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TABLE OF CONTENTS PAGE

NUMBER

Letter of Transmittal…………………...…………………….…...2
Letter of Acknowledgement………...……………………………3
KOLSON history and background...…………..…………………4.
Organizational structure………...…….....………………………...6
Mission statement……………………...…………………………7
Company objectives……………………...……………………….7
Organaizational culture....................................................................7
Product line and categories.........................……………………….8
Total Organized Biscuits Industry………………...……………...9
Marketing segmentation...............……………….………………10
*Target Marketing............………………………...…...11
* Positioning.......………………………………….…...11
* Brand Positioning……...…………………………….11
* Brand Personality……….……………...……………11
* Market size…………………………..……………….11
Market Share………..………………………..…………………12
Marketing Mix……….………………………………………….13
Products………………………………………………………....15
Critical analysis…………..……………………………………..21
Marketing strategy…………….………………………………...23
Distribution outlet……………….……………………………....24
Advertising……..……………………………………………..…25

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Sales promotion.…………………………………………………………………26
Market research….…………………………………………………………….…26
Marketing Objectives…………………………………………………………...27
Macro environment………………………………………………………………27
…………………………………………………………………….28
Financial Analysis………….…………………………………………………….29
……………………………………………………………………..30
……………………………………………………………………...31
………………………………………………………………………32

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Letter of Transmittal

To: Ms. Basma Ali


From: Saad Ali khan
Date: April.19. 2009

INFORMATIVE REPORT ON ‘KOLSON (BISCUITS)'


We were authorized to submit an informative report on one of the Pioneer food
manufacturing and processing industries in Pakistan 'Kolson' on April 19. 2009.
We here by submit the report.

We carried out preliminary research by interviewing Mr.Miraj Hussain ABM of


Kolson's biscuits cookies and cereals products and some research was carried
out through questionnaires. This research gave us an over view of Kolson's
organizational culture, level of market penetration, its responsibilities,
commitments and its position among competitors.

We enjoyed working on this report as a team. It gave us an exposure to the


market and the organization.

Thanking you.

Sincerely,
Saad Ali Khan ………………….

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LETTERS OF ACKNOWLEGMENT

FIRST WE WOULD LIKE TO ACKNOWLEDGE THE SERVICES AND

FACILITATION OF MR.MIRAJ HUSSAIN, BRAND MANAGER KOLSON

COOKIES, CEREALS AND BISCUITS AT FED GLOBE INTERNATIONAL. WE

HAD INTERVIEWED HIM FORM THE SAKE OF THE PROJECT AND IT WAS

NICE OF HIM TO TAKE OUT TIME FOR US FROM HIS BUSY SCHEDULE. HE

BRIEFED US UPON DIFFERENT MARKETING STRATEGIES KOLSON IS

PURSUING ABOUT ITS PRODUCTS, AND ABOUT KOLSON'S FUTURE

PLANS.

WE ALSO THANK OUR COURSE INSTRUCTOR, Ms. BASMA ALI FOR HER

GUIDANCE AND INSTRUCTION, WHICH ACTUALLY MADE THIS REPORT

POSSIBLE. WITHOUT HER HELP, WE WOULD NOT HAVE BEEN ABLE TO

COMPLETE THIS ACADEMIC WORK.

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KOLSON HISTORY AND BACKGROUND

Ever since its inception in 1942, as on today, Kolson enjoys the distinction of
being one of the Pioneer food manufacturing and processing industries in
Pakistan. The name of Kolson is synonymous with dynamic an innovative food
products.

The Philosophy of the company is based on self-commitments to offer


consumers greater choice of exclusive quality products. In doing so, the
company has, in true since, evolved its own marketing style to establish a more
effective relationship with consumers.

Being a food manufacturing the Kolson understands the responsibility to provide


consumer high quality products and selection of best ingredients that add to the
nutritional value of our product.

Kolson brands appeal to an extraordinarily diverse array of consumer. The


consumer segment starts from as young as one year old who starts developing a
taste for snacks and goes all the way up to older age people who consume pasta
and breakfast cereals as part of their healthy diet. In consumer promotions,
designed to enhance the Kolson image, they therefore, try to satisfy the growing
needs of all our target segments.

Kolson is proud to be the pioneer in Pasta production in Pakistan. More the 50


years back nobody could think of Pasta as forming a food habit being a new food
concept for populace of Pakistan. At present company is market leader in Pasta
products such as Spaghetti, macaroni, Lasagne, Noodles and Vermicelli.

