DEDICATIONWe dedicate this project to our Parents, Teachers and to each other as a tribute to our teamwork during the past fiveyears in Bahria University. 1 ACKNOWLEDGEMENT Praise and thanks to Allah, the lord of universe who is either of all knowledge and wisdom to mankind. We bow our head in gratitude to almighty Allah who blessed us with the capability to complete our project, which was a challenge for us. “We the group members would like to avail this opportunity to thank our course instructor of New Product Development, Mr. Pasha for his cooperation and support as a teacher.” We feel pleasure in expressing heart felt gratitude to our families for their encouragement affection, support, constant help and prayers at all times without which it was not possible for us to achieve this target. NELUM SHEHZADE FAIZAN ALI ZIA MARYAM CHOUDHARY 2 ABSTRACT: Packaged milk industry is a fast growing industry in Pakistan. Nestlé, presently is losing share at the hands of competitors and is engaged in differentiation and valuepricing strategies. Stiff competition from local players and changing consumer preferences are the main hurdles in Nestlé MilkPak’s efforts to regain its market leadership position in the industry. During our research we were able to access the lapse of largest and pioneer tetra milk pack company; Nestlé MilkPak Pakistan in this sector and opportunities that are ahead of them. We endeavor to identify the compatibility of the company's basic marketing strategies to its resources, structure of the company and ultimately the milk industry, and finally about implementing their strategies and staying abreast with everyday engorging competition. Through the analysis we determined that there is a need for a change in the dimensions and workings of Nestlé and how it can retain its position in such a dynamic industry. 3 Table of Contents Table of Contents.........................................4 CHAPTER 1: INTRODUCTION...................................8 BACKGROUND OF NESTLÉ AND MILK SEGMENT AND BROAD PROBLEM AREA:.................................................................................................................................9 PROBLEM STATEMENT:...............................................................................................14 OBJECTIVES OF STUDY:..............................................................................................15 RESEARCH METHODOLOGY:.....................................................................................16 METHODS OF RESEARCH:...................................................................................16 TYPE OF STUDY:....................................................................................................16 POPULATION SAMPLE..........................................................................................18 INSTRUMENTS/SOURCES OF DATA COLLECTION:.......................................19 SCOPE & LIMITATIONS........................................................................................19 CHAPTER 2: LITERATURE REVIEW.............................22 CHAPTER 3: INDUSTRY ANALYSIS.............................30 MILK INDUSTRY IN PAKISTAN..................................................................................30 CHAPTER 4: ORGANIZATION ANALYSIS.........................33 NESTLÉ MILKPAK PAKISTAN:...................................................................................33 SWOT ANALYSIS...........................................................................................................34 PORTERS FIVE FORCES MODEL.................................................................................39 FIVE FORCES MODEL APPLICATION IN NESTLÉ...................................................40 THREAT OF NEW ENTRY.............................................................................................41 POWER OF BUYERS......................................................................................................42 POWER OF SUPPLIERS. ................................................................................................42 THREAT OF SUBSTITUTES..........................................................................................43 THE COMPETITIVE RIVALRY.....................................................................................43 PEST ANALYSIS.............................................................................................................44 POLITICAL FACTORS: ..................................................................................................45 ECONOMICAL FACTORS: ............................................................................................45 SOCIAL FACTORS:.........................................................................................................46 TECHNOLOGICAL FACTORS:.....................................................................................46 NESTLÉ’S MARKETING STRATEGIES FOR ITS MILK PRODUCT LINE..............46 4 CONSUMER COMMUNICATION.................................................................................47 PRODUCT AVAILABILITY...........................................................................................47 BRANDING .....................................................................................................................47 DIFFERENTIATION STRATEGY..................................................................................48 POSITIONING STRATEGY............................................................................................48 MARKETING MIX...........................................................................................................48 MARKETING GROWTH STRATEGY...........................................................................51 CUSTOMERS’ ANALYSIS:............................................................................................52 Questionnaire analysis:......................................................................................................56 Comparison of Nestle MilkPak with other brands............................................................73 CHAPTER 5: IDENTIFICATION OF KEY AND CONCLUSIVE RESULTS. .75 CHAPTER 6: RECOMMENDATIONS...............................77 CHAPTER 7: ACTION PLAN...................................79 BIBLIOGRAPHY.............................................81 ANNEXURES................................................83 5 List of Figures: Figure 1: Product Concept................................33 Figure 2: Porters Five Forces Model......................40 Figure 3:Five forces model application in nestlé.........41 Figure 4: Product Life Cycle.............................49 Figure 5: Comparison of Prices and Packaging............50 Figure 6: Pie Chart of Gender ratio......................52 Figure 7: Age Distribution in Customer Survey .........................................................53 Figure 8: Occupation Distribution in Customer Survey. . . . .54 Figure 9: Income Level Distribution in Customer Survey. . .55 Figure 10: Ratio of Open Milk to Packaged Milk...........56 Figure 11: Preference to Nestlé MilkPak..................57 Figure 12: Satisfaction with Nestlé MilkPak Quality. . . . . .58 Figure 13: Need for Improvement in Nestlé MilkPak........59 Figure 14: Taste of MilkPak as compared to other tetra pack milk.....................................................60 Figure 15: Price of Nestlé MilkPak.......................61 Figure 16: Availability of Nestlé MilkPak................62 Figure 17: Choice of Other Milk Brands..................64 Figure 18: Recall of Nestlé Milk Advertisement...........65 Figure 19: Preference while purchasing tetra pack........66 Figure 20: Loyalty with the brand........................67 Figure 21: Recognition of Nestlé MilkPak brand...........68 Figure 22: Recognition of limited time packaging.........69 Figure 23: Perceived Traditional Advertisement Image. . . . .70 6 Figure 24: Perceived Modern Advertisement Image..........71 Figure 25: Perceived Serious Advertisement Image.........71 Figure 26: Perceived Image that Brand fits to life style 72 List of Tables: Table 1 : Comparison of Prices and Packaging.............50 Table 2: Gender Ratio....................................52 Table 3: Age Distribution in Customer Survey.............53 Table 4: Occupation Distribution in Customer Survey. . . . . .54 Table 5: Income Level Distribution in Customer Survey. . . .54 Table 6 : Ratio of Open Milk to Packaged Milk............56 Table 7: Preference to Nestlé MilkPak....................57 Table 8: Satisfaction with Nestlé MilkPak Quality........58 Table 9: Need for Improvement in Nestlé MilkPak..........59 Table 10: Taste of MilkPak compared to other tetra pack milk .........................................................60 7 Table 11: Price of Nestlé MilkPak........................61 Table 12: Availability of Nestlé MilkPak.................62 Table 13: Choice of Other Milk Brands...................63 Table 14: Recall of Nestlé Milk Advertisement ...........65 Table 15: Preference while purchasing tetra pack.........66 Table 16: Loyalty with the brand.........................67 Table 17: Recognition of Nestlé MilkPak Brand............68 Table 18: Recognition of limited time packaging..........69 Table 19; Perceived Advertising Image....................70 CHAPTER 1: INTRODUCTION Packaged milk industry in Pakistan is a very fast growing industry and through our research we’ll be able to access the oversight of Nestlé in this sector and opportunities that are ahead of them. Through 8 the analysis we’ll determine if there is a need for a change in the extents and workings of Nestlé or in other words what is next for them, how they are going to improve themselves further? How are they going to retain their position in such a dynamic industry? will What are the strengths, threats, opportunities and weaknesses for Nestlé in its Milk Line products? And we analyze the factors that will help them to regain their lost market share and what other market segments they can cater. BACKGROUND OF NESTLÉ AND MILK SEGMENT AND BROAD PROBLEM AREA: Nestlé was founded by Henri Nestlé in 1866 in Switzerland. Nestlé was derived from word nest in Swiss German which also is shown in the logo of Nestlé. Henri Nestlé came