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BCG Matrix of Engro foods

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Final Project

                                       On

                          “Principals of Marketing”
            ...
Table of contents


Acknowledgements              ……………………………………          4
Introduction                  ……………………………………  ...
BCG Matrix        ……………………………………   26
Interviews Questions   ……………………………………   29
Conclusion             ……………………………………   3...
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BCG Matrix of Engro foods

  1. 1. Final Project On “Principals of Marketing” On the topic “Marketing Analysis of ENGRO Foods” Presented To: “Sir UMER SAUD” Presented By: Mutahir Bilal MCE 12147 Salman Anjum MCE 12155 Mubeen Abdur Rehman MCE 12151 Zuhaib Ahman MCE 12152 Class M.Com Semester 2st Evening Superior University Lahore. 1
  2. 2. Table of contents Acknowledgements …………………………………… 4 Introduction …………………………………… 4 History …………………………………… 5 Vision …………………………………… 5 Mission …………………………………… 6 Core Values …………………………………… 6 Diversified Portfolio of Engro Pakistan ……………. ………. 6 Our Brands …………………………………… 8 Business Segments Being Targeted…………………… ………. 11 Sales Setup of the Company ………………………….......... 12 Departments …………………………………… 12 Production Process …………………………………… 14 Sales …………………………………… 16 Market Analysis …………………………………… 16 Segmentation …………………………………… 16 Silent Feature of SBU’s …………………………………… 19 SWOT Analysis …………………………………… 21 Market Share …………………………………… 24 Profit of Various SBU’s …………………………………… 24 Competitive profile matrix……………………………….. 25 Strategy adopted for Market growth……………….. 25 2
  3. 3. BCG Matrix …………………………………… 26 Interviews Questions …………………………………… 29 Conclusion …………………………………… 31 References …………………………………… 31 3
  4. 4. Acknowledgements: Firstly we would thank Allah for giving us the opportunity and the resources to be able to do something productive with our lives. Without His blessings we would not have been able to come as far as we have. Then our sincere thanks to Mr. Haroon Hafeez for helping us throughout this report. His guidelines have been very useful for us in preparing this report. He helped us find new ways of being innovative and creative. This report would not have been possible without his cooperation and continuous direction. We would also like to thank Mr. Farrukh, Regional Sales Officer at ENGRO Foods who spare sometime for us so that we could conduct the interviews with him. It is true that this response in the interview have been very helpful. Last but not the least we would like to thank our families for their incessant support and approval. Engro Food Limited: Engro Foods Limited was officially launched as a fully owned subsidiary of Engro in 2004. Using dairy as a stepping stone to enter into the food business, the Company has established state-of-the-art processing units in Sukkur and Sahiwal, along with an ice cream production facility in Sahiwal. Top quality brands like Olper’s, Olwell, Tarang, Omore and Owsum have been successfully launched under the helm of Company’s dairy products. To support these brands and their highest standards of quality, Engro Foods has invested heavily in milk processing and milk collection infrastructure. Engro Foods now plans to venture beyond the dairy sector. In this pursuit, grain and fruit markets have been analyzed in great detail. Engro has launched its new brand in fruit juices called as Olfrute. Engro Foods’ vision is “Elevating Consumer Delight 4
  5. 5. Worldwide” and the Company aims to generate a significant portion of its revenue from foreign operations. EngroFoods’History: Engro Foods (Pvt.) Limited (EFL) has been established in 2005 as part of a diversification process at the Engro Group. The plant located at Sukkur on 23 acre land, has the raw milk reception capability of 300,000 liters per day and UHT milk capacity of 200,000liters per day. The plant has been established at a cost of Rs. 1 billion which provides direct employment to 750 people.Engro Foods has entered the Food business through milk processing and sale with the company’s vision to pursue growth opportunities based on country fundamentals and own strength. It also positions the company to leverage its corporate social responsibility initiatives and work closely with rural communities to promote integrated farming and livestock development. This effort is expected to play pivotal role in poverty alleviation and improving livelihoods of the poor in the milk collection areas. Engro Foods will work with the Pakistan Poverty Alleviation Fund and its three partner organizations to help implement sustainable business models that increase farmer’s profitability and develop a positive social and business climate for growth and expansion of livestock and other forms of value added agriculture. Vision: "Our vision is to become a fast expanding mega foods company. To achieve our vision, the company will initially focus on dairy by investing a substantial amount in plant, milk collection capability and marketing. We are making concrete efforts to expand in and beyond Pakistan; through strategic international alliances, to eventually become global." 5
