COMPANY: ENGRO FOODS LIMITED

2015

Composed by: 1. Farhan Daud

2. Karan Kumar

3. Syed Talha Kadri

MARKETING PROJECT TARANG

INSTRUCTOR: SIR EJAZ AHMED MIAN

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MARKETING PROJECT TARANG

Table of Contents 1. ENGRO FOODS LIMITED ............................................................................................. 2

INTRODUCTION .................................................................................................... 2

MISSION STATEMENT ............................................................................................. 2

VISION STATEMENT ............................................................................................... 2

2. INDUSTRY ANALYSIS .................................................................................................. 3

3. BRAND ANALYSIS ....................................................................................................... 4

MARKETING MIX (4PS) ............................................................................................ 4

I. PRODUCT: ........................................................................................................ 4

II. PRICE: ............................................................................................................... 5

III. PROMOTION: .................................................................................................... 6

IV. PLACEMENT: .................................................................................................. 7

TARGET MARKET ANALYSIS .................................................................................... 9

I. DEMOGRAPHIC SEGMENTATION .......................................................................... 9

II. PSYCHOGRAPHIC SEGMENTATION ....................................................................... 9

III. BEHAVIORAL SEGMENTATION ............................................................................. 9

4CS MODEL .......................................................................................................... 10

I. COST ............................................................................................................... 10

II. CONVENIENCE.................................................................................................. 10

III. COMMUNICATION ............................................................................................ 10

IV. CONSUMER SOLUTION ................................................................................... 10

4. SITUATION ANALYSIS ................................................................................................ 11

PORTER 5 FORCE MODEL ...................................................................................... 11

I. THREAT OF NEW ENTRANTS: LOW ............................................................................ 11

II. THREAT OF SUBSTITUTE GOODS: HIGH ....................................................................... 11

III. BARGAINING POWER OF SUPPLIERS: HIGH ................................................................... 12

IV. BARGAINING POWER OF CUSTOMER: HIGH ............................................................... 12

V. COMPETITIVE RIVALRY WITHIN THE INDUSTRY: LOW ...................................................... 13

SWOT ANALYSIS ................................................................................................... 13

I. STRENGTHS ...................................................................................................... 13

II. WEAKNESSES .................................................................................................... 14

III. OPPORTUNITIES ............................................................................................... 14

IV. THREATS ...................................................................................................... 15

5. 4PS ANALYSIS & RECOMMENDATION ........................................................................... 15

I. PRODUCT ........................................................................................................ 15

II. PRICE ............................................................................................................... 16

III. PROMOTION .................................................................................................... 16

IV. PLACE........................................................................................................... 17

6. CONCLUSION .......................................................................................................... 17

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1. ENGRO FOODS LIMITED

INTRODUCTION

Engro Foods Limited was framed as a completely possessed auxiliary of Engro Corporation in 2005 as consequence of diversification. Utilizing dairy as a going stone to go into the sustenance business, Engro has dispatched multiple items, turning into a real player in the nourishment of business sector in Pakistan with Rs.43 billion incomes in 2014 and its shares and stocks are exchanged vigorously in money markets. At the very moment company offers six major brands Olpers, Tarang, Omung, Omore, Owsum, and Olfrute.

MISSION STATEMENT

“Build branded food business to improve quality of life by offering tasty,

affordable and high nutritional products to our consumers while maximizing stakeholder’s value.”

VISION STATEMENT

“Aim at transforming the company into first national food industry giant, then

into regional force and finally into a global player.”

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2. INDUSTRY ANALYSIS

The industry volume of Tea whiteners is 10,000 tons every annum while 29% of

the aggregate milk powder industry is milk whiteners

Tetra Pak gauges that drinking milk with tea represents 32% of aggregate milk of

total milk consumption in Pakistan, making this an extremely important focus

area for milk processing companies. Tea whiteners are less costly to produce

compared to packaged milk as it contains vegetable fats instead of animal fat

because of its affordability.

Contending brands of tea whiteners accessible in the Pakistani business are:

Tarang by Engro, Nestle EveryDay, Tea Max by Haleeb, Chaika by Shakargang, Chai

Mix by Nurpur and Millin by Premier Dairy Industry. Also tough competition by

dairies who sell fresh milk.

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3. BRAND ANALYSIS

It involves judging the product on various fronts such as Marketing Mix (4Ps),

Segmentation and Customer Point of View (4Cs).

