DEDICATION

We dedicate this project to our Parents, Teachers and to each other as a tribute to our teamwork during the past five-

years in Bahria University.

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ACKNOWLEDGEMENT

Praise and thanks to Allah, the lord of universe who is either of all knowledge and

wisdom to mankind. We bow our head in gratitude to almighty Allah who blessed us

with the capability to complete our project, which was a challenge for us.

“We the group members would like to avail this opportunity to thank our course

instructor of New Product Development, Mr. Pasha for his cooperation and support as

a teacher.”

We feel pleasure in expressing heart felt gratitude to our families for their

encouragement affection, support, constant help and prayers at all times without

which it was not possible for us to achieve this target.

NELUM SHEHZADE FAIZAN ALI ZIA

MARYAM CHOUDHARY

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ABSTRACT:

Packaged milk industry is a fast growing industry in

Pakistan. Nestlé, presently is losing share at the hands of

competitors and is engaged in differentiation and value-

pricing strategies. Stiff competition from local players and

changing consumer preferences are the main hurdles in Nestlé

MilkPak’s efforts to regain its market leadership position

in the industry.

During our research we were able to access the lapse of

largest and pioneer tetra milk pack company; Nestlé MilkPak

Pakistan in this sector and opportunities that are ahead of

them.

We endeavor to identify the compatibility of the company's

basic marketing strategies to its resources, structure of

the company and ultimately the milk industry, and finally

about implementing their strategies and staying abreast with

everyday engorging competition. Through the analysis we

determined that there is a need for a change in the

dimensions and workings of Nestlé and how it can retain its

position in such a dynamic industry.

Table of Contents

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CHAPTER 1: INTRODUCTION...................................8

BACKGROUND OF NESTLÉ AND MILK SEGMENT AND BROAD PROBLEM AREA:.................................................................................................................................8

PROBLEM STATEMENT:................................................................................................13

OBJECTIVES OF STUDY:...........................................................................................15

RESEARCH METHODOLOGY:.........................................................................................15

METHODS OF RESEARCH:.................................16

TYPE OF STUDY:.......................................16

POPULATION SAMPLE....................................18

INSTRUMENTS/SOURCES OF DATA COLLECTION:..............18

SCOPE & LIMITATIONS..................................19

CHAPTER 2: LITERATURE REVIEW.............................21

CHAPTER 3: INDUSTRY ANALYSIS.............................29

MILK INDUSTRY IN PAKISTAN...............................................................................29

CHAPTER 4: ORGANIZATION ANALYSIS.........................32

NESTLÉ MILKPAK PAKISTAN:..................................................................................32

SWOT ANALYSIS............................................................................................................33

PORTERS FIVE FORCES MODEL...............................................................................38

FIVE FORCES MODEL APPLICATION IN NESTLÉ............................................39

THREAT OF NEW ENTRY........................................................................................39

POWER OF BUYERS.................................................................................................40

POWER OF SUPPLIERS..........................................................................................41

THREAT OF SUBSTITUTES...................................................................................41

THE COMPETITIVE RIVALRY..............................................................................42

PEST ANALYSIS............................................................................................................42

POLITICAL FACTORS:...........................................................................................43

ECONOMICAL FACTORS:.........................................................................................43

SOCIAL FACTORS:...................................................................................................44

TECHNOLOGICAL FACTORS:..................................................................................44

NESTLÉ’S MARKETING STRATEGIES FOR ITS MILK PRODUCT LINE.......45

CONSUMER COMMUNICATION..................................................................................45

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PRODUCT AVAILABILITY.......................................................................................45

BRANDING...................................................................................................................46

DIFFERENTIATION STRATEGY.............................................................................46

POSITIONING STRATEGY.......................................................................................46

MARKETING MIX.......................................................................................................47

MARKETING GROWTH STRATEGY...........................................................................50

CUSTOMERS’ ANALYSIS:...........................................................................................50

QUESTIONNAIRE ANALYSIS:....................................................................................55

COMPARISON OF NESTLE MILKPAK WITH OTHER BRANDS.............................73

CHAPTER 5: IDENTIFICATION OF KEY AND CONCLUSIVE RESULTS. .75

CHAPTER 6: RECOMMENDATIONS...............................77

CHAPTER 7: ACTION PLAN...................................79

BIBLIOGRAPHY.............................................81

ANNEXURES................................................83

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List of Figures:

Figure 1: Product Concept.................................................................................................32Figure 2: Porters Five Forces Model.................................................................................38Figure 3:Five forces model application in nestlé...............................................................39Figure 4: Product Life Cycle.............................................................................................47Figure 5: Comparison of Prices and Packaging................................................................48Figure 6: Pie Chart of Gender ratio...................................................................................51Figure 7: Age Distribution in Customer Survey................................................................52Figure 8: Occupation Distribution in Customer Survey....................................................53Figure 9: Income Level Distribution in Customer Survey................................................54Figure 10: Ratio of Open Milk to Packaged Milk.............................................................55Figure 11: Preference to Nestlé MilkPak...........................................................................57Figure 12: Satisfaction with Nestlé MilkPak Quality........................................................58Figure 13: Need for Improvement in Nestlé MilkPak.......................................................59Figure 14: Taste of MilkPak as compared to other tetra pack milk...................................60Figure 15: Price of Nestlé MilkPak...................................................................................61Figure 16: Availability of Nestlé MilkPak........................................................................62Figure 17: Choice of Other Milk Brands..........................................................................63Figure 18: Recall of Nestlé Milk Advertisement...............................................................64Figure 19: Preference while purchasing tetra pack............................................................65Figure 20: Loyalty with the brand.....................................................................................66Figure 21: Recognition of Nestlé MilkPak brand..............................................................67Figure 22: Recognition of limited time packaging............................................................68Figure 23: Perceived Traditional Advertisement Image....................................................70Figure 24: Perceived Modern Advertisement Image.........................................................70Figure 25: Perceived Serious Advertisement Image.........................................................71Figure 26: Perceived Image that Brand fits to life style...................................................71

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List of Tables:

Table 1 : Comparison of Prices and Packaging.................................................................48Table 2: Gender Ratio........................................................................................................50Table 3: Age Distribution in Customer Survey.................................................................51Table 4: Occupation Distribution in Customer Survey.....................................................52Table 5: Income Level Distribution in Customer Survey..................................................53Table 6 : Ratio of Open Milk to Packaged Milk...............................................................55Table 7: Preference to Nestlé MilkPak..............................................................................56Table 8: Satisfaction with Nestlé MilkPak Quality...........................................................57Table 9: Need for Improvement in Nestlé MilkPak..........................................................58Table 10: Taste of MilkPak compared to other tetra pack milk........................................59Table 11: Price of Nestlé MilkPak.....................................................................................60Table 12: Availability of Nestlé MilkPak..........................................................................61Table 13: Choice of Other Milk Brands...........................................................................63Table 14: Recall of Nestlé Milk Advertisement................................................................64Table 15: Preference while purchasing tetra pack.............................................................65Table 16: Loyalty with the brand.......................................................................................66Table 17: Recognition of Nestlé MilkPak Brand..............................................................67Table 18: Recognition of limited time packaging.............................................................68Table 19; Perceived Advertising Image............................................................................69

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CHAPTER 1: INTRODUCTION

Packaged milk industry in Pakistan is a very fast growing

industry and through our research we’ll be able to access

the oversight of Nestlé in this sector and opportunities

that are ahead of them. Through the analysis we’ll determine

if there is a need for a change in the extents and workings

of Nestlé or in other words what is next for them, how they

are going to improve themselves further? How are they going

to retain their position in such a dynamic industry? What

are the strengths, threats, opportunities and weaknesses for

Nestlé in its Milk Line products? And we will analyze the

factors that will help them to regain their lost market

share and what other market segments they can cater.

BACKGROUND OF NESTLÉ AND MILK SEGMENT AND BROAD

PROBLEM AREA:

Nestlé was founded by Henri Nestlé in 1866 in Switzerland.

Nestlé was derived from word nest in Swiss German which also

is shown in the logo of Nestlé. Henri Nestlé came up with

the idea of developing something for infants those were not

able to accept their mother’s milk or any other substitute,

therefore to fight this problem of infant mortality he came

up with a product that was a combination of cow’s milk,

wheat flour and sugar and he called it Farine Lactee Nestlé

which was the first product of Nestlé being marketed in

Europe (Gupta).

In 1974, Jules Monnerat purchased Nestlé and launched a

condensed milk product of its own. In 1905, Nestlé got

merged with Anglo-Swiss condensed milk. After Nestlé got

fully established in Europe and everyone in Europe seem to

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know what Nestlé is that’s when Nestlé decided to expand its

boundaries out of Europe, and to set up the plants around

the globe and become a multinational (Gupta).