up with the idea of developing something for infants those were not able to accept their mother’s milk or any other substitute, of cow’s therefore wheat to fight and this sugar problem and he of infant it mortality he came up with a product that was a combination milk, flour called Farine Lactee Nestlé which was the first product of Nestlé being marketed in Europe (Gupta). In 1974, Jules Monnerat purchased Nestlé and launched a condensed milk product of its own. In 1905, Nestlé got merged with Anglo-Swiss condensed milk. After Nestlé got fully established in Europe and everyone in Europe seem to know what Nestlé is that’s when Nestlé decided to expand its boundaries out of Europe, and to set up the plants around the globe and become a multinational (Gupta). Nestlé’s decision to become multinational turned out to be fruitful. Today Nestlé has its own operating plants and 9 products Pakistan, in America, England, France, India, Brazil, Italy, Australia, Spain and Hungary, Belgium, various other countries around the globe. (Gupta), Nestlé has become the world's leading food manufacturer and the market leader around the globe in both coffee and mineral water, kinds and of the wide based range of products cereals, manufactured instant by Nestlé includes ready to cook dishes and cooking aids, all milk products, coffee, pharmaceuticals and ophthalmic goods, pet care products & baby foods and what not. Nestlé specializes in the areas like Baby Milk, Food, Mineral Water, and Pet Food. Nestlé’ is a publicly owned company, it has subsidiaries spread all around the world. Its website lists addresses in 104 countries. are Nestlé $ 71 has large number it of has annual almost sales 30000 any which in worth around billion and employees around the globe. Nestlé has almost 8000 brands total the world. Remarkably, there isn’t country where the products of Nestlé are not sold. Nestlé’s products are perceived to be safe and high quality and this is also symbolized from the logo of Nestlé which shows coat of arms, the birds’ nest which refers to the brand name of Nestlé. Nestlé places priority in developing high quality and safe products for which it conducts extensive Research & Development based innovation through which they build strong brands (Gupta). From the beginning, Nestlé was aware of the fact that the food products have to be developed in a way that they link closely with the eating and social habits of the local area where they are introducing their products in. That is the reason why Nestlé from the very start has always shown respect for diverse cultures and traditions and developed 10 products according to their needs. Nestlé strives to integrate its products with the local cultures and taste it also brings its own set of values to the local environment as well and merge both of them and come out with something unique. Therefore, Nestlé embraces gender can cultural or age. and social diversity and does not discriminate on the basis of origin, nationality, local religion, only swiftly answers race, then and to Moreover, long term are in a and Nestlé believes that if their actions are helpful to the community very for they in achieve profits for their company. Precisely, the environment is changing looking particular health consumers their concerns. Nestlé applies the concept “Think globally acts locally” box idea and being unconventional in their product real sense where ever it goes, as well as thinking out the distribution with the help of strategic global marketing. (M.Aslam). INTRODUCTION TO NESTLÉ MILKPAK PAKISTAN: Nestlé have been serving Pakistani consumers ever since 1988, that is when Nestlé based in Switzerland and a very well established brand in the world acquired the share of MilkPak in Pakistan following their strategy of acquiring well established local firms. Nestlé acquired 40% share in MilkPak initially. MilkPak was the first tetra pack milk that was introduced in Pakistan in 1981 with green natural and healthy its core milk from its name it and and and white packaging that is associated with Pakistani flag. It promised Nestlé packaging. It further gained strength when it bought by which brought competencies with helped MilkPak to expand. From the start MilkPak was very 11 well-received high quality and the brand soon first became face synonymous completion with from milk. MilkPak Haleeb in 1986 which launched its uniquely packaged blue tetra packs in the market. Nestlé and Switzerland 100 in milk from the very beginning of acquiring by MilkPak started investment in cooling tanks. Between 1988 1992, tanks were installed in Pakistan restructuring provision top off and of priorities within of the Nestlé. 1992 onwards, with full support from the Nestlé headquarters collection technical MilkPak. Switzerland, and the paid became milk operation assistance The agricultural for a Nestlé decade, investment Nestlé's purchase of fresh milk had quadrupled, and the number of small farmers selling milk to Nestlé tripled in number. In 2008 MilkPak hit the market share of 40% in the dairy milk category. (About Us, 2009) MILK COLLECTION As it is clear by the brand name of MilkPak, raw material of Nestlé MilkPak is milk. Over the last Twenty Eight years of its operation, Nestlé’s major concern has been to improve the value and volume of milk for UHT processing and for other milk based products. The company over the time has very successfully established its own milk collection system and stretched out its operations over a very large milk large shed area in that in Punjab. volume its MilkPak over milk has experienced for its than very high its growth of the and the taste time quality milk. Nestlé MilkPak has a very long shelf life because better competitors as been observed from the survey. 12 Today, Nestlé MilkPak has the largest milk collection network in Pakistan and its competitors cannot match it in the size, efficiency of the plant and high productivity. Nestlé collects milk from the huge network of village milk centers and sub centers daily. As mentioned earlier Nestlé from the very beginning invested in the chillers and these chillers are installed at these centers where milk temperature is reduced to 4 degree C to prevent it from any kind of bacteria development during the long hauls to the factories where it is processed. The milk is taken to the factories by the large fleet of specifically build tankers. Nestlé farmers conducts and and extensive education to program for the its high milk collection staff maintain quality in collection and milk loading and transportation system. Nestlé MilkPak does not compromise on quality and maintains high standards processing whether or its milk and collection, they pride transportation, themselves in it. packaging Other brands of Nestlé in Pakistan: • • • • Nestlé Juices Nestlé Nesvita Nestlé Yogurt Bottled Water 13 • • • • Chocolate KitKat Baby Food Brands Maggi noodles Nescafe PROBLEM STATEMENT: With are the changing more demographics and psychographics people conscious about their dietary habits becoming specially the hygienic aspect of the food quality. Milk industry is still new and is growing industry at a good pace in Pakistan and has a lot of scope for further advancement. Nestlé but MilkPak in it fact has the and are had been the market high it leader level is in of Pakistan in terms of a strong brand recognition and quality recently and been local in experiencing major tea whiteners dry milk protected the competition Haleeb various evaluated 2009). competition competition. from Nurpur from To players like like from Olpers, facing and its reUs, massive Tarang whereas still plan extensions its stay as a market leader Nestlé has over time. (About marketing Nestlé’s main focus is differentiation on the basis of quality, purity, high mineral content and rich iron and vitamin C quantities than the competitors and value-pricing and they use these strategies 14 very effectively. Rigid competition from local players and shifting consumer preferences are the major hurdles in Nestlé’s efforts to recuperate its market leadership position in the industry. Nestlé’s multiple requirement different to beat the they competition need to do is that to to capitalize on its brand name and come up with unique and strategies, overcome competition and gain back their lost share to the competitors. We also aim to identify the integration of Nestlé’s basic marketing strategies with its structure and resources and finally how they use them over all in the milk industry. We also strive to know the strengths and weaknesses of the company system. and And how effectively they have used the control finally what they have done till now about staying ahead of their competitors. OBJECTIVES OF STUDY: The project objectives include: Analysis of present scenario of packaged milk industry in Pakistan as a whole. Analyses of present marketing strategies implemented by Nestlé, to promote its milk product line. Calculating the difference among the standards of the local and foreign industry. 15 Suggesting new extent of competition for the Pakistani milk industry. Determine whether the change in the industry be in the form of a new need, new form or new technology or the general direction of Nestlé in this particular product line. RESEARCH METHODOLOGY: This section will explain how the research was carried out with research question, problem area, research technique, gathering empirical data analysis of data and finally the answer to the research question. METHODS OF RESEARCH: Two basic methods are is used to collect according and to examine research experiential data. These are qualitative and quantitative. Research methodology chosen question, so that it should be help full to find out the answer of research question (Maxwell, 1996). TYPE OF STUDY: Research Design is generally classified into two types of research, (Malhotra, insights exploratory 2008). into, and research and conclusive aims to of, the research present problems Exploratory research understanding confronting the research (Malhotra, 2008). The results and insights out of exploratory research are then further used in conclusive research, which can be further categorized into descriptive and causal research (Malhotra, 2008). 