MARKETING MIX (4Ps)

Tarang has carefully employed the following marketing mix to maximize its

returns:

I. PRODUCT:

The brand name was chosen as a strategic element to connect effectively with

the target market which can relate with Urdu. The Urdu word ترنگ (Tarang) is

a depiction of happiness, joy, festivity and a cheerful state of mind.

Tarang falls in the category of tea whiteners that contains:

• 6.5% vegetable fat

• 4.5% milk-solids non-fat

• 1.75% sugar

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• Minor ingredients such as emulsifiers and stabilizers.

The beverage is produced and Ultra Heat Treated (UHT) at the highly

sophisticated milk processing plants of Engro at Sukkur and Sahiwal in order to

preserve the taste and nutritional qualities.

Available in a diversified SKU portfolio: 125ml, 250ml, 500ml and 1 liter to

meet the needs of all tiers of its target audience.

Each pack is aseptically packed in Tetra Brik Slim and has a shelf life of 71 days.

Packaging is designed so as to complement Tarang’s positioning –bright colors

such as yellow, orange and red that depicts joy and festivity. As an FMCG, this

proves helpful for Tarang to be spotted easily.

II. PRICE:

Unit price of smallest pack offering (125ml) that makes 2 cups of tea is

maintained at Rs. 10.

Profit margin is kept very low to satisfy the price sensitive target market, which

shows that the target market of Tarang is lower middle class.

Discounts and credit terms are offered to important partners such as key

accounts (Metro, Cosmo etc.) and major distributors. Retailer are not given

any discount even if they take it in bulk quantity.

The pricing strategy employed is value based pricing which is about charging

just the right combination of quality and good service at a fair price.

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III. PROMOTION:

Engro Foods is currently utilizing the following mediums to generate positive

customer response for Tarang:

• Television commercials

• Radio ads

• Print ads (Newspapers, magazines, posters, etc.)

• Out of home advertising (billboards, conventional hoardings, banners, shop

signs, mobile advertising i.e. painted trucks and rickshaws)

Dancing Lollywood stars in a festive Desi environment capture the essence of

Tarang’s cheerful image, in tune with the bright colors of the packaging.

Aggressive promotional strategies employed by Tarang include sponsoring of:

TV shows (Hero Bannay ki Tarang), modernized remakes of super-hit Pakistani

films (Houseful) and couple award ticket to attend IIFA Macau. Billboards and

banners are used as a regular part of promotional campaigning.

FURTHER MORE

TVCs

• Time Slots- 7 am to 10 am and 5 pm to 7 pm

•Aaj, KTN, Play, 8XM, Hum TV, Oxygene, Sindh News and others

Radio Commercials

• Time Slots- 7 am to 9 am, 3 to 6 pm, 1pm to 2 am

BillBoards

•Karachi, Lahore, Islamabad, Rawalpindi, Faisalabad, Hyderabad Peshawar & other cities and towns

Brand Activation - Concerts

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SAMPLE OF OTHER PROMOTIONAL PLANS

IV. PLACEMENT:

Engro Foods rely on its distributors for the supply of its products to end

consumers. Tarang reaches the shelves of stores through value delivery

network comprising of distributors, retailers and consumers. For placement of

Tarang, Engro Foods prefer Numeric Distribution over Weighted Distribution.

The distribution strategy is designed in a way to take two things into account:

Maximum Retail Presence & Minimum OOS (Out of Stocks).

Tarang comes under the category of FMCGs, hence its timely supply is very

important.

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EFL has divided Pakistan into five regions for this purpose:

• Lahore

• Karachi

• Islamabad

• Peshawar

• Multan

Engro Foods Distribution Channels involve:

• 7 Distributors (General Trade)

• ICA (International Chain Account) includes the Cash and Carry Giant ‘Metro’

(10% of total Sales) etc.

• Food Services

EFL has outsourced the logistics function. It is carried out by third party that

specializes in supply chain management and provides integrated warehousing

and transportation services throughout Pakistan.

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TARGET MARKET ANALYSIS

Tarang has precisely picked its target market in the wake of directing broad

market surveying and applying the accompanying bases for division to boost

the arrival on its endeavors.

