marketing strategies of olper's milk and milkpak

Marketing of Olper’s Milk and Nestle Milkpak

ABSTRACT

This report is about the marketing of Olper’s and Nestle Milkpak. We start by giving a brief history about Olper’s and how it came into existence. Then we talk about its vision, core values and its marketing department. We discuss the research conducted by the company before introducing it to the market and how they have segmented its target market and positioned the product in the minds of the consumers. We then discuss the SWOT and PEST analysis. Then we discuss the 4 P’s of Olper’s milk. Two products are then discussed of Olper’s. Nestle Milkpak is then discussed starting from its history. We discuss its segmentation, targeting, positioning, differentiation. SWOT analysis, PEST analysis, 4 P’s. Then we discussed how the introduction of Olper’s as has affected the Milk industry. Recommendations are given in the end for both Olper’s and Nestle Milkpak.

ENGRO FOOD’S HISTORY

Engro Foods (Pvt.) Limited (EFL) was been established in 2005 as part of a diversification process at the Engro Group. ENGRO wanted to setup a new fertilization plant but due to certain constraints from the government wasn’t able to do so. Therefore, the organization decided to move into a new market. They came up with several options including telecommunications and power plant but they found out that the food industry held the greatest promise. Engro Foods has already set up two processing plants at Sukkur and Sahiwal.

Engro Foods entered the Food business through milk processing and sale with the company’s vision to pursue growth opportunities based on country fundamentals and own strength. It also positions the company to leverage its corporate social responsibility initiatives and work closely with rural communities to promote integrated farming and livestock development. This effort is expected to play a pivotal role in poverty alleviation and improving livelihoods of the poor in the milk collection areas.

Olper’s Milk, Company’s first brand was launched in March 2006 in 20 cities of the country simultaneously.

VISION

"Our vision is to become a fast expanding mega foods company. To achieve our vision, the company will initially focus on dairy by investing a substantial amount in plant, milk collection capability and marketing. We are making concrete efforts to expand in and beyond Pakistan; through strategic international alliances, to eventually become global."

Government College University


CORE VALUES

1. Leadership

2. Innovation

3. Quality and continuous Improvement

4. Candid and open communications

5. Individual growth and development

6. Enthusiastic pursuit of profit

7. Ethics and integrity

8. Safety, Health and Environment



MARKETING

Consisting of leading marketing professionals of the industry, who are graduates of top business schools of Pakistan, the Marketing Department ensures that from product need identification to product development, launch and post-launch, all strategic decisions are made based on authentic information and research. Identifying the target markets, effectively communicating to them and building the image of the brands as well as the Companies, is the job of the professionals running the marketing at Engro Foods.

MARKETING RESEARCH CONDUCTED BY ENGRO FOODS

Before the inception of the brand Olper’s, AC. Neilson carried out a marketing research for Engro Foods to determine the viability of the brand name Olper’s’ and the market readiness through surveys, interviews and focus groups. 1200 names were reviewed and analyzed before Olper’s was decided. Olper’s is promoted as the milk for all-purposes. The reason for this is that while conducting research, they found out that people want milk that could be used for all purposes such as drinking, tea whiteners etc.

Once the brand was introduced the organization wanted to add more product lines to it. Therefore they conducted another marketing research to find out the success of Olper’s. The researchers started off with secondary data that was available. They tried to uncover the level of complexity involved in such a decision and the magnitude of success. But that wasn’t enough so they started to collect primary data through the use of different techniques. The first started with survey research to understand the people’s beliefs, preferences and core needs that can be satisfied by introducing additional products. The researchers also conducted observational research to observe the people in different settings. They used it to find out which brand the people really bought, where did they take more time in purchase process and where did they look when they were shopping for grocery. This helped them to see the shelf-space that can be used. They used the method of shadowing that is they observed people while using the product. They also conducted unfocused groups where they interviewed a diverse set of people to explore ideas about the brand and what more they want in the food sector to be available to people.

The researchers conducted questionnaires to find the responses of consumers about Olper’s. They got a positive feedback from the customers who also encouraged them to invest further and to setup a new plant in Sahiwal. Through different research methods the organization was also able to find out the number of loyal of competitors’ brands.