16 Literature review in this report consists of exploratory research. In this part, secondary research method including analysis gain of news of articles, government reports, scholarly the recent and new developments in the articles, industry reports and press releases were used to insight dairy milk sector of Pakistan. First the situation of the dairy milk sector was analyzed through a secondary research method. Then analysis of the of tetra marketing pack milk strategies providers and was advertisement conducted. We milk will start our and research marketing by conducting exploratory by research in which we’ll observe the behavior of packaged industry strategies implemented Nestlé. We will also try to search the existing findings related to our topic. Then we will move onto descriptive research. This is a type of research that mainly focuses on providing an exact description of the variables in the problem model. Examples include market-potential studies, attitude surveys, media research, and price studies etc. Descriptive research describes “What is”. It looks at the present scenario. This is what is being done in the study too. Using descriptive research contributes quite a lot to the research, such as: problem Descriptive area and research tells us about so the that abnormal situations corrective measures can be taken. This would help in providing the recommendations at the end. Descriptive research makes possible the prediction of the future on the basis of results on 17 prevailing conditions, correlation and on the basis of people toward a certain issue. Descriptive research gives an improved and deeper understanding of a phenomenon on the basis of an in-depth study of the phenomenon. Descriptive research is the premise of Providing a basis for decision-making process. Descriptive research helps fashion many of the tools with which we do research In the end data has been analyzed to infer results and based on which recommendations and action plan has been suggested. POPULATION SAMPLE Population for a study is a group of people from which a researcher study all wants the to observe of the the reaction that and draw conclusions from (Babbie, 2005). It is never possible to members population interest researcher, in every case, researcher selects a particular sample among the population (Babbie, 2005). The Rawalpindi & Islamabad metropolitan area is the third largest in has Pakistan, with a population of over 4.5 million inhabitants (Frantzeskakis). For customers survey the population been restricted to the city of Rawalpindi & Islamabad. The target population of our project is the Nestlé’s milk consumers. The sample for customers has been restricted to 200 respondents. Sample was selected using Convenience Sampling. It refers to the collection of information from 18 members of the population who are suitably available to provide it (Malhotra, 2008). Population sample among packaged milk companies is restricted to the major milk packaged companies of Pakistan i.e. Olpers, Haleeb, Nurpur, GoodMilk and their respective sub brands. INSTRUMENTS/SOURCES OF DATA COLLECTION: There are two sources of data collection, first is Primary data while other by a is Secondary for data. the Primary sole data is of conducted researcher purpose addressing the problem at hand, whereas secondary data are data that have already been collected by others for purpose other than problem at hand (Malhotra, 2008). Secondary literature data is presented industry in this report and in form of review, analysis, background problem area. This data is collected from various sources which include news articles, government reports, scholarly articles, industry reports, press releases and different websites etc. In this research primary data is gathered through questionnaires and interviews. The questionnaire designed had some closed-ended and open-ended questions. Structured interview was used only to gain data from Nestlé’s officials, for the accurate industry analysis. SCOPE & LIMITATIONS The likely outcome of our project would provide the insight about the milk division of Nestlé, this would give the 19 reader/ user a general idea about how the things are being monitored by Nestlé and what are the procedures that are involved in milk production/ processing etc. Along with that, we would find out the opportunities and the areas for further improvement for Nestlé, like what are the areas which are left exposed or are with the competitors and what measures can be taken to ensure MilkPak covers those areas. It will help us to understand if there is a further need of product improvement or adding a new product to the existing milk line etc. The competitor analysis will help us to do find our parities and differences and help us to find ways to gain competitive advantages and how and when to reshape or modify our strategies. SWOT and PEST of the organization will be helpful in gaining the understanding. Along with that consumer preferences and their need requirements are observed. Most of our entire project would give us and the reader / user the understanding of different marketing, management, business development, and other concepts that are being taught to us during our program of MBA. Our project covers all the 7 Ps of marketing, branding strategies and the like. Limitations are that this study like any other is to be conducted within a specified period of time provided to us. Consumer preferences outside that time limit may change over the time. Moreover the extent of study of consumers is limited to Rawalpindi/Islamabad with a set sample size. In reality the market size of the packaged milk comprises many cities of Pakistan. data is It can be to assumed reality that for some the sensitive closest example advertising budgets and customer churn. 20 On the whole this research is subject to certain limitations pertaining to time and resources. 21 CHAPTER 2: LITERATURE REVIEW Nestlé has a reputation to enter the growing markets before any of the competitors builds moves income ever a reach from level it those markets, position to to consumer and in the Nestlé those upscale its successfully markets. level Nestlé, as the where significant niche of the Nestlé levels tries increases. reaches localize products for according to the needs of local markets. It also localizes its distribution and marketing strategy to the requirements of the local market. Nestlé also never let go of any opportunity to acquire any local firm whenever they find it worth a good opportunity. Nestlé’s organization structure is decentralized and the operating decisions are made by to local units. There are qualified managers that help in holding the organization together in Nestlé. To start up an market industrial requires operation a lot in of the new and and undeveloped attention precision in research; some factors affect the growth of the newly developed sector in organization and turn it into a loss. Such factors are as follows The availability of raw material Cost factor Economic climate Consumer purchasing power Consumer tastes 22 Nestlé used procurement and project management on various occasions the gap to b able to cut global major and costs. local in But the relationship of Nestlé suffered in a great deal because of between direction Nestlé’s is very strategies. There Nestlé’s strategic nature. system was called Globe which was directed by CEO. GLOBE was supposed to standardize Nestlé’s activities around the world. (Consumer Report, 2006). From the analysis from it is clear that factors Nestlé as has they taken have advantage the economic collaborated with the local government of Pakistan to gain access to the raw materials locally because of which they don’t have to import the raw material from other countries. By doing this Nestlé was able to cut down their costs and increase production. (Consumer Report, 2006). Nestlé has a history of having committed innovative product technology extensive R centers & D. all they around also the globe that their carry out license-in innovative technology from external sources. Nestlé carries out this process very carefully in a legal manner because the new technology processes. Nestlé has the following Business Principles in all has critical effect on Nestlé’s products and countries it operates in and it is very dedicated to these principles, taking into account local legislation, cultural and religious practices: • Nestlé creates and value for its consumers, for a shareholders, long term by employees, business partners 23 manufacturing and marketing its products in a unique way and this value is persistent over time. (About Us, 2009). • Nestlé is all about achieving the long term profits and they do not compromise on it in any way. (About Us, 2009). • Nestlé recognizes that its consumers place trust in the name of it and its brands, therefore they carefully monitor their behavior, beliefs and actions. (About Us, 2009). Buffaloes are the main source of milk production in Pakistan as they produce 70% of milk and rest of the 30% comes from cattle. There are basically two generic types of milk available in the Pakistani market: • • UHT milk Raw or unprocessed milk. Raw and unprocessed milk own the major chunk of the market which is 90% because of that quality measures are difficult to impose. The milk is delivered by local milkman on their bikes and they ride away after delivering therefore the quality controls on them cannot be regulated. There are also some retail outlets to provide open milk but they are not in a very large number. (Development Policy Institute Islamabad, 2008). UHT milk has its own set of problems and quality issues. Since UHT milk is made to b unaffected by many adulterations and has longer shelf life, the main problem with it is price which is slightly higher than the open milk. ( Development Policy Institute Islamabad, 2008). UHT milk market needs to be saturated in Pakistan. In Pakistan the capacity of processing milk is much higher than what is actually produced, the reason for it is that 24 urban consumer prefers using packaged milk but that is a very limited market and the higher price of UHT milk creates artificial ceiling for its distribution and usage in other sectors of Pakistan. (Raja, 2008). Brands like MilkPak which is owned by Nestlé and Haleeb Milk owned by Haleeb Foods has been leading the dairy market of the