  6. 6. MISSION STATEMENT: (Our mission is twofold) “To help farmers maximize their farm produce by providing quality plant nutrients and technical services upon which they can depend. To create wealth by building new businesses based on company and country strengths in Petrochemicals, Information Technology, Infrastructure and other Agricultural sectors. In pursuing the mission we shall at all time be guided in our conduct and decision making by our Core Values.” Core Values: o Leadership o Innovation o Diversity and International focus o Quality and continuous Improvement o Candid and open communications o Individual growth and development o Enthusiastic pursuit of profit o Ethics and integrity o Safety, Health and Environment Diversified Portfolio of Engro Pakistan: Our diversified businesses represent our immense growth potential to generate opportunities for creating growth potential to generate opportunities for creating and sustaining value for our stakeholders. Engro Fertilizers Limited: Agriculture accounts for 25%of GDPand45% of employment in Pakistan Second largest Urea producer of Pakistan. Capacity975 KT/A) -Market share20% Second highest phosphates sales (~400KT/A)- MarketShare23% ECPL’s Margins areby far the best in the industry. Zarkhez( NPK) Market leader -Capacity160 KT/A -MarketShare95% Urea shortage ex pected to grow to1.2million tons/annumby2010. World’s largest single-train Urea plant of 1.3million tons being setup at a cost of US$ 950 million. On commencement of operations in mid2010, cash fixed costs of the new plant will be a third of the existing plant; scale& brown field synergies Gas consumption at the new 6
  7. 7. plant willbe15%less than the existing plant. Engro’s Daharki complex will become the world’s fifth largest Urea production site; 2.28million tons, 3 plants. Engro Foods Limited: Established in2005, a 100%owned subsidiary First investment of dairy plant Processed milk market is growing at approx. 20% per annum Olpers achieved peak market shares of 12.3%within6months of launch Other products launched-Olpers Cream, Olwell High Calcium Low Fat Milk (Premium Brand) Plans to expand product portfolio Milk processing capacity to increaseby200%to200million liters annually Will become the only company in Pakistan covering the entire milk catchments area Already has the second largest chilled milk collection system in the country Distribution network to double from 58 towns to119 towns by the end of 2007 JV with global food major in advanced stage of negotiation. Engro Polymer & Chemicals Limited: Established in 1999 80-20 JV with Mitsubishi Corp. Pakistan’s only PVC manufacturing plant; facing buoyant domestic demand since 2006. Successfully placed 22% of sales in diverse export markets from Australia to East Africa in prior years(2004 -2005) Expansion and back integration underway-imported ethylene + new caustic soda plant ;EDC/VCM/PVC. Engro Energy Limited: Established in2006-100% owned subsidiary Pakistan is facing growing energy deficit Energy consumption has been growing at 7% per annum Setting up 220 MW gas based power plant at a cost of $220 million with commercial operation in 2009 Short-listed along with 3 other companies for privatization of Jamshoro Power Company. Engro Innovative Automation Limited: Acquired majority stake(51%)in a knowledge based company Innovative Engineering & Automation Ltd in 2003 Market Leader in domestic Industrial Automation Honeywell distributor in Pakistan Expanding internationally to synergize, and benefit from lower costs at home and higher demand a broad Now operating in Dubai, UAE which contributes 25% of revenue and half of 7
  8. 8. the profit Company’s first IP product ‘iboiler´ launched internationally in 2006 Acquired an automation company in the USin Dec. 2006; mandated to develop outsourcing opportunities. Engro Vopak Terminal Limited: A50-50 JV with Royal Vopak of Holland; established 1997 Royal Vopak is the world’s largest independent tank terminal operator Engro Vopak handles 70% of liquid chemical imports in Pakistan. Setting up our country’s first Cryogenic facility for ethylene imports Well positioned for setting up proposed LNG terminal under active consideration of the government; Cost US $350 -400 million. Engro Asahi Polymer &Chemicals. Limited: Established in 1999. 80-20 JV with Mitsubishi Corp. Pakistan’s only PVC manufacturing plant; facing buoyant domestic demand since 2006 Successfully placed22%of sales in diverse export markets from Australia to East Africa in prior years(2004 -2005) Expansion and back integration underway-imported ethylene-new caustic soda plant; EDC/VCM/PVC OUR BRNADS: Sheer indulgence in every sip comes only with the rich creamy thickness of Olper's. Give your day a fresh start with Olper's! Embrace the lighter side of milk and feel years lighter with our low-fat milk Olper's lite, for a guilt-free existence! 8
  9. 9. Savor the flavor of tradition and enjoy the rich, aromatic flavors of badam, zafran and rose in every sip of milk with Olpers' flavored milk! Enhance the culinary experience with Olper's Cream - a rich celebration of life at its creamy best Experience sheer bliss in a tea-cup with Tarang, our special tea creamer for that perfect cup of tea. Get nutrition and the best value for money with omung dobala. 9