After the analysis of data researchers present the findings to the decision makers who pass the final verdict. Due to the positive responses of consumers, the decision makers decided to go ahead with the idea of introducing more product lines to the food Olper’s brand.



It can be said that successful marketing research helps the marketers to understand the costumers’ needs that are still unfulfilled. The four new products of Olper’s in the market are Olwell diet milk, Olper’s cream, Tarang and Omore. The organization has further plans to expand more in this sector and introduce more products related to milk.

SEGMENTING AND TARGETING THE MARKET FOR OLPER’S

The milk sector shows a market that has homogeneous preferences that is the consumers have similar preferences.

They want milk to be clear and free from any impurities. It should be carefully processed It should be good for health and bones.

Keeping these things in mind, Olper’s market has been segmented. The marketers at Olper’s have had a number of options available to them when segmenting the market for their products.

Demographic Segmentation

Olper’s products are not bounded to any particular age, gender or lifecycle stage. The brand is meant for all the users in higher upper or middle class families. Even though the brand calls for a small percentage of an individual’s income but lower class wouldn’t want to buy the brand maybe because they are price sensitive or because they believe lose milk is better than processed milk and has all the nutrients that the processed milk lacks. However, all the companies in the milk sector are trying to change the image of processed milk as non-nutritionist milk. Therefore it can be said that Olper’s has been positioned as a brand for high income earners. Due to the income factor involved it can be said that Olper’s milk target a specific social class who are health conscious and concerned about their weight.

Psychographic Segmentation

On the basis of psychographics, factors such as personality traits, lifestyles and values, the marketers at Olper’s have segmented the market more towards achievers who are goal-oriented and focused on their careers, and those who are seeking variety in the milk sector. For example the ads for Olwell mostly show achievers who want to be successful, have high aims and are already doing quite well in their concerned fields. The Olper’s products have targeted variety seekers because the company has given them a new set of brand and so, many will make their first purchase because they want to try something new. Olper’s ads also target believers, traditional conservative people with concrete beliefs. The ads for Olper’s show the beliefs of healthy life with processed milk and plays on the emotional aspect more.



Behavioral Segmentation

Olper’s products have been segmented on the basis of benefits that consumers seek in the milk. In this case, people look for a brand that can be used for all purposes from drinking to tea whiteners as well to feed the animals. The ads also show that consumers should increase their milk consumption for example with every tea they should use Olper’s, every morning they should drink Olper’s and everyday they should feed their pets with Olper’s milk.

POSITIONING THE BRAND

Positioning involves designing the product and image that will occupy a distinctive place in the minds of the target market. As can be seen, Nestle Milkpak and Haleeb have the largest profit margins and market share in the milk industry. Thus the marketers at Olper’s have decided to create its own unique image and then strengthen the position in the customers’ minds. They have done this by taking a number of following steps:

Packaging of Olper’s Milk and Olwell in red color and Olper’s cream packed in purple color are quite different and distinctive from the typical green and blue packing used by other competitors.

The brand has been positioned as an all purpose milk that is meant for everyone, especially those who live life to the fullest, hence its tag line, “jo dil khol kay jeetey hain unheen kay liyay hai Olper’s”

The marketers have used different positioning for Olper’s products:

They have used the attribute positioning for Olper’s milk. The main theme of the product is that it is meant for purposes without any user imagery. Olper’s ad also show attributes of milk such as good for health.

They used the benefit positioning for Olwell. The product is positioned as delivering the benefit of helping to reduce weight and for healthy bones.

Olper’s cream is positioned as good for a specific use or application. In this case the cream can be used to make cake icings and desserts look good.



SWOT ANALYSIS

Strengths

Engro’s back

Olper’s is a brand of ENGRO foods. This means that consumers can relate their former image of ENGRO foods to Olper’s. ENGRO is a well established brand name in Fertilizer, IT and infrastructure business. The brand is well known so customers will automatically have a brand association with Olper’s and see it as a premium quality product. ENGRO is world renowned so it can easily attract foreign investors in backing it against other competitors such as Nestle.

ENGRO foods can easily afford research and development costs for Olper’s have in order to introduce new products. It can also distribute the brand through better channels because of its long term relationship with distributors in the agriculture sector.

