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Final Project of Dairy Queen 1 PROJECT of STRATEGIC MARKETING MANAGEMENT Submitted to: MR. MOBIN UL HAQ Submitted by: Muhammad Qayyum REHMAT ID # 053632-022 Shamshad Irfan CHATHA ID # 053632-006 Awais AHMED ID # 053632-009

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Page 1: haleeb

Final Project of Dairy Queen 1

P R O J E C T

of

S T R A T E G I C M A R K E T I N G M A N A G E M E N T

Submitted to:MR. MOBIN UL HAQ

Submitted by:

Muhammad Qayyum REHMAT ID # 053632-022

Shamshad Irfan CHATHA ID # 053632-006

Awais AHMED ID # 053632-009

Muhammad Ayyaz SHAH ID # 053632-057

MBA-P Sec:A Batch:36

UNIVERSITY OF MANAGEMENT & TECHNOLOGY

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D A I R Y Q U E E N UHT MILK

A Product of H A L E E B F O O D S

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ACKNOWLEDGEMENT

In the name of Allah most merciful and beneficent.

We are very thankful to Allah Almighty who gave us the opportunity, courage and

insight to explore more knowledge to complete this project and for His blessings that has

brightened every part of our lives. In writing this project, we were guided by our experience and

interest in Strategic Marketing Management. Beyond of all the material available we are

thankful to our respected resource person “MR. MOBIN UL HAQ” for giving us such a deep

knowledge about the subject that made “Strategic Marketing Management” a very interesting

subject. That is possible due to his very unique style of teaching we ever experienced during our

academics. And through his motivational behavior we were able to complete this difficult task.

We are also thankful to our beloved parents who have always provided us guidance and

they have always been source of inspiration for us. Along with the assistance and guidance from

our resource person “MR. MOBIN UL HAQ” and our parents we have been able to complete

this project and we found it very interesting and it helped us to explore our knowledge about the

subject.

Muhammad Qayyum RehmatShamshad Irfan ChathaAwais AhmedMuhammad Ayyaz Shah

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Table of Contents

P R O J E C T ..............................................................................................................1ACKNOWLEDGEMENT...............................................................................................................4EXECUTIVE SUMMARY.............................................................................................................7ENVIRONMENT OF DAIRY INDUSTRY...................................................................................9

DAIRY INDUSTRY ISSUES...................................................................................................11INDUSTRY DEFINITION...................................................................................................12BROAD DEFINITION..........................................................................................................12NARROW DEFINITION......................................................................................................12 CORE.............................................................................................................................13 BASIC............................................................................................................................13 AUGMENTED..............................................................................................................13 POTENTIAL MARKET...............................................................................................13

HALEEB FOODS.............................................................................................................15PRODUCT LINE...............................................................................................................16SITUATION ANALYSIS.................................................................................................22

MARKET DEMOGRAPHICS....................................................................................................23AGE.......................................................................................................................................23GENDER...............................................................................................................................23EDUCATION........................................................................................................................23FINANCIAL BACKGROUND.............................................................................................23FAMILY TRENDS...............................................................................................................23

MARKET NEEDS......................................................................................................................24SELECTION..........................................................................................................................24ACCESSIBILITY..................................................................................................................24

PEST ANALYSIS.....................................................................................................................24ECONOMICAL..........................................................................................................................26SOCIAL......................................................................................................................................26TECHNOLOGICAL...................................................................................................................27PORTER FIVE FORCES..........................................................................................................28THREAT OF NEW ENTRANTS.................................................................................................28BARGAINING POWER OF SUPPLIERS..................................................................................28BARGAINING POWER OF CUSTOMERS...............................................................................29THREAT OF SUBSTITUTES.....................................................................................................29INTERNAL RIVALRY................................................................................................................29

PEST V POTER (Summary).................................................................................................29SWOT ANALYSIS...............................................................................................................30

STRENGTHS............................................................................................................................30OPPORTUNITIES.....................................................................................................................31COMPETITOR OF HALEEB FOODS.....................................................................................31

NESTLE MILKPAK.............................................................................................................32NESTLE'S MILK SOURS IN PAKISTAN......................................................................34

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MARKETING & SALES..................................................................................................38NESTLÉ PRODUCT LINE.......................................................................................................40

CUSTOMER ANALYSIS.............................................................................................................43CVA...............................................................................................................................................43INTERNAL FACTOR EVALUATION........................................................................................45

STRENGTHS............................................................................................................................45WEAKNESSES.........................................................................................................................46

EXTERNAL FACTOR EVALUATION......................................................................................47OPPORTUNITIES....................................................................................................................47THREATS.................................................................................................................................48

GE MATRIX.................................................................................................................................49TOWS MATRIX...........................................................................................................................50NEW MARKETING STRATEGY...............................................................................................51

DEVELOPMENT WITH STRATEGY....................................................................................51Requirements.........................................................................................................................51Expected results.....................................................................................................................51

PRODUCT STRATEGY...........................................................................................................51(PRODUCT REPOSITIONING STRATEGY).........................................................................51

Definition...............................................................................................................................51Objectives..............................................................................................................................51Requirements.........................................................................................................................52Expected results.....................................................................................................................52

PRICING STRATEGY.............................................................................................................52(MAINTAINING THE PRICE)................................................................................................52

Definition...............................................................................................................................52Objectives..............................................................................................................................52Requirements.........................................................................................................................52Expected results.....................................................................................................................53

POSITIONING STRATEGY....................................................................................................53(AGAINST USAGE AND ITS BENEFITS)............................................................................53

Definition...............................................................................................................................53Objectives..............................................................................................................................53Requirements.........................................................................................................................53Expected results.....................................................................................................................53

PROMOTIONAL STRATEGY................................................................................................53Definition...............................................................................................................................53Objectives..............................................................................................................................53Requirements.........................................................................................................................54Expected results.....................................................................................................................54

SUMMARY...................................................................................................................................54

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EXECUTIVE SUMMARY

Dairy Queen Milk is a product of Haleeb Foods. Haleeb Foods is a largest company in

Pakistan’s dairy industry. Haleeb Foods is one of the organization competing in the UHT Milk

industry. There is a big room for development in dairy industry in Pakistan. UHT milk although

costly but people know about the milk importance and its quality. Now, there are many products

are available in the market regarding UHT milk but Haleeb found that there is a gap between

upper class and lower class, so, Haleeb decided to introduce lower price milk with best quality

and UHT treated milk for those whom can not afford high price milk. Dairy Queen is Haleeb

another standardized and homogenized pure UHT Milk with 3.5% fat and 8.9% solid non fats. At

an affordable price it has won the hearts of consumers everywhere. It is available in 6-layered

Tetra Pak Fino Packaging, introduced for the first time in Pakistan and has 2 months shelf life.

Government of Pakistan is now focusing on dairy industry.

R&D department of Haleeb Foods is continuous watching the market trend and the

development in dairy industry. Strategy of the dairy queen is to provide UHT milk for those

whom cannot afford high price milk and capture the share of the market. Dairy queen milk has

no competitor in terms of actual condition of the packaging and price. So, we can say that there

is no strategic group of dairy queen milk. It is unique product available in the market with its low

price positioning.

Government polices makes it easy to enter in this market but technology, availability of

raw milk, and process makes it difficult for the up coming companies in this industry. Although,

middle and lower class is the target market of the dairy queen but its quality and packaging

attract the upper class as well. UHT treated milk is dependent on the production of the healthy

animals and availability of raw milk. As the competition is concerned, there are many

companies in the particular industry and they are competing with each other with price,

positioning, packaging and availability.

This is time of advertising because when customer knows about your product then he will

be welling to purchase that product. Haleeb Foods Limited has hired Red Communication Arts

as their new advertising agency which will be handling the following accounts: 1.

BEVERAGES: Haleeb Good Day, Haleeb Funday, Tropico, Tropico Nectar, Candia, Candy Up,

Haleeb Labban 2.Corporate account. Now, mostly companies are using these tools to promote

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their products and image as well. Total share of packed milk is 4% and 96% is for loss milk.

Turnover of Haleeb is 9.2 billon. Haleeb Rashmi is also providing profit to the company because

this is low cost product and it has its own packaging. It’s daily sale is 11000 litter per day. As

market share is concern, Haleeb got 44% last year, Nestle 43%, Good Milk 4.5% and Norpur

10% last year. So, Competitor of Haleeb is Nestle because there nick to nick competition.

Nestle has long rang product line as compare to Haleeb. When we talk about the gaps

there is a gap in the implementation gap in strategies. Availability gape and awareness gape is

still there and now company is going to eliminate these gapes. As we know that industry growth

rate is 25% in the dairy industry. Now, the company’s focus is on the gross profit and company

is doing the things to increase the gross profit. The cities which are very important in terms of

sale share are Multan, Sahiwal, Fasil Abad, Gujranwala, and Rawalpindi. These cities are

providing 60% to 70% sales of Haleeb.

There are some problem from the customer side and distributor side. Dairy Queen has

fino packaging and its shape is not convenient for the customer. It has three lair packaging so,

leakage problem is from the distributor side.

Now, the best strategy is penetration in maximum household and increase the awareness

of the brand. This will be possible through activities and promotions. Tactical advertising will be

best for the promotional activities of the Dairy Queen.

