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Executive Summary
Pakistan is an agricultural country. According to Ministry of Food, Agriculture and livestock, agriculture accounts for 20.9 percent of the GDP. Dairy industry contributes 49% to the agriculture value and 11% to the GDP. Annual production of milk is 35.25 Billion liters in the country; But the Processed milk is only 4% of the total production. Like other countries Dairy is not a dedicated profession of the people, farmers is associated with dairy and agriculture at the same time, Profitability for the farmers is very less. Infrastructure is not developed, cooling tanks and other facilities are not available, and the large part of milk production is wasted. There is a multi-hierarchal distribution system of the milk; the farmers are not getting reward of their work. All these factors are making this industry unattractive for the farmers and the industry is no developing up to the mark. Only 4% of the total milk production is processed and used in urban areas of the country. Nestle Milkpak have a great share in the different multinational companies. It is statistically calculated that Nestle Milkpak have 50% share in the Nestle company and now Nestle become the leader of all multinational companies in food products and beverages. Nestle is operating in all big cities in Pakistan and try best to provide its Products to other small cities and towns. According to Pakistan Dairy Development Authority Only 0.52 Billion liters UHT and 0.5 Billion liters pasteurized milk is available in the country. In urban areas 4.7 Billion liters milk is provide by Gawalas. 1.27 Billion liters processed milk is sold by the milk shops. There is a potential of about 5 billion liters of milk sold in the urban areas. In urban areas people are more health and quality conscious, the income level of urban population is also good so this segment has potential for UHT and Pasteurized milk. 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. The Nestle Milkpak is following growth strategy. The immense competition is going in the market; it is recommended that Nestle Milkpak should invest more in milk business and

2 other value added milk products. In this way Nestle Milkpak can fulfill the local demand by locally processed milk and milk products instead of the imported milk products. Nestle has brand recognition throughout the world and they can export milk powder and other value added products in future.

NESTLE
Nestle is the largest food company in the world. It is present in all five continents, has an annual turnover of 74.7 billion Swiss Frances. There are 509 factories are running in 83 countries, having 231,000 employs.

Company Mission
At Nestle, we believe that research can help us to make better food, so that people live a better life. Good food is the primary source of good health, so we are trying to make good food. To provide fresh and pure products to the customers, we introduced (SHE) Safety, Health and environment policy to protect health of our employs and keep clean our surrounding environment

Company Vision
Vision of Nestle Milkpak Company is to expand business according to the increasing demand of market. As per our company vision in 2020 production capacity of all plants working in Pakistan is being increased. So extension of Kabirwala Plant is the example of our company vision.

History Of Nestle

Our story begins in 1867, when Henry Nestle developed a baby formula that saved childs life and marked the beginning of Nestle. It is originally consisted of two companies and two products, Henry Nestle and His baby food in Vevey, and the Anglo Swiss Condensed Milk company and its condensed Milk in Cham, both in Switzerland.

His first factory was located in Vevey. In 1875, He sold His Company and retired. In 1880 second factory was built in bercher. In 1883, first time Nestle built a factory abroad, in Edlitz Grimmenstein. In 1890, Vevey factory produced 28 billion cans of Milk food and 2.2 million cans of condensed Milk. In 1912, Nestle begins it long relationship with South Asia when Nestle condensed Milk company start. In 1979, Milkpak Ltd. Is founded by Syed Baber Ali. It manufactures UHT Milk, Cream and Butter as well as fruit Juices.

Nestle In Pakistan

Nestle have been serving Pakistani consumers since 1988, when our parent company Switzerland based on Nestle first acquired share in Milkpak. Nestle acquires 40% share in Milkpak. In 1990, sheikhupura factory starts the production of Nido Milk Powder cereals; a plant is acquired at Kabirwala. 1n 1992, Nestle takes over the running of company and begins to develop its Milk collection network. In 1996 Milkpak is renamed to Nestle Milkpak Ltd. In 1997, the Kabirwala plant becomes a fully owned unit of Nestle Pakistan. 1n 1998, Nestle Milk collection system in Punjab matures and company is able to buy all its Milk from Formers instead of relying on contractors. In 2005, Nestle Milkpak Ltd. Is renamed again Nestle Pakistan.