Nestlé’s decision to become multinational turned out to be

fruitful. Today Nestlé has its own operating plants and

products in America, England, India, Brazil, Australia,

Pakistan, Hungary, France, Belgium, Italy, Spain and various

other countries around the globe. (Gupta), Nestlé has become

the world's leading food manufacturer and the market leader

around the globe in both coffee and mineral water, and the

wide range of products manufactured by Nestlé includes ready

to cook dishes and cooking aids, all kinds of milk based

products, cereals, instant coffee, pharmaceuticals and

ophthalmic goods, pet care products & baby foods and what

not. Nestlé specializes in the areas like Baby Milk, Food,

Mineral Water, and Pet Food.

Nestlé’ is a publicly owned company, it has subsidiaries

spread all around the world. Its website lists addresses in

104 countries. Nestlé has large number of annual sales which

are worth $ 71 billion and it has almost 30000 employees

around the globe. Nestlé has almost 8000 brands in total

around the world. Remarkably, there isn’t any country where

the products of Nestlé are not sold. Nestlé’s products are

perceived to be safe and high quality and this is also

symbolized from the logo of Nestlé which shows coat of arms,

the birds’ nest which refers to the brand name of Nestlé.

Nestlé places priority in developing high quality and safe

products for which it conducts extensive Research &

Development based innovation through which they build strong

brands (Gupta).

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From the beginning, Nestlé was aware of the fact that the

food products have to be developed in a way that they link

closely with the eating and social habits of the local area

where they are introducing their products in. That is the

reason why Nestlé from the very start has always shown

respect for diverse cultures and traditions and developed

products according to their needs. Nestlé strives to

integrate its products with the local cultures and taste it

also brings its own set of values to the local environment

as well and merge both of them and come out with something

unique. Therefore, Nestlé embraces cultural and social

diversity and does not discriminate on the basis of origin,

nationality, religion, race, gender or age. Moreover, Nestlé

believes that if their actions are helpful to the local

community only then they can achieve long term profits for

their company. Precisely, the environment is changing very

swiftly and in particular consumers are looking for answers

to their health concerns. Nestlé applies the concept “Think

globally acts locally” in a real sense where ever it goes,

as well as thinking out the box idea and being

unconventional in their product and distribution with the

help of strategic global marketing. (M.Aslam).

INTRODUCTION TO NESTLÉ MILKPAK PAKISTAN:

Nestlé have been serving Pakistani consumers ever since

1988, that is when Nestlé based in Switzerland and a very

well established brand in the world acquired the share of

MilkPak in Pakistan following their strategy of acquiring

well established local firms. Nestlé acquired 40% share in

MilkPak initially. MilkPak was the first tetra pack milk

that was introduced in Pakistan in 1981 with green and white

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packaging that is associated with Pakistani flag. It

promised natural and healthy milk from its name and

packaging. It further gained strength when it bought by

Nestlé which brought its core competencies with it and

helped MilkPak to expand. From the start MilkPak was very

well-received and the brand soon became synonymous with high

quality milk. MilkPak first face completion from Haleeb in

1986 which launched its uniquely packaged blue tetra packs

in the market.

Nestlé Switzerland from the very beginning of acquiring

MilkPak started investment in cooling tanks. Between 1988

and 1992, 100 milk tanks were installed in Pakistan by

Nestlé. 1992 onwards, with full support from the Nestlé

headquarters in Switzerland, restructuring of the milk

collection operation and the provision of agricultural

technical assistance became top priorities for Nestlé

MilkPak. The investment paid off and within a decade,

Nestlé's purchase of fresh milk had quadrupled, and the

number of small farmers selling milk to Nestlé tripled in

number. In 2008 MilkPak hit the market share of 40% in the

dairy milk category. (About Us, 2009)

MILK COLLECTION

As it is clear by the brand name of MilkPak, raw material of

Nestlé MilkPak is milk. Over the last Twenty Eight years of

its operation, Nestlé’s major concern has been to improve

the value and volume of milk for UHT processing and for

other milk based products. The company over the time has

very successfully established its own milk collection system

and stretched out its operations over a very large milk shed

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area in Punjab. MilkPak has experienced very large growth in

the volume over the time for its high quality milk. Nestlé

MilkPak has a very long shelf life because of that and its

milk taste better than its competitors as been observed from

the survey.

Today, Nestlé MilkPak has the largest milk collection

network in Pakistan and its competitors cannot match it in

the size, efficiency of the plant and high productivity.

Nestlé collects milk from the huge network of village milk

centers and sub centers daily. As mentioned earlier Nestlé

from the very beginning invested in the chillers and these

chillers are installed at these centers where milk

temperature is reduced to 4 degree C to prevent it from any

kind of bacteria development during the long hauls to the

factories where it is processed. The milk is taken to the

factories by the large fleet of specifically build tankers.

Nestlé conducts and extensive education program for its

farmers and milk collection staff to maintain the high

quality in collection and milk loading and transportation

system. Nestlé MilkPak does not compromise on quality and

maintains high standards whether its milk collection,

transportation, processing or packaging and they pride

themselves in it.

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Other brands of Nestlé in Pakistan:

Nestlé Juices

Nestlé Nesvita

Nestlé Yogurt

Bottled Water

Chocolate KitKat

Baby Food Brands

Maggi noodles  

Nescafe   

PROBLEM STATEMENT:

With the changing demographics and psychographics people are

becoming more conscious about their dietary habits specially

the hygienic aspect of the food quality. Milk industry is

still new and is growing industry at a good pace in Pakistan

and has a lot of scope for further advancement.

Nestlé MilkPak in fact had been the market leader in

Pakistan in terms of a strong brand recognition and quality

but recently it has been experiencing high level of

competition from the local major players like Olpers, Haleeb

and Nurpur and in tea whiteners it is facing competition

from Tarang whereas dry milk like and its various extensions

are still protected from massive competition. To stay as a

market leader Nestlé has re-evaluated its marketing plan

over the time. (About Us, 2009).

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Nestlé’s main focus is differentiation on the basis of

quality, purity, high mineral content and rich iron and

vitamin C quantities than the competitors and value-pricing

and they use these strategies very effectively. Rigid

competition from local players and shifting consumer

preferences are the major hurdles in Nestlé’s efforts to

recuperate its market leadership position in the industry.

Nestlé’s requirement to beat the competition is to

capitalize on its brand name and come up with unique and

multiple different strategies, they need to do that to

overcome competition and gain back their lost share to the

competitors.

We also aim to identify the integration of Nestlé’s basic

marketing strategies with its structure and resources and

finally how they use them over all in the milk industry. We

also strive to know the strengths and weaknesses of the

company and how effectively they have used the control

system. And finally what they have done till now about

staying ahead of their competitors.

OBJECTIVES OF STUDY:

The project objectives include:

Analysis of present scenario of packaged milk industry

in Pakistan as a whole.

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Analyses of present marketing strategies implemented by

Nestlé, to promote its milk product line.

Calculating the difference among the standards of the

local and foreign industry.

Suggesting new extent of competition for the Pakistani

milk industry.

Determine whether the change in the industry be in the

form of a new need, new form or new technology or the

general direction of Nestlé in this particular product

line.

RESEARCH METHODOLOGY:

This section will explain how the research was carried out

with research question, problem area, research technique,

gathering empirical data analysis of data and finally the

answer to the research question.

METHODS OF RESEARCH:

Two basic methods are used to collect and examine

experiential data. These are qualitative and quantitative.

Research methodology is chosen according to research

question, so that it should be help full to find out the

answer of research question (Maxwell, 1996).

TYPE OF STUDY:

Research Design is generally classified into two types of

research, exploratory research and conclusive research

(Malhotra, 2008). Exploratory research aims to present

insights into, and understanding of, the problems

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confronting the research (Malhotra, 2008). The results and

insights out of exploratory research are then further used

in conclusive research, which can be further categorized

into descriptive and causal research (Malhotra, 2008).

Literature review in this report consists of exploratory

research. In this part, secondary research method including

analysis of news articles, government reports, scholarly

articles, industry reports and press releases were used to

gain insight of the recent and new developments in the dairy

milk sector of Pakistan. First the situation of the dairy

milk sector was analyzed through a secondary research

method. Then analysis of marketing strategies and

advertisement of the tetra pack milk providers was

conducted.

We will start our research by conducting exploratory

research in which we’ll observe the behavior of packaged

milk industry and marketing strategies implemented by

Nestlé. We will also try to search the existing findings

related to our topic.

Then we will move onto descriptive research. This is a type

of research that mainly focuses on providing an exact

description of the variables in the problem model. Examples

include market-potential studies, attitude surveys, media

research, and price studies etc. Descriptive research

describes “What is”. It looks at the present scenario. This

is what is being done in the study too. Using descriptive

research contributes quite a lot to the research, such as:

Descriptive research tells us about the problem area

and abnormal situations so that corrective measures can

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be taken. This would help in providing the

recommendations at the end.