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ENVIRONMENT OF DAIRY INDUSTRY

INTRODUCTION

Dairy farming is an agro-based activity, buffaloes and cows can be raised for milk

production in an organized manner for commercial purpose. For this project, animals can be

purchased from the animal markets or breeders in Sahiwal, Sheikhupura, Faisalabad. More than

70 percent farmers hold less than 5 acres of land. Dairy farming may prove a profitable business

for small landholders. They can also grow fodder on their land to feed dairy animals, without

disturbing the main crop. Dairy farming is one of the best projects if professionally done on

small land holdings. The return of the land used for feeding animals is higher as compared to

land used for traditional cropping. The economical size of the herd is 50 animals, which will

grow into 180 animals within a few years. Cows are also proposed in the herd, as they are high

yields and efficient converters of feed into milk. This herd would consist of 75 percent buffaloes

and 25 percent cows. A cow, on average, yields 14 litters milk a day over a lactation period of

305 days whereas the buffalo, on an average, yields 10 litters a day over a lactation period of 280

days. Pakistan is the fifth largest milk producer in the world. Milk production is 28 million

tonnes from 125 million heads. Milk is used for drinking, tea, desi ghee, yogurt and butter

making. Milk is also used to make Khoya and different types of sweets. Milk processing

companies use milk as a raw material to formulate different types of milk for example

pasteurized milk, UHT milk, condensed milk, skimmed milk, milk powder, etc. Different value

added products like yogurt, ice cream, butter and cheese are also produced from the raw milk.

The daily consumption of milk in Lahore is 2 to 3 million litters and that of Karachi is 4

million litters. The demand for processed milk has increased its share in quality conscious

consumers. During the last two decades, processed milk has achieved 4 percent share in the milk

market of Lahore, which is growing to about 4.5 percent per annum. Therefore, metropolitan

cities are the major markets for the sale of milk. With the every passing day, dairy products are

becoming costlier because live stock farming has not scientifically grown with the increase in

population and also it did not match with the pace of urbanization. Recently, milk prices in

Karachi increased without any reason. In a short time of two years, milk prices have gone up

from Rs 20 per liter to Rs 25, showing a 25 percent increase. Moreover, meat prices have also

risen to about 25 percent in the last six months. In such a situation, the only way to control prices

is to develop the dairy industry on scientific lines, which will not only provide meat and milk in

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abundant quantities to the domestic consumers but extra quantities can also be exported. In spite

of having a large population of livestock, the country is spending some $40 million annually on

the import of formula milk only, which is the highest amount spent by any country in the world

on this particular commodity. Currently, there are some 160 varieties of infant formula milk

available in the markets.

“The milk processing companies have reduced supply of their tetra pack milk products in

the domestic market for last couple of weeks in an apparent bid to increase the prices of

processed milk on the pretext of short supply. According to market sources, milk-processing

companies working in formal sector including Nestle, Haleeb, Dairy Queen, Pakola, Olper, and

Good Milk had increased prices of their milk products on September 15, 2005 from Rs34 per

litter to Rs35 per kg. Later on, these companies raised processed milk rates on February 6, 2006

from Rs35 to Rs36 per litter in retail market. “It was the second consecutive upward revision in

prices by these companies in a short span of four months,” General Secretary Karachi Retail

Grocers’ Group Fareed Qureshi told The News. “There is no autonomous authority or effective

institution in the country to protect rights of consumers and to check frequent and unjustified

price hike of different commodities. Neither Monopoly Control Authority (MCA) - now renamed

as Competition Authority - nor local governments took stringent measures against hoarders,

adulterators and profiteers to safeguard the interest of consumers,” a consumer said. Some three

months back fresh milk sellers increased prices from Rs28 per litters to Rs30 per litter at retail

and Rs26 to Rs28 per litter at wholesale level despite repeated warnings by the City District

Government Karachi (CDGK), who fixed official rates of fresh milk at Rs26 at wholesale and

Rs28 per litter at retail. A market source said in the past whenever these companies increased

prices of their products they curtailed their supplies as a first step and then increased prices.

Though Pakistan is the fifth largest milk producer in the world producing around 28 billion litres

of milk annually, it is still importing milk powder and condensed milk. Out of total production

only 5 percent milk is processed on hygienic lines whereas shelf life of the remaining 95 percent

un-processed milk is very short and due to unavailability of proper storage facilities most of milk

produced goes waste.

Government has allocated around Rs230 million for development of dairy industry in

fiscal budget 2006-07. The sector has been allowed duty free import of dairy and livestock-

related machinery and equipment (not manufactured locally). Moreover dairy sector has been

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exempted from sales tax besides of withholding tax. In order to reduce the cost of packaging of

dairy products, the duty on imports of raw materials and intermediary goods used in the

manufacture of packaging material has been reduced to 5 percent.”

DAIRY INDUSTRY ISSUES“LAHORE: Experts and representatives of leading players from private sector

addressed various issues pertaining to dairy industry at a seminar on "Dairy Farming for

Profit" here on Monday. The seminar was organized by the Pakistan Dairy Development

Company, commonly known as Dairy Pakistan and Pakistan Initiative for Strategy

Development and Competitiveness (PISDAC), a project for private sector development in

Pakistan, funded by USAID. Speaking on the occasion, Anthony Christiansen, the CEO of

Dairy Pakistan, said that Pakistan is the third largest producer of milk in the world with a

total production of 32 billion liters of milk a year. This makes its value even higher than the

combined value for wheat and cotton. To boost this vital sector, he added, a number of

initiatives are underway, including milk collection and chilling projects, Joint Milk Collection

Pilot Projects, research and capacity building and many more. He further said, "We are also

working on safety standards, dairy sector research work and strategy development by

evaluating the significance of the sector in terms of contribution to GDP, employment and

importance to serve as a vehicle to alleviate poverty especially among the rural population."

He informed the audience that these initiatives were being taken in line with the

recommendations of a Strategy Working Group (SWG), which was constituted by Federal

Minister for Industries, Production and Special Initiatives, Jahangir Khan Tareen, to develop

Diary Sector Development Strategy. Faisal Farooq, Chairman Dairy Pakistan, highlighting

various milk-marketing options, said that to improve the dairy sector, we are emphasising

on close coordination with key stakeholders across the dairy value chain as well as with

partners from educational institutions, government and private sector.

The Head of Agriculture Wing, Bank of Punjab, Moazzam Maneka briefed the

participants on the financing tools and options available for the dairy and agriculture sector.

The dairy farming experts and representatives of many leading players from private sectors

also spoke on the occasion and discussed at length the issues related to the dairy industry

including, milk marketing options and potential for dairy farming on a larger scale.

Dr M Ashraf from Nestle Pakistan enlightened the audience on issues relating to animal

health, farm layouts and shed designs and other speakers emphasised that dairy farming

could be very profitable if full attention was paid to important factors such as employment of

skilled farm management, high quality feed and breeding cows with high production

capabilities. The seminar ended at a positive note with high hopes for the development and

growth of the Pakistan’s dairy sector.”

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INDUSTRY DEFINITION

BROAD DEFINITION

When we look into milk industry as a broad definition, this industry operates in a fashion

where raw milk is distributed in two main streams.

Open

Packaged

This open milk is further distributed and transferred to different areas, which include the

same area of production, households, urban and rural areas. Packaged milk is further processed

through different types of processing techniques to produce different categories of packaged milk

that will be categorized and defined in our narrow definition of milk industry.

NARROW DEFINITION

Focusing towards our main industry and closing down our definition more narrow, we

see that packaged milk being broken down to different categories starting from UHT milk,

pasteurized milk, poly-pack milk, bottled milk, etc. Therefore, the industry which we have taken

in narrow definition is packed UHT milk.

UHT means Ultra Heat Treatment. In this process the milk passes through 140 degree

centigrade in 3 seconds and then immediately cooled to 20 degree centigrade in the next 5

seconds, which in turn kills all the bacteria. This is the most sophisticated and advanced process

in the world. At Haleeb Foods Limited we use the indirect method of UHT meaning that milk is

heated by steam passing through stainless steel pipes outside milk. All other brands in Pakistan

use the direct method of heating that is by injecting steam in the milk, this adds water content in

the milk, where as indirect heating in fact evaporates water from the milk.

PRODUCT COMPONENT MODEL

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CORE

The core product or benefit is milk associating energy and health for all ages of people, men

and women.

BASIC

Basic product is something that is sterilized and pure to use, so we can say that UHT treated

milk is a basic form of our core product. As its containing the factor of purity and safe

ingredients with preserved milk quality and features.

AUGMENTED

UHT milk is now coming with different flavors for the kids, then it has also been augmented

through different packaging that are being used by different companies, trying to get potential

out of UHT milk market.

POTENTIAL MARKET

UHT treated milk can be given with some extra hygienic ingredients such as nuts and other

energetic ingredients to make it more hygienic and healthy to use product.

FLOW OF MILK & CHANNELS

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HALEEB FOODS

COMPANY PROFILE

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Building an excellent reputation over the years, Haleeb Foods continues to be at the

forefront of product and packaging innovation. By the grace of God, it has achieved market

leadership in several food categories with a very strong portfolio, consisting of leading national

and international brands – Haleeb, Candia, Dairy Queen, Tea Max, Skimz, Tropico and Good

Day. Apart from its extensive nationwide distribution networks, Haleeb Foods is also serving

several export markets including South Korea, Bangladesh, Afghanistan and the Central Asian

states. Haleeb Foods has the distinction of being the first company in Pakistan to use Tetra Pak’s

novel packaging formats, Tetra Brick Aspetic (TBA) and Tetra Fino Aseptic (TFA). Haleeb

Foods has also introduced a number of unique products previously unknown to the Pakistani

market, like Haleeb Labban, delicious traditional lassi (buttermilk) prepared with pure thick milk

and yogurt, Candia Tea Max, cardamom flavored tea whitener, Candia milk, packed in

distinctive food grade plastic bottle, and Haleeb Good Day, 100% pure and natural fruit juice,

free of added sugar, artificial flavors and preservatives. All this and more makes Haleeb Foods

Pakistan’s number 1 and fastest growing packaged food company. As of fiscal 2005, its annual

turnover is Rs. 7.2 billion.

