramics established in 1998 as an export business concern manufacturing and
supplying. It produces objects for local and international market. RAK ceramic factory produce
Ceramic Wall and Floor Tiles, Décors and Borders, Cladding etc. RAK mainly involve in
manufacturing and marketing ceramic. In our country,RAK Ceramics approach to social

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responsibility is embedded in the Company’s culture. This factory has well qualified and
dedicated worker, they also use foreign technologies and techniques.

Market Demand of ceramic tiles: There are now around 28 manufacturing

companies of ceramic tiles in the market and every year more two new companies join the
market. The total market can produce up to 214.30 million square feet annually. The
Bangladesh market have gone up to Taka43.07 billion which is almost double from the last 5
years. Of the whole demand for tiles in Bangladesh 77.81 percent demand is met by the local
industries and the rest 22.82 percent is imported.

The market has a growth of 200 percent over the last 5 years and it will increase if the market
situation is stable. The market leader of the tiles industry is Rak ceramics which have a market
share of 22.97 percent. The market share of Great Wall Ceramics is 9.31 percent and China
Bangla got a market share of 10.32 % Fu Wang have a market share of 9.68 percent. Some
other notable companies are Dhaka Shanghai, Modhumoti, Sun power.

The reason Rak ceramics is the market leader is because it got a wide range of tiles in the
market it has got almost 2500 active model of tiles in the market. Its annual capacity of tiles is
11.68mn sqm.Rak ceramics doesn’t directly sell it to the end consumers they sell it through
their agents and they have now 92 dealers all around the country and these dealers are
supported fully by Rak ceramics.The total sale of Rak ceramics at the end of 2018 was Taka
500,33,75,972 in 2017 it was Taka 200,93,88,717.So we can see there is a huge growth in sales
too.

Market Segmentation: Rak ceramics segmented the market considering 3 important

factors these are

 Price: The historical and current price prevailing in the markets under consideration.
 Reliability: The financial stability of the markets under consideration.
 Liquidity: The frequency of import by the markets under consideration.

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Target Market: RAK ceramics normally target the actual purchaser of the product.
According to social class segmentation concept, middle level, upper middle level customers are
the target customer of RAK Ceramics. In income segmentation, the customer’s income level is
30,000,000 to 50,000,000 taka they are also quite a significant consumer of RAK Ceramics. The
RAK aims their advertisement mostly at them. From our research we can see that our most of
the potential customers are developer. The geographical location of the market will initially for
7 divisions like: Dhaka, Chittagong, Sylhet, Rajshahi, Khulna, and Barishal and the 64 districts of
Bangladesh.

RAK’s large target market is the developer companies of Bangladesh. The developer companies
buy RAK ceramics and sanitary wares for their developing projects. All most 40% product are
sold to the developer companies.

Next largest market is the building owners. The owners buy the RAK ceramics product for their
own. In this case the marketing people of the company collect communicate with the building
owners and tell about the product information such as the product price and the size. For
convincing the customer RAK sales & marketing department supplies free samples to the
customers. All most 30% product are been sold to the building owners.

The Architect firms and the consultancy firms are the target market for the RAK Ceramics
Bangladesh Ltd.

Major Players of the Industry

RAK tries to provide greater customer value and satisfaction in different specialized sector than
competitors. Competitors are also a factor in the microenvironment and include companies
with similar offerings for goods and services. To remain competitive RAK consider who their
biggest competitors are while considering its own size and position in the industry. The
company develops a strategic advantage over their competitors. RAK Ceramics Bangladesh Ltd.

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always upgrading their product and keep their product price reasonable than the other
competitors.

There are more players in the industry such as:

RAK
Mir ceramics
Great Wall
Akij
Star

Mir ceramic limited: Mir ceramic was established at North Mawna, Sreepur, and Gazipur. The
commercial production started from 2002 and they are producing different types of ceramic
tiles, which have no pinholes and waviness and results in smooth glazed surface. The company
is also exporting its products to India, Korea and Japan.

Great Wall ceramics industry: Great wall is the largest tiles manufacturer in Bangladesh; they
are in this market from last 11years and one of the tiles experts in the industry. They are a
competitively priced producer with high quality of tiles in Bangladesh and also believe to serve
in their market than other.

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Star Ceramics Limited: Star Ceramics Limited one of the largest Ceramic Tiles & Sanitary ware
manufacturing company in Bangladesh. It is situated in Hobigonj, Sylhet. They are the pioneers in
manufacturing digital printed tiles and the first producer of biggest tiles in Bangladesh. They have
robotic car application and less chance of human error which makes them a major player in the
ceramic industry.