I. DEMOGRAPHIC SEGMENTATION

AGE: 23 years

GENDER: Mostly males

INCOME: lower middle class to lower class(almost 95% of users with

approx. Rs. 25000 monthly income according to our primary research)

EMPLOYEMENT: Blue collar employees

LOCATION: Suburbs

II. PSYCHOGRAPHIC SEGMENTATION

Tarang is focused on towards the work class of Pakistan that buckles down

amid the day and needs to keep their nicotine levels high. They consume a lot

of tea and as they don't earn much, Tarang offers them a low priced in

comparison to different options for milk. This is the class that consumes tea

mostly form the local dhabas and visits the nearby local film houses. Tarang

positions itself for this martket and that why it is the perfect tea whitener.

III. BEHAVIORAL SEGMENTATION

Tea is matter of daily utilization for Tarang's target market - they are

substantial clients. As per statistical surveying we did for the brand, there were

an expected 74% of such overwhelming clients who drink 2 or more cups of

tea every day out of all tea consumers in karachi, who abide in the edges of

the metropolitan urban communities, and towns. They look to keep their

nicotine levels high to help them get past the day so they are searching for a

whitener that does not make the tea mellow. The target market is not an

exceptionally loyal and can't be depended upon for proceeded with

continuous utilization; they will pursue whatever is shoddy.

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4Cs MODEL

I. COST

Tarang when compared to other is cheap so the one-time cost incurred is quite

low. Also it is the perishable item so it carries the concept of use and throw.

This also means no repeat costs. Earlier described that it is one of the cheapest

liquid tea whiteners available so that’s the opportunity cost to the consumer is

minimal. While its availability at all almost general store saves both consumer

efforts and money as they don’t have to look for it other nearby stores.

II. CONVENIENCE

Tarang prime objective is targeting low income earners which it did and is still

doing by making it available at the general (convenient) stores which they are

likely to visit. Other this prices are also set due to the lower disposable income

of the market. Most of its consumers are found in KPK Province, so the supply

of product is very high. Shortages are unlikely to take place. To aware

consumer regarding the availability, prices of the product huge sums are spent

on the flashy advertisements.

III. COMMUNICATION

Consumers always wants low priced, highly nutritious and easily available

products. This demand is served by tarang as it carries all that a consumer

wants. Tarang is healthy as its ingredients are vegetable fat, milk-solids non-

fats and low fats. All of the features portrayed in the advertisements which are

done by its brand ambassador who are highly known and have good

convincing power.

IV. CONSUMER SOLUTION

One of the steps that Tarang took was setting a forum TALUQ helpline, for

consumers to express their queries, feedbacks and complaints. Also mailing

addresses and website sere that purpose too. Tarang reaches out to its

customers by way of surveys, interviews with distributers and questionnaires.

While frequent advertisement are carried with the special focus on the target

market.

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4. SITUATION ANALYSIS

Situation analysis refers to a collection of methods that managers use to analyze an organization's internal and external environment to understand the organization's capabilities, customers, and business environment. It includes:

PORTER 5 FORCE MODEL

I. Threat of New Entrants: LOW

The food processing industry is very large and aggressive: it is not uncommon

for firms inside the industry to do well.

Subsequently, numerous companies enter into market every year trying to

pick up an extent of the profitable market. Fortunately for ENGRO, the

organization has been around in Pakistan for quite a long time and brags a long

history of quality items and customer fulfillment, which has permitted the

organization to acquire a significant share of the market.

It has indicated quickened investment activity in late years through the

dispatch of quality items which shows a long haul commitment to PAKISTAN

and construction of high-tech processing plant to take care of the increasing

consumer demand.

Therefore, new entrants into the industry must endeavor to grab a segment of

Engro’s piece of the pie to survive. Basically, Engro is continually a target, thus

the risk of new participants is generally low.

II. Threat of Substitute Goods: HIGH

Because of the nature of the industry, Engro is best with the risk of substitute

goods. From beverages to milk-based products, there are arrays of similar

products that contend specifically with Engro.

Particularly in Pakistan, there are numerous local rivals in food and beverage

industry that gives comparable sort of item like Engro's. It is imperative for

Engro to consistently discover better approaches to enhance its items in light

of the fact that competition is so furious/fierce.

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Lately, Engro has concentrated on wellbeing and health parts of its items to

keep up its aggressive edge and client loyalty in the market.

III. Bargaining Power of Suppliers: HIGH

Bargaining power of suppliers is very important element to be considered in

any industry as they are the main strength of the company.

Engro is known for solid relations with the suppliers around the Pakistan

because of its colossal purchasing power and also because of the fact that is

such dairy and agriculture products quality is essential.