INTERNATIONAL CERTIFICATIONS

Haleeb Foods’ products are made with great care, and marked with our quality seal of

recognition. We are the only dairy company in Pakistan that undertakes 21 rigorous quality

control tests on every portion of the milk collected by our teams. These internationally

recognized tests are used to check for: a) adulteration, b) microbiological contamination and c)

adequacy of nutritional contents. All processes, from preparation to quality assurance to

packaging, are undertaken employing state-of-the-art technology and equipment. Therefore, we

take great pride in the fact that Haleeb Foods is the only food company in Pakistan that has the

following international certifications of quality and prestige:

HACCP (in process controls for safer products)

ISO 9002 (better quality for greater customer satisfaction)

ISO 14000 (environment-friendly operations)

COMPANY’S MISSION STATEMENT

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Build Branded food business to improve quality of life by offering tasty, affordable and

highly nutritional products to our consumers while maximizing stake holders' value

COMPANY’S VISON STATEMENT

Most Innovative and fastest growing food company offering products enjoyed in "every

home every day"

COMPANY’S VALUES

Enterprise

Empowerment

Accountability

Trust

Teamwork

PRODUCT LINE

DAIRY PRODUCTS

HALEEB BUTTER

Haleeb Butter is the best natural source of Vitamins A & D for everyone, and by far the

ideal way of starting yet another busy day. It is rich in its taste and revitalizes your energy for a

long tiresome day.

Shipping Units

20g pack: 300 packs/carton

50g pack: 120 packs/carton

100g pack: 60 packs/carton

200g pack: 30 packs/carton

1000g pack: 1 pack/carton

HALEEB ASLI DESI GHEE

Haleeb Asli Desi Ghee is obtained from pure milk through the traditional procedure of

heating butter slowly. Haleeb Asli Desi Ghee is free from all artificial ingredients, it has pure and

natural taste and is nutritionally preserved.

Shipping Units

0.5 kg pouch: 10 packs/carton

1 kg pouch: 5 packs/carton

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1 kg tin: 6 tins/carton

5 kg tin: 2 tins/carton

16 kg tin: 1 tin/carton

HALEEB CREAM

The premium cream processed hygienically from pure fresh milk, Haleeb Cream is

luxuriously rich in its thickness and nutritional value. It promises the richest assortment of

tempting toppings, delicious desserts and creamiest coffee with its unique taste, also great for

eating with bread etc. Packed in 6-layered Tetra Pack Brick Aseptic packaging. 6 months shelf

life.

Shipping Units

250 ml: 27 packs/shrink-wrapped tray

65 ml mini pack: 24 packs/dispenser

6 dispensers/carton

HALEEB YOGURT

Haleeb Plain Yogurt meets the highest quality standards and gives consumers unmatched

quality, freshness and taste with every spoonful. Offered in 450g, 200g and 900g packing, with a

freshness seal that keeps the product attributes fresh throughout its life.

Shipping Units

Plain Yogurt 450 gm: 12 Units/Tray

Plain Yogurt 200 gm: 24 Units/Tray

Raita 250 gm: 24 Units/Tray

HALEEB TEA MAX

In tune with the Haleeb Foods tradition of providing consumers high quality and value

added products, Haleeb Tea Max is the ideal choice for all tea and coffee lovers. Tea Max is

special milk that provides a rich taste in your beverage. It is also available in the unique and

delicious cardamom flavor, packed in a 6-layered Tetra Pack Brick Aseptic packaging.

Shipping Units

200 ml (plain) pack: 27 packs/carton

200 ml (cardamom) pack: 27 packs/carton

HALEEB CREAM (with honey)

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Haleeb Cream with Honey is an exclusive treat: delicious thick cream fortified with the

goodness of pure honey, making a tempting spread on bread. Enjoy it anytime and exude energy

and freshness whole day long. It is packed in a 6-layered Tetra Pak Brick Aseptic packaging.

Shipping Units

65 ml mini pack: 24 packs/dispenser

200 ml: 24 packs/tray

UHT MILK

HALEEB MILK

Consumers everywhere know that only Haleeb Milk makes the best tea ever because of

its thickness. Haleeb is pasteurized, homogenized, and standardized pure UHT milk of the

highest standard with 3.5% fats and 8.9% solid non fats. It is Haleeb Foods premier brand, and

the choice of quality-conscious consumers who only go for the best. Packed in easy to open, 6-

layered Tetra Pak Brick Aseptic packaging, it comes with a 3 months shelf life.

Shipping Units

1000 ml: 12 packs/carton

500 ml: 12 packs/shrink-wrapped tray

250 ml: 27 packs/shrink-wrapped tray

DAIRY QUEEN

Dairy Queen is Haleeb another standardized and homogenized pure UHT Milk with 3.5%

fat and 8.9% solid non fats. At an affordable price it has won the hearts of consumers

everywhere. It is available in 6-layered Tetra Pak Fino Packaging, introduced for the first time in

Pakistan and has 2 months shelf life.

Shipping Units

250 ml: 24 pouches per carton

500 ml: 16 pouches per carton

1000 ml: 9 pouches per carton

CANDIA

Candia is Europe's Number One selling milk. Haleeb Foods Limited and Candia of

France have joined hands to bring you the highest quality milk. Candia is pasteurized,

homogenized, standardized, double sterilized milk. This not only ensures the highest quality, but

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also the best taste ever. For the first time in Pakistan, Haleeb Foods Limited has introduced milk

packed in food grade plastic bottles. These bottles are manufactured from imported materials at

Haleeb Foods latest plant and guarantee longer shelf life, highest quality and storage with ease of

use.

Shipping Units

250 ml Bottle: 12 bottles/carton

1000 ml Bottle: 12 bottles/carton

CANDIA CLASSIC

Classic times ask for Classic tea, a product by Europe?s No.1 brand Candia. Its richness

and taste is bound to add more life to your cup, and it is an ideal choice for real tea drinkers.

Shipping Units

1000 ml: 12 bottles per case

500 ml: 12 bottles per case

CANDIA SKIMZ

Candia Skimz is the only completely fat-free milk with the richness of pure milk. Minus

fats, it is an ideal choice for weight-watchers and heart patients. It is also high in calcium

content, which prevents osteoporosis. Packed in a 6-layered Tetra Pack Brick Aseptic packaging,

it comes with a 3 months shelf life.

Shipping Units

200 ml: 12 packs/carton

250 ml: 27 packs/shrink-wrapped tray

SKIMZ

Skimz is a fat-free milk powder, naturally low in cholesterol; yet high in proteins and

calcium. There are mainly two types of milk powders, full cream and skimmed. SKIMZ is a

skimmed milk powder. Full cream powder contains 28% fat, whereas SKIMZ contains less than

1% fat. Moreover, the protein and calcium content is higher in SKIMZ as compared to full cream

milk powder. It is best suited for weight conscious people as well as those trying to maintain a

low cholesterol level.

Shipping Units

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200 g: 12 skillets/shrink-wrapped tray

500 g: 12 skillets/carton

CANDY UP

With the backup of Candia, Candy Up has been launched especially for flavored milk

drinkers, in chocolate & strawberry flavors to the sheer deli ght of children. The fact that it

comes in a bottle makes up for convenient usage as well.

Shipping Units

500 ml: 12 bottles per carton

HALEEB GOLD

Haleeb Gold - The Thickest Milk with Extra Cream. This marvelous product provides all

the benefits of the Thickest Milk along with the natural goodness of extra cream. Haleeb Gold

with its extra rich creamy taste makes a perfect cup of Tea. It enhances your performance and

helps to maintain a healthy, dynamic lifestyle.

Shipping Units

1000 ml: 12 packs/carton

500 ml: 12 packs/tray

250 ml: 27 packs/tray

HALEEB RESHMI PACK

Haleeb Reshmi pack is long life packaged milk and offers consumers premium quality

milk at an attractive price. Due to its multi-layered packaging material, Reshmi pack not only

retains the natural thickness of milk for a longer time, but also protects the milk from light, heat

and bacteria.

Shipping Units

250ml : 5 liters

1000ml: 6 liters

JUICES

HALEEB FUNDAY

Haleeb Funday is a delicious juice drink especially for kids, enriched with calcium, and

vitamins A, C & D. An exciting treat, packed with health and a great taste, Funday juices will

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surely be an instant success with kids with their unique and amusing names, Aamonka (mango)

and Arrochee (peach and lychee). They are packed in a 6-layered Tetra Pack Brick Aseptic

packaging.

Shipping Units

200ml Pack: 36 Packs /Carton Shrink wrap units

200ml Pack: 27 Packs/Carton

HALEEB GOOD DAY

Haleeb Good Day offers consumers a range of 100% pure juices with the essence of four

fruits in each glass, without any added sugar, flavors or preservatives. For consumption

absolutely anywhere and anytime, Good Days? six premium juices (apple, pineapple, red grape,

mango, orange, and mixed fruit) give you the absolute delight in taste, and revitalizes you at the

same time. It is packed in a 6-layered Tetra Pack Brick Aseptic packaging.

