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 Marketing Strategy

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Acknowledgment

Firstly, we would like to thank the AL- MIGHTY ALLAH, whogave us the strength and ability to complete this term report.

We would also like to express our gratitude to all those who

gave us the possibility to complete this term report by

providing us the information about the policies, strategies,

product, pricing, distribution, promotion & packaging etc which

helped us in formulating this report and guided us through out.

We want to thank our teacher which gave us the opportunity to

commence this term report in the first instance, to do the

necessary research work and to use local’s data. We are bound

to thank the Honourable Sir. MAZHAR ALI whose guidance were

always with us whenever we need it. We are deeply indebtedto company’s employees and our former colleagues of MBA for

their stimulating suggestions and encouragement helped us in

all the time of research and for writing of this term report. We

want to thank all of them for all their help, support, interest

and valuable hint. However, we accept full responsibility for

any deficiencies in the report.

AFSHEEN SAMNANI – 2837

  SANA JINDANI – 2978

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 Marketing Strategy

  NAZIA SHABAN ALI - 2922

EXECUTIVE SUMMARY 

 The purpose of the term report is to analyze the marketing

plans and strategies of MILKPAK, a brand of Nestle Pakistan

Ltd. and to know how they make this brand popular among

their consumers and how they compete with their competitors

in order to survive in the market.

 The brand has largest market share and target all social

classes. The organization has adopted innovative ways to

collect milk and distribute it with effective distribution

channels.

Nestle Milkpak Ltd believes in customer based aggressive

marketing. It always looks to the changing demands of peoples

and takes initiatives to fulfill those requirements perfectly.

People of Pakistan are getting more conscious about their

health and hygiene therefore the demand of processed milk is

rising gradually and showing great potential. The industry has

been growing at a robust rate of 20% during the last five years.

 Therefore, many new companies / organizations are getting

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into this sector engaging high investments creating a tough

competition in the processed milk industry.

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Organization Introduction

HISTORY:

Henri Nestlé founded Nestlé in 1866 in Switzerland. Nestlé means ‘little nest’ in Swiss

German. Nestlé first customer was a premature infant who could tolerate neither his

mother’s milk nor any other conventional substitute. Thus, Henri’s ultimate goal was to

help fight the problem of infant mortality due to malnutrition for which he developed a

 product combining various cow’s milk, wheat flour and sugar and name it Farine Lactee

 Nestlé, which was the first product of Nestlé being marketed in Europe.

In 1974, Jules Monnerat purchased Nestlé and collectively they launched a condensed milk 

 product of its own. In 1905, Nestlé got merged with Anglo-Swiss condensed milk.

After some time, when Nestlé got fully established and all its operation were properly

functioning in Europe and was gaining fame around Europe, then Nestlé decided to set up

 production plants around the globe to ensure the growth of the organization and to become

multinational

The decision to become multinational turned fruitful for Nestlé and today Nestlé has its

own operations and products in America, England, India, Brazil, Australia, Pakistan,

Hungary, France, Belgium, Italy, Spain and various other countries around the globe.

Dynamic Expansion:

The history of Nestle includes the development of many different products as well as acquisitions,

mergers and the purchasing of shares in companies, mainly abroad. Over the course of the years, this

enabled it to broaden its range of products and diversify its operations, while at the same timestrengthening the economic foundations of the company. Amongst the most important acquisitions wereCarnation in Los Angeles (milk, culinary products and pet foods) and more recently Rowntree Mackintosh

in York (chocolate and confectionery), Buitoni in Perugia (pasta) as well as Perrier in France (mineral

water). 

 Nestle, which does 98% of its business outside Switzerland, also has interests in non-food sectors, in

cosmetics (a large share holding in L'Oreal) and ophthalmic products (acquisition of Alcon LaboratoriesInc.) while continuing to give priority to food products.

Nestle Today

 Nestle is now the world's largest food company. It is present on all five continents, has an annual turnover 

of 74.7 billion Swiss francs, runs 509 factories in 83 countries and employs about 231,000 people the

world over. The Company owes its current status to the pioneering spirits inherited from its founderswhich continues to inspire it, to its concern with quality and to its constant search for new ways of 

satisfying man's nutritional needs.