  10. 10. Enjoy our heavenly nectars extracted from pure fruits to revitalize you with a much-needed boost, anytime anywhere. Only with Olfrute. Rise up to a better life with our all purpose dairy brand Omung available at the ultimate price and in the best quality A dash of Tarrka in your favorite cuisine is all it takes to bring out the flavor of your food and leave you craving for more. With its rich, creamy taste, high nutrition content and wide-range of chunky flavors, get more from your ice-cream with Omore! Enjoy home-made Lassi in the convenience of a Tetra Pak. Refresh your day with our two delicious flavors. 10
  11. 11. Enjoy home-made Lassi in the convenience of a Tetra Pak. Refresh your day with our two delicious flavors. BUSINESS SEGMENTS BEING TARGETED: Business Segments. Export Trade Services Trade: He has also been involved in international trade for the last six years, focused mainly on driving profits through trading positions. 11
  12. 12. Food service: Engro Foods Limited is also engaged in the food services by supplying to PIA,RAILWAYS & ALLTHE MAJOR RESTURANTRS. Company is already supplying to the hotels; PSL was in contract with Nestle for the year but Nestle was unable to keep up the supply in this lean period E.F.L supplied the stock to some of these hotels. E.F.L has entered into contract with PSL and it will be supplying to a chain of hotels for the next year. Exports: Engro is already considering exports to Afghanistan.  Trade sector 80 %  Others (Food service& Exports) 20% SALES SETUP OF THE COMPANY: The Company is operating 5 Regional Offices located in important cities of the Pakistan to handle the domestic business. These regions are  Karachi  Multan  Lahore  Rawalpindi  Peshawar Departments: 1. Administration Efficient management of all administrative affairs of Engro Foods (Pvt.) Limited is the job of the Administration department. From legal matters to general day-to-day operations of the office, the Administration department ensures that all affairs run smoothly. 2. Finance and Accounts The Finance and Accounting departments at Engro Foods are responsible for the total financial management of the different businesses of the company. From the usual accounting statements and sheets to risk and portfolio management, the team ensures that every rupee coming into and out of the Companies' pockets is properly documented and audited. 12
  13. 13. 3. Human Resource The Human Resource department at Engro Foods (Pvt.) limited spearheads there recruitment process to ensure that the finest human resource is taken on board at Engro Foods. Resumes of candidates are carefully filed and documented for current or future reference. The department, besides carrying out succession planning, maintains and implements HR policies pertaining to employment, retention and superannuation. Assessing training needs of employees and ensuring adequate training is also carried out by the professional HR team at Engro Foods. 4. Marketing Consisting of leading marketing professionals of the industry, who are graduates of top business schools of Pakistan, the Marketing Department ensures that from product need identification to product development, launch and post-launch, all strategic decisions are made based on authentic information and research. Identifying the target markets, effectively communicating to them and building the image of the brands as well as the Companies, is the job of the professionals running the marketing at Engro Foods. 5. Procurement As all of our food products are milk based the entire Milk Procurement department plays a critical role in defining the quality of the end product that reaches our customers. Ensuring regular collection of fresh and pure milk right from the farmer to the factory and ascertaining the freshness of milk all across the milk procurement process, is the responsibility of Milk Procurement department, consisting of food technologists working at the collection centers and veterinary doctors providing service to the farmers. 6. Management Information System: The MIS department at Engro Foods ensures that all automation is running error-free at all times. Regularly modifying and updating the Company's accounting software is also the MIS team's responsibility. 7. Production Modern technology is part and parcel of Production at Engro Foods. The state-of-the-art plant set up near Sukkhar has a processing capacity of more than 300,000 litres of milk per day, making it one of the largest in the country. Professionally qualified human resource efficiently works night and day to maintain highest hygiene standards. 13
