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Strategic marketing Managment Midterm project Submitted By: Hassan mehmood Ali ramzan Abdullah bin masood Afzaal

ahmad Rashid amjad Ali raza 10115 10134 10116 10110 10126 10133

Submitted To:

Sir: Khuram
MBA Summer4rth

Superior University Lahore

Environmental Analysis of Nestle Milkpak Technological trends: Q. To what extent is existing technology maturing?

Answer
Nestle is the world largest food company and nestle Milkpak is Nestls famous UHT milk brand. Nestle Milkpak has south Asias biggest Plant at Kabirwala. It is targeting upper and middle class. It is differentiating its brand by adding Iron and Vitamin C.

Nestle Pakistan using best and innovative technology to keep the quality of milk good and best processing and packing technology. Fist of all what is process of production Nestle milkpak using currently.

Milk Collection

Storing

Standardization

De-Creaming

Spray Drying

Evaporation

Pasteurization

Cooling

Strengths of existing technology:

A 250ml Nestle Milkpak Glass consist of followings:


27-30% of calcium, 15-18% of protein, 31-34% of phosphorous,6-9% of Vitamin A and 160-169 k Cal of energy, as recommended dietary allowance by national Academy of Science (USA). Dhood ki Qudrati Ghizayat Pure, nutritious goodness of Milk Pure, rich and delicious Nestle Milkpak standardized (UHT) benefits from Nestles expertise in bringing you the best life has to offer and benefits from 140 years of consumers trust. Nestle is using the latest technology in its production units. Nestle makes milk powder of the surplus milk in winter and converts this milk powder into UHT milk in summer. Nestle providing healthy and pure and clean milk by using latest technology which is their very big strength, so existing technology is pretty much latest. And giving high production.

Weakness in technology:
Lack of a cold chain to protect milk quality. That means there is insufficient technology there to protect milk after supplier delivery, there is a missing cold container trucks, which take milk from supplier to company. Thats why so much milk is wasted before reaching the plant. This can compromise the quality of product. Second is low yield of milk product in Pakistan, there is no technology or awareness toll is used to increase the yield of milk by Nestle. Farmer have no technology or awareness to increase the raw production of milk. No technology introduced to keep the milk at its original condition. An deliver consumer.

What Technology developments or trends are affecting or could affect the industry?
There are certain developments which competitors using and also putting affect on Nestle milkpak industry.
Like,

Haleeb using the technology for keeping milk thick to most original thickness, but milkpak not using such technology, this trend of technology is affected milkpak and could affect more. Olpers is another big competitor using the technology of using technological trend of keeping milk to its originality. There certain developments also can affect the milk pack like reduction of cost by preventing the wastage of milk through using cold store vehicles.

Consumer trends:
What are the current or emerging trends in lifestyle, fashion, and other components of culture? why?

Trends in Life style:


Because Milkpak consider middle and upper class as their target customer, so these classes in Pakistan day by day changing their life style, they are now more conscious about their health and want to use hygienic products to consume. Especially in food items like in milk they afraid to use open milk, because they think this is not hygienic, so there is huge customer inching towards packed product.

Behavioral trends:
Behavior of consumer is very rapidly changing towards clean and hygienic milk products thats why in milkpak sales increases 20 percent in Pakistan. Customer behavior towards the milkpak or packed milk is positively increasing due to concept of hygienic.

What demographic trends will affect the market size of the industry or its submarkets?
There are certain demographic trends can affect the industry. Like

Literacy rate is increasing in Pakistan, which is right now 54% in Pakistan. So as this demographic trend is rapidly changing, the young and literate generation will go towards hygienic products, this can affect the industry size positively, and industry size of packed milk will increase as literacy rate grow.

Literacy: Definition: Over the age of 15 and can read and write.
Total population: 54% (2004 EST.) Male: 60% Female: 40%

Second size of population is increasing in Pakistan rapidly as given in stats below, so market size for this industry grow with such affect. Another trend which affecting is increase in urban area population, because here upper middle class is more, and nestle milkpak target customers are upper middle class.

Population and Growth


Population: 180,000,000 (2008 EST.) Growth rate: 1.828% (2007 EST.) Birth rate: 27.74 births/1,000 population (2007 EST.) Death rate: 8 deaths/1,000 population (2007 EST.) Net migration rate: -1.24 migrant(s)/1,000 populations (2007 est.)