world’s fourth largest milk producing country for nearly two decades very successfully. Engro Foods which is basically a giant in fertilizers industry, in contrast, had only been established for few years in Pakistan. Olpers is the packaged milk brand owned by engro foods and no one in a branding industry could imagine how Olpers was going to distance itself from its parent company’s image. And Olpers surprised every by its high turnover 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 at present which is second only to Milk Pak (estimated at 40 percent). (Oppapers). In Pakistan the packaged milk category at first was originated in 1981 by Milk Pak, they were the pioneers of packaged milk in Pakistan. The idea was to collect the milk from rural areas across Punjab, process the milk that was collected from different milkmen, through UHT (Ultra-High Temperature consumers Processing) treatment, and to sell it to across Pakistan in uniquely colored triangular and rectangular packs that were designed to protract the milk’s quality for a longer period of time then usually a milk can be stored. Therefore when this idea was applies Milk Pak’s “Milk Packs” were 25 very well-received by the consumer success 1986 and and and the MilkPak as blue in a a very little milk. time gained was the received quality Haleeb milk in MilkPak’s first real competitor, which came into market in introduced colored packaged market. Milk Pak’s stance further grew in standing when it merged with Nestlé in Pakistan. By the figures of 2006, the dairy milk category in Pakistan was growing at 20 percent annually, and Milk Pak and Haleeb were well-received brands that have to are distinctive keep colors and those quality, of and brands natural the brand and promises branda providing high healthy milk in future as well, also all the packaged milk getting benefitted of because packages highly innovated (Oppapers). We know and studied during the course of our MBA program that advertising can increase sales through a certain procedure that the buyers mind goes through. One of the most popular models that explain this is the AIDA model. The acronym stands for ("AIDA” of marketing, 2009): A – Attention/Awareness: attract attention of the customer towards a particular product. I Interest: customer’s interest is then increased by advertisement Tetrapak. focusing on and demonstrating advantages and benefits of the product. D - Desire: influence customers that they want and desire the product or service and that it will gratify their needs. A - Action: guide customers towards taking action and/or purchasing. 26 The usefulness of promotion through advertising mainly the TVCs basically relies on the attention or memory retention of its audience. To see the effectiveness of advertising and the risk of the loss of any new information that comes to the consumer ways. Daniel Schacter ways (2001) are has pointed out seven These seven transience, absent- mindedness, blocking, misattribution, suggestibility, bias and persistence. Flaws in memory can have marked influence on as the a process result of successful exposure to processing an of advertising. if a memory (Griffiths, 1997). Even if a positive of malfunction intention is formed advert, interferes with that target, the advertising will not be effective (Griffiths, 1997). In response ways to to this Larry these Percy and seven (2004) risks has identified advertising with various campaign while avoid designing applying associated human/audience memory. These include (Larry Percy, 2004): Advertisers Advertisers (transience) should should integrate make those the message more with easy the to perception of the brand very carefully (transience) points understand in which the target audience is interested Advertisers Advertisers should should apply involve personal current references, brand particularly to positive memories (bias) positive attitudes are of long standing (bias) Advertisers should make sure the correct emotions are tied to the brands image (blocking, persistence) 27 Advertisers associated mindedness) should with use unique long cues term not likely to be other memories (absent- Advertisers should create a distinctive brand benefit claim link (misattribution) Advertisers Advertisers should should institute make sure links those in links memory are to well appropriate need category (absentmindedness) integrated with noticeable associations to the category need (blocking) Advertisers should ensure a consistent 'look and feel' over time to encourage familiarity (absent-mindedness) Advertisers should use strong visual images to create or reinforce positive memories associated with the brand (suggestibility) Advertisers should exploit reminders of past problems that could be evaded or solved by the brand (persistence). To evaluate in the impact and of advertising behavior on on the any success, brand a of growth was sales switching without can research was conducted by AC-Nielsen, and as a result it assumed that the the shrink adequate brand support advertising brand loyalty, brand equity, and premium pricing (Johnny Panagiotidis, 15th May 2005). Even if there is no ATL advertising is available and only BTL advertising is there, even in that case sales growth has been observed, but in that scenario consumers are more prone to switch the brand (Johnny Panagiotidis, 15th May 2005). 28 The involvement of the authors of this project will pertain to an in-depth analysis of the current situation of Pakistan’s existing packaged milk providers and capacity of Nestlé milk products to advance and stay abreast. Once an overview is achieved standards gaps or it in will order be to exist. compared verify The to if the some is international performance variances project followed by recommendations that will explain how Nestlé can gain its lost market share. 29 CHAPTER 3: INDUSTRY ANALYSIS MILK INDUSTRY IN PAKISTAN In Pakistan the packaged milk category at first was originated in 1981 by Milk Pak, they were the pioneers of packaged milk in Pakistan. The idea was to collect the milk from rural areas across Punjab, process the milk that was collected from different milkmen, through UHT (Ultra-High Temperature consumers Processing) treatment, and to sell it to across Pakistan in uniquely colored triangular and rectangular packs that were designed to protract the milk’s quality for a longer period of time then usually a milk can be stored. Therefore when this idea was applies Milk Pak’s and “Milk the Packs” MilkPak as blue were in a very a well-received little milk. time by the was the consumer success 1986 and and very gained received quality Haleeb milk in MilkPak’s first real competitor, which came into market in introduced colored packaged market. Milk Pak’s stance further grew in standing when it merged with Nestlé in Pakistan. By the figures of 2006, the dairy milk category in Pakistan was growing at 20 percent annually, and Milk Pak and Haleeb were well-received brands that have to distinctive keep colors and those quality, brands natural brand and promises providing high healthy milk in future as well. In the recent is a times, it seems that everywhere we look, a billboard, of packaged Haleeb, a TVC milk, Nurpur, or a radio jingle of the Nirala, regardless Pakola, there brand, either promoting brand whether it’s MilkPak, Goodmilk or Olper’s there is always some kind of 30 advertisements going on. But this isn’t surprising for a country like Pakistan which is according to recent statistics, the fourth largest milk producing country in the whole world which is 32 billion liters per year from 50 million animals, with urban consumption at nearly seven billion liters per annum. However, even though the rankings are high, packaged milk according to the recent estimates, has only twenty percent penetration in the total market. That is the reason why processed milk and companies marketing (PLMCs) their have been in aggressively attempt to advertising brands increase the penetration in the market. Even though current economic turnaround has contributed to the growth in the PLM sector, but still the penetration in the market is fairly less. The reason for the growth in PLM sector because people are becoming factor. open more This are and the more aware of the health and hygiene and increasing for dissatisfaction in this with reasons growth sector. factor milk However, many challenges still have to be overcome by the PLMCs to increase the penetration in the market. Milk even amongst the most urbanized consumer is perceived fresh, healthy and preservative free and straight from the cow, if it is provided to them by doodhwala ( milkman ) early in the morning. Therefore this perception has to be overcome, if increased penetration of packaged milk is to occur at a significant rate in the market. Another problem faced by packaged milk industry to make people switch from loose milk to packaged milk is price. 31 Brands like Milk Pak which is owned by Nestlé and Haleeb Milk owned by Haleeb Foods has been leading the dairy market of the world’s fourth largest milk producing country for nearly two decades very successfully. Engro Foods which is basically a giant in fertilizers industry, in contrast, had only been established for few years in Pakistan. Olpers is the packaged milk brand owned by engro foods and no one in a branding industry could imagine how Olpers was going to distance itself from its parent company’s image. And Olpers surprised every by its high turnover 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 at present which is second only to Milk Pak (estimated at 40 percent). Though there are and still price a lot of hurdles like consumer open and perceptions differentials between packaged milk and they needed to overcome, the processed milk market is set to grow. There is a still a very large market size that needs to be converted, which is a huge opportunity for PLMCs. If the economy remains stable for the next five at an years, penetration rate. in the market Industry will in increase astonishing (Dairy Pakistan, 2007). 