Kolson also has a leading edge in manufacturing breakfast cereals that are
innovative and extremely popular among the consumers of all ages.

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As company hierarchy enters to the third generation, it befittingly coincides with
yet another stunning product, an innovative range of high-class Biscuits. Jam
Hearts, Cream Hearts, Katch and Bravo, being sandwich, crackers and
traditional bakery biscuits respectively that are already fetching consumers'
recognition and appreciation because of its unique and smacking flavor and
texture.

The whole range of Kolson products is made by using latest German, Dutch,
Swiss and Italian etc latest technology and process to back prime raw materials.
The raw materials are procured from the leading available sources in Germany,
Denmark, Belgium and Nederland etc. The high quality Pakistani wheat products,
procured from select bunch of millers, are pivotal in determining the outcome of
high quality products.

As the global economy is taking a different turn in its outlook and demand,
Pakistan can not afford to lag. Kolson is prepared to accept the challenge to be
always one-step ahead of changes in offing. This is our simple promise to our
die-hard and prospective consumers in Pakistan.

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CURRENT MARKETING SITUATION

Biscuit is popular all over Pakistan during british rule biscuit so popular in the
subcontinent that is now a common breakfast and most in the evening time with
tea coffee and all the day people like to eat and serve to there guest
commonly.most of the biscuit consumed with multinational company .
Pakistan’s biscuits industry is comprised of approximately 25 units in what is
called its organized sector, or the sector that is comprised of regular
manufacturing units that market their products under a brand name and a similar
number in the unorganized sector, or the sector that is comprised of small
bakeries that produce and market their products without a brand name.

Pakistan is one of the leading biscuit consumer in the world.biscuit is a food item
today for 128 million Pakistani .Despite 107.5% in duty sales tax and other
charges it is available to the common man at a price appreciable below any
alternative nourishment and is fast emerging as a preeminent health food.
Study on economic feasibility of biscuit in Pakistan was illustrated from the start
till to date.The flourishing of the biscuit industry in its present form,many attempts
have been made so far on Govt. level and in private sector as well from the last
50 year.The serious efforts began in the late 80’s.With the Govt. encouragement
biscuit was the replacement of the other food in the area were made accordingly
.The successful growth of wheat in the area have been ascertained.the yield
potential and quality of made biscuit have been assessed to be economically
viable.the extent of a suitable area has been identified and finally the production
package for growers has been evolved.

Currently there are some 5 major brand of biscuit available in the market.These
varieties consists the well known brand such as LU , EBM, KOLSON ,BISCONI
and MAYFAIR.

Prices of branded biscuit range from 5 Rs.to 25 Rs(ticky pack, half role and
family pack) keeping a targeted market of household this report has been
prepared. Major portion of the Karachi city able to purchase well known brand
have to go for high quality biscuit available for consumption on the local shops.

Almost 50% of the market for users of biscuit in Karachi ,is being held by EBM
through its brands namely followed by 25% market share held by LU 9% by
BISCONI and the remaining 5% by MAYFAIR.

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ORGANIZATION STRUCTURE

7-Board of Directors

8- GMS

4- GA’S

RSM

ASM

TSO

SO

SR

DR

MARKETING DEPARTMENT STRUCTURE:


General Head Marketing

Brand Manager Brand Manager Brand Manager


Mr.Zeeshan Mr.Hatim Mr.Saqibuddin
Chips Slanty,Pasta Biscuits,cookies,c
ereals

ABM ABM ABM


Miraj
Hussain

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MISSION STATEMENT

To provide a one shop to promote socially responsible life style products while
growing the global market with the conscious.

COMPANY OBJECTIVES
The fundamental objective of Kolson is maximum growth in the food industry.

A recent example of the achievement of such an objective was to extend their

brand into a completely different category in late 2004 when they diversified their

food line by entering the biscuit market.

The long-term objective pursued by the company is to be on a constant lookout

for new competitors and to make efforts to nip them in the bud, so that in the end

they do not pose as a threat to Kolson’s market share.

ORGANIZATIONAL CULTURE AT KOLSON


At kolson, we believe that responsibility and trust are inseparable. Kolson must
have trusting relationships with customers, owners, employees and society in
general. Therefore a determined effort is made to attend to the Group's
responsibilities in society in a comprehensive and innovative way.