Akij Ceramics limited: Akij Ceramic limited, of Akij Group, has started its journey in 2012. There
factory is located in Mymensingh. In a very short span of time they became one of the strongest
players in ties industry of Bangladesh. They use international standard machines to provide best
designs and ensures guarantee of lifelong durability.

Major competitiveness of Rak Ceramics

RAK ceramics started its journey in Bangladesh on 26 November 1998 as a private limited
company, later it has converted into a public limited company. Manufacturing and selling of
ceramics and gres porcellanitic tiles, sanitary ware and bathroom sets are the core business
activities of RAK ceramics (Bangladesh). The company has secured number one position on the
basis of its World class manufacturing technology, effective cost structure, market leading
capacity, high production utilization, unique product design etc. The company serves clients in
more than 150 countries around the World.

They are competitive in terms of the following:

 Use of SACMI technology that provides high quality and cost-effective output.
 Focus on maximizing capacity utilization.
 Production capacity is higher compared to others such as Fuwang ceramics, Modhumati
tiles, China Bangla Ceramic etc.
 Persuasive brand image
 Number of professional expertise.
 Unique design and high end quality
 Manufactures eco-friendly products such as Wood Art Tiles.
 Health and safety production facilities

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  Incomparable merchandising performance.
 Major raw materials are imported from China, UK, Thailand, Singapore, India and few
other European countries.
 Practicing environmental stewardship from product design to operation processes.

Competition level in the industry

The competing local manufacturers are also active in making fresh moves to improve their
market standing and business performance. For instance, RAK Ceramics produces ceramic tiles
for both interior and exterior usage. According to the management of this company, they are
the first to manufacture tiles made of ceramics intended for external use that would be
manufactured within the country. Besides, RAK ceramics is also increasing its production
capacity to manufacture 20% more output than their nearest competitors to gain 25% of the
market share. This company is also coming up with powerful strategies like teaming up with
overseas entity to share its technological know-how and to turn its concern into the “first ever
European Standard multinational joint venture ceramics manufacturing facility.” The strongest
competitive pressures come not from outsiders, but also from current industry participants.
Great Wall Ceramic Industries Ltd., has announced to produce a high-end product, fine-cut tiles
with decorated borders to meet local demand since demand for costly tiles is high. FARR
Ceramics Ltd., which went into commercial production in February 2007, already bagged 10%
market share in Bangladeshi ceramics exports and is among the few now showing resilience
against global recession. Moreover, the management of FARR Ceramic claims, it is the first
Bangladeshi company to enter the export market of Argentina after shoring up its foothold in
Europe. There are few of the components of competition:

 Threats of new entrants: Threats of new entrants in the ceramics industry is immense.
This industry is not only prone to domestic firm but also prone to international firms. In
ceramics products capacity is measured in large increments. Purchasing or building
facilities proves to be a large capital expense. Within domestic products new companies
are posing extreme threats. Some of the domestic firms are producing quality products
also. Domestic companies are always posing threats to RAK Ceramics (Bangladesh) Ltd.

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  Bargaining power of buyers: Because of the large number of buyers, the bargaining
power of the group is moderate. The products are undifferentiated which motives
buyers to make purchasing decision based mainly on price.

 Threats of substitute products: The treats of substitute products in ceramics market are
weak in Bangladesh. The alternatives would often require a compete reworking of the
design of the products produced by different product consumers. Thus, low priced
alternatives are still unattractive because of the high switching costs. If the switching
cost does not detract the buyers, they can find alternative products to fulfill the
demand.

 Rivalry among competitors: The strongest force impacting the market is the rivalry
among competitors. As mentioned earlier, a firm must invest a great deal of capital to
enter into the industry. Once in the industry, capacity increases occur in large
increments. To further the rivalry, the lack of diversified products makes buyers
switching costs low. This can lead to a price competition among the firms into the
industry. Same competitors have diversified into other industries.

Challenges/Shortcomings of the industry

The lacking of certain strengths may be viewed as a challenge for the company. Likewise, each of the
following maybe considered as challenges:

 High cost structure – Numerous employees are in the company which incurs a handsome
amount of salary, bonus staff payments etc. Factory maintenance also brings in a huge
expenditure leading to high cost structure.
 Expensive raw material imports – Raw materials is bottleneck for ceramics industry supposedly.
For instance, china clay is imported from China henceforth making it expensive.
 Shifts in consumer tastes away from the firm’s products
 Emergence of substitute products
 Competitors have superior access to channels of distribution

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Public Relation Evaluation (PR Evaluation)

When communicating with a target audience it is important to firstly make a PR evaluation to

help you reach your target audience effectively. Public relations are one-way RAK can enhance
its brand image and establish a long-lasting relationship between RAK and its customers.