 Wherever possible, it sets up factories locally, employs personnel from the country concerned and relies

on indigenous raw materials. Its agricultural services provide assistance to improve the quality and yield

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of the raw materials it uses. Much attention is devoted to professional training and to the integration of the

Company in its economic and social environment. There are three companies co-ordinate the activities of 

some 200 operating companies around the globe. Their functions and details are as follows:

The first, Nestlé, holds the financial shares in the allied companies. It also check the profitability of 

these companies and to ensure the profitability of the group as whole.

The second, Nestlé, has two areas of activities that are as follows:

Research and technological development

Technical assistance

Beside this, it provides know-how in engineering, marketing, production, organization,

management and personnel training on a continuous basis.

The third company is Nestlé World Trade Corporation that oversees the import and export of 

merchandise worldwide.

Mission Statement of Nestle Pakistan

In line with this, Nestle 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 an extremely motivated and professionallytrained 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.

Brief Introduction/ production:

As a consequence of joint venture arrangement between Nestle S.A. of Switzerland and Milkpak 

Ltd. in 1988, the existing production facility of Milkpak in Sheikhupura became a part of Nestle Milkpak.

The Milkpak Sheikhupura factory commenced operations in 1981 as a producer of UHT milk. By

1988, it had expanded its operation and was also producing butter, cream, desi ghee - all under the brand

name of MILKPAK and juice drinks under the brand name FROST.

To meet the demands of the large food market that Pakistan offered, Nestle Milkpak reorganized

and reinforced the production of existing brands and gave shape to new production lines. The first to come

was a milk powder plant, which not only began producing NIDO in 1990 but was also critical to the

 production of several milk-based products in the future. With the installation of the roller dryer in 1990,

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the first such product to come was CERELAC - an internationally recognized brand of infant cereal. This

was followed by LACTOGEN 1 & 2 in 1991.

The year 1992 saw the introduction of tea whitener EVERYDAY and milk powder in bulk packing

named GLORIA. MILO and NESLAC came under production in 1994 and MILO RTD in 1995. Local

 packing of imported coffee under the name of NESCAFE 3 in 1 commenced the same year. In 1996,

 Nestle Milkpak's first confectionery plant of POLO Mint was installed and the production of NESTLE

PURE ORANGE JUICE commenced. Packaging of coffee under the brand name of NESCAFE CLASSIC

was undertaken the same year.

In 1997 NESTLE WHEAT and two variants of POLO viz. Strawberry and Orange were

introduced. In 1998 a substantial capital investment was made to launch several products and install two

new state-of-the-art technologies. SWEET TREETS were launched in early 1998. The addition of two

flavors of POLO: Blackcurrant and Strong Mint, increased the number of POLO variants to five. A new

variant Lemony was added to the range of popular FROST fruit drink flavors and a new 1-liter packing of 

FROST was introduced. Flavored milks under the brand FRESH & FRUITY came under production on

the new Tetra Filling Machine equipped with the modern "slim" format. MILO RTD and UHT Cream

were also shifted over to this new format.

A new flexible confectionery line enabled the manufacture of a wide range of high and low boiled

sweets and toffees, including TOFFO and two variants of SOOTH- ERS' Menthol Eucalyptus and Honey

Lemon. Nestle Milkpak also contracted to supply dairy mixes to McDonald's, for its popular soft serves

and milk shakes. And to top it all, the most prestigious project, NESTLE PURE LIFE was also

commissioned in December. Based on the latest water treatment and bottling technology, this marked the

entry of Nestle Milkpak in the Pakistan water market and that of Nestle in the world water market.

The expansion of high boiled sweet line continued in 1999 with the introduction of Fruit Drops

and BUTTERSCOTCH.