Shipping Units

250 ml Pack: 27 Packs/Cartons

1000 ml Pack: 12 Packs/Carton

TROPICO JUICE DRINK

With the quality assurance of Haleeb Foods, Tropico is the premium juice drink, superior

in taste and pulp contents, for that invigorating fruity refreshment. Tropico is available in three

flavors: apple, mango, and mix fruit, packed in a 6-layered Tetra Pack Brick Aseptic packaging.

Shipping Units

1000ml Pack: 12 Packs/Carton

250 ml pack: 36 packs/carton

250ml Pack: 27 Packs/Cartons

HALEEB LABBAN

Lassi is an age-old traditional beverage in the South Asian continent. Haleeb Labban

aims to give its consumers the same satisfying traditional taste of thick lassi, along with hygiene,

convenience and accessibility. Haleeb Labban is the only ready to drink packaged lassi available

in Pakistan. It is available in salty and sweetened variants, packed in a 6-layered Tetra Pack

Brick Aseptic packaging.

Shipping Units

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250 ml pack: 27 packs/carton

1000 ml pack: 12 packs/carton

TROPICO NECTAR

Juices play an important role in the functioning of our body, have many benefits

associated with them, and help you achieve the desired healthy way of life. Tropico nectar is

another product from the house of Haleeb Foods Limited, which is 100% pure nectar, available

in four sumptous flavors including Red Blood Orange & Kinoo, Mango, Apple and Kinoo.

Haleeb Tropico is also the only brand that is offering Red Blood Ornage & Kinoo Juice - that is

so deliciously different that you will want to have it in your house, all year long.

Shipping Units

250ml : 27 Packs/Carton

1 Ltr : 12 Packs/Carton

BULK PRODUCTS

CDL also produces bulk dairy products.

Bulk Products Avaiable

Instant Full Cream milk powder (IFCMP)

Full Cream Milk Powder

Skimmed Milk Powder

Instant Skimmed Milk Powder (ISMP)

Cream

Ghee

Butter

SITUATION ANALYSIS

DAIRY QUEEN MILK

Dairy queen milk has developed a strong position in terms of UHT treated milk in the

industry. Even being a new entrant and serving for just about few years in this industry still

Dairy queen milk managed to obtain a strong position along with its other some competitors. The

product being offered by all competitors is same (talking with respect to basic ingredient and

contents), there is not much difference of offering in the product among the companies. Yet there

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has been some difference offered through the packaging of the product. As it is always important

to have a good marketing plan to get itself into market and to grow in your own strategic group,

thus for Dairy queen milk it is important to have a marketing plan that can help it retain its

current market and also to help it grow gradually in the industry. Now, Dairy queen milk is

become lowest price milk in the market with 6-layered Tetra Pak Fino Packaging. Dairy queen

milk covers those consumers whom are not able to purchase the high price milk with best

quality, low price, and best milk.

MARKET DEMOGRAPHICS

AGE

As milk is a product that contains health and hygienic features so there is no particular

age distinction to be differentiated. So Dairy queen milk is for everyone who loves to be healthy

and who cares for the health needs. But still it is used in different age groups with some

differences, like children and older people are recommended as a growth ingredient and

something that gives a concept of strength and in middle age people it’s used in tea mostly.

GENDER

UHT treated milk by Dairy queen milk is meant for both the genders with no particular

distinction.

EDUCATION

Being a product involving some technological issues to make it more fresh and hygienic,

more educated people are using this product rather than uneducated. Also with the passage of

time, we see an improvement in its usage.

FINANCIAL BACKGROUND

UHT treated milk is an expensive product in terms of regular milk, so it is more in use of

middle and upper class of people. But as it is available at various places , people from different

financial backgrounds are using it according to their needs and requirements.

FAMILY TRENDS

As its being used in middle class mostly, and its penetrating downwards with time and

with price issues being adjusted accordingly. But using UHT treated milk is a more of higher or

upper level trends in milk industry and has been initiated with upper class.

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MARKET NEEDS

UHT treated milk is something that is homogenized, standardized and is toned at 3.5%

FAT level. So its just maintained at a standard level of milk to give the same quality and diet that

originally milk contains.

SELECTION

UHT treated milk by Dairy queen milk is available in ½ liter litter packaging.

ACCESSIBILITY

Dairy queen milk is available at many stores, and is within reach of customer easily. So,

Dairy queen milk has tried its best to provide its customers with the product by making it

available within their reach.

PEST ANALYSIS

POLITICAL

Dairy Sector in the Policy Context:

“The planners in Pakistan have always been more concerned about development of the

crop sector than dairying in the agriculture economy of the country. After in dependence, the

livestock population in Pakistan significantly deteriorated due to good stock was taken away by

evacuees, indiscriminate slaughter of animals by incoming refugees, dry cows and buffaloes

brought from rural areas by milk dealers for supply of milk in urban areas were slaughtered at

the end of lactation period, and increased demand for meat due to growth of population and

incomes. Urban areas faced acute shortage of milk and dairy products. The planners faced a

policy dilemma of how to increase draught power and milk production simultaneously. Efforts

were made to improve stock of cattle by breeding of indigenous animals, but output of improved

stocks was inadequate to make a dent on the dwindling supplies of improved cattle and buffaloes

in the country. The First Five Year Plan (1955-60) recognizes the importance of improving

breeding centers, operating more hospitals, dispensaries and mobile dispensaries to check spread

of contagious diseases for animals, in addition to providing for research on increasing

supplies of feeds and fodders, and starting pilot schemes for artificial insemination for

improvement of cattle [Government of Pakistan (1957)]. The First Plan was very specific in

removing gujar (a cast of milkmen) colonies from cities like Lahore to outskirts and in

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recommending milk supply schemes for Karachi and Lahore on a pilot basis. Under the scheme

government was to buy milk from gawalas (milkmen) residing in gujar colonies and supply

pasteurized milk in sealed bottles through registered milk depots. To reduce adulteration in milk,

the Plan recommended testing of milk for purity. The Plan also suggested that most of the milk

would be produced in villages near the cities where small farmers would specialize in dairying

by keeping half dozen or more cows, produce their own feed and organize them selves in to

cooperatives for assembling, transport and even processing of milk. Soon it became clear that the

First Plan, which articulated the problems at hand quite well proved to be too ambitious in their

implementation as compared to the Plan target. The question of how to improve milk production

capacity remained un-addressed even in the Second Five Year Plan (1960-65), which

experienced major policy shift toward development of the large-scale manufacturing sector.

Hence there was very little planned effort, if any, for the development of the dairy sector.2In the

Third Five Year Plan (1965-70) there was renewed emphasis on agriculture development

with the help of the seed-fertilizer-water technologies (the Green Revolution technologies) for

higher yields in the crop sector.

However, the dairying sector went into oblivion. The milk supply schemes envisaged in

the First Plan for Karachi and Lahore first became operational in Karachi in 1965. With the

support from UNICEF (United Nations Children’s Fund), in later part of sixties, subsidized milk

was made available in Karachi to low-income families and school children. This plant had to be

shut down in 1980 after running in deficit for fifteen consecutive years. Similarly, the Pilot Milk

Supply Project in Lahore also went into production in 1967, but like the project in Karachi this

project also failed to receive the patronage of successive government sand hence was abandoned.

Milk processing industry got a boost as part of the development of the manufacturing sector in

the country somewhere between sixties and seventies, when the private sector established 23

milk pasteurization and sterilization plants around three big cities, e.g., Karachi, Lahore, and

twin cities of Rawalpindi and Islamabad. These plants relied on supplies of skim milk powder

coming under the auspices of the World Food Program, which was recombined and pasteurized

before being sold to consumers. These plants failed mainly due to weak acceptance of the

recombined milk by consumers and its short shelf life. In other words, inadequate supplies of

fresh milk to milk processing industry proved to be the major hurdle in their success. There was

a renewed interest in the milk processing industry in late-seventies and early-eighties when

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policy support was provided by the Government in the form of exemptions in income tax, duty

free import of machinery and equipments, and availability of domestic and foreign currency

financing [Government of Pakistan (1990)].

Government has always tried promoting dairy industry within the country. For this

government has given lots of relaxation to milk industry for instance there is no tax or excise

duty on milk products. Government has a complete and comprehensive legal framework for milk

industry to keep things in flow and up to mark within the industry. At the same time government

keeps on revising its policies that could help improving overall industry. But when we say that

there are good policies and regulations to promote industry it also require some attention in terms

of implementation of these regulations and governments have never been able to make industry

follow these regulations and promotional policies due to not so keen interest of governments

officials and also the implementation process has been designed so complicatedly that things

never go smooth when it comes to implement or adopt these policies for industry players. The

reason comes as government couldn’t streamline the things for being practically observed by the

industry or government was not able to regulate the policies in a way that could reduce irritation

and long processing times for the companies.

ECONOMICAL

The main economic factor acting for this industry is uneducated suppliers of raw

material, so lots of raw material is affected in terms of its quality and preservation issues and a

big percentage of raw materials go to waste before its being processed. But at the same time

UHT milk doesn’t have any kind of taxes on it which makes it a good economic factor for the

industry growth and improvements in its production. As UHT milk is a bit costly than the

ordinary milk or non processed milk so income factor of consumer is always an important

economical factor for the industry players. UHT milk industry carry consumers from upper

middle and upper class and income level for this class has increased over time which is

something in favor for the industry.