Nestle Quality Policy

Quality is the foundation of our food, nutrition, Health and Wellness Company. A Nestle brand name on product is a promise to the customers that : It is safe to consume. It complies with all relevant laws and regulation. Quality is to win consumers trust and preference. We are committed to offering products and services to all customers that meat their needs.

Quality is every bodys commitment. Our management takes the lead, sets the objectives and demonstrates its commitment towards quality. All Nestle functions across our value chain are fully responsible to follow mandatory norms. Quality is to strive for Zero defect and no waste. We focus on facts and results and we strive for Zero defect and excellence in every thing we do. We adopt No waste and we constantly look for competitiveness and opportunities for continuous improvement of the quality standards delivered to our customers. Quality is to Guarantee, food safety and full compliance. We enforce food safety, regulatory and quality requirements in every step of our value chain.

Nestle Milkpak
Launched in 1981, it has become synonymous with quality milk. Backed by a very strong brand name, aggressive marketing and distribution plans, consistent quality and availability through out the year, MILKPAK UHT has been extremely successful. In September 1999, MILKPAK UHT milk was launched as NESTLE MILKPAK UHT MILK. NESTLE MILKPAK UHT MILK is available in three pack sizes of 1000, 500 and 250 ml.

Dhood ki Qudrati Ghizayat Pure, nutritious goodness of Milk Pure, rich and delicious Nestle Milkpak standardized (UHT) benefits from Nestls expertise in bringing you the best life has to offer and benefits from 140 years of consumers trust.

Encourage your family to exercise regularly, eat a healthy, well balanced diet and drink pure, nutritious Milk for good health. Milk is a must drink for your children as it is a rich source of calcium that helps in the growth and development of strong bones and teeth. A 250ml Nestle Milkpak Glass consist of following things 27-30% of calcium, 15-18% of protein, 31-34% of phosphorous,6-9% of Vitamin A and 160-169 kCal of energy, as recommended dietary allowance by national Academy of Science (USA).

Different Size Packing Of Nestle Milkpak

Enjoy Nestle Milkpak in four convenient sizes, depending on your family need. 1500ml, 1000ml, 500ml and single serve 250ml packing

Dynamic Expansion
Nestle Pakistan has being at the forefront of development of dairy sector in Pakistan as major industrial stake holder for a while .internal efforts and some initiatives with government have being going on since long in order to maximize the development of the sector .still, a need for sector wise coordination and combine efforts was there to ensure utilization of all available resources to move forward in the direction. Through the agric-services department nestle has being involved with various infrastructure and support related initiatives such as development of model farms, setup of milk chiller and import of Australian cow to boost milk production .nestle is also working towards setting up mega dairy farms to exemplify best farm practices and ways to boost mike production

OTHER BRANDS OF NESTLE

Nestle Juices Nestle Nesvita Nestle yogurt Bottled Water Chocolate Baby Food Maggi noodles Nescafe

INTERNAL COMPETITORS

Haleeb Milk Olpers milk Good Milk Dairy Queen Milk

EXTERNAL COMPETITORS

DANONE MILUPA

COMPETITORS ADVANTAGES

We never compromise on quality and quantity Our extensive milk collection system ensures that the Milk you get is of the finest quality. Our products are available in every city and town

Objectives and Goals of Nestle

Marketing objectives are compatible with the overall corporate objectives of nestle. Companys objective is to be the worlds largest and best branded food manufacturer while insuring that nestle name is synonymous with the products of the highest quality. Its chief objectives are: To achieve compatibility with international voluntary standards on environmental management systems. To build mutual trust with consumers, governmental authorities and business partners. To ensure continuous improvement of nestles environmental performance. Conservation of natural resources and minimization of waste. Total compliance with the laws. To establish the benchmark for good business practice. Employing new technologies and processing.

By committing to resources, both human and financial. Measuring the cost and benefits to business of its activities. Monitor progress. Audit results. Review targets.

SWOT ANALYSIS OF NESTLE Strengths

Skilled labor. Educated staff. Large number of offerings. Pre purchase virtual display. Arrangement of events. Good background of the company. 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

8 Year Annual Production (million liters) Annual Consumption (million liters) 2008-09 => 648.43 353.71 2009-10 => 753.89 372.05

Weaknesses
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 Nestle 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 nestle milkpak is always stand in the last because of low advertising and marketing.