32 CHAPTER 4: ORGANIZATION ANALYSIS NESTLÉ MILKPAK PAKISTAN: Today, Nestlé MilkPak produces its products in over 81 countries and achieves 98% of its turnover outside Europe. Nestlé MilkPak is the world’s largest milk company. It has an annual revenue of 70 billion Swiss francs, 522 new factories in 81 countries, 200 operating companies, 1 basic research outer and 20 technological development groups, has more than 231,000 employees and more than 8000 products around the globe. There are three main administrative companies that co-ordinate the activities of more than 200 operating companies around the globe. (About Us: Nestlé, 2009). Figure 1: Product Concept Nestlé is perceived as the best quality product all over the globe and the same idea is reflected and replicated in the introduction and launch of Nestlé MilkPak. It became 33 reputable brand very soon in Pakistan and many other milk producers later chased the same pattern to initiate their milk brands in the same market which has now become rigorously competitive. MilkPak has been nominated as the best brand on the attribute of sustaining quality. Familiarity with the brand has been rated as the second most sought after features and specify the superior quality of marketing and promotional communications which are more aimed at consumers’ awareness for consumption of packaged potential milk. for Availability further to of the Nestlé MilkPak has been rated as third in the sequence and definitely indicating indicates consumers’ improvement. upward Affordability has been graded as last by consumer voting sensitivity frequent pricing of essential commodities. In an economy like today affordability is a very important factor that affects the spending on packaged milk. SWOT ANALYSIS A SWOT Analysis is carried out by the company so that it is able to position itself to take advantage of particular opportunities in the environment and to avoid or minimize environmental threats. In doing so, the organization attempts to emphasize its strengths and moderate the impact of weaknesses and improving them. SWOT Analysis of Nestlé MilkPak done by a research group (AC Neilson) is as follows: 34 INTERNAL ANALYSIS STRENGTHS • • • A socially responsible Company. Nestlé MilkPak Limited’s products enjoy strong brand image and market pull. Innovative and constantly growing product line. Nestlé MilkPak launched 17 new products, including variants of existing products in recent past. • • • • • Sales force is the major resource strength in terms of physical possessions of the company. Marketing strategies employed by the company are innovative and draw in customers. Financial, marketing and sales strategies are devised by gauging the customer demands. Periodic trends. It is a large scale multinational organization, with copious • • • • • • • • funds and has the competence of acquiring weaker firms by throwing them out of competition Growing Sales and profits. Major shareholder in the food industry of Pakistan. Aggressive Marketing. Efficient Distribution networks throughout the country. Quality Products. Environment Friendly. Skilled labor. Educated staff. research is carried out to judge market 35 • • • • • • • • • • • Large number of offerings. Arrangement of events. Brand name Easy to approach outlets. Physical evidence Strong Brand image Quality product Solid Financial position Strong supply chain network Qualified work force Commitment to High Quality Products Focus on research and development, estimations of UHT Milk Production and Consumption up to 2008– 09 • Year Annual Production (million liters) Annual Consumption (million liters) 2008-09 2009-10 => => 648.43 353.71 753.89 372.05 WEAKNESSES: • • Selective investment due to uncertain economic and political conditions. Feasibility of new products needs to be analyzed, e.g. Nestea was launched some years back but it failed because no customer demand for it existed. • Relatively a new company in comparison to its rivals 36 e.g. Lever Brothers. • • • • • • Low levels of inventory maintained can be dangerous. No credit sales. Low sales margins due to highly value added products. They cannot launch many of its expensive international brands due to the lower income groups. Physically impossibility to have target market. There is weak marketing of MilkPak as there is no advertisement of MilkPak on official website. • • Lack of awareness among the target market. It Dependency on others (govt. & sponsors) for the arrangement of events. The target market of Nestlé MilkPak is upper middle and high class because lower middle and poor class cannot afford to buy UHT milk due to its premium price. • It is a main weakness of MilkPak that there are different companies of milk but the name of Nestlé MilkPak is always stand in the last because of low advertising and marketing. EXTERNAL ANALYSIS OPPORTUNITIES: • • Pakistan is the seventh largest producer of milk in the world with annual output of over 22 billion liters. There are substantial growth opportunities considering the average capitulate of Pakistani animals at only 1,100 liters/annum as compared to 6,000 liters/annum 37 for animals in Europe and USA. There are nearly 20 million milk producing animals in the country, mostly in Punjab (80%). • The overall milk market Nestlé in Pakistan is 20 with billion other liters, out of which processed milk contributes only 3 million liters. MilkPak along processed milk businesses makes a payment of only 2% to this large market. • Nestlé MilkPak has stretched out its product range by entering the cold dairy market recently by launching Nestlé plain yogurt and now fruit yogurt is also added to it. • • To expand the cold dairy products range, Nestlé fruit yogurt is the latest addition to this group. The cold dairy market offers many opportunities for the • company which can capitalize these products by banking on its superior quality milk. The coffee brand also offers many opportunities for the • company to expand by tuning the taste of the masses towards coffee. Credit policy can be implemented to increase sales. THREATS • • Price fluctuations due to rupee devaluation as raw material are imported. The uncertainty of economic conditions poses a great threat as the major funds invested in the country come from outside Pakistan. • The present economic crisis in the world, led to the withdrawal of foreign management from the company and the investment has come to a halt. 38 • • • • • • Competition with Nestlé’s owns smuggled brands. Effect of Seasonality’s upon sales. Imported products. Major player may enter target market Legal and ethical issues. Market segment growth could attract new entrants. raw material, in some of the company’s PORTERS FIVE FORCES MODEL The Porter’s Five Forces Analysis helps the marketer to contrast a spirited competitive environment. It has similarities with other tools for environmental audit, such as PEST analysis, but tends to focus on the single, stand alone, business or SBU (Strategic Business Unit) rather than a single product or range of products. (Porter's Five Forces Model). 39 Figure 2: Porters Five Forces Model Five forces analysis looks at five key areas namely the threat rivalry. of entry, the the power of of buyers, the and power of suppliers, threat substitutes, competitive FIVE FORCES MODEL APPLICATION IN NESTLÉ. In our project of Nestlé milk product line the application of Porters five forces model is as follows. 40 Figure 3:Five forces model application in nestlé THREAT OF NEW ENTRY. In the scenario preferences of packaged milk industry Gawala of Pakistan, to the there is a lot of potential as the consumers are switching their from conventional milk packaged milk. The new entrants that have some resources or experience are entering into milk industry. As the data from last 510 years show that the only two dominant brands of packaged milk available were the Nestlé MilkPak, and Haleeb Milk by Haleeb foods (formely Chaudhary daries limited). from Noon But in the of last decade new Halla brands milk came which like has Nirala Milk from the owners of Nirala Sweets , Nurpur milk group companies, currently closed its operations. And in the recent last few years two new brands came that have significantly captured a large market share that are Good Milk from Shakar ganj group, and Olpers by Engro foods. Now what Olpers and Good milk has done is that they hired the management from Haleeb and Nestlé at high wages and at 41 their expertise they captured the market, these companies have high budgets so they done intense and out of the box marketing and made their name in market. As earlier, there were only two players in milk industry; Nestlé and Haleeb so the government does not have strict policy , new brands came in to make healthy competition which has ultimately given benefit to the consumer. differentiation marketing and these companies only And as the industry is are like doing if a is by their for growing so new entrants have potential in the market. The distribution company example Olpers have strong distribution in Chakwal it will capture the market in that area and vice versa. POWER OF BUYERS. The power of buyers is high when there are only few firms in the industry providing their services. In the milk industry the buyers have more choices now with the entry of new brands like Oplers and Good milk. Like previously the buyers have only two choices either Haleeb or Nestlé. But now the situation has changed, buyers have many choices if any brand doesn’t or performs they good switch in to terms other of quality, For convenience pricing brand. example a restaurant that buys milk from Haleeb doesn’t get favorable terms of credit from company can now switch to any of other brands like Nestlé, Olpers , Good milk. There is a cut throat competition and each of them is striving for its market share. POWER OF SUPPLIERS. Now with more brands the switching cost is also low as buyers have increased choices. 