PR with farmers

ENGRO has been interacting with the farmers for fertilizers and has gained quite a good reputation over the years. It has led to a strong bond and long term relationship with the farmers who are willing to supply milk to the company. This is an added advantage and strength for the


Caption:

Jo dil khol kay jeetey hain unheen kay liye hai Olper’sBody Copy:

Dil khol kay jiyain Olper’s kay sath kunkah Olper’s hai mukamal doodh har tarah kay istimal kay liye Tag line (Corporate Slogan):

Subah Bakhair Zindagi


company because it will never be short of milk production. The farmers also won’t have to look elsewhere to sell their milk.

Positive response from customers

In first year, EFL crossed 1.4 billion sales figure which shows customers’ satisfaction upon EFL’s products.

Strong consumer and product research

Olper’s done a strong consumer & product research before and after launching the product. This has provided them the perfect launching pad to eventually emerge as a global player in the food industry. To develop its future portfolios, EFL has hired various global research partners like AC Nielsen, Mindshare, JWT Asiatic and MARS marketing and advertising agencies.

Third generation plant

EFL only, has the third-generation UHT milk plant in the country. EFL plant is the only plant in Pakistan that uses Bactofuge technology to virtually eliminate bacteria and ensure premium quality and hygiene. Moreover, it is also setting up another milk processing plant in Central Punjab (Sahiwal) with an investment of Rs. 2 billion (US $ 33 million).

Weaknesses

Olwell TVC

Olwell ad which is based on Western life style, ENGRO foods brand management showed a man who put off his clothes & remain just in his undergarments, or half nude lady in a cat walk or men admiring the figures of a lady in mix gender health club.

In this ad they are creating associations with the brand through the stripes, which is a highlight of Olwell packaging. Half naked people have been shown with tattoos of the same stripes in order to show that they are loyal consumers of Olwell. Also, the talent, situations and locations connects well with the ad to give Olwell a premium positioning.

The brilliant marketing people at ENGRO Foods failed to analyze is that the market they are targeted the ad on, is Pakistan, where practicing Muslims reside, who have strong religious beliefs. When making the ad, the brand managers were focused on, making an ad that should give the brand the most premium look and feel amongst the target consumers but on the other hand they were least bothered about the ethics, religious beliefs and cultural values.



Packaging

EFL is dependent upon Tetra Pak for the packaging of its entire dairy products. Tetra Pak is the only option available to Olper’s for packaging because it is having monopoly in the packaging sector in Pakistan. Due to this reason, Tetra Pak can charge them higher and it would increase the production cost.

Low quality milk

EFL is dependent upon Tetra Pak for the packaging of its entire dairy products. Tetra Pak is the only option available to Olper’s for packaging because it is having monopoly in the packaging sector in Pakistan. Due to this reason, Tetra Pak can charge them higher and it could increase the production costs.

Milk collection and distribution costs

EFL’s 34 out of 40 milk-collection centers are located in Punjab, whereas its only milk processing facility is situated near Sukkhur (Sindh). It increases the milk collection & distribution costs; and also increases the chances of milk getting spoiled because of increased travelling time.

Opportunities

Increased funding by government

Government has decided to increase farmers’ funding. This is an opportunity for ENGRO foods because previously due to weather conditions and other reasons there was lots of wastage of milk but now that can be reduced as farmers will be better able to store milk for longer time periods.

Increased consumption of Processed Liquid Milk



Competition may create opportunities for the company because each competitor in the milk industry wants to increase penetration of processed liquid milk and so they will create awareness for consumers through different advertising media. This will ensure the increase in the consumption of processed milk instead of lose milk and so will in turn lead to increase in sales for the company. Therefore there will be an opportunity for accelerated growth.

Awareness

Growing dissatisfaction with loose milk and increasing awareness about health and hygiene issues have led to increased processed milk consumption.

Third largest producer of milk

Pakistan is the Third largest producer of milk in the world with a total production of 32 billion liter of milk a year, whose value is more than that of the combined value of wheat and cotton, from a total herd size of 50 million milch animals (buffaloes and cows). Livestock accounts for 46.8 percent of agricultural value added and about 10.8 percent of the GDP. Milk is the largest commodity from the livestock sector accounting for 51 percent of the total value of the sector. Due to the steps taken by the government and private sector, country’s annual milk production is expected to grow at an additional 3 billion liters in the next few years. This is quite an opportunity for ENGRO foods as there is lot of growth in this part of the sector.

