Strategic Marketing and Planning Term Project

Muhammad Minhaj SiddiquiMuhammad SaadSabina BhagatMirza Fazal

Business Scope• Pakistan is the 4th largest milk producer country in the world having milk

production 36.2 million tons• Engro foods is one of the biggest and fastest growing businesses in Pakistan

and its vision is to provide products meeting global standards to local consumers.

• Engro’s business scope is to provide consumers with daily use products conforming to international standards in terms of quality, health and taste.

Causes• Increase in UHT Process Milk Market•Pakistan is the 2nd largest country of buffalo milk producer in the worldEffectsConsumers are shifting from gawala milk to tetra pack

Business Scope• Regions: The business operates nationwide with a number of distributors and

wholesaler providing Olpers to its customers. • Products: Its product portfolio comprises some of the country's biggest and best

selling brands including Olper's, Olper's Lite, Omore, Dairy Omung, Olper's Lassi and Tarang

• Functions / Applications: Milk for tea, milk for kids, milk for daily drinking, vitamin D with high calcium and milk for fitness

• Customers: House holds from upper class, upper middle class and middle class• Technologies: Ultra Heated Treatment for killing bacteria

Causes• Consumers are moving towards hygienic milk • Consumers can preserve the milk for long time

Effects• Nationally increase in sales for last five years• Customer can buy the milk with its monthly grocery

Market Players of UHT Milk

Year Of Current Owners

Company Name

Brand Name

Market Share

Nationally

Geographic Coverage

1981 Nestle Milk Pack 42% National

2006 Engro Foods Olpers 48% National

2006

Shakarganj Food

Products Limited

Good Milk 4% National

2009 Dairyland Dairy Fresh 3% National

1984 Haleeb Foods Haleeb Milk 2% National

42%

48%

2%

3%4% 1%

NestleEngroHaleebDay freshShakarjangOther

End User Application

low-fat, Vitamin D,hi-calcium milk that can boost energy, without the extra calories

Milk for tea/coffee

Milk for Kids Milk for Daily Drinking

External Analysis Market Structure

Olpers Milk,Nestle Milkpak

Olpers Milk,Nestle Milkpak

Olpers Milk,Nestle Milkpak Nesvita

Olpers lite,Nestle Nesvita

Product

Channel General Trade Food ServicesModern Trade

The Company

Milk for fitness

Market Size– Past 4 YearAnalysis:

The industry has seen increase in consumption of milk from various segments over the past years.

Emerging segments over the years have been milk for fitness, multi vitamins and separation of milk for tea/coffee from milk of daily drinking.

New segment in which currently no UHT Treated milk is functioning is milk for traditional sweets in which unpacked milk market has the highest share.

Olpers has declining market size from 2011 – 2013 due to their distribution network

Milkpak market size was declined in 2014 due to their low production of main SKU’s in 1000ml and 250 ml.

Value in Billion PKR MARKET SEGMENT 2011 2012 2013 2014 2015 P.A. %

Milk for Tea/Coffee 41.25 43.45 43.45 44.55 45.1 15%

Milk for Kids 22.5 23.7 23.7 24.3 24.6 13%

Milk for Daily Drinking 7.5 7.9 7.9 8.1 8.2 10%

Multivitamins Milk 2.25 2.37 2.37 2.43 2.46 9%

Milk for Fitness 1.5 1.58 1.58 1.62 1.64 10%

TOTAL (INDUSTRY) 75 79 79 81 82

Volume in Liters (Million)MARKET SEGMENT 2011 2012 2013 2014 2015 P.A. %

Milk for Tea/Coffee 0.66 0.055 0.44 0.77 0.99 14%

Milk for Kids 0.36 0.03 0.24 0.42 0.54 12%Milk for Daily Drinking 0.12 0.01 0.08 0.14 0.18 8%

Multivitamins Milk 0.036 0.003 0.024 0.042 0.054 10%

Milk for Fitness 0.024 0.002 0.016 0.028 0.036 9%

TOTAL (INDUSTRY) 1.2 0.1 0.8 1.4 1.8

Value in Billion PKRMARKET SEGMENT 2016 2017 2018 2019 P.A. % Milk for Tea/Coffee 4.7 4.9 5.02 5.076 15%Milk for Kids 3.2 3.2 3.3 3.4 13%Milk for Daily Drinking 4.6 4.4 4.3 4.2 9%Multivitamins Milk 2.5 2.6 2.8 2.8 10%Milk for Fitness 0.8 0.82 0.83 0.85 9%TOTAL (INDUSTRY) 15.8 15.92 16.25 16.33

Assumptions:

The UHT milk industry receives consumer acceptance and purchases remain on similar trend.