Engro has constantly concentrated over solid and tough business relations to

make the continuous quality stronger. Also, Engro likewise displays supportive

direction to its suppliers on the most proficient method to work all the more

capably to diminishing repetitive costs. And thus it cares of its suppliers which

in return pays them off in the form of quality products.

IV. Bargaining Power of Customer: HIGH

The haggling force of clients has dependably been a vital consider terms of

organization's execution so this should be given sensible worthwhile getting to

the company's position.

Clients convey tremendous amount of bargaining power concerning their

utilization of different Engro Products.

Despite the fact that a considerable number of substitute items and

contenders, Engro clients have exceptionally influential choices yet the quality

that has been kept up by Engro has made it extremely successful among the

clients.

It is very important to comprehend the force of the clients furthermore their

needs so they can be better fulfilled.

This is the thing that Engro dependably thinks about and that is reflected in

Engro's wellbeing and health program that have being utilized while

production of new items as society has in advancement of getting to be more

wellbeing cognizant.

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V. Competitive Rivalry within the Industry: LOW

Rivalry if sound would bring tremendous achievement however in the event

that negative would wreck the entire industry so it ought to be basically

dissected for better eventual fate of the organization.

Engro has a solid position in the food processing industry however couple of

significant opponents do exist in the business like Nestle and Fresh Milk Dairies

Aforementioned organizations are battling consistently to get on to one

another and stay away from any kind of rivalry however it is still there.

If we talk about marketing and advertising, these companies aside from fresh

milk dairy shops have spent the greater part of their expenditure with the end

goal of effective marketing and advertising and in rivalry have constantly out

performed one another.

Rivalry is savage in food processing industry, and this is an in addition to point

for shoppers. Given that these companies bear on in contending with one

another, customers will diligently appreciate enhancing item qualities.

SWOT ANALYSIS

I. STRENGTHS

Strong recognition of the parent brand: Engro Food Limited

Direct contact with farmers

Excellent marketing research tools

Can easily afford Research and Development costs for new features

Strong Quality control, Best Tetra pack

Only Engro Foods Limited has the third-generation UHT milk plant in the

country; it uses Bactofuge technology to virtually eliminate bacteria and

ensure premium quality and hygiene.

Tie-ups, sponsorships with Lollywood stars

One of the most diversified product portfolio

Available at affordable price

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A shelf life of 71 days

Proactive management that works well

Vast distribution network across the country

II. WEAKNESSES

Weak and inefficient supply chain network

Weak presence in urban cities of Islamabad, Lahore, Karachi, Peshawar and

Quetta

Consumer income sensitive

Engro Foods has only one dairy farm located in Sukkur; insufficient to meet

the requirements

Relatively less experience in FMCGs as compared to strong competitors

that have been in the industry for decades

No viable plant to produce powdered milk to capture the gap in the

powdered milk sector

The packaging, with its yellow color attracts bees during the summer that

leaves a bad impression on the packaging, making it look dirty. This puts off

the potential new customers

The formula of Tarang has an internal flaw where by it cannot sustain itself

at temperatures higher than 45°C and expires. As a result, the company has

to take a lot of expiry return during the summer season

III. OPPORTUNITIES

Increase penetration into urban cities

Health consciousness of people

Growing dissatisfaction with loose milk and increasing awareness about

health and hygiene issues have led to increased processed milk

consumption

High population growth

Government has a flexible policy for food industry

Introduction of new flavors

Better use of Social Media for advertising and promotion

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Exploit the huge ‘youth’ niche in the market by portraying a ‘cooler’ image

of itself

Works closely with rural communities to promote integrated farming and

livestock development as an effort for poverty alleviation and corporate

social responsibility

Rising price of livestock feed causes loose milk to become more expensive

and may lead to increased demand for Tarang

IV. THREATS

Health consciousness amongst people can take a toll as Trans fats present

in tea whiteners are health damaging

Preference for fresh milk

Strong competitors

Presence of an inflationary economy Due to high return prospects in the

tea whitener industry, new players might enter into the market.

Presence of an inflationary economy

Low purchasing power of people

Customers too much price sensitive and readily switch in case of higher

prices.