  14. 14. 8. Quality Assurance Quality Assurance is strictly followed in Engro Foods. Qualified food technologists at this department ensure that highest quality parameters are adhered to through all steps of production and that the products reach the consumers as per promise. 9. Supply and Distribution This department ensures timely and effective distribution of the products to different shops and stores spread all across Pakistan. From transportation management to obtaining route permits and approvals, is done by this department. THE PRODUCTION PROCESS Chlling and UHT Pasteurization Pacaging Storage Treatment Chilling and Storage: The production process at Engro Foods consists of four steps. Firstly, raw milk is collected from milk collection centers by tankers and brought to plants for processing. On arrival, the milk is tested for appearance, smell and temperature, and a sample is taken for analysis in laboratories. A series of tests are carried out relating to the compositional and hygienic quality of the milk. Subject to the satisfactory completion of these tests, the milk in the tanker is then unloaded into a silo. The milk processing factories cool the raw milk at a 14
  15. 15. temperature of 5°C or less into cooling tanks prior to being passed through heat treatment facilities. The chilling process helps to curb bacterial growth in milk. Pasteurization: Next comes the pasteurization stage, which is the process of boiling the milk and then immediately cooling it to a lower temperature. The milk is pasteurized at 85˚ C, which helps to kill 98% of the germs present in the milk. Pasteurization serves as the separation point of raw milk into different products, which include Tarang, Olpers and Olwell. At this point the cream and fat are removed from the milk and other special ingredients are added along with it to the 10 Supply Chain Management at Engro Foods milk as per the requirements of each product. For example, Tarang is a high-fat tea whitener and therefore it needs more cream content and different ingredients as compared to a product like Olwell, which is low fat and requires less cream. The milk after pasteurization is then standardized as prescribed by the Pakistan Pure Food Laws at 35% Fats and 8.9% SNF (solidnon fats). UHT Treatment: The pasteurized milk is then passed through the UHT (Ultra Heat Treatment). This is the most sophisticated and advanced stage in milk processing. In this process the milk passes through 140 degree centigrade in the first 3 seconds and it is then immediately cooled to 20 degree centigrade in the next 5 seconds, which in turn kills all the bacteria. The UHT process can be achieved either through indirect or direct heating systems. In the indirect method the milk is heated by steam passing through stainless steel pipes outside milk tanks. In the direct method either the steam is directly injected into the milk or the milk is forced through a fine nozzle into a tank filled with steam. Engro Foods makes use of the direct system for the UHT process. Packaging: Following the heat treatment, the milk is cooled in a sterile vacuum chamber. After the heat treatment the milk is cooled and packed in Tetra Pak cartons as soon as possible to prevent contamination. The packaging process is also carefully monitored. The packages undergo stringent controls to check that they are sterilized. The milk is then filled into the cartons under aseptic conditions. The cartons are filled automatically and continuously under completely sterile conditions and then heat-sealed. 15
  16. 16. SALES: The sales of Engro foods’ products are divided into:  Primary Sales  Secondary Sales Primary Sales refers to the sales of the batches of products by the manufacturer to the distributors. Secondary Sales refers to the sales by the distributors to the retailers from where the goods are eventually sold to the ultimate consumer. So Engro Foods is following the traditional channel of distribution that involves some intermediaries between the transfers from producer to the consumer. Manufacturer Final Distributors Retailers (Engro Foods) Consumer Market Analysis: Segmentation: It is difficult for any one company to engage in mass production, mass distribution and mass promotion for its product. The complexities arise from the proliferation of advertising and distribution channels and the high costs associated with reaching a mass audience. Therefore, companies segment the market so that they can target the group of customers who share similar needs and wants. The milk sector shows a market that has homogeneous preferences that is the consumers have similar preferences. They want milk to be white, carefully processed, and good for health and bones. Keeping these things in mind Engro foods market has been segmented. The marketers at Engro Foods have had a number of options available to them when segmenting the market for their products. 16