Threats

Competition

Competition may pose a threat because the company will have to maintain its leadership in an expanding market so that it doesn’t lose its market share to its competitors. For Olper’s it might be difficult to penetrate in a market where the loyalties exist for such brands as Nestle and Haleeb. These brands have been in the milk industry far too long and have left a mark in the minds of consumers in terms of quality. Competition seems to be getting tougher as a result of new players entering the dairy market.

Perceptions and Price Differentials

Consumers’ perceptions and price differentials can cause a threat for the company. It is important that Olper’s comes up to the expectations of the customers and fulfills its conformance quality that is the company meets its promised specifications.

Consumer’s preferences change with time and prices might create certain barriers in terms of the profit margins for Olper’s. For example, lose milk is still cheaper than packaged milk and that is also one factor that people still prefer to buy lose milk.

PEST ANALYSIS



Economic Factors

Inflation rate of Pakistan for the current fiscal year has grown to 7 percent. This thing is really hurting the purchasing power of Pakistani consumers. PLM which is already considered as more costly compared to open milk is becoming out of reach of general public. As a result, there is an increased pressure on PLM companies to either decrease their prices or at least keep prices stable. Moreover, packaged milk industry which each year pays millions of taxes is not being given any relief in terms of taxes by the government.

Competition is also increasing with the entrance of new domestic players in the dairy and food sector and plans to increase investments by the already established companies. Nirala, good milk, Pakola are the few names which have recently introduced their dairy product lines in the market. Major textile groups are also diversifying into dairy and livestock business and some of them have even acquired lands to start their business. Leading industrial groups such as Jamal Din Wali Sugar Mills, Dewan Group of Industries and Shakar Ganj Sugar Mills have already made substantial investments in dairy & livestock sectors. In March this year, Nestle Pakistan opened a state-of-the-art milk processing facility in Kabirwala, Punjab. The plant, Nestlé’s largest milk reception facility in the world has a processing capacity of 2 million liters of milk per day.

Socio-Cultural Factors

In order to make a noticeable increase in penetration, many challenges and perceptions still have to be overcome by the PLMCs.

The least important one, perhaps, is tradition. Milk, even amongst the most urbanized consumers, is synonymous with the early arrival of the doodhwala (milkman) at their home on his trusty bicycle (now replaced by a motorbike), reinforcing the impression that the milk is fresh, natural and straight from the cow. And it is this perception that only loose milk is fresh, and therefore healthy and preservative-free, that has to be overcome, if increased penetration is to occur at a substantial rate.

Over the years, all PLMCs, but especially the two older players, Nestle and Haleeb, as well as Tetra Pak (the company that packages the processed milk) have been making active efforts to convince loose milk users to switch to processed milk. In the last six years, Tetra Pak has launched three major campaigns aimed at changing consumer perceptions. Last year, Tetra Pak’s third campaign, Wohi Dhoodh Aur Kya? (Milk, what else?), addressed the misconception that processed that packaged milk has preservatives. The campaign talked about the benefits of Tetra Pak’s six-layered packaging material and innovative technology that keeps milk safe for a long time. The highlight of the campaign was the introduction of a buffalo character called, Moomoo, who explained why UHT milk stays safe and hygiene for a long time in a Tetra Pak carton.



Despite these marketing endeavors, perceptions cannot change overnight; this requires patience and continuous investment to educate consumers on the benefits of packaged milk. Every product’s lifecycle consists of an introductory phase, growth phase and maturity phase. It takes time to change attitudes, especially in a culture where the concept of fresh milk is healthier option. Another hurdle in converting loose milk users to processed liquid milk is price. In Punjab, because most dairy farms are based there, loose milk is cheap at approximately Rs 20 per liter, while processed milk is priced at approximately Rs 38 per liter. In Sindh, however, the price differential between loose (Rs 28) and processed milk (Rs 38) is only Rs 10. As a result of price considerations, most PLMCs have not increased prices in the last 5 years. Moreover, Nestle and Haleeb have introduced smaller packages to cater to consumers with limited cash flows, although there is a convenience factor at play here as well.

Technological Factors

Milk yields per animal have been increased through scientific feeding & breeding.

In year 2005, the Ministry of Industries and Production established Dairy Pakistan Company on the lines and model of Dairy Australia. The main objectives of the company are as under:

To promote milk and other value added dairy products in the domestic as well as international markets.