The year 2000 saw the production of some exciting products. First came NESCAFE Frothed

Original, followed by its two other flavors: Mocha and French Vanilla. NESCAFE Frappe RTD was to

come next. The fruit juice range was expanded by the production of Mango and Orange- Mango Mix. On

the confectionery side, Tutti Fruiti was added under the umbrella of POLO and Wild Cherry was added to

the SOOTHERS range. The success of NESTLE PURE LIFE in PET bottles encouraged the

commissioning of 5-gallon bottles production line for home and office in June. And the last product line

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of the year to be commissioned in November was that of NESTLE Plain Yogurt, a high quality product

with special Stay-Fresh Seal.

To meet the needs of safe and quality storage for the ever expanding product range and their 

volumes, a National Distribution Center (NDC) was completed and became functional in June, 2000.

Spread over 6614 square meters, it has the capacity to store up to 8300 pallets (approximately 8000 tons).

Kabirwala Factory

In 1986 Milkpak Ltd. acquired the services of Kabirwala Dairy Ltd. for co-packing of UHT milk under the

 brand name MILKPAK. Nestle Milkpak acquired KDL in 1990 as a subsidiary and installed a MAGGI

 NOODLES plant, which became operational in 1992, producing three flavours: Chicken, Masala andChatkhara. The second milk powder plant was commissioned in September 1996 and produces NIDO,

GLORIA and skim milk powder. The UHT line was discontinued in June 1996 and the same year witnessed the launching of MAGGI YAKHNI.

With the merger of this factory with Nestle Milkpak in April 1997, Kabirwala Factory, as it is now called,

is a fully owned unit of Nestle Milkpak Ltd.

The factory milk powder spray drying capacity was doubled in 1999 with the commissioning of the new

evaporator. 1999 also saw the installation of a pouch-filling machine, making KWF self sufficient n the

filling of full cream milk powder. 

A new continuous butter making line is under installation in the year 2000 hat will produce very high

quality cultured butter under Nestle branding.

Indus Fruit Products Ltd.

Indus Fruit Products Ltd. was leased by Nestle Milkpak in 1998 for pulping and production of MAGGICold Sauces. Tomato Ketchup, Mirch Masala and Khatti Meethi flavours are being produced under the

 brand name MAGGI.

Vision Statement of Milkpak 

To be “The Milk” for urban households of Pakistan

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Market:

Of the different agriculture sectors, live stock is the largest with the total value of Rs. 303 Billion (USD 5Billion). Its contribution to the agriculture value-added is 34% and to the total GDP is 8.3%. Milk is the

largest commodity from the live stock sector accounting for 51% of the total value of the sector. Pakistan

is the fifth largest producer of milk in the world.

Pakistan is the 5th largest milk producing country in the world. The total annual production and

consumption of milk in Pakistan is approximately 27 Billion Litters, from which the chunk of 6.4 billionliters is used by Urban Household and rest by Rural areas. Surprisingly, only 3% is used for processed

milk and the major chunk of 97% is for gawala / milkmen.

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Market Analysis

Consumers’ Consumption Analysis:

Analysis shows that out of total Monthly Share of Expenditure of Consumption in Food Items,consumption for milk in Pakistan is 22%.

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Segmentation Strategy

The dairy milk market in Pakistan is divided in the following 8 major segments:

• Drinking• Tea whitening / creaming

• Deserts

• Infant Nutrition

• Health Conscious

• Corporate

• Flavored Milk 

• Exports

Target Market Strategy:

 Nestle Milkpak has targeted the consumers of the following segments, who are more health conscious and

 belong to middle-middle class and upper.

• Drinking

• Health Conscious

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Competitors Analysis

Top Brands Available in the market according to market share

1. Nestle Milk Pack 44%2. Haleeb 36%

3. Olper’s 6%

4. Good Milk 4%5. Others (Nirala, Nurpur, etc.) 10%

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The biggest competitor for Nestle Milkpak is Chaudhry Dairies (Haleeb), which has been in the processed

milk industry since 1999 having the second highest market share. The strength of CDL is that they have been in the consumer market since 1986 and have been succeeded to deliver the consumer according to

their demand, satisfying their needs and wants, as they desire. Therefore, its brand equity is comparatively

 better than other competitors in the processed milk industry except Nestle Milkpak.

The other companies / organizations in the same industry have captured a very low market share due to

their low popularity, weak branding or either due to the non-consumer items background of the producer such as Engro Chemicals.