  17. 17. Demographic segmentation Engro products are not bounded to any particular age, gender or lifecycle stage. The brand is meant for all the users in higher upper or middle class families. Even though the brand calls for a small percentage of an individual’s income but lower class wouldn’t want to buy the brand maybe because they are price sensitive or because they believe lose milk is better than processed milk and has all the nutrients that the processed milk lacks. However all the companies in the milk sector are trying to change the image of processed milk as non- nutritionist milk? Therefore it can be said that Olper’s has been positioned as a brand for high income earners. Due to the income factor involved it can be said that Engro foods target a specific social class who are health conscious and concerned about their weight. Psychographic segmentation On the basis of psychographics, factors such as personality traits, lifestyles and values, the marketers at Engro food’s have segmented the market more towards achievers who are goal-oriented and focused on their careers, and experiences those who are seeking variety in the milk sector. For example the ads for Olwell mostly show achievers who want to be successful, have high aims and are already doing quite well in their concerned fields. The Engro’s products have targeted experiences because the company has given them a new set of brand and so many will make their first purchase because they want to try something new. Olper’s ads also target believers, traditional conservative people with concrete beliefs. The ads for Engro’s show the beliefs of healthy life with processed milk and plays on the emotional aspect more. Behavioral segmentation Engro’s products have been segmented on the basis of benefits that consumers seek in the milk. In this case, people look for a brand that can be used for all purposes from drinking to tea whiteners as well to feed the animals. The ads also show that consumers should increase their milk consumption for example with every tea they should use Olper’s, every morning they should drink Olper’s and everyday they should feed their pets with Olper’s milk. There may be some hard core loyal in the milk sector. Loyalty maybe towards such established brands as Nestle and Haleeb. There might even be switchers and shifting loyal in the milk sectors that are either price sensitive or want variety. As a result, the marketers need to find ways to make the hard core loyal attracted to the Olper’s brand and shifting loyal and switchers to convert into hard core loyal as well. Positioning the brand Positioning involves designing the product and image that will occupy a distinctive place in the minds of the target market. As can be seen, nestle milk pak and Haleeb have the largest 17
  18. 18. profit margins and market share in the milk industry. Thus the marketers at Olper’s have decided to create its own unique image and then strengthen the position in the customers’ minds. They have done this by taking a number of following steps: 1. Packaging of Olper’s milk and Olwell in red color and Olper’s cream packed in purple color are quite different and distinctive from the typical green and blue packing used by other competitors. 2. The brand has been positioned as an all purpose milk that is meant for everyone, especially for those who live life to the fullest, hence its tag line, “jo dil khol kay jeetay hain unheen kay liyay hai Olper’s”. Engro food’s always tries to create customer intimacy that is it focuses on satisfying the customers’ unmet needs. Processed milk is seen as less lacking all the nutrition’s that is part of milk due to passing through so many processes. But Engro food’s positions itself as milk that has not lost its nutrients. The unique selling proposition for Engro food’s is Subah Bakhair Zindagi , but recently the company changed the USP to: Jo dil khol kay jeetay hain unheen kay liyay hai Olper’s. Both the tag lines have a very positive impact on Olper’s image because of the emotions involved in both the lines. The marketers have used different positioning for Olper’s products: o They have used the attribute positioning for Olper’s milk. The main theme of the product is that it is meant for all purposes without any user imagery. Olper’s ads also show attributes of milk such as good for health. o They used the benefit positioning for Olwell. The product is positioned as delivering the benefit of helping to reduce weight and for healthy bones. o Olper’s cream is positioned as good for a specific use or application. In this case the cream can be used to make cake icings and desserts look great. It can be said that all the different stages have been performed by the marketers with extreme care and research. 18
  19. 19. Salient Features USP's of SBU Marketing mix includes Product Price Place Promotion  Product  Price  Place  Promotion Product Product Variety: A wide range of dairy ice creams and frozen desserts Quality: Premium ice cream rich in calcium which is fresh every time Design: Includes ice pop, choc bar, dairy ice cream and pop sickle. Features: Made from fresh milk and cream and high in nutrition Product Name: Frooze ice pops, Olper Milk, Olwell, Omng Lussi, Dairy Omng, Olfrute, Nutty/ Caramel Cones, Strawberry/Mango/Vanilla Affair, Kulfi, Lick a Flavor, Frooze Cups. Packaging: High quality and eye catching packaging. Packaging color ranges from red, blue, yellow, orange and green. Packaging is colorful in order to attract children. Sizes: Sizes include 1ltr and half liter for dairy Milk. Choc bars & soft serve ice cream are of different sizes. 19