“In my experience, there are close ties between the values you create and the
values you promote. To ensure long-term value creation, kolson’s activities
arebased on responsible and sound business practice in all partsoftheoperation."

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PRODUCT LINE AND CATEGORIES

- SLANTY - TWITCH
- TWINKLE Cheese balls - SMART CHIP
- CRINKLE PATATO - FRIEND CHIP
- PATATO CHIPS - SNACKER
- LONDON STICKS
- CHATA PATA RINGS

- KATCH
- BRAVO
- JAM HEARTS (Vanilla & strawberry)
- JAM HEARTS (Chocolate)
- CREAM HEARTS
- CREAM HEARTS (Chocolate and Vanilla)

- CHOCO WHEELZ
- FROOT WHEELS
- COCOA BEANS
- HONEY RICE CRISPIES

- MACARONI
- LASAGNE
- NOODLES
- SPAGHETTE

- VERMICELLI
OBJECTIVES - VERMICELLI
- VERMICELLI

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Total Organized Biscuits Industry
14000

12000

10000

8000

6000

4000

2000

0
2001- 2002- 2003- 2004- 2005- 2006- 2007- 2008- 2009- 2010-
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Assumptions:

1. The major growth in the industry will be brought by organized players.


2. Economical & Political conditions will remain stable.
3. Country will maintain the present & healthy growth rate.
4. Kolson will also increase its efforts for further penetration but the focus will
be more on the trade push.

KOLSON-FG

A Fabled success story of cooperation & trust.

Kolson-FG Joint operations are a unique example of CUSTOMER-VALUE


CHAIN integration, which provides for a win-win solution to all the stake holders.

Fed globe provides all the promised services & enjoys the position of a strategy
partner for Kolson in Pakistan.

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MARKETING SEGMENTAION
Kolson segmented the market according to Demographic, Geographic,
Psychographic and Behavioral.

DEMOGRAPHIC
In demographic marketing segmentation of the Kolson divide market age wise,
gender wise, according to family size, family life cycle, income, generation.

PLAN: Cookies, Bravo, Kids Mobile, Movements.


12 to 40 years.
Male and Female
Young, Adults and Teens

Cream: Jam Hearts, Cream Hearts.


1 to 28 years
Kids and Teens and some times old People

Cracker: Katch
18 to 35 years male and female both, young and adults.

GEOGRAPHIC
Kolson sell its biscuit nationally and Internationally.All the major citys of Pakistan
urban & rural areas easily available for them.

PSYCHOGRAPHIC
Kolson offer its Biscuit to lower class, middle class and working class.

BEHAVIOURAL
Kolson biscuits are in regular consuming product that’s why Kolson make it
available every where as buyers buy Kolson biscuits easily and it gives good
quality in biscuit at affordable price.

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TARGET MARKETING
Kolson target to all age of people.

POSITIONING
Kolson positioned its biscuits as a full of energy, young adults, remetiz, delicious
and innovative family and Party biscuits.

BRAND POSITIONING
Bravo when we hear the name of Bravo it indicated the full of energy and daring biscuits.
Jam Heart indicates the biscuits for Lovers and Teen agers.
Mobile name of biscuits indicates is a kid's biscuit.

BRAND PERSONALITY
Kolson has a strong brand personality that's why it supports the other categories
brand.

MARKET SIZE
Kolson biscuits are sold in all over the Pakistan nationally and now a Kolson
biscuit enters in International market like USA, Canada.

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MARKET SHARE

50% EBM
25% LU
11% Kolson
9% Bisconi
5% Mayfair

M a r k e t S h a r e s o f B is c u it C o m p a n ie s
Kolson
Biscuit
shares EBM
11% LU
K o ls o n
B is c o n i
M a y fa ir

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MARKETING MIX

PRODUCT: product is biscuit with the brand name of “JAM HEARTS”

PRICE: (All Products have Same price)


Ticky Pack: PKR 5.00
Half Roll: PKR 12.00
Family Pack: PKR 25.00

PRICING APPROACHES
Kolson use competition base prices approaches for set its price strategy. Kolson
sets its prices strategies available in the market.

PLACE
Kolson considers its distribution network to be one of its key strengths because it
is highly effective at supplying the various Kolson products at the retail outlets.
They have outsourced their marketing and distribution operations to Fed Globe
International.