To promote development and up-gradation of dairy supply chain in Pakistan by supporting and facilitating the farmers, processors and other stakeholders across

To support dairy sector growth by way of supporting and facilitating business development services for the enterprises across the dairy value chain.

To initiate and support interventions across the dairy value chain to enhance sector competitiveness through innovations and research.

To promote technology development, transfer, assimilation, streamlining, acquiring and/or up-gradation across dairy value chain by undertaking new initiatives.

To help introduce international best management practices for better productivity and operational efficiencies.

To promote training and skills development of human resources associated with the dairy sector.

PRODUCTS



Olper’s Milk

Olper’s Cream

Olwell Hi-Cal Lo-Fat (HCFL) Milk

Tarang

Omore

Olper’s Milk

Launched on 20 March 2006, Olper’s milk is EFL’s standardized and homogenized pure UHT (Ultra heat treated) milk with 3.5 % fat and 8.9 % solid non-fats. It is EFL’s premier brand, and the choice of quality-conscious consumers who only go for the best. It is available in easy-to-open, 6-layered Tetra Pak Brick Aseptic red packaging and comes with a 3 months shelf life.

PLACEMENT AND DISTRIBUTION

According to Mr. Ali Akbar, Director Marketing EFL, “In order to succeed, you should ALWAYS capitalize on your STRENGHTS and NEVER on your COMPETITOR’S WEAKNESS!”

Engro Foods did exactly that. They used their decades of PR with farmers and used it to provide world-class supply-chain management for delivering the ultimate quality milk in Pakistan.

Having kicked off simultaneously in 20 cities across Pakistan, the launch has been ambitious and currently Olper’s is available in 80 cities across Pakistan. It reflects the company’s intention to become a big player in the industry, both on a national and international level.

Engro Foods Limited has its own distribution network. EFL has divided Pakistan into five regions for milk distribution namely: Karachi, Lahore, Islamabad, Peshawar and Multan. Due to an appealing color scheme, which stands out in the clutter and thanks to the EFL’s strong relationship building and special discounts to retail outlets, Olper’s has gained a proper shelf placement in the presence of competitors like Nestle and Haleeb .

PRICE

EFL is pursuing the competitive pricing strategy for its products. In competitive pricing the price of the product is determined considering the price of major competitors like Nestle, Haleeb etc.

Size (ml) Olper’s Nestle Milk Haleeb Haleeb Dairy



Pack Queen1000 Rs.57 Rs. 57 Rs. 57 Rs. 52

500 Rs.32 Rs. 32 Rs. 32 Rs. 28

250 Rs.16 Rs. 16 Rs. 16 Rs. 12

PROMOTION AND ADVERTISING

Olper’s launch was, perhaps one of the most aggressive as far as processed liquid milk (PLM) is concerned, with TVCs, print ads, radio commercials, billboards and plenty of BTL (below the line) activities including direct consumer and shop branding activities. Due to this aggressive marketing campaign, the competition seems to be getting tougher. This can be gauged from the fact that Nestle re-launched its product packaging and marketing campaign just before Olper’s launch. One can also a far greater number of milk advertising billboards in Multan city than seen earlier like of Nirala, good milk and Nestle.

Ramadan CampaignOlper’s always had a unique campaign; and it has been 3 years since Olper’s celebrates the spirit of Ramadan. Olper’s advert launched in Ramadan 2009 is the latest example for it. This Ramadan they have has come up with another nice promotional campaign. They are promoting the Muslim patriotic spirit all around the world through the most popular “Hum Mustafavi Hein” song and a message of Peace for the whole world. The advert features Atif Aslam and Dawood Ali. It is directed by Asim Raza and he has worked fabulously. This ad has been shot in 5 different countries I-e Pakistan, Dubai, Morocco, Brunei and Turkey. They have shown the Muslim rich culture, heritage and beautiful mosques.



Omore

Engro foods have recently expanded its brands portfolio by launching a premium quality ice cream with the name of Omore. Omore started its sales from the city of Lahore because of the culturally inheritor of celebrator of festival of colors i.e. The Spring Festival. They have started off with 24 different packs and flavors that attract kids and adults from all walks of life. Omore has initiated heavy marketing campaign.