SOCIAL

Socially the most important thing for the industry is that people have realized the

importance of UHT milk because of its safety and better health issues than ordinary milk that

could carry lots of bacteria and germs during its complete delivery to the end user. But at the

same time people avoid using UHT milk due to its cost factor, being costly consumption of UHT

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milk is far less than other un processed milk, but with the time and awareness among people they

have realized that the cost they are paying does pay them back good enough in terms of health

issues and quality of milk. So with time this issue is decreasing as people have got to know the

value of what they are paying for. Critical social issue going around among consumer about

UHT milk is that its something treated or created artificially, which is required to be taken care

of by industry player through their awareness and information campaigns for their consumers to

make them clear about such thoughts they carry about UHT milk to utilize better potential from

the market.

TECHNOLOGICAL

First of all because the farmers or Gawala don’t have the means of transportation to

deliver the milk up the value chain themselves, and they also don’t have the means to maintain

the freshness of the milk (refrigeration) so that the milk retains its actual value. Both issues are

related to the availability of appropriate technologies. Technology is, in this case primarily a

function of capital. In milk and specially UHT milk industry technology is a critical factor in

terms of barriers to entry. Although the market is already saturated, downward pressure on UHT

milk prices could be created through either meeting existing capacity, or the establishment of

new UHT plants. The downward price pressure would then induce new section of socio-

economic cross section to enter the market as consumer of UHT milk. Custom duties on the

import of packaging machinery, which is at the heart of the UHT segment of the industry (either

TetraPack technology, or alternatives), are prohibitively high. The artificial cap on increase on

demand of UHT there fore creates a negative impact on small farmers, who must continue to

supply to the informal sector where they are subject to the Gawala. So because being expensive

as high capital investments are required for establishing UHT milk plants due to heavy capital

cost on machinery this industry is suffering.

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PORTER FIVE FORCES

THREAT OF NEW ENTRANTS

There was a time when there was not a big threat of new entrants in this industry,

however with time and with maturity of dairy industry infrastructure threat of new entrants has

increased slightly. As in past it was considered to be a very expensive and costly industry in

terms of plants for packaged and pasteurized milk, whereas now with some government support

and so many options in terms of financing activities, entering dairy industry is not longer a big

deal. As with time and within couple of years so many companies have entered the market which

was never the case if we look back into last 3 or 4 years. So, dairy industry will be facing higher

threats if we look into current situation of market opportunities and market potential, because

dairy industry does carry a high potential of growth in it.

This factor can also be justified with the fact that this industry was not well established in

terms of technology and knowledge base of not only consumers but the producers of raw

material and production so as the information and system is being developed, with good potential

of growth this industry will definitely be having new entrants in coming period of time.

BARGAINING POWER OF SUPPLIERS

Bargaining power of suppliers is not very high in this industry as mostly the suppliers’

lack of knowledge in their field and otherwise the milk collections centers are owned by the

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processors themselves or either they have a long term contracts with these collection centers. On

the other hand the processing plants or buyers offer lower price to these collection center based

on the fact that these collection centers have their own system of payments to the farmers, based

on the more the payment is paid in advance less is the price in terms of litters, so same is going

through the suppliers and processing units.

BARGAINING POWER OF CUSTOMERS

Bargaining power of customers is relatively improving with time as new entrants have

entered the market. But still as this industry is something that relates to health issues and requires

sensitive and taste related issues so bargaining power has been reduced by some major players

using their brand image and quality image in the market. But with time and awareness in the

market, which include both the customers and the suppliers the bargaining power of customers

has been improving but still its not something that can create big fear for the market players to be

afraid of.

THREAT OF SUBSTITUTES

The UHT milk industry has the highest threat of substitute from the Gawalla market,

where a gawalla (milk man) delivers the Open milk in the homes by himself. The UHT milk

industry has it the highest threat because the Gawalla market is capturing 94% share of the total

milk industry and processed or packed milk industry has only 6% of the total market share. Now,

in that 6% of the packed milk industry, UHT milk has 90% market share. Therefore the only

major and biggest substitute of UHT milk industry is Gawalla industry. It is the fact that the

consumers may quickly switch to the open milk when there is an increase in the prices of UHT

milk products or decrease in the quality of the UHT milk.

INTERNAL RIVALRY

There are two major players in UHT milk industry Nestle MilkPak and CDL, where as

other players collectively have 11% market share while these two players have 45% and 44%

share respectively. So the basic rivalry lies between Neslte and CDL and its has gone higher and

higher with in last couple of years as CDL has been improving relatively but still has to fight

long way to meet Nestle’s brand image and technological superiority in the industry.

PEST V POTER (Summary)

Pest Analysis shows that dairy industry is very attractive and there are many

opportunities for the companies, but as we know that there are many companies in the ground for

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playing. Penetration and awareness are main tools for the success of any company. Suppliers are

getting more benefit from the companies due to internal competition. Customer has more choices

then previous and his economical condition is better that’s why he wants more choices. The

power of the customer in being increased by the available choices in the market.

It comes out clearly from an historical review of the past dairy policies in Pakistan that

policy makers never had faith in the development of the dairy sector. For example, a cursory

look at the Five-Year Plans shows that the policy interventions for dairy development were very

few and far between, which also reflects in the poor showing of milk yields per animal, and in

the way milk supply channels are currently organized. In this section, we present a preliminary

review of Pakistan’s dairy development policies in an historical perspective, and highlight the

role played by the market forces in creating incentives for higher milk production by subsistence

and market oriented milk farmers in the country. If we talk about the powers, if supplier power

will increase then company will increase the price and penetrate in lower level and use those

benefits which are given by the Government of Pakistan. If customer bargaining power will

increase, then company will start tactical promotional activities to reduce the bargaining power

of the customer.

SWOT ANALYSIS

Analysis of Strengths and Weaknesses for the DAIRY QUEEN MILK in the industry Key

internal factors for the DAIRY QUEEN MILK are;

STRENGTHS

Dairy queen milk has a good in house R&D to help them improve the system and quality

control aspects.

The staff is highly trained and qualified.

Dairy queen milk has an updated technology regarding UHT treated milk.

Dairy queen milk has good brand awareness because of its product repute

Quality of dairy queen milk is good thing for the company which company can count on

Dairy queen milk has its own sales force and sales team to work in the market for dairy

queen milk.

WEAKNESSES

Dairy queen milk is available at selected stores and outlets, which sometimes create

problem for the consumer to get the product with ease and convenience.

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Dairy queen lack the promotional activities such as advertisements and billboards

OPPORTUNITIES

As unprocessed milk is the raw material for the product and is available and can be

managed with ease

The staff is highly trained and qualified.

Government is wiling to support UHT milk products

Government has allowed duty free imports of machinery and feeds dairy animals

With education and time awareness regarding UHT milk has increased and is helpful for

Dairy Queen to act

THREATS

UHT milk is growing as product but is a bit slow in process

UHT milk is being packed using tetra pack technology which is a costly one

Mostly the raw milk being transported to plant doesn’t carry good shape as its transported

from longer distances

COMPETITOR OF HALEEB FOODS

HISTORY OF NESTLE

Nestlé was founded in 1866. In the 1860s Henri Nestlé, a pharmacist, developed a food

for babies whose mothers were unable to be breastfed. His first success was a premature infant

who could not tolerate his own mother's milk nor any of the usual substitutes. The value of the

new product was quickly recognized when his new formula saved the child's life, and soon,

Farine Lactée Henri Nestlé was being sold in much of Europe. In 1905 Nestlé merged with the

Anglo-Swiss Condensed Milk Company. By the early 1900s, the company was operating

factories in the United States, United Kingdom, Germany and Spain. World War I created new

demand for dairy products in the form of government contracts. By the end of the war, Nestlé's

production had more than doubled. The first Nestlé factory to begin production in the United

States was opened in Fulton, Oswego County, New York. The factory however was closed in

2001, after the company decided that the cost of restoring, and updating the factory was not

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worth the effort. Employees of the factory were furious, and raised the company flag upside

down the day the closing was announced.

After the war, government contracts dried up and consumers switched back to fresh milk.

However, Nestlé's management responded quickly, streamlining operations and reducing debt.

The 1920s saw Nestlé's first expansion into new products, with chocolate the company's second

most important activity. Nestlé felt the effects of World War II immediately. Profits dropped

from $20 million in 1938 to $6 million in 1939. Factories were established in developing

countries, particularly Latin America. Ironically, the war helped with the introduction of the

company's newest product, Nescafé, which was a staple drink of the US military. Nestlé's

production and sales rose in the wartime economy.

The end of World War II was the beginning of a dynamic phase for Nestlé. Growth

accelerated and companies were acquired. In 1947 came the merger with Maggi seasonings and

soups. Crosse & Blackwell followed in 1950, as did Findus (1963), Libby's (1971) and Stouffer's

(1973). Diversification came with a shareholding in L'Oréal in 1974. In 1977, Nestlé made its

second venture outside the food industry by acquiring Alcon Laboratories Inc. In 1984, Nestlé's

improved bottom line allowed the company to launch a new round of acquisitions, notably

American food giant Carnation and the British confectionary company Rowntree Macintosh in

1988. The first half of the 1990s proved to be favorable for Nestlé: trade barriers crumbled and

world markets developed into more or less integrated trading areas. Since 1996 there have been

acquisitions including San Pellegrino (1997), Spillers Petfoods (1998) and Ralston Purina

(2002). There were two major acquisitions in North America, both in 2002: in June, Nestlé

merged its U.S. ice cream business into Dreyer's [1], and in August a $2.6 billion acquisition was

announced of Chef America, Inc. In the same time frame, Nestlé came close to purchasing the

iconic American company Hershey's, though the deal fell through. Another recent purchase

include the Jenny Craig fitness firm for $600 million. In December 2005 Nestlé bought the

Greek company Delta Ice Cream for €240 million. In January 2006 it took full ownership of

Dreyer's, thus becoming the world's biggest ice cream maker with a 17.5% market share.