Certainly, as the industry is showing a lot of potential consumers, therefore, the threat of new entrants

should not be ignored as well as the newly introduced brand like Good Milk and Olpers which aregradually capturing the consumer market causing decrease in market share of Nestle Milkpak.

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Industry Product life cycle

 

Introduction Growth Maturity Decline

Segments (UHT)

 Nestle Milk Haleeb

 Nurpur   

 Nirala

Pakola milk   

Olpers

Goodmilk   

UHT Product Life Cycle

 

MARKETING MIX

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INTRO GROWTH MATURITY DECLINE

 Nestle

Olpers

GoodMilk 

 Nurpur Haleeb

Pakola

Milk 

 Nirala

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Price Strategy:

Price is the amount charged for a product or a service, of the sum of the value that consumers exchange

for the benefits of having or using the product or service. Price is the only element in the marketing mixthat produces revenue, all other elements represent cost. This shows the price is also one of the flexible

elements of the marketing mix. Unlike product features, price can easily be changed.

MILKPAK has very strong band equity in-spite of that its prices are more competitive comparing with its

competitors; the pricing strategy is made by aiming to cater the educated and health conscious people who

live in urban areas. Nestle procure milk from Gawalas through its collection points that is why its pricesfor processed milk would always be higher than open milk which is well understood by its customers, as

its customers perceive its delivered value more than the competitors because at same price they get a

world renowned brand.

 Brand Open Milk Milkpak Haleeb Olpers Nurpur

Quantity (ml) Price (PKR) Price (PKR) Price (PKR) Price (PKR) Price (PKR)

250 9.5 13 13 13 13

500 19 25 25 25 25

1000 38 44 44 44 44

Promotion:

Sales promotion consists of a diverse collection of incentive tools, mostly short term, designed tostimulate quicker and greater purchase of particular product by consumers or the trade.

Whereas advertising creates a reason to buy, sales promotion offers an incentive to buy. There are manytools that can be used for consumer promotion and trade promotion. Sales promotion tools are used by

most organizations, including manufacturing, distributors, retailers, trade associations and non-profit

organizations.

Sellers use incentives type promotions to attract new tries, to reward loyal customers and to increase the

repurchase rates of occasional uses. Brand switchers are primarily looking for low prices, good value or  premium. Sales promotions are unlikely to turn them into loyal brand users. Sales promotions used in

markets of high brand similarity produce a high sales response in the short run but little permanent gain in

the market share.

Some consumer promotional tools that are used by MILKPAK: 

Media Advertisement:

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Milkpak recites continuous advertisements on different TV channels, print media, Radio,

Billboards to create health awareness to attract new customers, which also reinforces the brand

superiority and excellence in mind of exiting consumers.

Premiums:

Milkpak offers special premiums to boost its sales by attracting new customers on special

occasions such as Ramadan, EID etc.

Product:

Product is anything that can be offered to a market for attention, acquisition, use of consumption that

might satisfy a need or want. Milkpak is a consumer product, which the final consumers for personal

consumption buy it.

Among the consumer product it would be placed under Convenience-Impulse as they are bought less

frequently among them the consumers compare carefully on suitability, quality and price. When buyingthese kinds of product the consumer spends a lot of time and efforts in gathering information and making

comparison.

It is very important from marketing point of view that whenever a product is placed or offered in the

market it should be communicated properly to its target consumers. The claims regarding the brand made

 by the company, the product must have the potential to fulfill all those claims otherwise it could destroy

the brand and the company image as well.

 Nestle Milkpak’s basic strategy is to satisfy its consumers by providing nutritious milk, purity, economyand uniqueness in taste of the product.

Place:

It is very crucial strategy of the marketing but it does vary from type to type of the product. Place strategymeans where the product would be available for the sale. To make product available at different locations

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they established a distribution channel that is a set of interdependent organization involve in the process of 

making a product or services available for use or consumption by the consumer or business image.

Place strategy might be different from a point of view of a specialty product as that cannot be made

available at every store but it can only be made available at certain stores that are selected according to the

target market and pricing strategy.