By the end of March, every eye of Lahore was attracted towards the catchy decoration of Lahore done by Omore. Other then the colorful advertising streamers, they had sponsored PHA in decorating Lahore with artificial and colorful flowers etc. Clearly, as they boasted off, Lahore really seemed to be in bloom. Believing in the fact that a marketer believes that advertisement is not an expense, it’s an investment, and they have invested a lot.Their advertising campaign includes:

1. Streamers2. Decoration of City in collaboration with PHA3. TV Ads4. Sponsoring cooking shows5. TV Bloopers, Art of Happiness6. Search planes Confetti

They had placed their streamers across Lahore and other cities. The city of Lahore was decorated with artificial flowers and decoration material. Their TV ad is consisted on a cool, attractive and catchy jingle which is sung by everyone these days.



Olwell Hi-Cal-Lo-Fat (HCLF) Milk

Launched on December 15, 2006, Olwell is a low-fat, high-calcium milk with the richness of pure milk. It is an ideal choice for weight-watchers and heart patients. It is also high in calcium content, which prevents osteoporosis. Packed in 6-layered Tetra Pak Brick Aseptic red packaging with easy-to-open plastic cap, it comes with a 3 months shelf life.

The brand is positioned rather too narrowly towards SEC A. Nestlé’s NesVita and Calcilock campaign was closer to a normal Pakistani consumer. Secondly, there are certain boundaries and cultural values that should be respected. Olwell ad is too much for me to digest and I have no options but to switch the channel. Engro has over done it and to make things worse it’s not as clear and well communicated as NesVita was.



COMPETITORS

When Engro Foods launched Olper’s Packaged Milk in 2006, many in Pakistan’s food and beverage industry thought the brand would flounder and ultimately fail, being unable to challenge established category leaders.

The milk sector in Pakistan is Huge and that is putting it lightly. According to SMEDA we produce about 28 billion liters a year and Packaged Milk is just a dent on this number. 92% to 93% of milk is open milk. Because of various socio economic factors Packaged Milk is still not that popular here. There is only 4% penetration of packaged milk in the market.

Nestle Milkpak is the king of the market having 40% market share. Haleeb was second in place. Olper’s swept the rug right out from under Haleeb’s feet and they lost their market share and their place as second best. Now Olper’s market share is 22%.

Size (ml) Olper’s Nestle Milk Pack

Haleeb Haleeb Dairy Queen

1000 Rs.57 Rs. 57 Rs. 57 Rs. 52

500 Rs.32 Rs. 32 Rs. 32 Rs. 28

250 Rs.16 Rs. 16 Rs. 16 Rs. 12


40%

22%

38%

OLPERS MARKET SHARE

MILK PACK

OLPERS

OTHER


NESTLE MILK PAK

MILKPAK’S HISTORY

Milkpak was first introduced in the market by Milkpak Ltd. In 1981 and originated the packaged milk category by which they pioneered tetra pack milk in Pakistan. The supply chain involved collecting milk from rural areas across Punjab, processing the milk through UHT (Ultra-High Temperature Processing) treatment, and selling it to consumers in uniquely colored triangular and rectangular packs designed to prolong the milk’s quality.

It was a simple solution, but difficult in practice: importing the stainless steel chilled containers required was prohibitively expensive. By 1988, the company purchased 120 tons of milk a day from 26,000 farmers.

However Milkpak’s “Milk Packs” were very well-received and the brand soon became synonymous with quality milk. Its first real competition came in the form of Haleeb, which introduced distinctively blue tetra packs to the market in 1986.

Then in 1988, Switzerland-based Nestlé SA, acquired a share in Milkpak Ltd and immediately

began investing in milk cooling tanks. Between 1988 and 1992, 100 milk tanks were installed.



1992 onwards, with full support from the Nestlé headquarters in Switzerland, reorganization of the milk collection operation and the provision of agricultural technical assistance became top priorities.

The investment paid off. Within a decade, Nestlé's purchase of fresh milk had quadrupled, and the number of small farmers selling milk to Nestlé tripled.

In 2008 the market share of Nestlé Pakistan in the dairy milk category has been estimated at 40 percent.

Marketing Strategy

Nestle is pursing growth strategy. They have invested $ 70 billion at Kabirwala Plant and they are planning to invest $ 381 billion in the milk business.