NESTLE MILKPAK

VISION STATEMENT OF NESTLE MILKPAK

The strategic priorities of Nestle Milkpak are focused on delivering shareholder value

through the achievement of sustainable, capital efficient and profitable long term growth.

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Improvements in profitability will be achieved while respecting quality and safety standards at

all times.

In line with this objective, Nestle Milkpak envisions to grow in the shortest possible time

into the number one food company in Pakistan with the unique ability to meet the needs of

consumers of every age group - from infancy to old age, for nutrition and pleasure, through

development of a large variety of food categories of the highest quality. Nestle Milkpak

envisions the company to develop an extremely motivated and professionally trained work force,

which would drive growth through innovation and renovation. It aspires, as a respected corporate

citizen, to continue playing a significant role in the social and environmental sectors of the

country.

SUMMARY OF OPERATIONS

PRODUCTION

The joint venture between Milkpak Ltd. And Nestle S.A. came about in 1988 and the

company was renamed as Nestle Milkpak Ltd. Prior to that, Milkpak Ltd., produced UHT milk,

butter, cream, desi ghee and fruit drinks at Sheikhupura factory. 21 branded product lines were

added during 1990 to 1998. Nestle Milkpak operates the largest and an extremely efficient milk

collection system in the country, which enables it to collect the highest quality milk for

production of UHT and powder milks as well as other milk based products. The company

voluntarily provides extension services of farmers in the area of animal husbandry and livestock

breed improvement.

EXPORTS

Nestle Milkpak entered the export market in 1993 with exports of Rs.3.2 million to

Afghanistan. Growing steadily over the years, its exports stood at Rs.321 million by June, 1998.

Currently, it's overseas markets include the UAE, UK, USA, Sri Lanka, Malaysia, Bangladesh,

Afghanistan and Central Asian States.

CONTRIBUTION TO OTHER SECTORS

In the social sector, the company provides over 1,100 job opportunities for skilled,

unskilled and professional manpower. It plays a remarkable role in vitalizing the rural economy

by disbursing over Rs.1.37 billion annually against milk purchases, benefiting over five million

household members of the dairy farmers.

THE ENVIRONMENT

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In line with its universal commitment, Nestle Milkpak fully complies with its responsibilities

forwards the protection of the environment. By making available the processed and packaged

dairy products to urban consumers, it helps in arresting urban environmental degradation caused

by the influx of cattle into towns. Within it's own production facilities, the company takes pains

to operate an elaborate water treatment system to cleanse its industrial wastewater before

releasing it for irrigation.

BUSINESS INFORMATION

Date of Inception of Business: January,1980

Fixed Capital: Rs. 74 million (includes fixed assets & working capital)

Present Fixed Capital: Rs.1,526 million

Increase in Percentage Terms: 2,062%

SHARES

Listed on Stock Exchange: 8th July, 1978

Share price at time of listing: Rs.10 per share

Highest share price: Rs.165.00 per share on June 30, 1996

Present price: Rs.112.00 per share 

NESTLE'S MILK SOURS IN PAKISTAN

Nestle, the Swiss baby food transnational corporation (TNC), has been attacked for

''blatant'' violations of the international marketing code for infant foods in Pakistan in a new

report here. Released by Islamabad-based health advocacy group The Network, it has prompted

Pakistan's military rulers to order officials of the Health Ministry to take appropriate steps for

''necessary action'' on the basis of the report.

The report ''Milking Profits: How Nestle puts sales ahead of infant health'' is based on

evidence provided by a former employee of the TNC. Says Tracy Wagner, campaign officer at

The Network: ''This is the first time that such explicit and irrefutable evidence has come from

inside this massive company.'' The Network is a partner of the International Baby Food Action

Network (IBFAN). Although Pakistan does not have laws to regulate the marketing of infant

foods, companies are obliged to abide by the International Code for the Marketing of Breastmilk

Substitutes, adopted in 1981 as a ''minimum requirement'' by the World Health Assembly, the

highest global policy-making body. The code prohibits all promotion of breastmilk substitutes

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and feeding products, including direct contact with mothers, incentives to doctors and free

product samples and supplies. However, the report reveals that Nestle is guilty of Code

violations in Pakistan. An internal document included in the report establishes a direct link

between its sales and financial benefits and sponsorships to doctors.

''The document shows irrefutably that Nestle agreed to pay for half the price of an air

conditioner to a doctor, considering his influence in the district - provided sales of Nan and

AL110 go up,'' said Wagner, adding, ''We possess this document in original, spelling out the deal

in no uncertain terms.'' The report also includes specific evidence about Nestle's direct contact

with mothers in the waiting rooms of doctors, in hospital wards and by organizing baby shows. It

says the company provides free samples and supplies of products covered by the international

code.

The Swiss TNC denies the allegations and accused its former employee Syed Aamar

Raza, who supplied the documents to The Network, of blackmail and gaining employment by

presenting a false diploma. Nestle claims to possess audio recordings of Raza's blackmail

attempt, allegedly attempted in February 1998, which he denies: ''I never tried to blackmail

Nestle. If they have evidence against me, they should take the case to the appropriate forum and

press charges against me,'' Raza said over the phone from Germany, where he is closely working

with European IBFAN groups to highlight ''Nestle's unethical practices in Pakistan''. ''The

evidence in the report speaks for itself - this company is violating the international code as a

matter of routine,'' said Wagner.

The report has reopened debate on the need for strict curbs on the marketing of

breastmilk substitutes in Pakistan which registers one of the highest infant mortality rates in the

world. According to the ''State of the World's Children Report 2000'' recently released by the UN

children's agency, Unicef, nearly 10 percent of babies born in this country die in the first year.

''Bottle-feeding contributes significantly to diarrhoea and respiratory infections, two leading

causes of infant death in Pakistan,'' said Dr Asad Hafeez, a pediatrician in Islamabad. The office

of the Chief Executive, Pakistan's military ruler Gen Pervez Musharraf, has instructed the

Ministry of Health in a letter to take appropriate steps on the issue, and report back to the Chief

Executive's Secretariat. The letter signed by Brig Tariq Hamid Khan says, ''The report is

forwarded to Health Division for necessary action as may be appropriate under the policy in

vogue, under intimation to this Secretariat as well as the petitioners (The Network).''

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Health Ministry officials said they had submitted a draft which took seven years to

finalize, of a proposed law - the Protection of Breastfeeding and Young Child Nutrition Act - to

the Nawaz Sharif Cabinet last year. The draft law has incorporated provisions from the

marketing code adopted by South Asia's regional grouping Saarc, at a ministerial meet for

children in Pakistan in 1996, which is stricter in the light of the high rates of malnutrition and

poverty among children in the region. ''We'll soon forward the draft to the cabinet for its approval

as an ordinance,'' said an official of the health ministry. An earlier report, ''Feeding Fiasco'',

published by The Network in 1998 accused all baby food manufacturers in Pakistan of violating

the code. Among the 160 or so brands sold here, are the US Mead Johnson and Abbot, and

Japanese Morinaga. According to Wagner, ''Nestle is just one of many baby food companies

playing with the lives of Pakistani babies. Without laws, we have no legal recourse and can only

try to shame them into more responsible corporate conduct.''

Nestlé Pakistan runs a milk programme for undernourished young children and mothers

through several NGO partners. This assistance goes to the destitute, poor and disabled at day

care centres, schools, hospitals, shelters and jails where children are incarcerated with their

mothers. Nestlé Pakistan has been involved for over 15 years in supporting dairy development in

the Punjab province, where it collects milk for processing. Its efforts have been focused on

increased milk production and livestock development – something that directly and positively

impacts the lives of the small farmers with low income. This is a great success story. This has

brought prosperity to farmers through an assured and growing income resulting from increased

sale of their milk. These efforts of the Company have been widely acclaimed by the farmers and

the government alike.

Towards this end, the Milk Collection Department operates an Agri-Service unit, staffing

it with qualified people, who provide a wide range of services in the areas of breed improvement,

animal health, better feeding and good animal husbandry practices. The Company also helps

farmers to avail of micro credit from banks for the purchase of dairy equipment and animals.

FOCUS

Creating value for society while creating value for our shareholders…. this is Nestlé's

approach to the community and, on a wider view, to the attainment of the U.N. Millennium

Development Goals. We regard these Goals as highly important objectives for improving the

state of the world. The Millennium Development Goals are, among other things, a bold attempt

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to prioritise what is needed to address the most pressing needs of people in developing countries

in particular. They focus on poverty reduction, education, health for women, children and the

reduction of pandemics like HIV/AIDS and malaria. They address environmental sustainability;

and they stress the importance of partnership in order to achieve results.