Descriptive research makes possible the prediction of

the future on the basis of results on prevailing

conditions, correlation and on the basis of people

toward a certain issue.

Descriptive research gives an improved and deeper

understanding of a phenomenon on the basis of an in-

depth study of the phenomenon.

Descriptive research is the premise of Providing a

basis for decision-making process.

Descriptive research helps fashion many of the tools

with which we do research

In the end data has been analyzed to infer results and based

on which recommendations and action plan has been suggested.

POPULATION SAMPLE

Population for a study is a group of people from which a

researcher wants to observe the reaction and draw

conclusions from (Babbie, 2005). It is never possible to

study all the members of the population that interest

researcher, in every case, researcher selects a particular

sample among the population (Babbie, 2005). The Rawalpindi &

Islamabad metropolitan area is the third largest in

Pakistan, with a population of over 4.5 million inhabitants

(Frantzeskakis). For customers survey the population has

been restricted to the city of Rawalpindi & Islamabad.

The target population of our project is the Nestlé’s milk

consumers. The sample for customers has been restricted to

200 respondents. Sample was selected using Convenience

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Sampling. It refers to the collection of information from

members of the population who are suitably available to

provide it (Malhotra, 2008).

Population sample among packaged milk companies is

restricted to the major milk packaged companies of Pakistan

i.e. Olpers, Haleeb, Nurpur, GoodMilk and their respective

sub brands.

INSTRUMENTS/SOURCES OF DATA COLLECTION:

There are two sources of data collection, first is Primary

data while other is Secondary data. Primary data is

conducted by a researcher for the sole purpose of addressing

the problem at hand, whereas secondary data are data that

have already been collected by others for purpose other than

problem at hand (Malhotra, 2008).

Secondary data is presented in this report in form of

literature review, industry analysis, and background problem

area. This data is collected from various sources which

include news articles, government reports, scholarly

articles, industry reports, press releases and different

websites etc.

In this research primary data is gathered through

questionnaires and interviews. The questionnaire designed

had some closed-ended and open-ended questions. Structured

interview was used only to gain data from Nestlé’s

officials, for the accurate industry analysis.

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SCOPE & LIMITATIONS

The likely outcome of our project would provide the insight

about the milk division of Nestlé, this would give the

reader/ user a general idea about how the things are being

monitored by Nestlé and what are the procedures that are

involved in milk production/ processing etc. Along with

that, we would find out the opportunities and the areas for

further improvement for Nestlé, like what are the areas

which are left exposed or are with the competitors and what

measures can be taken to ensure MilkPak covers those areas.

It will help us to understand if there is a further need of

product improvement or adding a new product to the existing

milk line etc. The competitor analysis will help us to do

find our parities and differences and help us to find ways

to gain competitive advantages and how and when to reshape

or modify our strategies. SWOT and PEST of the organization

will be helpful in gaining the understanding. Along with

that consumer preferences and their need requirements are

observed.

Most of our entire project would give us and the reader /

user the understanding of different marketing, management,

business development, and other concepts that are being

taught to us during our program of MBA. Our project covers

all the 7 Ps of marketing, branding strategies and the like.

Limitations are that this study like any other is to be

conducted within a specified period of time provided to us.

Consumer preferences outside that time limit may change over

the time. Moreover the extent of study of consumers is

limited to Rawalpindi/Islamabad with a set sample size. In

reality the market size of the packaged milk comprises many

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cities of Pakistan. It can be assumed that some the

sensitive data is closest to reality for example advertising

budgets and customer churn.

On the whole this research is subject to certain limitations

pertaining to time and resources.

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CHAPTER 2: LITERATURE REVIEW

Nestlé has a reputation to enter the growing markets before

any of the competitors reach those markets, and Nestlé

successfully builds a significant position in those markets.

Nestlé moves from niche levels to the upscale level as the

income level of the consumer increases. Nestlé, where ever

it reaches tries to localize its products for according to

the needs of local markets. It also localizes its

distribution and marketing strategy to the requirements of

the local market. Nestlé also never let go of any

opportunity to acquire any local firm whenever they find it

worth a good opportunity.

Nestlé’s organization structure is decentralized and the

operating decisions are made by to local units. There are

qualified managers that help in holding the organization

together in Nestlé.

To start up an industrial operation in the new and

undeveloped market requires a lot of attention and precision

in research; some factors affect the growth of the newly

developed sector in organization and turn it into a loss.

Such factors are as follows

The availability of raw material

Cost factor

Economic climate

Consumer purchasing power

Consumer tastes

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Nestlé used procurement and project management on various

occasions to b able to cut major costs. But the relationship

of Nestlé suffered in a great deal because of the gap

between Nestlé’s global and local strategies. Nestlé’s

direction is very strategic in nature. There system was

called Globe which was directed by CEO. GLOBE was supposed

to standardize Nestlé’s activities around the world.

(Consumer Report, 2006).

From the analysis it is clear that Nestlé has taken

advantage from the economic factors as they have

collaborated with the local government of Pakistan to gain

access to the raw materials locally because of which they

don’t have to import the raw material from other countries.

By doing this Nestlé was able to cut down their costs and

increase production. (Consumer Report, 2006).

Nestlé has a history of having committed innovative product

technology centers all around the globe that carry out

extensive R & D. they also license-in their innovative

technology from external sources. Nestlé carries out this

process very carefully in a legal manner because the new

technology has critical effect on Nestlé’s products and

processes.

Nestlé has the following Business Principles in all

countries it operates in and it is very dedicated to these

principles, taking into account local legislation, cultural

and religious practices:

• Nestlé creates value for its consumers, shareholders,

employees, and business partners for a long term by

manufacturing and marketing its products in a unique way and

this value is persistent over time. (About Us, 2009).

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• Nestlé is all about achieving the long term profits and

they do not compromise on it in any way. (About Us, 2009).

• Nestlé recognizes that its consumers place trust in the

name of it and its brands, therefore they carefully monitor

their behavior, beliefs and actions. (About Us, 2009).

Buffaloes are the main source of milk production in Pakistan

as they produce 70% of milk and rest of the 30% comes from

cattle. There are basically two generic types of milk

available in the Pakistani market:

UHT milk

Raw or unprocessed milk.

Raw and unprocessed milk own the major chunk of the market

which is 90% because of that quality measures are difficult

to impose. The milk is delivered by local milkman on their

bikes and they ride away after delivering therefore the

quality controls on them cannot be regulated. There are also

some retail outlets to provide open milk but they are not in

a very large number. (Development Policy Institute

Islamabad, 2008).

UHT milk has its own set of problems and quality issues.

Since UHT milk is made to b unaffected by many adulterations

and has longer shelf life, the main problem with it is price

which is slightly higher than the open milk. ( Development

Policy Institute Islamabad, 2008).

UHT milk market needs to be saturated in Pakistan. In

Pakistan the capacity of processing milk is much higher than

what is actually produced, the reason for it is that urban

consumer prefers using packaged milk but that is a very

limited market and the higher price of UHT milk creates

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artificial ceiling for its distribution and usage in other

sectors of Pakistan. (Raja, 2008).

Brands like MilkPak which is owned by Nestlé and Haleeb Milk

owned by Haleeb Foods has been leading the dairy market of

the world’s fourth largest milk producing country for nearly

two decades very successfully. Engro Foods which is

basically a giant in fertilizers industry, in contrast, had

only been established for few years in Pakistan. Olpers is

the packaged milk brand owned by engro foods and no one in a

branding industry could imagine how Olpers was going to

distance itself from its parent company’s image. And Olpers

surprised every by its high turnover by the end of 2006,

sales for Olper’s Milk had reached Rs.1 billion

(approximately US$ 15 million) and in 2008, the brand has a

market share of close to 22 percent at present which is

second only to Milk Pak (estimated at 40 percent).

(Oppapers).

In Pakistan the packaged milk category at first was

originated in 1981 by Milk Pak, they were the pioneers of

packaged milk in Pakistan. The idea was to collect the milk

from rural areas across Punjab, process the milk that was

collected from different milkmen, through UHT (Ultra-High

Temperature Processing) treatment, and to sell it to

consumers across Pakistan in uniquely colored triangular and

rectangular packs that were designed to protract the milk’s

quality for a longer period of time then usually a milk can

be stored. Therefore when this idea was applies Milk Pak’s

“Milk Packs” were very well-received by the consumer and the

MilkPak in a very little time gained success and received as

a quality milk. Haleeb was MilkPak’s first real competitor,

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which came into market in 1986 and introduced blue colored

packaged milk in the market. Milk Pak’s stance further grew

in standing when it merged with Nestlé in Pakistan. By the

figures of 2006, the dairy milk category in Pakistan was

growing at 20 percent annually, and Milk Pak and Haleeb were

well-received brands that have distinctive colors and those

brands brand promises to keep providing high quality,

natural and healthy milk in future as well, also all the

packaged milk branda are getting benefitted because of the

highly innovated advertisement of packages and Tetrapak.