Targeting:

Urban areas of the country Upper and Middle income class

Segmentation:

Geographic SegmentationMilkpak has segmented the market on the basis of Geographic segmentation and its target market is major populated cities of pakistan.

Demographic SegmentationNestle Milkpak is also segementing the market on the basis of Income level of the people. . The brand is meant for all the users in higher upper or middle class families.

Positioning

Nestle Milkpak has adopted the functional positioning strategy like:

“Khaalis He Sab Kuch Hai”

“Wohi Qudarti Maza”

“Jaan Banaoo”



Differentiation

Addition of IRON and Vitamin “A & C”

Strengths:

Strong Brand image:Nestle has been serving the Pakistani consumers since 1988, and it has built a strong brand image due to its quality products.

Quality product:Nestle Milkpak is known as the best UHT milk in Pakistan due to consistency in quality.

Solid Financial position:Nestle Milkpak’s annual turnover is Rs.30 Billion which provides it a financial edge over its competitors.

Conduct more training programs:Conduct more training programs to educate their employees like conduct a program of their drivers with motorway police.

Try to collect fresh and clean milk :For this purpose Nestle Milkpak Company make a team of doctors who go to those places from where they collect milk. Doctors check the supplier’s animals and give them the information about the safety and eating program of the animals.

Make shops for farmers:Nestle Milkpak make one stop shop for their supplier’s farmer .From there they purchase clean crops, medicine or other material on reasonable price.

Strong supply chain network:Nestle collects Milk directly from the farmers instead of relying on the contractors. And its distribution is also very strong. In this way it has a complete control over its supply chain.

Qualified work forceNestle believe in expert workforce because it is necessary to remain his name at top companies.

Commitment to High Quality Products;For this purpose they make customer service management who receive the complaints or suggestion of customer and take quick action.



Focus on research and developmentNestle Milkpak give the value to the customer through new innovation. For this purpose they add iron quality in milk and Nesvita for strong bones.

Weaknesses:

Nestle Milkpak does not give milk to the shopkeeper on credit. This thing has affected on the annual sale of the milk because their competitors give milk on credit.

Nestle Milkpak company does not spend its lot of money on advertising or other promotion programs.

Price is also weakness of Milkpak because sometime its price is high than other competitors.

Nestle has not been able to retain talented workers. People at the centers are sometimes treated in an insulting manner. There is a lack of job surety in nestle Milkpak because they give job most to their employees on contract basis.

Opportunities:

Pakistan dairy industry is the World’s fifth largest industry with annual production over 40 million tones.

There is an opportunity for companies to introduce value-added products like shrikhand, ice creams, paneer, khoya, flavored milk, dairy sweets, etc.

There is a phenomenal scope for innovations in product development, packaging and presentation.

There is an opportunity for companies to increase productivity through UNDP&PDDC supporting projects.

Farmers are engaged in agriculture and dairy at the same time. More people are coming towards processed milk because loose milk is dangerous for

health due to a lot of contamination. There is an opportunity for investors to invest in Pakistan dairy industry. There is an opportunity of the increasing employment for the people after starting

UNDP&PDDC projects.

Threats:

Very low quality milk is provided by the milkmen to dairy farms which is a very big threat for the entire market.

The shortage of milk providing animals is also a threat for entire milk industry. Poor profitability for farmers Lack of contact for farmers to the market mechanism. Lack of education among the farmers is making it difficult to change farm and dairy

management systems.



Despite the huge volume of milk produced in Pakistan, processors find it hard to procure sufficient milk to meet future consumer demand.

Load shedding is a major problem of all companies because they purchase generator for the running of their chiller, due to this the company’s budget and price of milk increase.

PEST ANALYSIS

Political factors:

The rules of government of Pakistan do affect the company and its brand. The company policies are affected and its budget is also affected .Nestle paid 15% sales tax and 18% excise duty when they direct import chiller from the other country but mostly they purchase chillers inside the country .Increases the prices of light and petrol effect transportation and other cost.

On the other hand, Government gives chiller to the Nestle Milkpak at interest free installment through UNDP and PDDP projects. This process reduces the pressure on milk industry and increase the productivity.