New segments continue to gain market share by introducing new products for that segment.

Special packaging is introduced so as to adapt the product to consumer lifestyle.

Government policies and regulations remain stable.

Market Size – Future 4 YearsVolume in Liters (Million)

MARKET SEGMENT 2016 2017 2018 2019 P.A. %

Milk for Tea/Coffee 1.1088 1.1286 1.1385 1.1286 15%

Milk for Kids 0.6048 0.6156 0.621 0.6156 13%Milk for Daily Drinking 0.2016 0.2052 0.207 0.2052 10%

Multivitamins Milk 0.06048 0.06156 0.0621 0.06156 9%

Milk for Fitness 0.04032 0.04104 0.0441 0.04104 10%

TOTAL (INDUSTRY) 2.016 2.052 2.0727 2.052

Product Lifecycle

Analysis:

Good Milk and Dairy Fresh are the new entries to the UHT Treated market and are at their introduction phase.

Olpers and Milk Pack are currently at their growth phase section. Now both should be thinking on tapping to new markets that is going for product extension.

Haleeb, on the other hand, is on its maturity/decline phase where it is needed to come up again to gain the market share.

Haleeb MilkMilk Pack

Olpers

Dairy Fresh

Competitions Segment Matrix:

CompetitionMarket Share Segments

Overall

Milk for Tea/Coffee

Milk for Kids

Milk for Daily Drinking

Multi-vitamins Milk

Milk for Fitness

Olpers 48% 40 15 40 - 5 100Milk Pack 42% 20 20 40 10 10 100Good Milk 4% 10 20 50 0 10 100Dairy Fresh 3% 60 10 30 - - 100Haleeb 2% 70 5 25 - - 100Total 100 Historical Growth 16.9 5.9 5.15 3.36 1.86 Projected Growth 18.25 6.55 5.15 4.55 2.55 Company Profitability 55% 30% 10% - 5%

Analysis:

Companies’ major share is currently in milk for milk for tea/coffee and Kids

Company has potential for milk for fitness and multi vitamin milk segment where the competitors are not even strong.

Company can increase its profitability in the milk for kids segment.

ANALYSIS

Increase in the modern trade and decrease in the general trade due to super marts like Imtiaz, Chase up etc

Consumer are shifting from Kiryana to supermarkets

Change in consumer buying behavior

DISTRIBUTION STRUCTURE: SHIFT FROM 2011 TO 2015

% OF RS MIL

Olpers Milkpak Olpers Milkpak

Shift in years

2011 2015 2011 2015 2016 2019 2016 2019

General Trade

70.00% 55.00% 68.00% 42.00% 55% 35% 42% 30%

Food Services

10.00% 5.00% 16% 20.00% 5% 7% 20% 25%

Modern Trade

20.00% 40.00% 16.00% 38.00% 40% 58.00% 38% 45%

Total 100% 100% 100% 100% 100 100% 100 100%

Distribution Shares And Company’s Position

% OF PKR MILLION

INDUSTRY DISTRIBUTION

OLPERS TURNOVER SHARE

NESTLE TURNOVER SHARE

General Trade 77 78 72

Food Services 8 7 15

Modern Trade 40 30 28

It can be observed that most of Olpers sales occur through trade which includes retail stores, superstores, super markets etc.

ANALYSIS:

Driving Forces And Trends In The UHT Milk Industry

Hygienic MilkPurityThicknessComplete Nutrition'sEasy to useLong term storage

External FactorsThere are various reasons for the growth of the UHT market such as • People prefer more hygienic milk as compared

to gawala milk• Government can ban the gawala milk due to

hygienic issues• People can easily store the milk for long period• Complete nutrition is available in UHT Milk• Easy to use without boiling

People use tetrapak Milk specifically for sweet dishesPeople can consume more milk if it is available at their door stepLow price with good quality milk can increase growthVitamin D with high calcium milk is the emerging segment which is recommended by doctor

TOP – External Trends

Trend Potential Impact We T

More Hygienic and thick Multi uses for desert and sweet dishes Yes Yes

Availability Fastest delivery at home through one call No No

Low price with good quality milk opportunity No No

Vitamin D High calcium milk Opportunity No Yes

KEY INPUTS FOR STRATEGY FROM EXTERNAL ANALYSIS

1. Lack of self-owned distribution network thus having less in-depth coverage of market.2. Higher cost due to transportation of milk form one major plant to all cities. 3. Emerging segments of health and specifically fitness conscious people. Catering to

them would increase the market share.4. Most profitable segments like tea/coffee and daily drinking of milk needs to be further

tapped in various regions.5. Entering into markets that will buy in bulk quantity i.e. institutional selling. This would

involve partnering with Hotels, café, Hospitals, Offices, Educational institutions, Airport etc.