  20. 20. Service: Satisfying the dessert needs of the population in the best possible manner and delivering quality every time to the consumer Warranty: None what so ever. Returns: Only in the case when product is expired. Price List Price: Price varies for different ice creams. Depending upon Cups Rs 20 Soft serve ice cream Rs 10-50 1Ltr ice cream Tub Rs 150 2ltr ice cream Tub Rs 275 Cones Rs 30 Ice Pop: Rs 10 Olper per Ltr Rs105 Trang Tea Whitener(200m.l) R.s18 Olwell Cream 200 m.l R.s80 The price of its competitor (Walls) is more or less the same and price of liter ice creams is less than Walls which is a great strategy Omore offers a 16% margin to retail traders and shop keepers which are slightly lower than Walls, who offer a margin of 20% to shop keepers. They are new in the market and do not have the same relationship with retailers as Walls. Place: Channels: Sells directly to the end user through retailers and shopkeepers. This is the trend in Pakistan followed by many FMCGs. Coverage: Engro Products for the time being is only available in limited areas on Punjab and available throughout Pakistan. The company started off its operation in Punjab because it has the largest province population wise. Transport: Engro products are transported to retailers and shop keepers through private transportation firms e.g. Abu Dawood Logistics and also through a few trucks owned by the company. This is done in order to remove transportation and vehicle costs Locations: Available at large/medium sized and small bakeries, grocery stores and pharmacies in Pakitan - Sell their products directly to consumers using cycles and their own personnel. This strategy has been in practice for many years and is being used by Walls and Hico too. 20
  21. 21. Promotion: Advertising: Vehicle Advertising, Outdoor billboards, Point of Sale Displays and Ads on televisions. Advertisements are mostly colorful reminiscent to their ice cream packaging. When Engro foods was initially launched they adopted a rather unique way of advertising. Flyers were thrown in different housing communities using airplanes. Message: Linked Engro foods with joy and happiness so their tagline/slogan is Art of Happiness´. Linked with consumers and got reviews of different products using various mediums social communities e.g. Facebook and Orkut linked their ice cream with other brand names like Olpers and Olwell. This promoted their other brands as well which are also relatively new in the market. SWOT Analysis Strenghts Weaknesses Opportunities Threats 21
  22. 22. Strengths  Personal relations with farmers ENGRO has been interacting with the farmers for fertilizers and has gained quite a good reputation over the years. It has led to a strong bond and long term relationship with the farmers who are willing to supply milk to the company. This is an added advantage and strength for the company because it will never be short of milk production. The farmers also won’t have to look elsewhere to sell their milk.  Positive response from customers in first year, EFL crossed 1.4 billion sales figure which shows customers’ satisfaction upon EFL’s products.  Its taste, quality proposition and world-class quality proposition system.  Third-Generation Plant EFL only, has the third-generation UHT milk plant in the country. EFL plant is the only plant in Pakistan that uses Bactofuge technology to virtually eliminate bacteria and ensure premium quality and hygiene. Moreover, it is also setting up another milk processing plant in Central Punjab (Sahiwal) with an investment of Rs. 2 billion (US $ 33million). Weaknesses  Olwell TVC Olwell ad which is based on Western life style, ENGRO foods brand management showed a man who put off his clothes & remain just in his undergarments, or half nude lady in a cat walk or men admiring the figures of a lady in mix gender health club.  Owning Red Color The Company has not owned the color red like Nestle has a green Milkpak; Haleeb has a blue carton etc.  Low Quality Milk EFL is not having its own dairy farms; it largely collects loose milk from farmers & galas through its 40 milk collection centers.  Packaging EFL is dependent upon Tetra Pak for the packaging of its entire dairy products. Tetra Pakis the only option available to Olper’s for packaging because it is having monopoly in the packaging sector in Pakistan.  Milk collection & distribution costs EFL’s34 out of 40 milk-collection centers are located in Punjab, whereas its only milk processing facility is situated near Sukkhur (Sindh).  Narrow brand portfolio It has been more than a year now, when EFL launched its first dairy product, Olper’s Milk on March20, 2006. But EFL’s brand portfolio still consists of just 3 products i.e. Olper’s Milk, Olwell Milk and Olper’s Cream. Whereas its competitors like Nestle and Haleeb Foods have a much diversified line of dairy products. 22