Third trend which can affect is high costly milk that only upper middle class or upper class is target customers, size of market can be narrow because as inflation is increasing in pakistan, majority people going below these classes, so in future this industry can be affected due to, decrease in per capita income of people in Pakistan.

What demographic trends represent opportunities and threats?

Opportunities:
Size of population increases so number of customers will also increase. Market size will also grow. So this is very big opportunity for nestle milk pack. Literacy rate is increasing so, this is also a opportunity to increase market size, and number of customers, because educated class like clean and hygienic products. Urban area population is rapidly increasing, where most of target customers lies. Chang in life style of people towards hygienic products also opens opportunity.

Threats:
As per capita income is decreasing , people going to lower classes, due to high cost milk there could be a big threat of losing the target customer to large extent. Unawareness of farmers can cause production of raw milk very low, so to meet the demand could be difficult, so if raw milk imported could be more costly.

Government /economic trends:

What are the economic prospect and inflation risks for countries in which the firm operates? How will they affect strategy? There are some figures

At an average, a Pakistani consumer spends 42 % of income on food. Inflation rate in Pakistan is increased to 22% and more. Per capita income Is near 800$ usd. Two big urban cities Lahore and Karachi are having more then 25 million population.

As inflation rate increases in Pakistan Third trend which can affect is high costly milk that only upper middle class or upper class is target customers, size of market can be narrow because as inflation is increasing in Pakistan, majority people going below these classes, so in future this industry can be affected due to, decrease in per capita income of people in Pakistan.

What changes in regulation are possible? What will their impact be?
There are some changes which are possible like FBR can impose more manufacturing as well as retailing taxes , Which can increase the cost of per unit Which can increase the price of milkpak That can affect very badly and sales can be reduced Government can deploy expert person to create awareness in farmer To increase the yield of raw milk. Electricity cost is increasing and can affect in future.

What are the political risks of operating in a governmental jurisdiction?


There is very uncertain situation right now in Pakistan like More taxes can be deployed on industry. Energy crises can be more swear that which is greater risk. Regulation of milk from informal sources like farmers can me banned or could employed some conditions.

General External Analysis Questions: What are the significant trends and future events?
Nestle milkpak allocate certain trends like People going to wards clean and hygienic products and in milk there is very less rate of packed milk sale in Pakistan, its about 4% so as people want to be hygienic, so get them aware with your brand to increase your customer and market size. The immense competition is going in the market so Nestle Milkpak should penetrate more and more in the market. Only 4 % milk is being processed and 96% people are using loose milk so Nestle Milkpak has the opportunity to capture a large share of the market through more creative advertising and other promotional activities. Nestle Milkpak should invest more on research and development because customers using loose milk are getting a lot of contaminations especially in urban areas so Nestle Milkpak can provide awareness to people in this aspect.

What are the threats and opportunities do you see?


More people are coming towards processed milk because loose milk is dangerous for health due to a lot of contamination. Growth of processed milk is increasing with 20% annually so Nestle Milkpak has the opportunity to capture a large share of market.

Two main competitors Haleeb and Olpers are main threat for Milkpak especially the Olpers is growing very fast. Inflation is getting higher and higher so the purchasing power of the people is decreasing day by day. There is no entry barrier for new entrants as the Olpers has come in the market.

Evaluate the strategic uncertainties in terms of their impact?

Marketing Strategy

Nestle is pursing growth strategy. They have invested $ 70 billion at Kabirwala Plant and they are planning to invest $ 381 billion in the milk business.

Uncertainties:
Rate of inflation increases more or decreases biggest uncertainty. Any other milk company can improve their positioning. Is middle or lower middle class could be regular customer. Is the packed milk could be a fashion among classes. If there is improvement in open milk cleanliness it can reduce the sales of packed milk. How long people will change their life style to jump to hygienic products. This will impact as low growth of this industry.

Worth of uncertainties on the basis of scenario?


People are going towards low classes day by day so this milk charge premium prices. So there are lot of uncertainties prevails around this industry, this costly milk started to be unaffordable for even target customer, so this can worth the production strategy, that milkpak day by day increasing with increase of market size. There is very heavy political instability in Pakistan and worst economic conditions , it can be more deepen.