Kolson biscuits& JAM HEARTS can be found at nearly all retail outlets
throughout Pakistan. They have a distribution network in all the major cities in
Pakistan.

Kolson is targeted at late teens and the youth. This is also evident from their
advertisements and television commercials. Kolson biscuits see itself competing
mainly with its closest rival Bakery and the market leader Sooper. It also sees the
non-branded egg and milk cookies as threats to its market share.prince by LU is
the biggest competitor of JAM HEARTS.

CHANNELS OF DISTRIBUTION

General Stores, Wholesale market departmental and super stores, i.e.


increased efforts to penetrate the market.

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PROMOTIONAL ACTIVITIES
The company is aware and does quarterly analyses about who purchases what
products of Kolson. The company evaluates the trends in the markets; where
there are heavy sales and where there are no or negligible sales. Once they
have analyzed their strong and weak sales areas they decide which promotional
tools to apply.

The promotional tools that are used by Kolson are

 BTL Activities
– Third Party Contracts
– Trade Gatherings
– Road Shows
– Club Dinners
– Conducted in Presence of concerned Sales Officer

 ATL Activities
– Advertising Agency is Brand Partnership
– Media, Billboard Campaign
– Print Campaign
– Etc

Media advertisements and billboards

Kolson markets its products through heavy advertisements. Most of the television
advertisements focus on its snacks and biscuits. Many billboards across the city
display Kolson products. The advertisements target all age groups and income
levels.

Trade push

When trade push is employed a good display position is sought after at outlets. If
there is money to be invested the common rule of “eye level is buy level” is
employed.

“jo cheez dikhti hai woh bikti hai!”

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PRODUCTS

Name: Katch
Category: Cracker
Packaging: Ticky Pack (4per pack) & Half Roll & Family Pack
1 Box: 115gms (4.06 oz)

Ingredients:- Wheat Flour, Sugar, Vegetable Fat, and Oil, Invert Syrup malt
Extract, Skin Milk Powder, Yeast, Salt Raising Agents, Natural Enzyme,
Emulsifying Agents.

Nutrition Chart (Per 100gms)

Energy 2030KJ
Protein 9.5 gm
Fat Total 32.1 gm

Carbohydrates:
Total 71.1
Sugar 10.0

Cholesterol 4.2 mg
Dietary Fiber 1.1 gm
Sodium 271 mg

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Name: Bravo
Category: Egg & Milk Biscuits
Packaging: Ticky Pack (4per pack) & Half Roll Packaging:
1 Box: 24gms x 24 pkt (0.85 oz x 24)

Ingredients:- Wheat Flour, Sugar, Vegetable Fat, Skim Milk Powder, Fresh Eggs,
Cocoa Powder, Salt Emulsifying Agent, Artificial Food Colour & Flavours.

Nutrition Chart (Per 100gms)

Energy 2133KJ
Protein 7.5 gm
Fat Total 27.5 gm

Carbohydrates:
Total 72.9 gm
Sugar 25.8 gm

Cholesterol 17.2 mg
Dietary Fiber 0.180 gm
Sodium 271 mg

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Name: Jam Hearts (Vanilla Cream with Jam Topping)
Category: Cream Biscuit

Packaging: Ticky Pack (4per pack) & Half Roll & Family Pack

1 Box: 115gms (4.06 oz)

Ingredients:- Wheat Flour, Sugar, Vegetable Fat, Invert Syrup, Skim Milk
Powder, Salt Maize Starch, Raising Agents, Emulsifying Agent, Artificial Food
color and Flavors, Strawberry jam.

Nutrition Chart (Per 100gms)

Energy 1563KJ

Protein 6.3gm

Fat Total 15.6 gm

Carbohydrates:

Total 63.0gm

Sugar 31.1 gm

Cholesterol 9.1 mg

Dietary Fiber 0.270 gm

Sodium 481 mg

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Name: Jam Hearts (Chocolate cream with jam Topping)
Category: Cream Biscuit

Packaging: Ticky Pack (4per pack) & Half Roll & Family Pack

1 Box: 115gms (4.06 oz)

Ingredients:- Wheat Flour, Sugar, Vegetable Fat, Invert Syrup, Skim Milk
Powder, Salt Maize Starch, Raising Agents, Emulsifying Agent, Artificial Food
color and Flavors, Strawberry jam.