(Oppapers).

We know and studied during the course of our MBA program

that advertising can increase sales through a certain

procedure that the buyers mind goes through. One of the most

popular models that explain this is the AIDA model. The

acronym stands for ("AIDA” of marketing, 2009):

A – Attention/Awareness: attract attention of the customer

towards a particular product.

I - Interest: customer’s interest is then increased by

focusing on and demonstrating advantages and benefits of the

product.

D - Desire: influence customers that they want and desire

the product or service and that it will gratify their needs.

A - Action: guide customers towards taking action and/or

purchasing.

The usefulness of promotion through advertising mainly the

TVCs basically relies on the attention or memory retention

25

of its audience. To see the effectiveness of advertising and

the risk of the loss of any new information that comes to

the consumer Daniel Schacter (2001) has pointed out seven

ways. These seven ways are transience, absent-mindedness,

blocking, misattribution, suggestibility, bias and

persistence. Flaws in memory can have marked influence on

the process of successful processing of advertising.

(Griffiths, 1997). Even if a positive intention is formed

as a result of exposure to an advert, if a memory

malfunction interferes with that target, the advertising

will not be effective (Griffiths, 1997).

In response to this Larry Percy (2004) has identified

various ways while designing and applying advertising

campaign to avoid these seven risks associated with

human/audience memory. These include (Larry Percy, 2004):

Advertisers should integrate the message with the

perception of the brand very carefully (transience)

Advertisers should make those points more easy to

understand in which the target audience is interested

(transience)

Advertisers should apply personal references,

particularly to positive memories (bias)

Advertisers should involve current positive brand

attitudes are of long standing (bias)

Advertisers should make sure the correct emotions are

tied to the brands image (blocking, persistence)

Advertisers should use unique cues not likely to be

associated with other long term memories (absent-

mindedness)

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Advertisers should create a distinctive brand benefit

claim link (misattribution)

Advertisers should institute links in memory to

appropriate need category (absentmindedness)

Advertisers should make sure those links are well

integrated with noticeable associations to the category

need (blocking)

Advertisers should ensure a consistent 'look and feel'

over time to encourage familiarity (absent-mindedness)

Advertisers should use strong visual images to create or

reinforce positive memories associated with the brand

(suggestibility)

Advertisers should exploit reminders of past problems

that could be evaded or solved by the brand

(persistence).

To evaluate the impact of advertising on the success, growth

in sales and switching behavior on any brand a research was

conducted by AC-Nielsen, and as a result it was assumed that

without the adequate support of advertising the brand can

shrink brand loyalty, brand equity, and premium pricing

(Johnny Panagiotidis, 15th May 2005). Even if there is no

ATL advertising is available and only BTL advertising is

there, even in that case sales growth has been observed, but

in that scenario consumers are more prone to switch the

brand (Johnny Panagiotidis, 15th May 2005).

The involvement of the authors of this project will pertain

to an in-depth analysis of the current situation of

Pakistan’s existing packaged milk providers and capacity of

Nestlé milk products to advance and stay abreast. Once an

overview is achieved it will be compared to the

27

international standards in order to verify if some

performance gaps or variances exist. The project is followed

by recommendations that will explain how Nestlé can gain its

lost market share.

CHAPTER 3: INDUSTRY ANALYSIS

MILK INDUSTRY IN PAKISTAN

In Pakistan the packaged milk category at first was

originated in 1981 by Milk Pak, they were the pioneers of

28

packaged milk in Pakistan. The idea was to collect the milk

from rural areas across Punjab, process the milk that was

collected from different milkmen, through UHT (Ultra-High

Temperature Processing) treatment, and to sell it to

consumers across Pakistan in uniquely colored triangular and

rectangular packs that were designed to protract the milk’s

quality for a longer period of time then usually a milk can

be stored. Therefore when this idea was applies Milk Pak’s

“Milk Packs” were very well-received by the consumer and the

MilkPak in a very little time gained success and received as

a quality milk. Haleeb was MilkPak’s first real competitor,

which came into market in 1986 and introduced blue colored

packaged milk in the market. Milk Pak’s stance further grew

in standing when it merged with Nestlé in Pakistan. By the

figures of 2006, the dairy milk category in Pakistan was

growing at 20 percent annually, and Milk Pak and Haleeb were

well-received brands that have distinctive colors and those

brands brand promises to keep providing high quality,

natural and healthy milk in future as well.

In the recent times, it seems that everywhere we look, there

is either a billboard, a TVC or a radio jingle promoting a

brand of packaged milk, regardless of the brand, whether

it’s Haleeb, Nurpur, Pakola, Nirala, MilkPak, Goodmilk or

Olper’s there is always some kind of advertisements going

on. But this isn’t surprising for a country like Pakistan

which is according to recent statistics, the fourth largest

milk producing country in the whole world which is 32

billion liters per year from 50 million animals, with urban

consumption at nearly seven billion liters per annum.

29

However, even though the rankings are high, packaged milk

according to the recent estimates, has only twenty percent

penetration in the total market. That is the reason why

processed milk companies (PLMCs) have been aggressively

advertising and marketing their brands in attempt to

increase the penetration in the market. Even though current

economic turnaround has contributed to the growth in the PLM

sector, but still the penetration in the market is fairly

less.

The reason for the growth in PLM sector because people are

becoming more and more aware of the health and hygiene

factor. This factor and increasing dissatisfaction with open

milk are the reasons for growth in this sector. However,

many challenges still have to be overcome by the PLMCs to

increase the penetration in the market.

Milk even amongst the most urbanized consumer is perceived

fresh, healthy and preservative free and straight from the

cow, if it is provided to them by doodhwala ( milkman )

early in the morning. Therefore this perception has to be

overcome, if increased penetration of packaged milk is to

occur at a significant rate in the market.

Another problem faced by packaged milk industry to make

people switch from loose milk to packaged milk is price.

Brands like Milk Pak which is owned by Nestlé and Haleeb

Milk owned by Haleeb Foods has been leading the dairy market

of the world’s fourth largest milk producing country for

nearly two decades very successfully. Engro Foods which is

basically a giant in fertilizers industry, in contrast, had

only been established for few years in Pakistan. Olpers is

the packaged milk brand owned by engro foods and no one in a

30

branding industry could imagine how Olpers was going to

distance itself from its parent company’s image. And Olpers

surprised every by its high turnover by the end of 2006,

sales for Olper’s Milk had reached Rs.1 billion

(approximately US$ 15 million) and in 2008, the brand has a

market share of close to 22 percent at present which is

second only to Milk Pak (estimated at 40 percent).

Though there are still a lot of hurdles like consumer

perceptions and price differentials between open and

packaged milk and they needed to overcome, the processed

milk market is set to grow. There is a still a very large

market size that needs to be converted, which is a huge

opportunity for PLMCs. If the economy remains stable for the

next five years, penetration in the market will increase at

an astonishing rate. (Dairy Industry in Pakistan, 2007).

CHAPTER 4: ORGANIZATION ANALYSIS

NESTLÉ MILKPAK PAKISTAN:

Today, Nestlé MilkPak produces its products in over 81

countries and achieves 98% of its turnover outside Europe.

Nestlé MilkPak is the world’s largest milk company. It has

an annual revenue of 70 billion Swiss francs, 522 new

31

factories in 81 countries, 200 operating companies, 1 basic

research outer and 20 technological development groups, has

more than 231,000 employees and more than 8000 products

around the globe. There are three main administrative

companies that co-ordinate the activities of more than 200

operating companies around the globe. (About Us: Nestlé,

2009).

Figure 1: Product Concept

Nestlé is perceived as the best quality product all over the

globe and the same idea is reflected and replicated in the

introduction and launch of Nestlé MilkPak. It became

reputable brand very soon in Pakistan and many other milk

producers later chased the same pattern to initiate their

milk brands in the same market which has now become

rigorously competitive.

MilkPak has been nominated as the best brand on the

attribute of sustaining quality. Familiarity with the brand

has been rated as the second most sought after features and

32

specify the superior quality of marketing and promotional

communications which are more aimed at consumers’ awareness

for consumption of packaged milk. Availability of the Nestlé

MilkPak has been rated as third in the sequence and

definitely indicates potential for further improvement.

Affordability has been graded as last by consumer voting

indicating consumers’ sensitivity to frequent upward pricing

of essential commodities. In an economy like today

affordability is a very important factor that affects the

spending on packaged milk.

SWOT ANALYSIS

A SWOT Analysis is carried out by the company so that it is

able to position itself to take advantage of particular

opportunities in the environment and to avoid or minimize

environmental threats. In doing so, the organization

attempts to emphasize its strengths and moderate the impact

of weaknesses and improving them.

SWOT Analysis of Nestlé MilkPak done by a research group (AC

Neilson) is as follows:

INTERNAL ANALYSIS

STRENGTHS

A socially responsible Company.