Economical factors:

If we disintegrate our milk supply chain and re-evaluate its each component in detail, it will be safe to say that there are fair enough chances of such lethal contaminations. The first and probably the most crucial problem arise from the on-field farm practices of our rural farmers. Pakistan is blessed with good genetic potential for dairy development, buffalo being the principal source of milk. But due to problems such as poor nutrition, mismanagement, failure to control disease, unavailability of veterinary and poor animal husbandry, only 5% milk is used for processing.Nestle Milkpak is playing an important role in the economic growth of Pakistan .They earn lot of profit and also trust its profit in social welfare through making schools etc. They also give job opportunities to the people of rural areas through giving them animal on interest free installments. Now a days, our economy is on recession due to this the prices of processing milk is increasing day by day.

Social factors:

Social factors include the demographic and culture aspect of the external micro environment. These factors affect customer needs and the size of potential market. People mostly prefer fresh and open milk & rely less on processing milk because they understand processing milk companies add chemical in milk during process. But Nestle Milkpak try to change this trend through advertisement and awareness programs. Processing milk is mostly used in large cities or towns. Companies try to win large number of customers giving quality or values.



Technological factors:

Technological variables have an overall positive effect on the business. As rate of innovation and production technology is always in the favor of company. Technology is particular importance because it has always been the main source of increase in productivity. Nestle uses latest technology and high quality machinery in the production of milk. For example Nestle recently open Asia’s largest factory in Kabirwala. Nestle Milkpak used machinery which produced 1800 to 2000 tones milk daily.

Marketing Mix

Product:

Quality Product

Nestle Milkpak has the largest market share due to its consistent quality.

Product Style and logo

Nestle Milkpak is available in different product range and stylish packaging.

Product Lifecycle

Nestle Milkpak has been in the market for a very long time and it is at maturity stage.

Price:

Competition Based Pricing

Milkpak is holding a large share in the market due to its quality at same price as compared to competitors.

Placement:

Distribution Channels:

Milkpak is not sold directly to consumers and the complete distribution process is followed. It uses indirect channels for distribution like:

Manufacturer Distributor



Wholesaler Retailer Consumer

Promotion:

Focusing on health conscious people in their advertisement.

Promotion Mix

Advertisement Public relations

A FAMOUS BRAND

Brands like Milk Pak (owned by Nestle) had led the dairy market in the world’s fourth largest milk producing country for nearly two decades without any real sustained competition. Engro Foods, in contrast, had only recently been established by Engro a traditional giant in Pakistan's chemical and fertilizer industry.

Evidently, Olper’s has woken up the competition. Milk Pak responded with campaigns of its own to reaffirm the positive equity of its brand and has largely focused on a message of health, vitality, and strength through quality milk. Despite dwindling market share “Olper’s is very strong in terms of consumer quality perception. Our monthly blind taste tests show that consumers rate Olper’s significantly higher than Milk Pak”.

Olper's continues to understand its consumers and follow through on that knowledge. Engro Foods aims to become the only company to utilize all of the milk collecting areas in Pakistan and also plans on developing the biggest dairy farm in the country. The company’s reputation as a local giant actively involved with community welfare in remote areas has also been a positive add-on for Engro Foods.

Branding experts could not imagine how Olper’s could distance itself from its parent company’s incredibly unappetizing, chemical-laden, and non-edible roots. Yet, by the end of 2006, sales for Olper’s Milk had reached Rs.1 billion (approximately US$ 15 million) and in 2008, the brand has a market share of close to 22 percent second only to Milk Pak (estimated at 40 percent). The critics had to grudgingly accept that the new entrant to the multi-billion rupee packaged milk category meant business.



RECOMMENDATIONS

For Olper’s

Olwell’s advertising must conform to local values. PR Activities; mother’s day special sponsorships. Advertising at the right place; Olwell’s TVC can run during yoga shows in the morning. Offer discounts in Ramadan.

For Nestle

The immense competition is going in the market so Nestle Milkpak should penetrate more and more in the market.

Only 4 % milk is being processed and 96% people are using loose milk so Nestle Milkpak has the opportunity to capture a large share of the market through more creative advertising and other promotional activities.

Nestle Milkpak should invest more on research and development because customers using loose milk are getting a lot of contaminations especially in urban areas so Nestle Milkpak can provide awareness to people in this aspect.


marketing strategies of olper's milk and milkpak

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