Nutrition Chart (Per 100gms)

Energy 1563KJ

Protein 6.3gm

Fat Total 15.6 gm

Carbohydrates:

Total 63.0gm

Sugar 31.1 gm

Cholesterol 9.1 mg

Dietary Fiber 0.270 gm

Sodium 481 mg

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Name: Cream Hearts (Sandwich Biscuit with Chocolate &
Vanilla)
Category: Cream Biscuit

Packaging: Ticky Pack (4per pack) & Half Roll & Family Pack

1 Box: 115gms (4.06 oz)

Ingredients:- Wheat Flour, Sugar, Vegetable Fat, Cocoa Powder, Invert Syrup,
Glucose Syrup, Honey, Skim Milk Powder, Salt Maize Starch, Raising Agents,
Emulsifying Agent, Artificial Food color and Flavors.

Nutrition Chart (Per 100gms)

Energy 2119KJ

Protein 7.0gm

Fat Total 21.5 gm

Carbohydrates:

Total 67.4gm

Sugar 35.2 gm

Cholesterol 9.2 mg

Dietary Fiber 0.280 gm

Sodium 519 mg

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Name: Cream Hearts (Double Cream)
Category: Cream Biscuit

Packaging: Ticky Pack (4per pack) & Half Roll & Family Pack

1 Box: 115gms (4.06 oz)

Ingredients:- Wheat Flour, Sugar, Vegetable Fat, Cocoa Powder, Invert Syrup,
Glucose Syrup, Honey, Skim Milk Powder, Salt Maize Starch, Raising Agents,
Emulsifying Agent, Artificial Food color and Flavors.

Nutrition Chart (Per 100gms)

Energy 2119KJ

Protein 7.0gm

Fat Total 21.5 gm

Carbohydrates:

Total 67.4gm

Sugar 35.2 gm

Cholesterol 9.2 mg

Dietary Fiber 0.280 gm

Sodium 519 mg

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CRITICAL ANALYSIS

SWOT ANALYSIS

STRENGTH
The competitive edge identified for Kolson is their product innovation. Their idea
of innovation is reflected in their creation of unique products. Bravo is unique in
that it has a thin chocolate layer that runs in the middle and the shape is also a
bit different from any other egg and milk biscuit in the market.

Another strength identified is the supply and distribution channel. They are able
to achieve a strong distributor network because their well established products
like Slanty and Spaghetti also utilize the very same networks. Kolson also has
regional warehouses in the major cities like Karachi, Lahore, Quetta and
Peshawar.

WEAKNESS
One weak area that we can identify is their lack of expertise and experience in
the biscuit market. Other key players in the biscuit market such as LU and Peek
Freans have years of experience in the field of confectionaries and have created
a brand image. Customers do not necessarily think of biscuits when they hear of
Kolson. Another reason for this is the success of Slanty which has created a
strong association of chips manufacturer with Kolson.

OPPORTUNITY
According to market growth research conducted by Kolson the biscuit industry is
expected to grow b 50% in the next five years. This growth can be attributed to
opening u of new markets, especially in the rural areas where branded biscuits
are struggling save for Tiger. The way Tiger biscuits achieve this is by including
more biscuits per pack then its rivals.

Kolson can penetrate into these rural areas and possibly lower down its prices or
include more biscuits in the same pack. They would also need to adjust their
biscuit's taste and price for the rural markets possible by introducing a variant of
the same biscuit in a different packaging.

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Kolson can also take the opportunity of promoting its biscuits as a better and
healthy alternative to other snack foods. Their biscuits contain nutritious like milk
and egg and so Kolson can promote that as well.

THREATS

Three main threats have been identified. The first and most pertinent threat is the
fast growing and highly competitive local industry. The mail players are Peek
Freans, LU, Bisconi, and the unbranded industry. Although the unbranded
industry is not so much successful in the metropolitan areas, it has managed to
give the branded products a very tough time in the smaller villages.

Second area Kolson must be careful about is the emerging threat form
International businesses that are establishing snack operations in Pakistan. So
far a significant competitor in the egg and milk market has not risen from the
Multi National Corporations but it is just a matter of time that they start looking in
this lucrative segment, which is, about grow even more.

The last threat that can be identified is related to the overall biscuit industry. It
results from the fast growing snack food industry (other then biscuit) which is
trying to fight for the customer money. A person, when he will have a choice, may
spend the money upon chips or nimco rather then spending on biscuits.