Nestlé MilkPak Limited’s products enjoy strong brand

image and market pull.

Innovative and constantly growing product line. Nestlé

33

MilkPak launched 17 new products, including variants of

existing products in recent past.

Sales force is the major resource strength in terms of

physical possessions of the company.

Marketing strategies employed by the company are

innovative and draw in customers.

Financial, marketing and sales strategies are devised

by gauging the customer demands.

Periodic research is carried out to judge market

trends.

It is a large scale multinational organization, with

copious funds and has the competence of acquiring

weaker firms by throwing them out of competition

Growing Sales and profits.

Major shareholder in the food industry of Pakistan.

Aggressive Marketing.

Efficient Distribution networks throughout the country.

Quality Products.

Environment Friendly.

Skilled labor.

Educated staff.

Large number of offerings.

Arrangement of events.

Brand name

Easy to approach outlets.

Physical evidence Strong Brand image

Quality product

Solid Financial position

Strong supply chain network

Qualified work force

Commitment to High Quality Products

34

Focus on research and development, estimations of UHT

Milk Production and Consumption up to 2008– 09

Year Annual Production

(million liters) Annual Consumption

(million liters)

2008-09   => 648.43 353.71

2009-10 =>  753.89 372.05

WEAKNESSES:

Selective investment due to uncertain economic and

political conditions.

Feasibility of new products needs to be analyzed, e.g.

Nestea was launched some years back but it failed

because no customer demand for it existed.

Relatively a new company in comparison to its rivals

e.g. Lever Brothers.

Low levels of inventory maintained can be dangerous.

No credit sales.

Low sales margins due to highly value added products.

They cannot launch many of its expensive international

brands due to the lower income groups.

Physically impossibility to have target market.

There is weak marketing of MilkPak as there is no

advertisement of MilkPak on official website.

Lack of awareness among the target market.

It Dependency on others (govt. & sponsors) for the

arrangement of events. The target market of Nestlé

MilkPak is upper middle and high class because lower

middle and poor class cannot afford to buy UHT milk due

to its premium price.

It is a main weakness of MilkPak that there are

different companies of milk but the name of Nestlé

35

MilkPak is always stand in the last because of low

advertising and marketing.

EXTERNAL ANALYSIS

OPPORTUNITIES:

Pakistan is the seventh largest producer of milk in the

world with annual output of over 22 billion liters.

There are substantial growth opportunities considering

the average capitulate of Pakistani animals at only

1,100 liters/annum as compared to 6,000 liters/annum

for animals in Europe and USA. There are nearly 20

million milk producing animals in the country, mostly

in Punjab (80%).

The overall milk market in Pakistan is 20 billion

liters, out of which processed milk contributes only 3

million liters. Nestlé MilkPak along with other

processed milk businesses makes a payment of only 2% to

this large market.

Nestlé MilkPak has stretched out its product range by

entering the cold dairy market recently by launching

Nestlé plain yogurt and now fruit yogurt is also added

to it.

To expand the cold dairy products range, Nestlé fruit

yogurt is the latest addition to this group.

The cold dairy market offers many opportunities for the

company which can capitalize these products by banking

on its superior quality milk.

The coffee brand also offers many opportunities for the

company to expand by tuning the taste of the masses

towards coffee.

Credit policy can be implemented to increase sales.

36

THREATS

Price fluctuations due to rupee devaluation as raw

material are imported.

The uncertainty of economic conditions poses a great

threat as the major funds invested in the country come

from outside Pakistan.

The present economic crisis in the world, led to the

withdrawal of foreign management from the company and

the investment has come to a halt.

Competition with Nestlé’s owns smuggled brands.

Effect of Seasonality’s upon sales.

Imported raw material, in some of the company’s

products.

Major player may enter target market

Legal and ethical issues.

Market segment growth could attract new entrants.

PORTERS FIVE FORCES MODEL

The Porter’s Five Forces Analysis helps the marketer to

contrast a spirited competitive environment. It has

similarities with other tools for environmental audit, such

as PEST analysis, but tends to focus on the single, stand

alone, business or SBU (Strategic Business Unit) rather than

a single product or range of products. (Porter's Five Forces

Model).

37

Figure 2: Porters Five Forces Model

Five forces analysis looks at five key areas namely the

threat of entry, the power of buyers, the power of

suppliers, the threat of substitutes, and competitive

rivalry.

FIVE FORCES MODEL APPLICATION IN NESTLÉ.

In our project of Nestlé milk product line the application

of Porters five forces model is as follows.

38

Figure 3:Five forces model application in nestlé

THREAT OF NEW ENTRY.

In the scenario of packaged milk industry of Pakistan, there

is a lot of potential as the consumers are switching their

preferences from conventional Gawala milk to the packaged

milk. The new entrants that have some resources or

experience are entering into milk industry. As the data from

last 5- 10 years show that the only two dominant brands of

packaged milk available were the Nestlé MilkPak, and Haleeb

Milk by Haleeb foods (formely Chaudhary daries limited). But

in the last decade new brands came like Nirala Milk from the

owners of Nirala Sweets , Nurpur milk from Noon group of

companies, Halla milk which has currently closed its

operations. And in the recent last few years two new brands

came that have significantly captured a large market share

that are Good Milk from Shakar ganj group, and Olpers by

Engro foods.

Now what Olpers and Good milk has done is that they hired

the management from Haleeb and Nestlé at high wages and at

39

their expertise they captured the market, these companies

have high budgets so they done intense and out of the box

marketing and made their name in market. As earlier, there

were only two players in milk industry; Nestlé and Haleeb so

the government does not have strict policy , new brands came

in to make healthy competition which has ultimately given

benefit to the consumer. And as the industry is growing so

new entrants have potential in the market. The

differentiation these companies are doing is by their

marketing and distribution only like if a company for

example Olpers have strong distribution in Chakwal it will

capture the market in that area and vice versa.

POWER OF BUYERS.

The power of buyers is high when there are only few firms in

the industry providing their services. In the milk industry

the buyers have more choices now with the entry of new

brands like Oplers and Good milk. Like previously the buyers

have only two choices either Haleeb or Nestlé. But now the

situation has changed, buyers have many choices if any brand

doesn’t performs good in terms of quality, convenience or

pricing they switch to other brand. For example a restaurant

that buys milk from Haleeb doesn’t get favorable terms of

credit from company can now switch to any of other brands

like Nestlé, Olpers , Good milk. There is a cut throat

competition and each of them is striving for its market

share.

POWER OF SUPPLIERS.

Now with more brands the switching cost is also low as

buyers have increased choices.

40

The power of suppliers is stronger than powers of buyers.

The dairy farms that had been supplying milk to packaged

milk brands have more choices now as they can sell their

milk to any of prevalent packaged milk brands who offer more

prices and favorable terms of payments etc.

Other thing is that the switching costs of buyers is high

and also matters like it will cost high when switching from

one supplier to another requires more complex procedures.

Like if Nestlé buy milk from one buyer and switch to other

it had to re make its policies and negotiation terms and

conditions , along with that it also had to make other

changes etc.

THREAT OF SUBSTITUTES.

The substitutes options to the packaged milk are very less

yet very strong in the market, the substitutes are the

conventional open milk, and the dry powdered milk. One

important thing is that milk is the generic product so to

make its substitutes is a difficult thing. So threat of

substitute is low.

THE COMPETITIVE RIVALRY.

This is very high in this industry, there are many cases

when one brand has bought or hired the sales force of other

company, there are many promotions and marketing campaigns

going on to capture the market share. The only way to

compete is on the basis of marketing as the prices are

almost same. The different brands have done their

positioning differently as:

Nestlé. Purity is everything.

41

Haleeb. The thickest milk.

Olpers. A complete milk.

Good milk. Healthy life.

PEST ANALYSIS

In analyzing the macro-environment, it is significant to

discover the factors that might in turn affect a number of

imperative variables that are likely to influence the

organization’s supply and demand levels and its costs

(Kotter and Schlesinger, 1991; Johnson and Scholes, 1993). A

number of checklists have been developed as ways of sorting

the vast number of possible issues that might affect an

industry. A PEST analysis is one of them that is merely a

framework that categorizes environmental influences as

political, economic, social and technological forces. The

analysis examines the impact of each of these factors (and

their interplay with each other) on the business. The

results can then be used to take gain of opportunities and

to make contingency plans for threats when preparing

business and strategic plans.

Kotler (1998) claims that PEST analysis is a useful

strategic tool for understanding market growth or decline,

business position, potential and direction for operations.