Opportunities
Increasing interest of people 31billion customers are there in Pakistan for milk. Upton now only 4 billion customers are being facilitated.27 billion customer markets is still available to be penetrated. Few and weak competitors Estimations of UHT Milk Production and Consumption up to 2008 09 Year Annual Production 2008-09 2009-10 => => 648.43 353.71 753.89 372.05

9 The projected values of UHT Milk consumption and production are obtained from the ARIMA model. 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.

Threats
Major player may enter target market Legal and ethical issues. Market segment growth could attract new entrants. Economic slow down can reduce demand. 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. Taste of consumer has already developed which is hard to change.

Current market situation

Today, Nestl Milkpak produces in over 81 countries and achieves 98% of its turnover outside Europe. Nestl milkpak is the worlds largest milk company, which does 98% of its business. It has an annual turnover 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 companies co-ordinate the activities of some 200 operating companies around the globe. Their functions and details are as follows: The first, Nestl milkpak, holds the financial shares in the allied companies. It also checks the profitability of these companies and to ensure the profitability of the group as whole.

The second, Nestl milkpak, has two areas of activities that are as follows: Research and technological development,

10 Technical assistance Beside this, it provides know-how in engineering, marketing, production, organization, management and personnel training on a continuous basis. The third company is Nestl World Trade Corporation that oversees the import and export of merchandise worldwide.

Core competency and key success factors: Nestle have stronger distribution channels Financials of Nestle Milk pack

Key Stats & Ratios

Q3 (Sep '08)

Annual (2007)

Annual (TTM) 3.61% 9.89% 13.33% 7.56% 28.86%

Net profit margin Operating margin EBITD margin Return on average assets Return on average equity Employees

0.15% 8.55% 0.31% 1.17% 2,345

6.39% 10.87% 14.39% 12.55% 54.35%

Financials
Financials for September 2005 Description Values

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Hierarchical details of Marketing/ sales department

Nestle is a big name and it is one of the best brand of the country having the largest market share in milk pack industry in Pakistan. It is not only one person who is marketing the milk pack everyone who is part of Nestle is marketing it. If we make the hierarchy of the marketing of Nestle Milk pack we will find out that there is a brand manager who is responsible for all activities that will take place in the marketing department under him is sub brand manager who is responsible in the absence of the brand manager. They are the top management and mostly deicide what to do and how to do. What steps should be taken to do the marketing. Under them there is a whole marketing team who work according to the instructions which they have got from the top management. These team are further divided into sub teams. All the decision regarding the T.V commercials, radio, news paper and billboards are decided by the brand manager on the advice and on the bases of statistical calculations. For example for placing a billboard all calculations are made that what size of billboard will be suitable, where should be it place so that is well seen, how much should be spend on it either it is in our budget or not. All these things are taken in account and a lot of thinking is done before applying the idea.

Officers and Directors

Syed Yawar Ali Esquire Trevor Clayton

Chairman of the Board Chief Executive Officer/ Managing Director, Director

Raymond Franke Peter Wuethrich Zafar Hussain Shah Uzma Qaiser Butt

Head of Finance and Control, Secretary Head of Technical Head of Sales Head of Human Resources

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Haseeb Aslam Salman Nazir Adeel Aali Ali Aziz

Country Business Manager (Water) Head of Supply Chain Head of Quality Assurance Product Unit Manager Beverages

Organization Structure

13 National Sales Manager

Zonal Sales Manager

Regional Sales Manager

Customer Service Manager

Area Managers

System Support

Event Management

Customer Service Officers Territory Incharge System Support Officer

Sales Associates

Event Management Officer

DS Leader

Market segmentation and target strategy including consumer profiling

It is really a big market and it is always difficult to segment the big market. There are many uses for segmentation.

Needs Based Segmentation

Milk Pack has made different sizes of tetra packs which can match the needs of buyers, ranging from 0.25 liters to 1.5 liter. Buyers can buy according to there need between these quantities.

Product Segmentation
Manufacturers diversify products within each needs base to appeal to buyers with different tastes and wealth.

Customer Segmentation

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Customers are segmented based on their needs and product preferences. Segments grow or shrink over time as a product improve, become outdated or tastes changes.

Global Segmentation
Insurance firms and medical and legal practices also use product segmentation, and sometimes attempt to cover all the product space.