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COMPETITOR ANALYSIS

Lefèvre-Utile Biscuit Co.


The Lefèvre-Utile Biscuit Co. was a baker and cookie maker founded in
Nantes, France in 1846 by Jean-Romain Lefèvre. Today it is known as LU and is
a part of Kraft Foods.
The name LU comes from Lefèvre and his business partner and wife, Pauline
Utile. Their initials were first utilized by Alfons Mucha for an 1897 calendar ad for
the Lefèvre-Utile Biscuit Co. That same year the company hired Firmin Bouisset
to create a poster ad. Bouisset, already famous for his work for the Menier
Chocolate company, created Petit Écolier ("the Little Schoolboy") which
incorporated the LU initials. Bouisset's poster was used extensively and the
image was embossed on the company's Petit Beurre line of biscuits. Within a
few years, the success of the logo resulted in the company becoming known as
LU.
The founders' son, Louis Lefèvre-Utile took over the company and eventually it
was acquired by Generale Biscuit S.A. which in turn was sold to Groupe Danone
in 1986. Although an international brand today, LU products are primarily
distributed in Western Europe and as of 2005 represented nearly half of the
Sales for Danone's biscuits and cereal division.

In November 2007, LU was sold to Kraft Foods.

LU Prince Filled Biscuits Choco €2.69


Two crunchy biscuits filled with a layer of
chocolatecream, rich of grains and milk.
To enjoy with your coffee, tea or as a
snack.

Content: 308 gr
Price range of 5 Rs.to 25 Rs(tikey pack
half role and familiy pack)
Prince is the main competitor of JAM
HEARTS.

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MARKETING STRATEGY

 Market Development / Acquiring New Customers:

The aim of this strategy will be to concentrate efforts towards increasing the
number of users by converting consumers, from using traditional using of
biscuits, through Mass Media and Rural Penetration.

 Market Maintenance /Retaining the Existing Customers:

This strategy will be geared towards building long-term relationships with


customers. The strategy would also include meeting the competition so as to
retain the existing customers.

TARGET MARKETING
Kolson target Every member of a family, i.e. mass marketing one product for
all.and for JAM HEARTS it is targeting on teen ages and the youth.

POSITIONING
kolson has positioned itself as a value for money product. It tries to portray itself
as a quality biscuits and in the false prophecy that people believe it to be a
foreign brand where as most of the people perceive it to be a cheap local brand.
Concept of family is absent from Bravo advertisements, as well as JAMHEARTS,
unlike its other competitors, LU, ABM.

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DIFFRENTIATION

kolson differentiates its products in the high priced segment. Similarly they
innovate and bring out new products in the high priced segment. With some

existing products, which don’t sell that much. kolson has reduced their quality
and sells them at a lower price.

PRICE
The current pricing strategy of Kolson's biscuits and of JAM HEARTS is
competition based. It is fair enough, because a higher price may take away its
urgent market share and a lower price would make the customers think that it is a
cheap product.

DISTRIBUTION OUTLET
General stores, wholesale markets, departmental and super stores, i.e.
increased efforts to penetrate the market.

company Super
store

Distributor

Wholesaler
Retailers
s

End Users / Applicants


Products children Adults

mobile biscuit Jam heart For


For Kids Adults
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SALES & DISTRIBUTION OBJECTIVES & MODEL:
 To make distribution a competitive advantage to reach as many people
and to cater to as many cities as possible.
 High level of retail penetration –maximize sales
 Reinforce brand image & positioning
 Low distribution cost
 High channel loyalty through fair profitability for channels

ADVERTISING

Advertising Budget

We recommend that the advertising budget should be based on the following


actual sales and assumptions about the projected increase in the same. The
advertising budget for the year was set according to the sales.

1. kolson on TV: TV ads are used to promote kolson as a brand that the name
off bravo indicates full of energy and daring biscuits for you and JAM HEARTS
for lovers as its name shows itself.
When it comes to advertising, kolson prefers TV, as it is the best media. Apart
from this, in Pakistan, TV is a strong medium, it has highest reach. Thus a large
part of advertising budget is focused on TV.

2. kolson on Print: The print ads are the extracts of TV commercials, placed
in various kinds of magazines ranging from health to fashion.

3. kolson on Billboards: The billboards are also the extracts of TV commercials


placed at the busy roads for most part of the day.