42 The power of suppliers is stronger than powers of buyers. The dairy farms that had been supplying milk to packaged milk brands have more choices now as they can sell their milk to any of prevalent packaged milk brands who offer more prices and favorable terms of payments etc. Other thing is that the switching costs of buyers is high and also matters like it will cost high when switching from one supplier to another requires more complex procedures. Like if Nestlé buy milk from one buyer and switch to other it had to re make its policies and negotiation terms and conditions , along with that it also had to make other changes etc. THREAT OF SUBSTITUTES. The substitutes options to the packaged milk are very less yet very strong open in the market, the substitutes are and the dry powdered milk. the One conventional milk, important thing is that milk is the generic product so to make its substitutes is a difficult thing. So threat of substitute is low. THE COMPETITIVE RIVALRY. This is very high in this industry, there are many cases when one brand has bought or hired the sales force of other company, there are many promotions and marketing campaigns going almost on to capture The the market share. The have only done way to compete is on the basis of marketing as the prices are same. different brands their positioning differently as: Nestlé. Purity is everything. 43 Haleeb. The thickest milk. Olpers. A complete milk. Good milk. Healthy life. PEST ANALYSIS In analyzing the macro-environment, it is significant to discover the factors that might in turn affect a number of imperative variables supply that and are likely to influence and its as the costs of organization’s A number of the a demand been levels (Kotter and Schlesinger, 1991; Johnson and Scholes, 1993). checklists vast number have of developed issues ways sorting merely possible that might affect an industry. A PEST analysis is one of them that is framework that categorizes environmental influences as political, economic, social and technological forces. The analysis examines the impact of each of these factors (and their and to interplay make with each other) for a on the business. The results can then be used to take gain of opportunities Kotler (1998) contingency plans is threats useful when preparing business and strategic plans. claims that PEST analysis strategic tool for understanding market growth or decline, business position, potential and direction for operations. PEST also positively affecting useful operations ensures with a into that company’s performance of (Porter, to enter new is aligned that are the powerful forces change its business new environment decides markets and 1985).PEST is business PEST when company countries. analysis of Nestlé MilkPak Pakistan has following points: 44 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 .Nestlé paid 15% sales tax and 18% excise duty when they directly imported chiller from the other country but mostly they purchase chillers inside the country. Increased prices of electricity and petrol cause transportation and other cost heavily which results in the increased prices of processed milk. On the other hand, these days Government provides chillers to the Nestlé MilkPak at interest free installment through UNDP and PDDP projects. This process reduces the pressure on milk industry and increase the productivity. ECONOMICAL FACTORS: Pakistan is blessed with good potential for dairy development, buffalo being the principal source of milk. But due to problems such as poor nutrition, mismanagement, failure and to control animal disease, unavailability of veterinary only 5% milk is used for poor husbandry, processing. Nestlé MilkPak is playing an important role in the economic growth of Pakistan. They earn a lot of profit and also trust its profit in social welfare by making schools or helping with funds during earthquake in Azad Kashmir. Nestlé Pakistan also helps educating the farmers how to get maximum quantity of milk from the animals by providing them sufficient food. They also provide job opportunities to the people of rural areas by giving them animal on interest free installments. 45 Now a days, our economy is on recession due to this the prices of processing milk has been increased day by day. SOCIAL FACTORS: People in Pakistan mostly prefer fresh and open milk & rely less on processed milk because they understand processing milk companies add chemicals and preservatives in milk during process. But Nestlé MilkPak try to change this trend through heavy advertisement and awareness programs. Processing milk is mostly used in large cities or towns. Companies try to win large number of customers by providing them quality and value. TECHNOLOGICAL FACTORS: Nestlé uses latest technology and high quality machinery in the production of milk or other products, it also fulfill the customer’s requirement. For example, Nestlé recently opened Asia’s largest factory in Kabirwala. Nestlé MilkPak now uses machinery that produced 1800 to 2000 tones milk daily. NESTLÉ’S MARKETING STRATEGIES FOR ITS MILK PRODUCT LINE The corporate strategy of Nestlé Pakistan is growth. The operational strategies of Nestlé in Pakistan are as follows: o Consumer communication o Product availability and development o Quality strategy o Branding strategy o Differentiation strategy 46 o Positioning strategy o Marketing Mix Strategy CONSUMER COMMUNICATION The taste of the customer and awareness is brought among people about healthy and delightful eating with the help of electronic media, advertisements boards, banners, advertising on newspapers, pamphlets, brochures, handouts and by the stall activity of marketing department. Customer feedback is also very important for Nestlé MilkPak and to cater this it has setup a special call centre. Good to know is the tag line Nestlé use for customer communication and satisfaction. PRODUCT AVAILABILITY From time to new time activities or areas such are as area storming, Thus, determining places being done. making the distribution of MilkPak everywhere. BRANDING Nestlé is a strong brand so while catering to Pakistani market of Milk it has developed a broad branding strategy. The packaging of the MilkPak is in green and white color in lieu of the is a colors major of flag of of Pakistan packaged thus milk following and very Glocalization. It is because of this branding that Nestlé MilkPak producer 47 successful in high brand recognition and brand recall and product quality in Pakistani market. DIFFERENTIATION STRATEGY Nestlé has differentiate itself in terms of nutrients in MilkPak e.g. “Addition of IRON and Vitamin “A & C” and purity “Khalis hi sab kuch hay”. POSITIONING STRATEGY Nestlé MilkPak has adopted the functional positioning strategy like: “Khaalis He Sab Kuch Hai” “Wohi Qudarti Maza” “Jaan Banaoo” MARKETING MIX Product: • Quality Product Nestlé MilkPak has the largest market share due to its consistent quality. 48 • Product Packaging Nestlé MilkPak is available in different product consumption range and stylish packaging. • Product Lifecycle Nestlé MilkPak has been in the market for more than two decades and it is at continual growth stage. Figure 4: Product Life Cycle Initial growth Decline Continuous growth Maturity Price: • Competitive Pricing MilkPak has a large share in the market. The price of MilkPak is competitive with other brands in market. 49 Table 1 : Comparison of Prices and Packaging Figure 5: Comparison of Prices and Packaging Placement: • Distribution Channels: 50 MilkPak complete is not sold directly process to is consumers. followed. A It distribution uses indirect channels for distribution like: Manufacturer Distributor Wholesaler Retailer Consumer Promotion: • Spotlighting on health conscious people in their advertisement. Promotion Mix • Advertisement • Public relations MARKETING GROWTH STRATEGY Nestlé is pursing growth strategy. They have invested $ 70 billion at Kabirwala Plant and they are planning to invest $ 381 billion in the milk business in coming years. 51 CUSTOMERS’ ANALYSIS: To meticulously considering the response Nestlé MilkPak customers were from Rawalpindi and Islamabad, belonging to varying demographics i.e. different age groups, occupation and income levels were surveyed. This survey was in form of questionnaire, a sample of which is attached in Appendix. At start, let’s look at how the total population of survey is distributed in terms of gender, age, occupation and income level; we have taken gender and income level as the major criteria for our sample selection. Following tables and charts show the distribution of respondents over these categories: GENDER: Overall 54% of our respondents were female, and rest 46% were males. Table 2: Gender Ratio Gender Male 93 Female 107 Figure 6: Pie Chart of Gender ratio 52 AGE: While being totally neutral in selection of sample, it is seen that most of the MilkPak users are between 26-35yrs age group. This is because they belong to the current generation, who has an eye over every thing, conscious about health and are working class and has lack of time. below 15 years is just 2% of the total population sample, but in future it seems to be really attractive age group for MilkPak customers because children are the best influencers for selling. Table 3: Age Distribution in Customer Survey Category No. Of Respondents Below 15 4 Age Group 15 to 25 40 26 to 35 88 36 to 45 42 Above 45 26 Figure 7: Age Distribution in Customer Survey OCCUPATION: distributed In in terms three own of occupation and the / sample low was / categories namely, retired income, employed/having business housewives financially dependent family members. While being unbiased in selection of sample, it is witnessed that the last two categories consume packaged milk more. 53 Table 4: Occupation Distribution in Customer Survey Occupation Low income 33 Employed / have my own business 102 Retired /housewife /financially dependent family member 65 Figure 8: Occupation Distribution in Customer Survey Retired/HW Employed/OB Low Income 0 50 100 150 200 INCOME LEVEL: This category is divided into five divisions from below Rs.10,000 to above Rs.75,000, keeping in mind the social income groups prevailing in Rawalpindi and Islamabad. The respondent’s income levels indicate that MilkPak users belong to every income group. Hidden Trend: It is seen that the above Rs 50,000 income level people tend to show their preferences for Packaged Milk more because of various reasons e.g. shopping in malls and convenience, availability of packaged milk its long life. Table 5: Income Level Distribution in Customer Survey Below 10,000 4 10,000 to 25,000 Income Level 25,000 to 50,000 (in Rs.) 50,000 to 75,000 Above 75,000 12 34 72 78 54 Figure 9: Income Level Distribution in Customer Survey 2 6 % % 1% 7 B elow 10k 10-25k 25-50k 50-75k above 75k 3% 9 3% 6 Now in the second phase of our analysis, lets dissect the responses on main questions and try to figure out the hidden and/or clearly visible, registered trends. 