  23. 23. Opportunities  Increased funding by Government Government has decided to increase farmers’ funding. This is an opportunity for ENGRO foods because previously due to weather conditions and other reasons there was lots of wastage of milk but now that can be reduced as farmers will be better able to store milk for longer time periods.  Increased consumption of PLM Competition may create opportunities for the company because each competitor in the milk industry wants to increase penetration of processed liquid milk and so they will create awareness for consumers through different advertising media.  Awareness Growing dissatisfaction with loose milk and increasing awareness about health and hygiene issues have led to increased processed milk consumption.  Third largest producer of milk Pakistan is the Third largest producer of milk in the world with a total production of 32billion liter of milk a year, whose value is more than that of the combined value of wheat and cotton, from a total herd size of 50 million milk animals (buffaloes and cows). Livestock accounts for 46.8 percent of agricultural value added and about 10.8percent of the GDP. Threats  Competition may pose a threat because the company will have to maintain its leadership in an expanding market so that it doesn’t lose its market share to its competitors. For Olper’s it might be difficult to penetrate in a market where the loyalties exist for such brands as Nestle and Haleeb.  Perceptions and Price Differentials Consumers’ perceptions and price differentials can cause a threat for the company. It is important that Olper’s comes up to the expectations of the customers and fulfills its conformance quality that is the company meets its promised specifications. Consumer’s preferences change with time and prices might create certain barriers inters of the profit margins for Olper’s. 23
  24. 24. Market share of Engro Foods: Sales Nestle Engro Halleb Uniliver Nestle 35% Engro 27% Halleb 17% Uniliver 21% Profit of varies SBU’s of ENGRO Foods Division Revenues Profit Percent Market Growth Rate (million Pkr) (million Pkr) Value Persenge Olper’s 4500 2000 60 +4 Olfrute 2550 1500 25 +2 Tarang 3200 1305 35 +8 Omore 759 200 12 +5 24
  25. 25. Dairy Omang 654 178 10 +1 COMPETITIVE PROFILE MATRIX (CPM): Critical Success Factors Weight Rating Score Rating Score Rating Score Research & Development 0.08 3 0.24 3 0.24 4 0.322 Financial Position 0.09 3 0.27 3 0.27 3 0.274 MarketShare 0.07 2 0.14 4 0.28 3 0.215 ProductQuality 0.08 3 0.24 3 0.24 3 0.246 PriceCompetitiveness 0.11 3 0.33 3 0.24 2 0.227 Management 0.10 3 0.30 4 0.40 3 0.308 Glo balEx pansion 0.08 3 0.24 4 0.32 3 0.249 Customer service 0.06 3 0.18 3 0.18 2 0.1210 Sales & Distribution Network 0.09 3 0.27 4 0.36 3 0.2711 ProductionCapacity 0.07 2 0.14 3 0.21 4 0.2812 Alliances 0.08 3 0.24 4 0.32 3 0.24 Total 1.0 2.76 3.51 2.98 Strategy adopted for Market growth Engro Foods are using different strategies at the same time to gain market share and to create sound image of the products and company in the minds of the customers. The company adopting flowing strategies. Market Penetration (Olper and Omore) Product Development (Omang Lassi and Olfrute) Market Development ( Targeting almost all regions in Pakistan) 25
  26. 26. Boston Consultant Matrix Model BCG model relates to marketing. The BCG model is a well-known portfolio management tool used in order to analyze and position the product by keeping in view the market share as well as the market growth rate of the product. BCG matrix is often used to prioritize which products within company product mix get more funding and attention. The BCG model is based on classification of products (and implicitly also company business units) into four categories based on combinations of market growth and market share relative to the largest competitor. In order to elaborate the BCG matrix, I have chose Engro foods limited. Though Engro has a number of other business in which it involve but in this report I have focused only in one business unit of Engro which is Engro foods limited. Engro foods have launched six major brands since 2004, year of establishment of Engro foods. In these six major brands five are dairy products. In year 2010, Engro has launched olfrute which is a fresh juice product by this particular company. In this report, I have categorized all the six major brands of Engro foods in to four categories of BCG matrix. The decision of this categorization has been made on the basis of two major things that are market share and the growth in the market. 26
  27. 27. Stars In the BCG matrix, I have placed two products in the star categories that are Omore and Tarang as the growth rate of these two products are quite high as you can see in the table- 1.Beside this the market share is also increasing. As both of the products are relatively new in the market as compared to its competitors and the market share is not so well but still in this shortage period this growth rate and the market share is incredible. There is a lot of potential in both of these products and company can increase its market share by massively investing in these two products. Investing Strategy must be used in order to constant the growth, the company must constantly invest in order to grow the current level of market share. Growth Rate +5% (Olper), +8% (Trang) Ice Cram Market Share Tea Whitener Market Share Omore 38% Trang 51% Walls 45% Every Day 27% Yummy 17% Tea Max 22% Cash Cows Olper is one of the well renowned brands by Engro foods and this has lead to a drastic change in the diary industry of Pakistan. Before olper, haleeb and milk pack had the monopoly in the tetra pack diary industry but after the olper success a lot of other brands like good milk, nurpur etc got enter into the market. Now the market of the olper has a relatively high market share and the third largest milk producer in Pakistan. Olper milk and cream come under the same umbrella of brand nameolper. Harvesting Strategy should use and Engro should milk its cow for the Omore and Tarang in order to increase their current market share. Growth Rate +4 Milk Market Share Cream Market Share Opler 21% Olper Cream 28% Milk Pak 45% Nestle Cream 52% Haleeb 34% Haleeb Cream 20% 27