PEST also ensures that company’s performance is aligned

positively with the powerful forces of change that are

affecting business environment (Porter, 1985).PEST is useful

when a company decides to enter its business operations into

new markets and new countries. PEST analysis of Nestlé

MilkPak Pakistan has following points:

42

POLITICAL FACTORS:

The rules of government of Pakistan do affect the company

and its brand. The company policies are affected and its

budget is also affected .Nestlé paid 15% sales tax and 18%

excise duty when they directly imported chiller from the

other country but mostly they purchase chillers inside the

country. Increased prices of electricity and petrol cause

transportation and other cost heavily which results in the

increased prices of processed milk.

On the other hand, these days Government provides chillers

to the Nestlé MilkPak at interest free installment through

UNDP and PDDP projects. This process reduces the pressure on

milk industry and increase the productivity.

ECONOMICAL FACTORS:

Pakistan is blessed with good potential for dairy

development, buffalo being the principal source of milk. But

due to problems such as poor nutrition, mismanagement,

failure to control disease, unavailability of veterinary and

poor animal husbandry, only 5% milk is used for processing.

Nestlé MilkPak is playing an important role in the economic

growth of Pakistan. They earn a lot of profit and also trust

its profit in social welfare by making schools or helping

with funds during earthquake in Azad Kashmir. Nestlé

Pakistan also helps educating the farmers how to get maximum

quantity of milk from the animals by providing them

sufficient food. They also provide job opportunities to the

people of rural areas by giving them animal on interest free

installments.

43

Now a days, our economy is on recession due to this the

prices of processing milk has been increased day by day.

SOCIAL FACTORS:

People in Pakistan mostly prefer fresh and open milk & rely

less on processed milk because they understand processing

milk companies add chemicals and preservatives in milk

during process. But Nestlé MilkPak try to change this trend

through heavy advertisement and awareness programs.

Processing milk is mostly used in large cities or towns.

Companies try to win large number of customers by providing

them quality and value.

TECHNOLOGICAL FACTORS:

Nestlé uses latest technology and high quality machinery in

the production of milk or other products, it also fulfill

the customer’s requirement. For example, Nestlé recently

opened Asia’s largest factory in Kabirwala. Nestlé MilkPak

now uses machinery that produced 1800 to 2000 tones milk

daily.

NESTLÉ’S MARKETING STRATEGIES FOR ITS MILK PRODUCT

LINE

The corporate strategy of Nestlé Pakistan is growth. The

operational strategies of Nestlé in Pakistan are as follows:

o Consumer communication

o Product availability and development

o Quality strategy

o Branding strategy

o Differentiation strategy

44

o Positioning strategy

o Marketing Mix Strategy

CONSUMER COMMUNICATION

The taste of the customer and awareness is brought among

people about healthy and delightful eating with the help of

electronic media, advertisements boards, banners,

advertising on newspapers, pamphlets, brochures, handouts

and by the stall activity of marketing department. Customer

feedback is also very important for Nestlé MilkPak and to

cater this it has setup a special call centre. Good to know

is the tag line Nestlé use for customer communication and

satisfaction.

PRODUCT AVAILABILITY

From time to time activities such as area storming,

determining new places or areas are being done. Thus, making

the distribution of MilkPak everywhere.

BRANDING

Nestlé is a strong brand so while catering to Pakistani

market of Milk it has developed a broad branding strategy.

The packaging of the MilkPak is in green and white color in

lieu of the colors of flag of Pakistan thus following

Glocalization. It is because of this branding that Nestlé

MilkPak is a major producer of packaged milk and very

45

successful in high brand recognition and brand recall and

product quality in Pakistani market.

DIFFERENTIATION STRATEGY

Nestlé has differentiate itself in terms of nutrients in

MilkPak e.g. “Addition of IRON and Vitamin “A & C” and

purity “Khalis hi sab kuch hay”.

POSITIONING STRATEGY

Nestlé MilkPak has adopted the functional positioning

strategy like:

“Khaalis He Sab Kuch Hai”

“Wohi Qudarti Maza”

“Jaan Banaoo”

MARKETING MIX

Product:

• Quality Product

Nestlé MilkPak has the largest market share

due to its consistent quality.

46

　 • Product Packaging

Nestlé MilkPak is available in different product

consumption range and stylish packaging.

• Product Lifecycle

Nestlé MilkPak has been in the market for more

than two decades and it is at continual growth

stage.

Figure 4: Product Life Cycle

Initial growth Continuous growth

Decline Maturity

Price:

• Competitive Pricing

MilkPak has a large share in the market. The price

of MilkPak is competitive with other brands in

market.　

47

Table 1 : Comparison of Prices and Packaging

Figure 5: Comparison of Prices and Packaging

Placement:

• Distribution Channels:

48

MilkPak is not sold directly to consumers. A

complete distribution process is followed. It uses

indirect channels for distribution like:

Manufacturer

Distributor

Wholesaler

Retailer

Consumer

Promotion:

• Spotlighting on health conscious people in their

advertisement.

Promotion Mix

• Advertisement

• Public relations

MARKETING GROWTH STRATEGY

Nestlé is pursing growth strategy. They have invested $ 70

billion at Kabirwala Plant and they are planning to invest $

381 billion in the milk business in coming years.

49

CUSTOMERS’ ANALYSIS:

To meticulously considering the response Nestlé MilkPak

customers were from Rawalpindi and Islamabad, belonging to

varying demographics i.e. different age groups, occupation

and income levels were surveyed. This survey was in form of

questionnaire, a sample of which is attached in Appendix.

At start, let’s look at how the total population of survey

is distributed in terms of gender, age, occupation and

income level; we have taken gender and income level as the

major criteria for our sample selection. Following tables

and charts show the distribution of respondents over these

categories:

GENDER: Overall 54% of our respondents were female, and rest

46% were males.

Table 2: Gender Ratio

Gender

Male Female

93 107

Figure 6: Pie Chart of Gender ratio

50

AGE: While being totally neutral in selection of sample, it

is seen that most of the MilkPak users are between 26-35yrs

age group. This is because they belong to the current

generation, who has an eye over every thing, conscious about

health and are working class and has lack of time. below 15

years is just 2% of the total population sample, but in

future it seems to be really attractive age group for

MilkPak customers because children are the best influencers

for selling.

Table 3: Age Distribution in Customer Survey

Age Group

Category Below 15 15 to 25 26 to 35 36 to 45 Above 45

No. Of Respondents 4 40 88 42 26

Figure 7: Age Distribution in Customer Survey

OCCUPATION: In terms of occupation the sample was

distributed in three categories namely, low income,

employed/having own business and retired / housewives /

financially dependent family members. While being unbiased

in selection of sample, it is witnessed that the last two

categories consume packaged milk more.

51

Table 4: Occupation Distribution in Customer Survey

Occupation

Low income Employed / have my own businessRetired /housewife /financially

dependent family member

33 102 65

Figure 8: Occupation Distribution in Customer Survey

INCOME LEVEL: This category is divided into five divisions

from below Rs.10,000 to above Rs.75,000, keeping in mind the

social income groups prevailing in Rawalpindi and Islamabad.

The respondent’s income levels indicate that MilkPak users

belong to every income group.

Hidden Trend: It is seen that the above Rs 50,000 income

level people tend to show their preferences for Packaged

Milk more because of various reasons e.g. shopping in malls

and convenience, availability of packaged milk its long

life.

Table 5: Income Level Distribution in Customer Survey

Income Level (in Rs.)

Below 10,000 10,000 to 25,000 25,000 to 50,000 50,000 to 75,000 Above 75,000

4 12 34 72 78

52

Figure 9: Income Level Distribution in Customer Survey

Now in the second phase of our analysis, lets dissect the

responses on main questions and try to figure out the hidden

and/or clearly visible, registered trends.

53

Questionnaire analysis:

1. What is your preference: open milk or tetra pack?

Table 6 : Ratio of Open Milk to Packaged Milk

Ratio of Open Milk to Packaged Milk

Options Open Milk Tetra Pack Both

Responses 48 96 56

Figure 10: Ratio of Open Milk to Packaged Milk

Out of the sample size of 200 respondents from Rawalpindi

and Islamabad showed a mixed trend. Total Fifty one percent

of the consumers in market use either open milk or open milk

and packaged milk simultaneously. Packaged milk has

54

28%

48%

24%

OPEN MILK

TETRA PACKMILK

COMBINATIONOF BOTH

penetrated deeply in market especially in cities and the 48%

of the people prefer tetra pack milk in comparison to 28%

people who are stick to conventional open milk only in all

sorts of circumstances and don’t like packaged milk at all.

High Price perceptions also prevails in this 28% of sample.

Whereas the 24% people use packaged milk as substitute of

open milk n this shows the growth potential in market.

2. If you buy packaged milk then would you prefer Nestlé

MilkPak?

Table 7: Preference to Nestlé MilkPak

Preference to Nestlé MilkPak

Options Yes No Up to some extent

Responses 120 46 34

Figure 11: Preference to Nestlé MilkPak

60%23%

17%

YES

NO

UP TO SOMEEXTENT

55

Here in this case when the respondents were asked about

their preference of the Nestlé MilkPak over other tetra

packs 60% of them responded in favor of MilkPak, 23% of the

respondents choose other tetra pack milks and 17% were

neutral and according to them they purchase whatever brand

is available. This analysis shows the higher preference of

MilkPak over other brands.