55 Questionnaire analysis: 1. What is your preference: open milk or tetra pack? Table 6 : Ratio of Open Milk to Packaged Milk Options Responses Ratio of Open Milk to Packaged Milk Open Milk Tetra Pack Both 48 96 56 Figure 10: Ratio of Open Milk to Packaged Milk 24% 28% OPEN MILK TETRA PACK MILK COMBINATION OF BOTH 48% Out of the sample size of 200 respondents from Rawalpindi and Islamabad showed a mixed trend. Total Fifty one percent of the consumers in market use either open milk or open milk and packaged milk simultaneously. Packaged milk has 56 penetrated deeply in market especially in cities and the 48% of the people prefer tetra pack milk in comparison to 28% people who are stick to conventional open milk only in all sorts of circumstances and don’t like packaged milk at all. High Price perceptions also prevails in this 28% of sample. Whereas the 24% people use packaged milk as substitute of open milk n this shows the growth potential in market. 2. If you buy packaged milk then would you prefer Nestlé MilkPak? Table 7: Preference to Nestlé MilkPak Options Responses Preference to Nestlé MilkPak Yes No Up to some extent 120 46 34 Figure 11: Preference to Nestlé MilkPak 17% YES NO 23% 60% UP TO SOME EXTENT 57 Here in this case when the respondents were asked about their preference of the Nestlé MilkPak over other tetra packs 60% of them responded in favor of MilkPak, 23% of the respondents choose other tetra pack milks and 17% were neutral and according to them they purchase whatever brand is available. This analysis shows the higher preference of MilkPak over other brands. 3. Are you satisfied with quality of MilkPak? Table 8: Satisfaction with Nestlé MilkPak Quality Satisfaction with Nestlé MilkPak Quality Options Yes No Responses 182 18 Figure 12: Satisfaction with Nestlé MilkPak Quality 9% YES NO 91% 58 The response to this question is related with the response of the question that if respondents prefer MilkPak over other tetra pack brands. One reason of the high percentage of preference could be its taste, as out of the sample of 200 respondents, 91% of them replied that they like the taste which of it better the than any taste other is brands of and only 9% of replied that they prefer the taste of other milk brands shows better one the reason MilkPak being the market leader. 4. Would you like to have improvement in MilkPak? Table 9: Need for Improvement in Nestlé MilkPak Need for Improvement in Nestlé MilkPak Options Yes No Responses 182 18 Figure 13: Need for Improvement in Nestlé MilkPak 9% YES NO 91% 59 The response to this question is similar to the last one the reason being that it was about the taste of MilkPak. The people that prefer the taste of Nestlé MilkPak does not want it to be changed and the people that does not prefer its present taste thinks it should be changed. Therefore 91% of the respondents do not want the taste to change and 9% of the respondents want it to change. 5. Rate the taste of MilkPak as compared to other tetra pack milk? Table 10: Taste of MilkPak compared to other tetra pack milk Taste of MilkPak compared to other tetra pack milk options responses Very bad 0 Bad 0 moderate 46 good 92 Very good 62 Figure 14: Taste of MilkPak as compared to other tetra pack milk 0% 23% 31% very bad Bad Moderate Good Very Good 46% 60 According to the responses to this question as much as 31% of the respondents think that the taste off Nestlé MilkPak is very good as compared to any other tetra pack milk. 46% of the respondents think it’s good and 23 % think its moderate as compared to other tetra pack milks. None of the respondents think that the taste of MilkPak is worst or not as good as any other tetra pack milk. 6. Is the price of Milk Pak rational? Table 11: Price of Nestlé MilkPak Options Responses Price of Nestlé MilkPak Yes No 172 28 Figure 15: Price of Nestlé MilkPak 14% YES NO 86% 61 A huge population of our sample as 86% responded that the price of Nestlé MilkPak is competitive and justified in comparison to other tetra milk packs. 14% felt that the MilkPak is over-priced. The thinking might be in comparison to the price of open milk. 7. Is MilkPak readily available to you? Table 12: Availability of Nestlé MilkPak Options Responses Availability of Nestlé MilkPak Yes No 172 28 Figure 16: Availability of Nestlé MilkPak 14% YES NO 86% 62 86% of our sample size of population is contended with the availability of the Nestlé MilkPak and its intensive distribution. It is available every where in cities, super markets, grocery shops and in kiosks also. The convenient availability of the Nestlé MilkPak is backed by the strong and efficient supply chain management system of Nestlé Pakistan. However there are many areas where milk Pack is not available and 14% people reported that they could not have the access to Nestlé MilkPak. 8. Which brand of tetra pack you will buy in case of unavailability of MilkPak? Table 13: Choice of Other Milk Brands Choice of Options Responses Olpers 82 Other Milk Brands Haleeb 62 Good milk 28 Any other 28 63 Figure 17: Choice of Other Milk Brands 14% 14% 41% OLPER'S HALEEB GOOD MILK ANY OTHER 31% When the sample of 200 respondents were asked the question that which other tetra pack they would prefer if MilkPak is not available to them, 41% of the respondents replied that they would go for Olpers if they don’t find MilkPak, 31% prefer Haleeb in case they can’t find MilkPak, 14% replied in the favor of good milk and 14% of the population replied other brands. This shows that Olpers is a very close competitor of MilkPak and even if people can’t find MilkPak majority would go with Olpers and Haleeb. 9. Do you recall the ad of Nestlé when you see Nestlé milk at the store? 64 Table 14: Recall of Nestlé Milk Advertisement Recall of Nestlé Milk Advertisement Options Yes No Responses 110 90 Figure 18: Recall of Nestlé Milk Advertisement The recall of Nestlé MilkPak advertisement is not very high and encouraging.55% of the sample population could recall advertisement in contrast to 45% who did not. The reason being that Nestlé’s strategy about advertisement is not very intensive. Nestlé believes on providing good quality products and knowing the customers better than and communication with customers merely advertisement on TVCS. 10. What you prefer while buying packaged milk? 65 Table 15: Preference while purchasing tetra pack Preference while purchasing tetra pack options responses Purity/quality 82 price 76 Convenience availability 24 18 Figure 19: Preference while purchasing tetra pack 41% of the people emphasized on purity and quality of the milk while choosing different brands. Price of the brand is also a major reason of switching to different milk brands. 38% of the people in our sample were price conscious. Convenience of packaged milk and availability were minor issues in regard to quality as milk is a food item. 11. If Nestlé milk isn’t available at shop/ out of stock you ask the shopkeeper about its reason or switch to other available brand of milk? 66 Table 16: Loyalty with the brand Options Responses Loyalty with the brand Other brand Ask reasons 142 58 Figure 20: Loyalty with the brand In the previous question we have seen that quality is foremost important to people while buying edible products such as milk. But as milk is very generic product and there aren’t many substitutes available so people as 71% responded that due to the non availability of Nestlé in market they will go for other brands for some time though in spite of their strong loyalty with Nestlé Milk. 12. Can you remember and recognize the colors of Nestlé MilkPak (white & green) at billboard? 67 Table 17: Recognition of Nestlé MilkPak Brand Recognition of Nestlé MilkPak through colors Options Yes No Don’t know Responses 178 18 4 Figure 21: Recognition of Nestlé MilkPak brand Nestlé brand. is In a very quality MilkPak perceived has and trusted white strong colors Pakistan green and representing colors of the land.89% of respondents claim that they can recognize Nestlé MilkPak. 13. Nestlé has been changing its packing with the events like Independence day pack with Pak flag and Ramadan packs, have you seen such packs on the shelves of shops as it is for a limited time offer with high turnover of milk.? 68 Table 18: Recognition of limited time packaging Recognition of limited time packaging Options Yes No Responses 126 74 Figure 22: Recognition of limited time packaging Nestlé’s sales promotion strategy is intensive during the special events like Ramdan, Jashan Azadi and the Eids. Special packaging is introduced to emphasis the relationship Nestlé shares with its consumers. Nestlé is quite successful in this regard as 63% of the population sample responded that they can recall and recognize the special packaging and colors of the brands. 14. How you perceive brand image from the Television advertising for each company? 69 Table 19; Perceived Advertising Image Traditional Modern Serious Image Fits my Life Style Quality service Economical Service Trustworthy Wide Range of products Innovative Perceived Advertising Image Nestlé Olpers Goodmilk Haleeb 82 54 36 45 49 81 12 24 85 60 31 52 36 72 70 69 76 29 84 75 82 82 69 108 34 48 31 32 14 54 29 36 17 35 34 9 Nurpur 26 24 38 22 11 74 8 30 29 Figure 23: Perceived Traditional Advertisement Image 1% 1 1% 9 3% 3 Nestle Olp ers Good Milk Haleeb 1% 5 Nu u rp r 2% 2 70 Figure 24: Perceived Modern Advertisement Image Figure 25: Perceived Serious Advertisement Image 14% 31% 20% Nestle O lpers GoodMilk Haleeb Nurpur 12% 23% 71 Figure 26: Perceived Image that Brand fits to life style 11% 14% 18% Nestle Olp ers Good Milk Haleeb 40% 17% Nu u rp r This is one of the most comprehensive questions of this questionnaire in terms of the perceived advertising image of the key players of tetra pack milk industry of Pakistan. In this question all the respondents were asked to mark the key players of this industry i.e. Nestlé, Olpers, Haleeb, Goodmilk, Nurpur. with reference to 8 characteristics i.e. traditional, modern, serious image, fits my life style, quality service, economical service, trustworthy, wide range of products and innovative. Above table shows the ranking of each company in percentages with respect to the above stated 12 characteristics. The above table shows the power of advertisement used by Olpers. As it has the highest ranking among other players in the industry and Nestlé is right behind it. Olpers is leading in many given aspects like modern, trustworthy and innovative etc and Nestlé is right behind it whereas other three brands are way behind them in all the aspects. 