5. 4Ps ANALYSIS & RECOMMENDATION

I. PRODUCT

In comparing Tarang with its competitors like Everyday, Teamax and Haleeb we can conclude that Tarang’s brand name and packaging has justified its meaning of festivity and joy. The main product concept of Tarang has been to provide taste along with quality and affordability and it has so far been successful in doing so. One thing which has to be noted is that Tarang has an edge over its competitors in price and taste but it just lacks behind a little when it comes to quality especially in comparison with fresh milk, which usually gives Tarang a tough time in the market. Moreover, if we consider the Stock keeping Units (SKUs) so tarang starts off

with 125 ml whereas its major competitors like Everyday starts at 200 ml but

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recently Everyday has introduced its sachets which are priced as low as Rs.8

and to Rs.18. This taken was specially taken by Everyday in order to give

Tarang a tough time in the market and to attract its lower and middle income

groups.

II. PRICE

Since, Tarang targets the lower and middle income groups so it operates in a

price sensitive market. According to statistics collected in 2014 it has been

seen that 95% of Tarang users have monthly income of less than Rs.25000.

Under such market conditions it is quite clear that Tarang has maintained price

levels for its SKUs with the lowest being priced at Rs.10 (125ml) and we can

deduce that the strategy of value based pricing has indeed worked for tarang

in keeping its target market intact despite competition from new and existing

competitors.

When it comes to pricing Tarang faces major competition from Fresh milk but

it has successfully managed to tackle the competition. This is because; there is

very little price difference between a cup of tea made from Tarang and that

made from fresh milk. A consumer believes that he/she gets a similar product

packed safely but priced a little high under the name of Engro Foods when

compared with just open fresh milk.

III. PROMOTION

As per our surveys we have found that the promotional strategy of this

product is up to the mark and almost every person we ask knew about this

product. 14 out of 15 people came to know about this product through its T.V

advertisements.

Along with T.V advertisements, Tarang sponsors different TV shows like Hero

Bannay ki Tarang and Tarang houseful movies. While Tarang depicts festivity

and joy in its colourful and extravagant TVCs, it is successful to draw the

attention of its target audience. But due to new entrants in the industry and

constant competition from competitiors like Everyday, Tarang needs to alter

its promotional strategy especially the TVCs.

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Tarang needs to introduce more sophisticated advertisements to target

audience in the urban section of Pakistan because it has already captured the

market in the rural area. Bursting with colors and full of Lollywood stars

dancing on catchy tunes- that is how Tarang aims to attract viewers’ attention

to its TVCs, yet majority of our respondents (65%) find them as being unable to

serve the purpose, filmy and exaggerated, with 33% of those who discontinued

its use identifying ‘advertising’ to be in need for improvement. It can thence be

inferred that even though Tarang’s ads have been successful in creating brand

recognition, not significant sales have been generated by them.

IV. PLACE

Tarang relies on its distributors and retailers for its delivery to its potential

consumer. From our survey we came to know that Tarang is heavily demanded

in some areas and often the distribution process is slow which makes some of

its SKUs unavailable when demanded.

From this we can deduce that Tarang can be at a possible disadvantage in

comparison to its competitors when it comes to prompt availability. Being a

FMCG it is very important for Tarang to keep a strong check over its

distribution process which is outsourced and done by a third party.

Though the distribution network of Tarang is strong but many retailers

complained that both 125ml and 1litre pack are short in supply and sometime

due to this they don’t even turn up for months.

6. CONCLUSION

Tarang, as a fluid tea whitener, confronts extreme direct and indirect

competition. It is, however doing admirably in the growing tea whitener

industry of Pakistan. Its targeting and positioning are the aftereffect of

painstaking market research and corporate technique, which is to a great

extent successful.

Large portions of the outside strengths impacting the tea whitener industry

have suggestions for Tarang, in the form of both threats and opportunities.

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The brand likewise has numerous strengths and shortcomings regarding

recipe, bundling and conveyance which are specific to it.

The promotional campaigns are one of the principle calculates that set it

unfathomably separated from other tea whiteners. Its broad advertising to a

great extent encapsulates the Lollywood culture of festivity and fantasy, which

is in immediate stand out from the family-based subjects of other tea whitener

brands.

From our product investigation we infer that Tarang, while a lucrative Strategic

Business Unit for Engro Foods Ltd, confronts various inside shortcomings and

outer dangers to its piece of the overall industry, client base and ensuing

incomes.

Tarang still has a long way to go. It is as of now experiencing a troublesome

stage where the product has come to its maturity and a ton has been put

resources into it yet the profits regarding benefits don't speak to its revise

potential.