FINANCIAL PERFORMANCE FOR THE YEAR ENDING 2002:

Although the economy showed marginal improvement, the business environment

remained generally stagnant during 2002. Despite this, the company has performed very well

during the period under review, which can be assessed from the following information:

PKR Million 2001 2002 Change

Sales 8,054 9,222 +14.5%

Operating Profit 902 1,149 +27.4%

of sales 11.2% 12.5%

Net Profit 414 651 +57.2%

of sales 5.1% 7.1

For the fifth consecutive year, the company registered an impressive double digit Real

Internal Growth of 14.1%. Major product categories viz: liquid and non liquid milks, chilled

dairy and water, showed strong growth. Exports rose to Rs. 383 million representing a 39.3%

value growth. Export to Afghanistan, which represents 60% of Nestle’s total exports, doubled

from Rs. 102 million in 2001 to Rs. 231 million in 2002. Total sales for the year reached Rs. 9.2

billion, showing a value growth of 14.5% over last year. Net profit for this year stood at 651

million, an increase of 57.2%, which translates into a net profit margin of 7.1 % as against 5.1%

in 2001. Improved profit margin became possible through various initiatives. While sustained

volume growth and cost saving initiatives in the areas of production and purchasing were mainly

instrumental in achieving this, proper controls of fixed general overheads, lower financial cost

due to lower interest rates and tight control of working capital also significantly contributed in

improving the net profit.

PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31ST DECEMBER 2002

G Rs ’000Sales 9,181,267Cost of goods sold 6,441,080

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GGross profit 2,740,187Admin & Selling expenses 1,587,171GOperating profit 1,153,016Other income 33,837Total 1,186,853GFinancial charges 95,986Other charges 81,594Total 177,580GProfit before taxation 1,009,273Provision for taxation 349,173GProfit after taxation 660,100Unappropriated profit b/f 79,024Profit available for appropriation 739,124GInterim dividend @ Rs.6 per share 271,638Final dividend @ Rs. 6 per share 271,638Transfer to general reserve 130,000Amount capitalized by issue of shares Under scheme of arrangement for Amalgamation

91

Total 673,367GUnappropriated profit C/F 65,757Earning per share – (Rupees) 14, 58

MARKETING & SALES

During the year under review the company achieved sustainable profitable growth by

capitalizing on the opportunity presented by a positive business environment. This became

possible through successful marketing & sales strategies and focus on key initiatives. Innovation

and renovation remained the key to development of new products. In 2005 several new products

were introduced that included NIDO 1+, NESTLE NESVITA HI-Calcium low fat milk,

NESTLE NESVITA Hi-Calcium low fat Yogurt, NESTLE Corn flakes, NESTLE KOKO

KRUNCH in addition to two new products in the chocolate category viz: KIT KAT CHUNKY &

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NESTLE MILKYBAR. New SKU’s were also added to the existing range with the launch of

NESTLE RED GRAPE NECTAR.

The strategy to increase penetration by offering right price point pack sizes,

supplemented by aggressive distribution expansion across the country especially in small towns,

paid off in water, juices, NESCAFE, and yogurt. Success was ensured through well executed

localized activities such as effective communication, consumer services shows, door-to-door

sampling and consumer promotions.

During the period under review we continued with our strategy to increase distribution

penetration and develop additional trade channels. Activities such as town storming, special

distribution drives and distributor training were extensively undertaken in second strata towns.

Area-based territory management continued to be strengthened and wider availability and

visibility of products provided a competitive adge. The key initiative of ‘Category Sales

Development’ continued to effectively strengthen strategy planning with respect to channels,

customers and shoppers.

FOOD SEVICES

Food Services remained a fast developing business and continued to meet specialized

needs of Out-of-Home customers. Its role and activities were further strengthened during 2005.

Out-of-Home channels that the unit serves included hotels, restaurants, clubs, businesses,

industries, third party canteens and NESCAFE vending operations. Our strategic outlook was

focused on propelling growth of liquid milks, tea creamers, hot & cold beverages & water.

Consumer trends of out-of-home consumption promise a bright future for this business. In 2005

the market share of key brands was further strengthened, trade spent & market returns were kept

well under control while achieving sales value growth of 36.1% and real internal growth reached

31.1%.

RAW MATERIALS

Agricultural raw materials provide the basis to the company’s finished products and

therefore are central to its operations. Although not involved in raw material production, the

company supports sustainable agricultural and dairy farming practices, including environmental

protection.

NESTLÉ PRODUCT LINE

DAIRY:

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NESTLE EVERYDAY

To target the large potential offered by the tea-creaming segment, NESTLE EVERYDAY

tea-creamer was launched in 1992. supported by integrated marketing, focused distribution with

sampling drives and excellent consumer acceptance, the brand has shown strong growth and

acceptance, the brand has shown strong growth and holds great promise for the future. The brand

is available in a variety of pack sizes ranging from 40gm to 1000gh.

NESTLE EVERYDAY Liquid

NESTLE EVERYDAY liquid, leveraged by a very strong mother brand EVERYDAY

Powder was introduced to capture the huge liquid milk consumption in tea. Launched in june

2002 in 200ml, it is now also available in 125ml and 375ml sizes. Year 2005 has seen this brand

become a significant player in highly competitive milk market.

NESTLE MILKPAK UST MILK

Launched in 1981, MILKPAK milk became synonymous with purity. In September 1999,

it was launched under the Nestle brand, which further strengthened its position. Backed by a very

strong brand name, aggressive marketing and distribution, consistent quality and all year round

availability. NESTLE MILKPAK milk has become number one selling milk brand in Pakistan. It

is available in four pack sizes of 1500ml, 1000ml, 500ml and 250ml.

MILKPAK UHT Cream

MILKPAK UHT Cream was introduced under the MILKPAK brand in 1986. it is

available in an attractive 200ml slim pack. The consumer trust in the brand name and the product

has ensured its dominant share in the cream category.

NESTLE NESVITA Hi-Calcium Low Fat Milk

MILKPAK Desi Ghee

NESTLE NIDO

NESTLE Raita

NESTLE Easy Whip

WATER:

Launched in December 1998, NESTLE PURE LIFE was Nestle’s first global bottled

water brand. Marketed in 2.5 and 1.5 liter PET bottles, it was established as the near market

leader within 3 months of launch, becoming the benchmark for quality of bottled water in

Pakistan. With focused attention on distribution, marketing communication and merchandising,.

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Nestle pure life soon came to command dominant market leadership, establishing a new price

point for bottled water. Nestle Pure Life is a part of the product portfolio of Nestle Waters, wich

ranks as the biggest bottled water company in the world with its renowned brands. Nestle pure

life is registered with NSF international as an independent quality certification agency, with the

authorization to use its mark of quality on the label. Its also approved by PSQCA and carries its

mark of certification.

In 2000, NESTLE PURE LIFE established a successful Home & Office (H&O) delivery

service, which has abstantially grown ever since and has come to dominate the 5-gallon market

in major towns, offering greater convenience and better value to the consumers. Successful

marketing and sales strategies has provided greater convenience and better value to the

consumers. The brand is poised for continued strong growth.

ALPINE Full Cream Evap

BEAR BRAND

CARNATION Condensada

CARNATION Coco Evap

CARNATION Evap

MILKMAID Reconstituted Condensed Milk

NESTLÉ All Purpose Cream

NESTLÉ Cream

NESTLÉ Fresh Milk

NESTLÉ Low Fat Milk

NESTLÉ Cottage Cheese

NESTLÉ Creamy Yogurt Natural

NESTLÉ Sour Cream

BEVERAGE:

Nescafe 3 in 1

NESCAFE Gold

MILO Powder

MILO RTD

NESCAFÉ Classic

NESVITA

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NESTEA Black Tea

NIDO Full Cream Milk

CEREALS:

ALMOND CLUSTERS

NESTLÉ Cookie Crisps

NESTLÉ KOKO CRUNCH

MILO BALLS

CORNFLAKES

BANANA NUT CLUSTERS

FITNESSE

FITNESSE with FRUITS

KOKO KRUNCH

HONEY STARS

CONFECTIONERY:

POLO

NESTLE KIT KAT

NESTLE KIT KAT Chunky

MAGGI 2-MINUTE NOODLES

ALMONETS

FOX’s FRUITS

KITKAT (White and Milk Chocolate)

NESTLÉ Crunch

NESTLÉ Dark Chocolate

NESTLÉ Classic White Chocolate with Almonds

RAISINETS

SMARTIES

BABY FOODS

LACTOGEN

NAN

CERELAC

NESTLE Rice

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NESLAC

OTHERS:

NESTLÉ Ice Cream

CUSTOMER ANALYSIS

CVA

Middle class customer is more interested is price then taste. Because UHT milk is bit

costly than lose milk. UHT milk price is 34 and lose milk is available at 20 to 30 rupee per litter.

Pure milk is a problem for the customer and customer wants to get or purchase pure milk with

quality because now customer is more conscious about health that’s way he wants to purchase a

quality product. Although taste of the product is an issue, but against high price it’s not a issue

for the customer.

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Dairy Queen is a product which is providing value to the customer “Best Milk at Low

Price”. Quality and taste is providing in dairy queen at low price for the middle class household

families.

Prices are going up day by day due to high price demand from the suppliers and

companies have to increase their prices of UHT milk. Heleeb and Nestle made a promise that

they will increase their prices of milk together. When you position your product on the bases of

requirements of the customer it will be always in the mind of the customer and our positioning is

“low price milk”.

There are many brand of UHT milk in the market and they have their own segments or

target market. But Dairy Queen finds out a new segment and target market for the penetration

and position the product. Our segment is middle class household and low income level families,

whom are not afford high price milk.