6. Maintain and increase the Top of the Mind awareness for product.

SWOT - ANALYSIS

Opportunities Threats Strengths WeaknessesExternal Analysis Internal Analysis

Promising Opportunities

Only opportunities after improvement

Ability to resist

High Risks

Competitive Advantage(s)?

Constraints to potential business objectives & strategic scenario’s

1. Farmer Funding2. Growing Consumption3. Increasing awareness4. Largest Producer

1. High Price2. Competition

1-Strong Supply chine Network And Strong Relationship with Distributer.2-Growing Market Share3-Strong Parent Company4-High Market Penetration

1-Milk collection and distribution cost.

2-Not having their own dairy farm.

3-Geographical Reach in sub-rural area

Olper’s

Strengths1-Strong Supply chine Network And Strong Relationship with Distributer.2-Growing Market Share3-Strong Parent Company4-High Market Penetration

Weakness1-Milk collection and distribution cost.2-Not having their own dairy farm.3-Geographical Reach in sub-rural area

Opportunities1-Growing Consumption.2-Increase the availably of the product.3-Increase consumption of UHT milk Through awareness.

SO Strategies1-Olper’s Have availability in urban market they just work on awareness and increase sales.

WO Strategies1-After providing awareness it can be affordable in sub areas on interior KPK and Punjab But for that they need to increase their product reach.2-If they own dairy farms they will be cost controller in industry.

Threats1-High Pricea) Existing.b) New.

ST Strategies1-The threats of high price can become the strengths of Olper’s if own their dairy Farms and cut the cost channel.

WT Strategies1-Karachi, Lahore, Islamabad, Faisalabad and Rawalpindi Except these 5 cities all Pakistan contribute less than 50% in Olper’s market share, so for the rest of Pakistan they need a good strategy for increase their sales.

Confrontation Matrix

ST Strategies

By changing consumer’s perspective company can shift the focus from enjoying the final end product (e.g. tea, coffee, flavored milk) to enjoying Olpers. Thus gaining a competitive advantage in the industry and further strengthening its brand recall.

Olpers buying the milk from gowalas, it is important for them to maintain their prices.

WT StrategiesOlpers focus on the big 5 cities for it sales which contribute more than 50% of their overall sales. It is therefore a weakness for

them which will lead to a threat to being confined to specific areas of the country only.

SO StrategiesAs Olpers is a renown brand of UHT treated milk, it now needs to further strengthen its market share by making the product

available across the nation i.e. rural expansion.

WO StrategiesOlpers can gain the market share of expanded areas by working of cost cutting measures thus providing consumer of that

geographical area product in affordable prices.

Confrontation Matrix

Consumer Buying Criteria:Relative Importance of Factors:

A consumer survey was conducted in which various questions were asked which are collected below to assess the criteria on which consumers buy dairy milk.

Factor Absolutely Crucial Very Important Moderately

Important Not Important Don’t Want

Brand Name 32% 24% 31% 8% 5%

Packaging 5% 10% 56% 20% 9%

Thickness 30% 35% 25% 7% 3%

Hygiene 56% 41% 3% 0% 0%

Different Usages 44% 38% 12% 6% 0%

Health 63% 30% 7% 0% 0%

Reduce Fats 12% 17% 30% 14% 27%

Availability 44% 36% 17% 3% 0%

Easy to Use 20% 24% 35% 15% 6%

Analysis:

The attribute which is of highest importance to consumer is that the milk they consume should provide them health. Moreover, hygiene is the second most priority of the consumer. With that come the different usages like milk for traditional sweets, flavored milk (jam-e-shereen) etc. Also, consumers rated the availability of the product on high importance as they go for a competitor brand if there brand of milk is not available.

Rating Against Consumer Buying Criteria:Rating of the company and each competitor is done on base 10.

Quality & Price Olpers MilkPackNon-Price Attribute Weightage

%

Product RelatedBrand Name 8% 8.5 8.5Packaging 10% 7 7Thickness 18% 6 8Hygienic 32% 9 9Different Usages 5% 8 7Reduce Fats 2% 3 3Easy to Use 5% 5 5Availability 20% 6 9Total 100% 6.8 6.9

Analysis:

Based on consumer buying criteria olpers is doing well by providing hygienic and healthy product.