72 Comparison of Nestle MilkPak with other brands Attributes/Brands Brand Image Brand Positioning Brand Recall Consistent Quality Price Distribution(cities) Distribution(rural) Advertisement Frequency Promotion Advertisement Nestle Pure Purity is everything Strong Always Rs. 58 Intensive Intensive Less Tvcs, News Emotional, Olpers Strong All Purpose milk Strong Always Rs. 57 Intensive Intensive Intensive Tvcs,radio, Billboards, Shows Emotional, 73 Haleeb Thick Thickest Milk Strong Always Rs. 57 Intensive Less Medium GoodMilk Open Milk Drinking Pure Milk Drink Fresh Good Milk and Pure everyday None --Always Depends Rs. 57 50-60/kg Less Intensive Less Intensive Medium None None None Tvcs, Tvcs, Home to News Home Emotional, Emotional Appeals Taste Convenience Market Research Target Market Packaging Brand History Financials Product Differentiations Sub Brands Marketing Objectives Market Share of packaged milk industry Total Market share Natural Yes Nestle Research laboratories Middle, upper middle, health conscious people 0.25L,0.5L 1.0L 1981 Backed by Nestle Purity, Rich Iron, Vitamin C Nesvita,Nido Olwell To be market leader 40% 8% (40%of 20%) Good Yes Market Research Unit Middle, upper middle, health conscious people 0.25L,0.5L 1.0L, 1.5L 2006 Backed by Engro Foods All purpose Creamy Yes Timely Middle, upper middle, Sweet Yes Timely Middle, upper middle, Natural No None Everyone 0.25L,0.5L 1.0L 1986 Now Less Stable 1.0L Depends To be market leader 25% 5% (25% of 20%) Good for tea and desserts Dairy --Queen To be To attain market 20% share leader 35% other brands 7% (35% of 20%) 2007 Always Backed by --Shakarganj Foods Drinking --Milk -------80% 74 CHAPTER 5: IDENTIFICATION OF KEY AND CONCLUSIVE RESULTS Thoroughly Nestlé considering the theoretical process of how impacts the consumer behavior, analyzing closely each data collected through customer survey to Strategy of Nestlé taking up for its milk product line and examining have a handle on the customers’ respective perspectives, and alignment of strategies with Nestlé MilkPak’s marketing following results were deduced: Nestlé MilkPak is quite able-bodied in the market. It has a good image among the consumers. It is legendary for its quality and being the pioneer of safe and good quality milk. It is selling well. The marketing of it is also being done quite well. Even though Nestlé’s overall performance is quite well in the market but there is always a room for improvement as the market is always very dynamic and so the management of Nestlé has to align the strategies according to the changing demands of the market. Nestlé abreast time. Brand awareness and brand recognition are present and MilkPak’s of management as it must also be to careful provide and stiff Olper’s has managed competition to MilkPak and Haleeb in a very short span of Nestlé MilkPak can capitalize on it in all ways. Marketing is aligned with the strategies of Nestlé MilkPak. 75 All brands acknowledge that the intention behind their huge marketing investments specifically in terms of TVCs is to attract new customers, retain existing customers and make competitors customers switch to their Brand. Customer churn is acknowledged by all the brands to be a common problem threatening each of them and TVCs is being used as a major tool/medium to overcome this problem. 76 CHAPTER 6: RECOMMENDATIONS Nestlé MilkPak is a success story in Pakistani market. It has maximum market share. There is not a lot to recommend to a brand name as strong we found as Nestlé. out during Few of the and recommendations that surveys research are as follows: o As we have analyzed Nestlé MilkPak has 360 degrees promotions and involves in various ATL and BTL activities. The ATL activities comprising of broadcast media are not very aggressive. Nestlé MilkPak has made only few TVCs and special occasion advertisement is missing specially when other brands like Olpers and Haleeb o Nestlé vibrant o Branding is Link need and and to themselves improve its with local occasions related attract of to new the will buyer. to aggressively. strategies advertisement because the market is very dynamic and interactive packaging as a advertisements is a by a lot customers and retain the old ones reflection the on of production and the marketing process. A package that perceived firms attractive favorable pay people the undoubtedly Although have impact already attention branding and packaging and use it to their benefit, there might still be room for innovation and research in this field especially since, in our time marketing is very important. Due 77 to excess availability of different and innovative things, good marketing is required in order to get what any user wants. o Nestlé should engage in more guerilla marketing techniques to attract more customers and retain the existing customers. o Nestlé must have to promote its Everyday; liquid tea whitener brand. o Nestlés only flavored milk brand is Milo, it had to come up with new flavored milk brands as demand for such milk is rising in new generation, there are already brands available by Olpers , and Shakarganj group etc. o Further marketing campaigns on TVCs should be adopted by Nestlé to compete with Olpers, what we have observed is that the intense marketing of Olpers had made it a strong brand in a short span of time. o Nestlé MilkPak should have to make its distribution channel strong, in order to get maximum shelve space at stores, so people would have no choices for other brands. What we have observed that in a shop if Nestlé milk is not available people buy other brands like Olpers and Haleeb. o The producing which age, firm should differentiate between can be separated into groups on the the many needs, desires and perceptions of the various consumer groups, basis of gender, personality, income and other demographic variables. Thus, the firm can focus on the target market that is relevant for its product, and make sub the brand and package suitably. milk Different can be other brands and flavored segment targeted as it is an untapped market till now. 78 CHAPTER 7: ACTION PLAN To implement the recommendations made to produce effective results following is the plan of action: o Nestlé special MilkPak need to make few of new TVCs and occasion advertisements as they are missing especially when other brands like Olpers and Haleeb Link themselves with local occasions aggressively. o Nestlé can to do activity in schools for young children about the Nestlé milks telling them about its Nido brand and the importance of calcium to the growth and nutrition of these children. o Another important area for Nestlé is that its brand Nido’s subdivision like nido 1 +, and nido 3, this market is untapped, Nestlé can reposition itself in these sub brands as medicated toddlers Milks and do activity to tell mothers the importance of such milk. As it has good market potential. o Nestlé can do marketing activities like what Olpers had done in milk Ramadan, and it distributed as Aftari, yet the it Roh-Azfza a good flavored dates was marketing activity at the same time corporate social responsibility. maketing These smaller are also powerful with guerilla Nestlé techniques aligned MilkPak’s strategy. 79 o The market of tea whitener is already developed by Tarang and Tea Max, Nestlé can capture the market using its strong brand name and marketing as the tea whitener market of has is already developed at the expense Tarang and Tea Max. The events of valentine day, strong association with the love and Mothers day etc. approaches, Nestlé’s brand Everyday relationships, Nestlé can capitalize on this event to capture the market for its Everyday brand. 80 BIBLIOGRAPHY FGriffiths, R. (1997). What Emotions Really Are. The University of Chicago Press. Gupta, V. Nestlé's Brand Management Strategies. About Us. Retrieved November 20, 2009, from http://www.Nestlé.pk/brands/Nestlémilkpack.aspx About Us. Retrieved 2009, from Oppapers: http://www.oppapers.com Development Policy Institute Islamabad. (2008). Report of Sustainable Development Policy Institute Islamabad, Pakistan. Islamabad: SDPI. "AIDA” of marketing. (2009, June 16). Retrieved August 26, 2009, from www.barrypopik.com... Attention-Interest-Desire-Action): http://www.barrypopik.com/index.php/new_york_city/entry/attention_interest_desire_act ion_aida_of_marketing/ About Us. (2009, November 11). About Us: Nestlé Pakistan. Retrieved November 11, 2009, from Nestlé Pakistan: http://www.Nestlé.pk/brands/Nestlé-milkpack.aspx About Us. (2009, November 28). Nestlé. Retrieved November 28, 2009, from Nestlé Pakistan: http://www.Nestlé.pk About Us. (2009, December 20). Nestlé. Retrieved December 20, 2009, from Nestlé: http://www.Nestlé.com Dairy Industry in Pakistan (2007). Daniel L.Schacter (2001). The Seven Sins of memory. 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Do you recall the ad of Nestlé when you see Nestlé milk at the store? A: Yes B: No 85 10. What you prefer while buying packaged milk? A: Purity, Quality B: Price C: Convenience D: Availability 11. If Nestlé milk isn’t available at shop/ out of stock you ask the shopkeeper about its reason or switch to other available brand of milk? A: Yes B: No 12. Do you have strong recognition of Nestlé milk, like you remember the colors (white & green) at billboard that’s not visible to you clearly you recognize its Nestlé? A:Yes B:No C:Don’t Know 13. Nestlé has been changing its packing with the events like Independence day pack with Pak flag and Ramadan packs, have you seen such packs on the shelves 86 of shops as it is for a limited time offer with high turnover of milk.? A: Yes B: No 14. How you perceive brand image from the Television advertising for each company? Perceived Advertising Image Nestlé Olpers Goodmilk Haleeb Traditional Modern Serious Image Fits my Life Style Quality service Economical Service Trustworthy Wide Range of products Innovative Rate from 1 to 5. 5 being highest and 1 being lowest Nurpur 87