3. Are you satisfied with quality of MilkPak?

Table 8: Satisfaction with Nestlé MilkPak Quality

Satisfaction with Nestlé MilkPak Quality

Options Yes No

Responses 182 18

Figure 12: Satisfaction with Nestlé MilkPak Quality

91%

9%

YES

NO

56

The response to this question is related with the response

of the question that if respondents prefer MilkPak over

other tetra pack brands. One reason of the high percentage

of preference could be its taste, as out of the sample of

200 respondents, 91% of them replied that they like the

taste of it better than any other brands and only 9% replied

that they prefer the taste of other milk brands which shows

the better taste is one of the reason of MilkPak being the

market leader.

4. Would you like to have improvement in MilkPak?

Table 9: Need for Improvement in Nestlé MilkPak

Need for Improvement in Nestlé MilkPak

Options Yes No

Responses 182 18

Figure 13: Need for Improvement in Nestlé MilkPak

91%

9%

YES

NO

57

The response to this question is similar to the last one the

reason being that it was about the taste of MilkPak. The

people that prefer the taste of Nestlé MilkPak does not want

it to be changed and the people that does not prefer its

present taste thinks it should be changed. Therefore 91% of

the respondents do not want the taste to change and 9% of

the respondents want it to change.

5. Rate the taste of MilkPak as compared to other tetra pack

milk?

Table 10: Taste of MilkPak compared to other tetra pack milk

Taste of MilkPak compared to other tetra pack milk

options Very bad Bad moderate good Very good

responses 0 0 46 92 62

Figure 14: Taste of MilkPak as compared to other tetra pack milk

0%0%

23%

46%

31%very bad

Bad

Moderate

Good

Very Good

58

According to the responses to this question as much as 31%

of the respondents think that the taste off Nestlé MilkPak

is very good as compared to any other tetra pack milk. 46%

of the respondents think it’s good and 23 % think its

moderate as compared to other tetra pack milks. None of the

respondents think that the taste of MilkPak is worst or not

as good as any other tetra pack milk.

6. Is the price of Milk Pak rational?

Table 11: Price of Nestlé MilkPak

Price of Nestlé MilkPak

Options Yes No

Responses 172 28

Figure 15: Price of Nestlé MilkPak

86%

14%

YES

NO

59

A huge population of our sample as 86% responded that the

price of Nestlé MilkPak is competitive and justified in

comparison to other tetra milk packs. 14% felt that the

MilkPak is over-priced. The thinking might be in comparison

to the price of open milk.

7. Is MilkPak readily available to you?

Table 12: Availability of Nestlé MilkPak

Availability of Nestlé MilkPak

Options Yes No

Responses 172 28

Figure 16: Availability of Nestlé MilkPak

86%

14%

YES

NO

60

86% of our sample size of population is contended with the

availability of the Nestlé MilkPak and its intensive

distribution. It is available every where in cities, super

markets, grocery shops and in kiosks also. The convenient

availability of the Nestlé MilkPak is backed by the strong

and efficient supply chain management system of Nestlé

Pakistan. However there are many areas where milk Pack is

not available and 14% people reported that they could not

have the access to Nestlé MilkPak.

8. Which brand of tetra pack you will buy in case of

unavailability of MilkPak?

Table 13: Choice of Other Milk Brands

Choice of Other Milk Brands

Options Olpers Haleeb Good milk Any other

Responses 82 62 28 28

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Figure 17: Choice of Other Milk Brands

41%

31%

14%

14%

OLPER'S

HALEEB

GOOD MILK

ANY OTHER

When the sample of 200 respondents were asked the question

that which other tetra pack they would prefer if MilkPak is

not available to them, 41% of the respondents replied that

they would go for Olpers if they don’t find MilkPak, 31%

prefer Haleeb in case they can’t find MilkPak, 14% replied

in the favor of good milk and 14% of the population replied

other brands. This shows that Olpers is a very close

competitor of MilkPak and even if people can’t find MilkPak

majority would go with Olpers and Haleeb.

9. Do you recall the ad of Nestlé when you see Nestlé milk

at the store?

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Table 14: Recall of Nestlé Milk Advertisement

Recall of Nestlé Milk Advertisement

Options Yes No

Responses 110 90

Figure 18: Recall of Nestlé Milk Advertisement

The recall of Nestlé MilkPak advertisement is not very

high and encouraging.55% of the sample population could

recall advertisement in contrast to 45% who did not. The

reason being that Nestlé’s strategy about advertisement

is not very intensive. Nestlé believes on providing good

quality products and knowing customers better and

communication with the customers than merely

advertisement on TVCS.

10. What you prefer while buying packaged milk?

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Table 15: Preference while purchasing tetra pack

Preference while purchasing tetra pack

options Purity/quality price Convenience availability

responses 82 76 24 18

Figure 19: Preference while purchasing tetra pack

41% of the people emphasized on purity and quality of the

milk while choosing different brands. Price of the brand is

also a major reason of switching to different milk brands.

38% of the people in our sample were price conscious.

Convenience of packaged milk and availability were minor

issues in regard to quality as milk is a food item.

11. If Nestlé milk isn’t available at shop/ out of stock

you ask the shopkeeper about its reason or switch to

other available brand of milk?

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Table 16: Loyalty with the brand

Loyalty with the brand

Options Other brand Ask reasons

Responses 142 58

Figure 20: Loyalty with the brand

In the previous question we have seen that quality is

foremost important to people while buying edible products

such as milk. But as milk is very generic product and there

aren’t many substitutes available so people as 71% responded

that due to the non availability of Nestlé in market they

will go for other brands for some time though in spite of

their strong loyalty with Nestlé Milk.

12. Can you remember and recognize the colors of Nestlé

MilkPak (white & green) at billboard?

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Table 17: Recognition of Nestlé MilkPak Brand

Recognition of Nestlé MilkPak through colors

Options Yes No Don’t know

Responses 178 18 4

Figure 21: Recognition of Nestlé MilkPak brand

Nestlé is a very quality perceived and trusted strong brand.

In Pakistan MilkPak has green and white colors representing

colors of the land.89% of respondents claim that they can

recognize Nestlé MilkPak.

13. Nestlé has been changing its packing with the events

like Independence day pack with Pak flag and Ramadan

packs, have you seen such packs on the shelves of shops

as it is for a limited time offer with high turnover of

milk.?

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Table 18: Recognition of limited time packaging

Recognition of limited time packaging

Options Yes No

Responses 126 74

Figure 22: Recognition of limited time packaging

Nestlé’s sales promotion strategy is intensive during the

special events like Ramdan, Jashan Azadi and the Eids.

Special packaging is introduced to emphasis the relationship

Nestlé shares with its consumers. Nestlé is quite successful

in this regard as 63% of the population sample responded

that they can recall and recognize the special packaging and

colors of the brands.

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14. How you perceive brand image from the Television

advertising for each company?

Table 19; Perceived Advertising Image

Perceived Advertising Image

Nestlé Olpers Goodmilk Haleeb Nurpur

Traditional 82 54 36 45 26

Modern 49 81 12 24 24

Serious Image 85 60 31 52 38

Fits my Life

Style36 84 34 29 22

Quality

service72 75 48 36 11

Economical

Service70 82 31 17 74

Trustworthy 69 82 32 35 8

Wide Range of

products76 69 14 34 30

Innovative 29 108 54 9 29

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Figure 23: Perceived Traditional Advertisement Image

Figure 24: Perceived Modern Advertisement Image

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Figure 25: Perceived Serious Advertisement Image

Figure 26: Perceived Image that Brand fits to life style

This is one of the most comprehensive questions of this

questionnaire in terms of the perceived advertising image of

the key players of tetra pack milk industry of Pakistan. In

this question all the respondents were asked to mark the key

players of this industry i.e. Nestlé, Olpers, Haleeb,

Goodmilk, Nurpur. with reference to 8 characteristics i.e.

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traditional, modern, serious image, fits my life style,

quality service, economical service, trustworthy, wide range

of products and innovative. Above table shows the ranking of

each company in percentages with respect to the above stated

12 characteristics.

The above table shows the power of advertisement used by

Olpers. As it has the highest ranking among other players in

the industry and Nestlé is right behind it. Olpers is

leading in many given aspects like modern, trustworthy and

innovative etc and Nestlé is right behind it whereas other

three brands are way behind them in all the aspects.