It should improve in domain of availability that is to say that it should work towards making its product more available nationwide.

Olpers as compared to its other competitors is providing products in packages which are acceptable to the consumer.

Areas where Olper’s should work on and question are the different usages for which it can be used and its use for fitness.

CUSTOMERS BUYING CRITERIA:

KEY ISSUES

• Distribution network of the Olpers in the rural area is very week

• Thickness of the Olpers Milks is not very good as compare to its major competition

• High Milk collection and distribution cost• Unavailability of their own dairy farm

Blue Ocean Strategy:Method Opportunity

Introducing Olpers Delivery Trucks

Olpers can work on its own distribution network and launch a pilot project in which it should launch delivery trucks for its products. Consumers will be directed to Olpers call-center where they can place their weekly orders and their weekly (or as required) milk will be delivered at their homes.

Look for major buyers Olpers can collaborate with various restaurants, cafes, hotels, offices, hospitals, educational institutions, and airport etc where the institution will use/sell their products. In this way, Olpers can increase their market share by institutional or corporate selling.

Strategic Intent:

• Number one UHT Milk provider in Pakistan

• To develop the effective distribution channel across the country

• To own the dairy farm in different regions in Pakistan

• To explore new emerging segments for tea milk

• Most profitable segments like tea/coffee and daily drinking of milk needs to be further tapped in various regions.

Vision:

To become every consumer’s first and foremost choice for milk to be used in every purpose.

Mission:

Our aim is to become a product that fulfills all dairy needs of consumers. We strive to become the one and only name for quality experience to our consumer and becoming integral part of their lives by complying with global standards and in a socially responsible manner.

VISION & MISSION

Product 

As per our input from the external and internal analysis we have concluded that one of the key issues of Olpers is to explore the new segments like “High calcium milk”

Secondly, Olpers current positioning is “ For all purpose” i.e the general purpose milk, it can be customized like Olpers for Tea/Cofee etc.

Vitamin D,hi-calcium milk that can boost energy, without the extra calories

Tea & Coffee Kids Daily DrinkingFitness

For relaxing Growth, increasing height,

Sharpe mind

low calories, fitness, energetic

Healthy bones Maintaining Vitamin D for

calcium

Marketing Plan

Price Analysis

250 ml 1000 ltr 1.5 ltrOLPERS 30 110 155NESTLE 35 120

The Price of Olpers is relatively is not to high to that of the others, Olpers should continue with same but currently should not increase its price, but its relatively high as compared the new entrant.

Place

The major issues that Olpers face are its availability in depth of regions. This effects its sales which is currently coming from the big 5 cities only

It is therefore a weakness for them which will lead to a threat to being confined to specific areas of the country only.

Olpers should spread more awareness of the usability of its product so as to increase the market share and customer loyalty.

Pakistan has more than 800,000 retail outlets from which olpers is supplied only 200,000 retail outlet.

PromotionVitamin D,hi-calcium milk that can boost energy, without the extra calories

Tea & Coffee Kids Daily Drinking

Fitness

ATL/ BTL Activities in

Offices, University &

colleges

BTL Activities in Schools by

showing motivational

animated movies

ATL/BTL activities in fitness club,

Gymnasium & sports club

Showing ATL for spending the

fresh day

Recommendation by the doctors

S.R # INPUT FOR STRATEGY ACTION PLAN TIME FRAME

1 Lack of self-owned distribution network thus having less in-depth coverage of market.

Establish a self-owned distribution network.

2 years

2 Higher cost due to transportation of milk form one major plant to all cities.

Reduce cost in longer run by establishing another plant

5 years

3 Emerging segments of health and specifically fitness conscious people. Catering to them would increase the market share.

Expand into products offering solutions to consumer needs.

1 year

4 Most profitable segments like tea/coffee and daily drinking of milk needs to be further tapped in various regions.

Develop marketing strategies to target this segment by innovative offerings

1 year

5 Entering into markets that will buy in bulk quantity i.e. institutional selling. This would involve partnering with Hotels, café, Hospitals, Offices, Educational institutions, Airport etc.

An institutional channel to be established that caters to identified potential buyers/partners

2 years

6 Gap exists in catering the customers through channel. Home delivery system is the strategy that can be used to reach directly to consumer.

Introduce Olpers Delivery trucks for home delivery of dairy products

1 year