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Kolson is spending only 10 to 12% on Bravo and only 5 to 7% on JAM HEARTS
This is a fairly low percentage of expenditure on advertising.

SALES PROMOTIONS

Objective

kolson has been working a big deal on promotional activities they think that
brand equity is more important. Although they sometimes do below the line
activities such as they set up stalls in different places. Kolson also do
promotional campaign but on a very small scale for JAM HEARS.

♦ To build market share. Through promotions activities the aim is to create


a market presence relative to other brands of biscuits. Through promotion
kolson wants to be able to supplement other marketing efforts in order to
increase market share from 11% to 15%

♦ To build brand image and positioning. Advertising will be used to


enhance the image of the brand and also to create a specific image in the
mind of the consumer i.e. positioning. Similarly sales promotion should be
carried out in a way so as to further the quality perception of the product.

MARKET RESEARCH
Conduct through market research to understand the consumer-choices and
behaviors. Try to figure out what where Kolson& jam hearts lags, as compare to
its competitor, LU, ABM.
Kolson should ask the customers about what changes and additions in terms of
taste, size, packaging, etc, would the customers like to see in its biscuits.

MARKETING OBJECTIVES

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To increase Kolson's market share to 11% of the entire Biscuit industry in the
future.

MACRO ENVIORNMENT(FORCES)

Economic Conditions:
The economic conditions of the country play an important part in the biscuits
industry. For instance currently Pakistan’s economy is improving, the
common man has more money to spend and they can buy simple
commodities like biscuits. This improvement in the economic conditions also
allows the companies to further invest and launch new products to cater to a
bigger market.

The government has shown a strong commitment to reducing poverty and is


receiving support from the World Bank through around US$ 1.2 billion in
financing for 18 active projects and, over the past five years, an additional
US$ 1.5 billion in adjustment lending to strengthen the government's broader
reform programs.

Social and Political conditions:


Social and political conditions decided whether the sales of a product are
going to increase or decrease. For instance if there is political stability then
new companies will enter into the biscuits industry and existing industries will
invest further. Furthermore political stability is a sort of an invitation for
multinational companies to come and invest here which is a good thing for the

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customer as he will now have more choices but this is not good for the
existing companies, as they will have to face a new competitor.

Government Regulations:
The government regulations decide both the influx of foreign goods and the
rules and regulations for the existing industries to follow.

Environmental Concern:
Even though environmental concerns are not so strict in Pakistan but still the
biscuits industry gets certification from standard organizations. For instance
kolson is ISO 9001: 2000 and ISO 14000 certified.

TECHNOLOGICAL FACTORS:

Technology in modern organizations is the know-how, the Equipment, the


experience, the knowledge and skills that are required for better production and
better service and since biscuit industry is the one of the major hi-tech industries
so it is important to be ahead in R&D activities for the continuous appraisal of the
services provided.

New Entrants:

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The biscuits industry does not fear any new entrants because of the high
investment cost and also because companies do not focus on this particular
industry.

FINANCIAL ANALYSIS OF GROSS PROFIT


During the year company achieved an increase in net sales from Rs. 1,764 in the
corresponding period last year to Rs. 2,041 million, a growth of 16%. Gross profit
for the year 2007-08 shows decline by 10.55% as compared to previous year. A
brief financial analysis is presented as follows:

2008 2007
Rupees in millions

Sales 2,041 1,764


Gross profit 98 271
Profit from operations 134 207
(Loss)/ Profit before tax (95) 97
(Loss)/ Profit after tax (8) 81

The outgoing year has been one of the toughest the company has ever faced in
terms of rising cost, global inflation, uncertain political situation and an erratic
economy.
Cost components that lead to reduction in GP may be segregated as follows:

Cost component % Increased with respect


to Sales

Raw/ Packing material 6.52%


Payroll 1.81%
Depreciation 0.68%
Others 1.54%
Total decline in GP

1. RAW/ PACKING MATERIAL

Major raw material used in the production process and their average
annual prices are as follows:

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AVERAGE PRICE PER KG %
PARTICULAR
2008 2007 INCREASE

Wheat Flour 20 15 33%


Palm Shortening 86 52 65%
Vegetable Oil 87 52 67%
Potato Starch 67 36 86%
Potato Flakes 102 95 7%
Packaging film (Slanty) 295 264 12%

a. WHEAT FLOUR

The year 2008 witnessed shortage of wheat flour in the country and
consequently prices moved significantly upward. Demand supply
mismatch was mainly due to inconsistent government policies. The same
may be analyzed from the graph below:

Wheat Flour Rate Analysis


2500
Rate in Rupees per Bag

2000

1500

1000

500

0
JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN
2007-08 1277 1307 1532 1532 1532 1582 1902 1777 1652 1702 1802 2152
2006-07 1135 1180 1155 1195 1185 1185 1215 1195 1195 1175 1195 1215

b. Palm Shortening & Vegetable Oil

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International oil prices significantly soar as compared to previous year.
Average price of Oil increases to $1,214 per metric ton from $ 738 per
metric ton in corresponding year. The impact was compounded due to
drastic devaluation of Pakistan rupee. Both these factors impacted our
landed cost by average 66% over the previous year. The same may be
analyzed from the graph below:

To manage the price inflation, company has taken various steps including
exploring new suppliers locally to hedge ourselves against further rupee
devaluation risks. Further, fortunately international oil prices have also
shown a sharp decline subsequent to balance sheet date which will have
a positive impact on future profits.

2.PAYROLL COST

Increase in payroll cost is mainly due to the enhancement of minimum


wage by 15% to Rs. 4,600 per month for unskilled labor for financial year
2007-08 as compared to Rs. 4,000 during the year 2006-2007.

FUTURE OUTLOOK

 Wheat Flour

Government has increased the purchase price of wheat from farmers


which will help in increasing farmer’s confidence and ultimately increasing
the yield. The increase in supply will help reducing the price inflation. It is
expected that wheat flour prices will reduce by at least 15% from the
current level.

 Palm Oil/ Shortening

The international palm oil prices have also shown declining trend
subsequent to balance sheet date and reduced by 60% since march 2008.
Landed cost has also been reduced to Rs. 80/kg in October 2008 from Rs.
120/kg during March – June 08 quarter.

The above noted reduction will positively impact on company’s profitability


in future.

 Packaging film

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Plastic film manufacturing industry has been facing consistent fluctuations
in raw material prices due to crude oil prices globally, which have a direct
effect on the price of polypropylene resins. However, due to significant
reduction in crude oil prices by almost 65%, packaging film prices have
also reduced by almost 20% and we believe they this declining trend will
continue.

Other measures taken by the company

1. Adjustment in SKU
To meet the cost pressures, the company has redesigned its SKU’s by adjusting
weight etc. of its finished products. The objective is to keep the SKU’s within the
cost limits and ensuring desired profitability.

Electricity charges
Currently Pakistan is facing the problem of load shedding and increase in
electricity tariffs. To avoid shut down risks and to reduce fuel costs, company has
imported gas generator which will increase our energy efficiency and will result in
future cost savings.

1.Working capital management


The company is also working on the reduction in inventory levels to bring down
the working capital and ultimately resulting in bringing down financial charges.

The core task is to key various processes gear up to meet future


challenges. Towards this end, research and development activities are
emphasized to ensure a continued flow of new products and also continuous
improvement in product quality. In these inflationary times we are also focusing
on cost effectiveness, both in terms on the fund invested on sales and marketing
efforts and on resources devoted to manufacturing expenses. However our

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primary focus is still on aggressive sale growth, through both new and existing
products which will further allow us to take advantage of economies of scale.
Thus these measures would also give us more flexibility and have ample
opportunities to maneuver to generate profits both through a combination of
economies of scale and flexibility.

RECOMMENDATION
1. Kolson has not been so active in terms organizing or sponsoring
social events. We think that it should take a step forward by
sponsoring events like sports, concerts, and academic events. The
reason we chose academic events is Kolson currently positions
Bravo& Jam hearts as product for teens and youth, which is quite
evident from its TV commercials. In order to reinforce positioning, it
should sponsor academic events organized by college and university
students, who in turn are its target market.

2. Furthermore the Kolson should also actively involve themselves


through all the channels where it could connect to families. Since
Bravo in broad sense will be targeted to the whole families and
Kolson is a family brand with products for every member of the family.

3. Another program we would like to initiate is that Kolson can initiate


a marketing campaign in rural areas. We know that the rural area
market has a lot of potential and some local unbranded companies
are operating very successfully there. None of the branded company
has really tapped that market segment, and Kolson can be the first
one to do so. This would give then a competitive edge over other
players in the market, and ensure a rise in sales.

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