Comparison of Nestle MilkPak with other brands

Attributes/Brands Nestle Olpers Haleeb GoodMilk Open Milk

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Brand Image Pure Strong Thick Drinking Milk

Pure

Brand Positioning Purity is everything

All Purpose milk

Thickest Milk

Drink Good Milk everyday

Fresh and Pure

Brand Recall Strong Strong Strong None ---Consistent Quality Always Always Always Always DependsPrice Rs. 58 Rs. 57 Rs. 57 Rs. 57 50-60/kgDistribution(cities) Intensive Intensive Intensive Less IntensiveDistribution(rural) Intensive Intensive Less Less IntensiveAdvertisement Frequency

Less Intensive Medium Medium None

Promotion Tvcs, News

Tvcs,radio,Billboards,Shows

Tvcs, Home to Home

Tvcs, News

None

Advertisement Appeals

Emotional, Emotional, Emotional, Emotional None

Taste Natural Good Creamy Sweet NaturalConvenience Yes Yes Yes Yes No Market Research Nestle

Research laboratories

Market Research Unit

Timely Timely None

Target Market Middle, upper middle, health conscious people

Middle, upper middle, health conscious people

Middle, upper middle,

Middle, upper middle,

Everyone

Packaging 0.25L,0.5L1.0L

0.25L,0.5L1.0L, 1.5L

0.25L,0.5L1.0L

1.0L Depends

Brand History 1981 2006 1986 2007 AlwaysFinancials Backed by

NestleBacked by Engro Foods

Now Less Stable

Backed by Shakarganj Foods

---

Product Differentiations

Purity, Rich Iron, Vitamin C

All purpose

Good for tea and desserts

Drinking Milk

---

Sub Brands Nesvita,Nido Olwell Dairy Queen

--- ---

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Marketing Objectives

To be market leader

To be market leader

To be market leader

To attain 20% share

---

Market Share of packaged milk industry

40% 25% 35% other brands ----

Total Market share

8%(40%of 20%)

5%(25% of 20%)

7%(35% of 20%)

80%

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CHAPTER 5: IDENTIFICATION OF KEY AND CONCLUSIVE RESULTS

Thoroughly considering the theoretical process of how Nestlé

impacts consumer behavior, analyzing closely each Strategy

of Nestlé taking up for its milk product line and examining

the data collected through customer survey to have a handle

on the customers’ respective perspectives, and alignment of

strategies with Nestlé MilkPak’s marketing following results

were deduced:

Nestlé MilkPak is quite able-bodied in the market. It has a

good image among the consumers. It is legendary for its

quality and being the pioneer of safe and good quality milk.

It is selling well. The marketing of it is also being done

quite well. Even though Nestlé’s overall performance is

quite well in the market but there is always a room for

improvement as the market is always very dynamic and so the

management of Nestlé has to align the strategies according

to the changing demands of the market.

Nestlé MilkPak’s management must also be careful and abreast

of Olper’s as it has managed to provide stiff competition to

MilkPak and Haleeb in a very short span of time.

Brand awareness and brand recognition are present and Nestlé

MilkPak can capitalize on it in all ways. Marketing is

aligned with the strategies of Nestlé MilkPak.

All brands acknowledge that the intention behind their huge

marketing investments specifically in terms of TVCs is to

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attract new customers, retain existing customers and make

competitors customers switch to their Brand. Customer churn

is acknowledged by all the brands to be a common problem

threatening each of them and TVCs is being used as a major

tool/medium to overcome this problem.

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CHAPTER 6: RECOMMENDATIONS

Nestlé MilkPak is a success story in Pakistani market. It

has maximum market share. There is not a lot to recommend to

a brand name as strong as Nestlé. Few of the

recommendations that we found out during surveys and

research are as follows:

o As we have analyzed Nestlé MilkPak has 360 degrees

promotions and involves in various ATL and BTL

activities. The ATL activities comprising of broadcast

media are not very aggressive. Nestlé MilkPak has made

only few TVCs and special occasion advertisement is

missing specially when other brands like Olpers and

Haleeb Link themselves with local occasions

aggressively.

o Nestlé need to improve its strategies related to

advertisement because the market is very dynamic and

vibrant and interactive advertisements attract new

customers and retain the old ones

o Branding and packaging is a reflection of the

production and the marketing process. A package that is

perceived as attractive by the people will undoubtedly

have a favorable impact on the buyer. Although firms

already pay a lot of attention to branding and

packaging and use it to their benefit, there might

still be room for innovation and research in this field

especially since, in our time marketing is very

important. Due to excess availability of different and

76

innovative things, good marketing is required in order

to get what any user wants.

o Nestlé should engage in more guerilla marketing

techniques to attract more customers and retain the

existing customers.

o Nestlé must have to promote its Everyday; liquid tea

whitener brand.

o Nestlés only flavored milk brand is Milo, it had to

come up with new flavored milk brands as demand for

such milk is rising in new generation, there are

already brands available by Olpers , and Shakarganj

group etc.

o Further marketing campaigns on TVCs should be adopted

by Nestlé to compete with Olpers, what we have observed

is that the intense marketing of Olpers had made it a

strong brand in a short span of time.

o Nestlé MilkPak should have to make its distribution

channel strong, in order to get maximum shelve space at

stores, so people would have no choices for other

brands. What we have observed that in a shop if Nestlé

milk is not available people buy other brands like

Olpers and Haleeb.

o The producing firm should differentiate between the

needs, desires and perceptions of the various consumer

groups, which can be separated into groups on the basis

of age, gender, personality, income and many other

demographic variables. Thus, the firm can focus on the

target market that is relevant for its product, and

make the brand and package suitably. Different other

sub brands and flavored milk segment can be targeted as

it is an untapped market till now.

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CHAPTER 7: ACTION PLAN

To implement the recommendations made to produce effective

results following is the plan of action:

o Nestlé MilkPak need to make few of new TVCs and special

occasion advertisements as they are missing especially

when other brands like Olpers and Haleeb Link

themselves with local occasions aggressively.

o Nestlé can to do activity in schools for young children

about the Nestlé milks telling them about its Nido

brand and the importance of calcium to the growth and

nutrition of these children.

o Another important area for Nestlé is that its brand

Nido’s subdivision like nido 1 +, and nido 3, this

market is untapped, Nestlé can reposition itself in

these sub brands as medicated toddlers Milks and do

activity to tell mothers the importance of such milk.

As it has good market potential.

o Nestlé can do marketing activities like what Olpers had

done in Ramadan, it distributed the Roh-Azfza flavored

milk and dates as Aftari, it was a good marketing

activity at the same time corporate social

responsibility. These smaller yet powerful guerilla

maketing techniques are also aligned with Nestlé

MilkPak’s strategy.

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o The market of tea whitener is already developed by

Tarang and Tea Max, Nestlé can capture the market using

its strong brand name and marketing as the tea whitener

market is already developed at the expense of Tarang

and Tea Max. The events of valentine day, Mothers day

etc. approaches, Nestlé’s brand Everyday has strong

association with the love and relationships, Nestlé can

capitalize on this event to capture the market for its

Everyday brand.

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ANNEXURES

82

Questionnaire:

1. What is your preference: open milk or tetra pack?

A: Open Milk

B: Tetra Pack

C: Both

2. If you buy packaged milk then would you prefer Nestlé

MilkPak?

A:Yes

B:No

C:Up to Extent

3. Are you satisfied with MilkPak quality?

A:Yes

B: NO

4. Would you like to have improvement in MilkPak?

A:Yes

B: NO

5. Rate the taste of MilkPak as compared to other tetra

pack milk?

A: Very Bad

B: Bad

C: Moderate

83

D: Good

E: Very Good

6. Is the price of Milk Pak rational?

A: Yes

B: NO

7. Is MilkPak is readily available to you?

A: Yes

B: No

8. Which brand of milk you will buy if MilkPak is

unavailable?

A: Olpers

B: Haleeb

C: GoodMIlk

D: Other

9. Do you recall the ad of Nestlé when you see Nestlé milk

at the store?

A: Yes

B: No

84

10. What you prefer while buying packaged milk?

A: Purity, Quality

B: Price

C: Convenience

D: Availability

11. If Nestlé milk isn’t available at shop/ out of

stock you ask the shopkeeper about its reason or switch

to other available brand of milk?

A: Yes

B: No

12. Do you have strong recognition of Nestlé milk,

like you remember the colors (white & green) at

billboard that’s not visible to you clearly you

recognize its Nestlé?

A:Yes

B:No

C:Don’t Know

13. Nestlé has been changing its packing with the

events like Independence day pack with Pak flag and

Ramadan packs, have you seen such packs on the shelves

of shops as it is for a limited time offer with high

turnover of milk.?

85

A: Yes

B: No

14. How you perceive brand image from the Television

advertising for each company?

Perceived Advertising Image

Nestlé Olpers Goodmilk Haleeb Nurpur

Traditional

Modern

Serious Image

Fits my Life

Style

Quality

service

Economical

Service

Trustworthy

Wide Range of

products

Innovative

Rate from 1 to 5.

5 being highest and 1 being lowest

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