SEGMENT OF DAIRY QUEEN

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INTERNAL FACTOR EVALUATION

Analysis of Strengths and Weaknesses for Dairy Queen Milk in the industry, key internal factors

for Dairy Queen Milk are as below,

STRENGTHS

FACTOR WEIGHTS RATE TOTAL COMMENTS1 In house R&D 0.11 4 0.44 Dairy Queen Milk has a good in

house R&D to help them improve the system and quality control aspects

2 Trained staff 0.09 4 0.36 The staff is highly trained and qualified.

3 Technology 0.11 4 0.44 Dairy Queen Milk has an updated technology regarding UHT treated milk.

4 Good brand awareness

0.19 4 0.76 Dairy Queen Milk has a good brand awareness because of its older product repute

5 Services 0.13 3 0.39 Dairy Queen Milk has a good service center to help people regarding any concerns about the product

6 Quality 0.08 4 .32 Quality of Dairy Queen Milk is good thing for the company which company can count on

7 In house sales forces

0.09 3 .27 Dairy Queen Milk has its own sales force and sales team to work in the market for Dairy Queen Milk

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WEAKNESSES

FACTOR WEIGHTS RATE TOTAL COMMENTS

1 Availability 0.18 1 0.18 Dairy Queen Milk is available at

selected stores and outlets, which

sometimes create problem for the

consumer to get the product with ease

and convenience.

2 Promotional

activities

0.02 2 0.04 Dairy Queen Milk lack the

promotional activities such as

advertisements and billboards

Total 1 3.2

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EXTERNAL FACTOR EVALUATION

Opportunities and Threats that Dairy Queen Milk carries being in the UHT milk industry.

Key external factors for Dairy Queen Milk are;

OPPORTUNITIES

Factor Weights Rate Total Comments1 Availability of raw

material0.14 3 0.42 As unprocessed milk is the raw

material for the product and is available and can be managed with ease

2 Health conscious customers

0.21 4 0.84 The staff is highly trained and qualified.

3 Government support 0.09 3 0.27 Government is wiling to support UHT milk products

4 Duty free import of machinery

0.12 2 0.24 Government has allowed duty free imports of machinery and feeds dairy animals

5 Increased awareness of UHT milk

0.19 4 0.76 With education and time awareness regarding UHT milk has increased and is helpful for Dairy Queen Milk to act

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THREATS

FACTOR WEIGHTS

RATE TOTAL COMMENTS

1 Slow growth

of demand

0.13 3 0.39 UHT milk is growing as product

but is a bit slow in process.

2 Packaging as

an expensive

ingredient

0.03 2 0.06 UHT milk is being packed using

tetra pack technology which is a

costly one

3 Transportation of raw material

0.09 2 0.18 Mostly the raw milk being transported to plant doesn’t carry good shape as its transported from longer distances

Total 1 3.16

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GE MATRIX

IFE = 3.2EFE = 3.16

The result of the GE matrix lies in the cell 1 described as grow and build, “best milk at

low price” is the most appropriate and effective strategy that Dairy Queen Milk can currently use

for its product. Market development with commitment strategy is used when, we are seeing that

we are not so well in market share and there are well established and known competitors are

there in the market, but we still lye somewhere from which we can find some new markets, and

there are new channels of distribution available which are of good quality. When an organization

see that it’s pretty well at the place where it is. It is also used when some organization thinks that

it has an ability to use the production capacity and to expand it with requirement. And at the

most when the industry for that company is rapidly giving margin to grow.

If we go in details of the strategy we have chosen here for Dairy Queen Milk then it is,

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TOWS MATRIX

STRENGTHSThe staff is highly trained and qualified.Dairy Queen Milk has an updated technology regarding UHT treated milk.Dairy Queen Milk has its own sales force and sales team to work in the market for Dairy Queen Milk.

WEAKNESSESDairy Queen Milk is available at selected stores and outlets, which sometimes create problem for the consumer to get the product with ease and convenience.Dairy Queen Milk lack the promotional activities such as advertisements and billboards

OPPORTUNITIESGovernment is wiling to support UHT milk products.Government has allowed duty free imports of machinery and feeds dairy animalsWith education and time awareness regarding UHT milk has increased and is helpful for Dairy Queen Milk to act

The staff is highly trained and qualified.Government is wiling to support UHT milk products.

Dairy Queen Milk is available at selected stores and outlets, which sometimes create problem for the consumer to get the product with ease and convenience.With education and time awareness regarding UHT milk has increased and is helpful for Dairy Queen Milk to act

THREATSUHT milk is being packed using tetra pack technology which is a costly one.Mostly the raw milk being transported to plant doesn’t carry good shape as it’s transported from longer distances.Prices are going up day by day due to raw milk prices.

Dairy Queen Milk has its own sales force and sales team to work in the market for Dairy Queen Milk.Prices are going up day by day due to raw milk prices.

Dairy Queen Milk is available at selected stores and outlets, which sometimes create problem for the consumer to get the product with ease and convenience.UHT milk is being packed using tetra pack technology which is a costly one.

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NEW MARKETING STRATEGY

DEVELOPMENT WITH STRATEGY

Definition

Maintaining stable interest in the market

Objective

To maintain the status quo but to grow gradually

To improve sale and product image

Requirements

To grow in the market, but at the same time not losing the current position and

advantages Dairy Queen Milk has.

To improve product image will help increasing and growing in UHT milk industry

To keep customer satisfied and happy

Expected results

Acceptable profitability and gradual growth

Improved product image and sales

PRODUCT STRATEGY

(PRODUCT REPOSITIONING STRATEGY)

Definition

Here we will be reviewing the current positioning of the product and its marketing mix,

thus seeking new position for it that seems more appropriate with its brand name.

Objectives

To correct the original positioning mistake

To increase the growth of market for Dairy Queen Milk through increasing life of product

in market

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Requirements

Repositioning is sought through the promotion of the product for more varied uses of the

product.

This will require some new promotional activity to get into attention those customers

who are not yet been inclined towards it, but with care so that the old customers are not

alienated.

This may require to present the product with some different uses, such as flavored milk,

milk for tea, milk for coffee, milk with lower fat, etc

Expected results

This will help us grow in our existing market

This will also give us new customers thus increasing our overall market and helping us

taking our product to a growth route

Increased sales, market share, new product uses, profitability and growth

PRICING STRATEGY

(MAINTAINING THE PRICE)

Definition

Maintaining the price will mean here to get along with the competitors in the price as this

market is already at higher price levels so to get reasonable profits and to also maintain

the market its good for Dairy Queen Milk to stick and to maintain the prices that market

carries.

Objectives

To enhance public image for Dairy Queen Milk by making them use the product.

To maintain position in the market in terms of market share and profitability, but our

basic them of growth will help us through our other strategic plans.

Requirements

Going along market price will help Dairy Queen Milk to enhance its image for

governmental agencies as well the customers

Working on new marketing strategy so it will help us minimize the uncertainty of results

we might get with price change.

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As overall market price is being followed so slight changes in environment will not affect

much.

Expected results

This will help us maintain the status quo for the firm’s market position.

Also will give us an enhanced image of firm in front of the product users.

POSITIONING STRATEGY

(AGAINST USAGE AND ITS BENEFITS)

Definition

Usage of product is that how and when this product can be used for its higher benefits

and outcomes.

Benefits are pointed towards its hygienic and health customers

Objectives

To get the right customers from the market

To grow through making customer know the different usages of the product

Requirements

This will help Dairy Queen Milk to grow with the help of finding new customers

It also does carry some extra focuses along with it, so customers will be identified with

its more benefits that can help Dairy Queen Milk to retain that growth.

Expected results

This will help us grow in our existing market through new customers

This will also give us new customers thus increasing our overall market and helping us

taking our product to a growth route

Increased sales, market share, new product uses, profitability and growth

PROMOTIONAL STRATEGY

Definition

It is something that make customer recognize the offering of a company

Objectives

To build up a long term image for a product

To improve sales, as customer will come to know about the product in detail

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Requirements

It will help Dairy Queen Milk making customer believe that with such advertising

campaigns they have come up with some good quality product.

Helps reaching geographically dispersed customers.

Expected results

Growth in sales.

Market share will go up.

Brand recognition is associated with advertisement.

SUMMARY

After completion of the project, Dairy Industry is very attractive and there is a big room

for improvement and for the new products. Growth rate is very high and many companies are

coming and many new products are also coming in the market. Competition level is very high

and customer and suppliers powers are increasing. Media can play important role in the game

and who will use it he will be the top position. Haleeb is competing with Nestle. Nestle is multi

national company and it has many resources and they are using these resources. But, prices are

very high and it will increase continuously that way new entry will be may stop. Now, Nestle

shift his focus on the powder milk and water also. Our weaknesses will be remove and we will

get more out off total number of share from the market. Dairy Queen’s strategy is good but there

is a gap in the implementation of the strategy. Now, Dairy Queen is becoming nation wide

product and it’s move is towards Nestle. Multan, Fisal Abad, Sahiwal and Rawalpinde are the

cities where Dairy Queen’s share is high. Penetration and awareness of the Dairy Queen is very

important variables of its strategy. Customer wants low price and quality product these are two

main requirements which is being fulfilled by the Dairy Queen. Advertising is very important in

the life of a product and our new strategy is based on the advertising. TOM is very important

factor from the customer side when ever he will purchase UHT milk our product name will be in

his mind and he will purchase our product. Dairy Queen’s USP is low price milk and we will

cash this USP.