Place strategy of Milkpak is straightforward as milk is a convenience impulse product therefore Milkpak 

 by that mean is widely available in all major / minor stores, shops across Pakistan whether its competitor’s brands are available or not.

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SWOT Analysis:

STRENGTHS:

T  HE O LDEST B RAND

 Nestle Milkpak is Pakistan’s first brand in the processed milk industry and has been working in this

industry since in 1981. They are first one to introduce processed hygienic milk.

T  HE N  ETWORK 

 Nestle Milkpak reaches its customers through the widest network of distributing channel. Therefore,

they have been successful to sustain their market leadership processed milk industry since 1981.

T  HE B RAND I  MPRESSION 

Being a multinational group, its brands are considered highly reputable and also because of its

successful delivering values in other consumer items.

T  HE M  ARKET L EADER

 Nestle has been quite successful in delivering consumer products to satisfy consumers needs and

wants, as it holds 44% of market share of total processed milk customers.

T  HE B RAND E QUITY 

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Out of 4.8 million customers of processed milk, Nestle is serving more than 2.1 millions customers

showing a greater brand equity.

 I  NNOVATIONS 

Research and Development unit of Nestles is working efficiently and providing timely solutions with

respect to consumers’ demands.

 BYPRODUCTS R EVENUES 

The revenues earned from its byproducts, also contributing positively towards company’s financial

 position.

G OOD F  INANCIAL B ACKGROUND

 Nestle Milkpak Ltd has got a good financial background as it is a joint venture between Nestle and

Packages Limited who are both market leaders in their respective industries.

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WEAKNESSES:

T  HE R AW M  ATERIAL

There is only one source of fresh milk that is the local market otherwise if Nestle Milkpak imports

milk that may not be as fresh as the local market’s, so the market is governed by locals therefore,

 Nestle has to cope up their demand to remain in the competition.

C OST & P  RICING 

The source of raw material for Nestle Milkpak is the local market therefore it collects fresh milk from

market, processed it and packed it before distribution. In this scenario the cost incurred and product

 price will be certainly higher than the milkman therefore, Nestle Milkpak is unable to compete in the

overall milk industry due to higher cost factor.

C ULTURAL & S OCIAL F  ACTOR

Being a multinational group Nestle Milkpak has been ignored in various areas of Pakistan.

C ONTRACTING M  ARKET S  HARE 

As new entrants are entering in the industry certainly they have gained business, causing reduction in

the Market Share of Nestle Milkpak.

 L ACK  OF C ORPORATE C USTOMERS 

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 Nestle Milkpak has not been much used by the corporate customers which have been using dry milk 

 powder instead of liquid milk.

C ONTRACTING M  ARKET S  HARE 

As new entrants are entering in the industry certainly they have gained business, causing reduction in

the Market Share of Nestle Milkpak.

U  NEVEN S  ALES V OLUME 

As the processed milk industry covers just 6% of total consumer market therefore, it is hard to predict

what will be the sales turnover to enable them to produce appropriate units to avoid any excess/

shortage in the market. Secondly, people in Pakistan are not much consistent with their behavior and

taste therefore, that factor cause uneven sales volume over the years.

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C ORPORATE C USTOMERS 

Corporate customers in Pakistan are normally using dry milk powder for their usage. Nestle Milkpak 

can convince and market these corporate customers towards liquid milk, which have not been targeted

 by any processed milk producers so far.

 STP S TRATEGY 

 Nestle Milkpak can select a particular segment, target it for specialized milk products and position that

appropriately such a flavored milk for children.

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THREATS:

 E  XISTING E  NTRANTS 

Though Nestle owns the largest market share but its competitors are gaining the market share

gradually such as Good Milk and Olpers, both entered in this industry in last two years but they jointly

owns 10% of market share, showing positive response from the consumer market.

  N  EW E  NTRANTS 

Processed milk producers has just 3% of market share in the overall milk industry therefore it has a lot

of potential consumers are yet to be targeted especially the rural areas of Pakistan. In that scenario the

industry is encouraging more producers to enter in the industry, which will certainly decrease the

overall market share of the existing producers.