  28. 28. Question Marks At the end of year 2010, Engro food has launched its first juice brand name Olfrute. Olfrute has relatively low market share but the growth potential is quite high. Olfrute is facing a tough competitor with a strong brand name of Nestle. The initial promotion and the sales figures depict that it can be a successful product but still the results of this brand has yet to come. In this particular period Engro food has also launched flavored milk with brand name owsum. Though the experiences of haleeb in the case of candia was bitter, now just see what Engro will do in order to make this brand a success. Growth Rate +2 Juices Market Share Nestle 49% Olfrute 13% Country 25% Halleb 13% Dog Engro has lauched a brand with the name Olwell with high calcium and low fat. This has get a great failure and the market share of Olwell as compared to nesvita is quite low beside this its sales are started decreasing as compared to the previous year figures. Divesting Strategy can be used as from the past two years the market share has been started losing and also the there is slow market growth for this product. Growth Rate +1 Milk Market Share Dairy Omang 10% Milk Pak 45% Dairy Queen 38% Halla 7% 28
  29. 29. MAJOR COMPETITORS: Engro Foods Limited is fully aware of its competitors. The company had to consider the areas including (product design, segmentation, target market, advertising, time to launch a new product, time for necessary changes & constant over view). The major competitors in case of offering the UHT milk are o Nestle o HFL o Millac o Halla o Prime o Nurpur o Nirala o Dairy Crest Other than the brand mentioned above Olper’s also faces an indirect competition fromthe local milkman the GAWALA. INTERVIEW QUESTIONS DUEING OUR VISIT TO MANAGEMNT OF ENGRO FOODS. Question No. 1 In last 2 years how many products your organization has launched? Answer: Lasttwo years alfruit, owsum, omore, tarang and some other products are lunched. Question No.2 What are the number of products you launched since your entrance in market? Answer: Olpers (cream and milk ) tarang (liquid, cream and powder)owsum alfruit, tarqa aslighee, omore,alwell (for diet),different kinds of clorious product(milk) are major products launched by us. Question No. 3 What is your core competitive advantage over your competitor? Answer: Aggressive style of business launching more products in short time. Question No. 4 What is the % discount rates you give to your supplier, retailer and wholesaler? 29
  30. 30. Answer: The discount rate for retailer and wholesaler is according to market. And if target achieved extra benefit will be given to them. Question No. 5 What is the core strategy behind the advertising of your products? Answer: To target the audience e.g Owsum for children, Olpers for all purpose, Tarang for Sweetlovers like Punjabi’s. Question No. 6 How vast are your distribution channels in Pakistan? Answer: Over 500 + distribution channels covering all over Pakistan. Question No. 7 Does you have your own transportation to take product to outlets or you outsourced the transportation system? Answer: Not exactly but we are using outsourced transportation for to carry our products. Question No. 8 What are your different marketing strategies for the promotion of product? o Targeting audience o Nominal price o Good discount to distributor when they achieve the target Question No. 9 How you make profitable relationship with customer? Answer: We visit city school and Beconhouse for profitable relationship programs of Olpers and Tarang house full programs are organized all over Pakistan to attract the house wife to use our product Question No. 10 What are your target markets? Answer: Pakistan, Afghanistan and Oman (and for all ages) Teenagers, children and old persons as well. Question No. 11 Are there any customer relation centres for complaints? Answer: No customer complaint centre but we have taken feedback through distributors. Retailers and local shopkeepers and then try to solve them and make product as good as possible. 30
  31. 31. CONCLUSIONS: ENGRO FOODS LIMITED is the subsidiary of ENGRO group. Their brands are one of the top brands in Pakistan in the milk sector. Their products OLPERSMILK ,OLPERS CREAM,AWSUM FRUIT MILK ,TARANG TEA and OMORE ICE CREAM purchased heavily by customers. This is due to marketing Strategies, Promotion, price and quality of their products. Above mentioned are the Marketing Strategies of their products due to which there Revenues increases day by day. They provide the customers what they want; their distribution channels are vast and their prices are nominal. These are Reasons for the success of their brands. References: Area Sales Manager ZAREEF AGHA http://www.engrofoods.com 31

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