RAK tries to maintain good relationship with their valuable customer by providing high quality
products along with a moderate price. RAK offers luxurious product for its High-class customer
and moderate product for the customer who are in moderate income level. RAK Ceramics have
many dealer points in every possible corner of the country. That’s why they can maintain a
good relation with their customer. Conventional companies focused on mass marketing but
today’s firms are building more direct and lasting relationship with more carefully selected
customers. Today, RAK provide products updates to their superior customer through SMS,
Online and Mobile. It also makes a relationship through different paying system like, installment
facilities, pay through credit card etc. The ultimate aim of public relationship is to produce high
customer Equity. RAK views customers as assets that need to be managed and maximized. But
not all customers, not even all loyal customers are good investment. RAK classify customer
according to their potential profitability and manage its relationship with them accordingly.

At RAK, they are engaged in a number of valuable activities that are being undertaken within all
of their businesses and across their manufacturing sites. However, they have identified and
agreed to the need to do more and do so in a more focused manner.

Future RAK Ceramic:

Ceramic industry become a booming sector for Bangladesh as the growth of potential of both
domestic and local market indicates it may become one of the big foreign exchange earners for

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the country. In FY 2017-18, this sector earned $52 million from exports which is more than the
target by almost $9 million, according to Export Promotion Bureau (EPB) data. A BCMEA study
shows apart from export, recently local companies are now meeting the major demand of the
growing local market. The market is now meeting around 90 per cent demand for tableware, 70
per cent tiles demand and more than 80 per cent of the sanitary products demand in the local
market. RAK ceramics is the largest ceramic industry in Bangladesh. RAK always step forward to
being with trends so they can be part of the next level, rather than becoming backdated. The
company does the market research to find the market data to achieve their market growth.
Company’s sales & marketing department always analyze their financials state for supporting
their product & service to the customers. From last decades record RAK Ceramics
manufacturing capacities increased three time fastest-growing and most profitable companies
in our local market. Leading to 2011 the Top line and bottom-line grow was 14.42 percent and
20.13 percent CAGR respectively over the last five years. In 2010 RAK Ceramics Awarded ‘Super
brands’ as, the only one in ceramics industry space in Bangladesh. Over all RAK ceramic is
already contributing a great economic progress through export earnings, foreign currency
savings and generating employment to our country. And Over the years RAK ceramics in
Bangladesh has flourished immensely and has gained recognition throughout the worldwide.
However, there is some absence of possibility as considering weakness of RAK ceramics:

 High cost for structure

 Lack of natural resources
 Lack of direct distribution channels
 High cost for importing raw materials
 New regulations Increasing trade barriers
 Taxation is introduced on product or service.
 Price wars with competitors.

The govt. is playing a good role to supporting the ceramic industries. To discourage import of
tiles and sanitary ware items, introduced supplementary duty on imports has already increased
to 45 percent in place of existing 20 percent. Also, the representative department from govt.

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has made declare of uninterrupted power and gas supply for this sector. Providing all those
accommodation for ceramic industry would have positive impact to RAK for increase their
business globally more efficiently.

RAK ceramics Bangladesh ltd is rightly positioned in demand and to expand in ceramics business
worldwide. The company has achieved consistent growth in revenue and profits. Over all we
can conclude that if the company can overcome the stated limitations, it has a very potential
growth in future and it can become a big foreign exchange earner for our country with its
dazzling products in the era of globalization.

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References

Express, T. (2019). Tiles manufacturing industry expands over the years. [online] The Financial Express.
Available at: http://today.thefinancialexpress.com.bd/special-issues/state-of-construction-industry-in-
bangladesh/tiles-manufacturing-industry-expands-over-the-years-1551033761 [Accessed 19 Jul. 2019].

Anon, (2019). [online] Available at: https://today.thefinancialexpress.com.bd/special-issues/state-of-

construction-industry-in- [Accessed 19 Jul. 2019].

Assignment Point. (2019). Marketing Strategies of RAK Ceramics Limited - Assignment Point. [online]
Available at: https://www.assignmentpoint.com/business/marketing-business/marketing-strategies-of-rak-
ceramics-limited.html [Accessed 19 Jul. 2019].

Dhaka Bank | Excellence in Banking. (2019). Important Business News Extracts March 28, 2018 - Dhaka
Bank | Excellence in Banking. [online] Available at: https://dhakabankltd.com/important-business-news-
extracts-march-28-2018/ [Accessed 19 Jul. 2019].

Ceramic industry booms | daily sun. (2019). Retrieved 18 July 2019, from https://www.daily-
sun.com/printversion/details/341254/2018/10/07/Ceramic-industry-booms

Rosid, M. (2019). RAK Ceramics (BD) Ltd. Retrieved 18 July 2019, from http://rakcerambd.com/about-
profile.php?id=26&type=Description

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