 S UPPLIERS U  NION 

 Nestle Milkpak should maintain good relationship with the local suppliers in order to get sufficient

supply of fresh milk at standard market rates.

 E  NVIRONMENTAL & G OVERNMENT R EGULATIONS 

 Nestle Milkpak has to cope up with the environmental regulations requirements. Similarly, all

government regulations given by SECP, Federal Ministry etc must be complied with or otherwise

 penalty may be imposed such as business suspension, license cancellation etc. which may affect their 

 business badly.

 L AW & O RDER S  ITUATION 

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Law and order situation of the country may also affect negatively for instance supply of fresh milk 

may be abundant due to curfew due to which production will certainly stop.

 P OLITICAL R ELATIONS 

If in case Pakistan Switzerland political affairs get disturbed due to any reason, Nestle might have to

stop its Pakistan operation to follow its origin country.

 E CONOMIC C ONDITIONS 

It may be possible that Pakistan may come into economic crises due to which consumers’ purchasing

 power may get reduced.

 S OCIAL C  HALLENGES 

Being a multinational group Nestle Milkpak may face social challenges such as restriction in buying

foreign products may come in this situation.

G  LOBAL C OMMUNITY R ESPONSE 

Pakistan has always been under criticism of Global Community due to its abnormal political

conditions, foreign policies, being an Islamic country supporting other Islamic countries, capability of 

using atomic warheads, abnormal relations with India, terrorism etc. If it comes to greater opposition

 by the global community Nestle may have to stop its operation if Switzerland’s Government advises.

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The BCG Growth Matrix

 Nestle Milkpak is earning higher profits and has been the market leader in the processed milk industry for 

the last several years, its annual sales are increasing in every subsequent year but its market share is not

rising much i.e. almost constant as the industry growth rate is 20% and its individual growth rate is more

or less same. Therefore, being the market leader we rate Nestle Milkpak in the Star quadrant.

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 Marketing Strategy

31-34% of Phosphorous, 6-9% of Vitamin A and 160-169 Kcal of energy, as Recommended Dietary Allowanceby the National Academy of Sciences, USA.

Enjoy NESTLÉ® MILKPAK® in four convenient sizes, depending on your family's needs: 1500ml, 1000ml, 500ml& single-serve 250ml packing.

Our proudest achievement is our internationally acclaimed development of the Punjab's milk district.Hundreds of thousands of small farmers live over an area of 100,000 square kilometres in central Punjab. Of these farmers,most have only a few head of buffalo – yet Pakistan is the world's fifth largest producer of milk.Milk is very fragile in our hot climate, and distribution historically depended on a network of suppliers and middlemen. Withoutrefrigeration, the milk arrived in towns already soured or adulterated with preservatives, such as vegetable oil or caustic soda.When Milkpak Ltd. began operations, such was the state of affairs that though the milk was cleaned, pasteurised, homogenised

and sterilised at the Milkpak factory in Sheikhupura, its shelf-life in summer was, at most, four weeks. By contrast, in EuropeUHT milk had a shelf-life of six months.Something had to be done. Milkpak immediately took measures to improve milk quality and the collection system, and whenNestlé entered in 1988, these efforts were stepped up.Keep reading:

Iqra University 30

MD's Message Nestlé International Nestlé Pakistan Know More Contact Us 

Milk, Dairy & Chilled Dairy Beverages Bottled Water  Baby Food Prepared Meals Breakfast Cereals Chocolate & Confectionary

Corporate Social Responsibility Welfare Projects Responsibility to Environment SH&E Policy Earthquake Relief  

Our Philosophy Wellness For You Smarter, Healthier You! Smarter, Healthier Kids! 

Getting Started What We Believe In Why Join Nestlé Know More What We Look For  How To Apply 

 You Are Important To UGetting Connected Whats Good For You IsNestle Kitchen Talk To Us 

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 Marketing Strategy

Optimise and consolidate resources and processes for a low-cost but efficient· Develop and manage simplified and effective supply network to achieve a high level of service· Create a continuous improvement culture driven by performance measures and reward

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