In-store Display Segmentation

Nestle have also segmented Milk Pack on the bases of In- Store display segmentation. In this type of segmentation the company have given different shelves in bib stores and also given the chillers to some of the agent having the Milk Pack sticker upon them but in Pakistan unfortunately the shop keepers are not using the shelves properly and they have put other brand products on those shelves. Drug stores, grocery stores, book stores, and other retail outlets use segmentation in order to keep like products close to each other within the store, making shopping convenient and cross selling more profitable.

Customer Profiling (Customer Data): Transaction Details

Frequency, amount and timing of purchases, items bought, prices paid, Use of cash or credit.

Acquisitions Details
Marketing channel,

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Promotion type, and Address/city.

Appended Database Data Life Style

Profession/occupation, vehicle ownership, Internet use, Travel, Pets, and Hobbies.

Financial
Investments, credit card usage and type, living expenses, and credit worthiness.

Demographic
Age, income, education, gender, marital status, and Number of kids.

Almost all type of peoples are the consumers of the milk.

Geographic

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Own/rent, urban/rural, size of city, region, and size of dwelling.

Market Research Data Behavioral

Purchase patterns, why they bought, what they use the product for, Responsiveness to different marketing channels.

Attitudinal
Product preferences, willingness to try other brands, price sensitivity, shop for convenience, Opinion of the company and the competition.

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FAB Analysis
Product strategy including a complete FAB analysis, product line and product depth analysis.
Product Characteristics expressed as

Feature
This feature

Advantage
what it does

Benefit
and how it helps the client.

Calcium Vitamin A Phosphorous Protein Iron Vitamin C Market Positioning:

essential for strong bones and teethes strong Improve vision and keeps skin and hair healthy Important for healthy bones and teeth Necessary for cell and tissue growth Stronger the bones it is good for bones.

strong bones and teethes Better eyesight and healthy skin and hair strong bones and teethes Proper growth of cell and tissues It full fill the daily nutrition requirement Stronger bones

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They will position our product as a high quality product consumer focused. Messages like They knows your taste better than us, Nestle Milkpak now at your door step; Add additional flavors to your life will help us portray our picture clearly and distinctly. Milkpak will position our product against the competitors and gain competitive advantage through our efficient promotional methods, using innovations, and by reaching closer to our target market through the arrangement of events like BASANT, VALENTINE DAY and etc. In short consumers will view us as a product providing highly quality, in terms of taste, customer focused and, at the same time reasonably priced as compared to others.

Pricing strategies of Milkpak

Milkpak was first launched in 1988 in Pakistan. Actually this is the Pakistani product and purchased by the Nestle Company. Price of the Milkpak set after the market survey. In this market survey the survey team want to search that how much value consumer actually wants to give this product. They provided the milk to the different people without telling them the name of the company and ask them what should be the price of this one glass milk. In this way company know the willingness of the people that how much money customer actually want to spend on that product. After this they checkout their cost on that product and after analysis they set the price of the Milkpak. After launching it in the market they again check the consumer behaviour regarding price of the Milkpak, and if consumer is satisfy with the product then they ask question to judge the behaviour of consumer that if the price of the Milkpak increased by the company then what will they do. If consumer still satisfied then they increase the price of the Milkpak. CDL have adopted value pricing, in which they charge fairly low price for a high offering. Value pricing says that the price should represent a high-value offer to consumers.

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Value pricing is not a matter of simply setting lower prices on ones products compared to competitors. A matter of reengineering the companys operations to become a low- cost producer without sacrificing quality, and lowering prices significantly to attract a large number of value-conscious customers.

Setting price by looking the competitors

The competitors of milkpak are Haleeb milk, olphars and good milk but the biggest competitor is open milk. Total requirement of milk in Pakistan is 31 billion litres in which only 3 billion litres are provided by packed milk. 28 billion litres are provided by milkmaid. So if the nestle want to set price according to their competitors then they have to set price according to the price of open milk which is not possible.

Marketing Channels
These are the sets of the interdependent organizations involved in the process of making a product or service available for the use of consumption.

Channel Function and Flows

A marketing channel performs the work of moving goods from producer to consumers. It overcomes the time, place and possession gaps that separate goods and services from those that need or want them. It perform number of functions: They gathering information about potential and current customer, competitors, and other actors and forces in the marketing environment. They develop and disseminate persuasive communication to stimulate purchasing They place an order to the company

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They provide for the successive storage and movement of the physical products.

Channel Level
Manufacturer It is a two-level channel, milkpak has its own distributors which are suppose to deliver the milkpak to the wholesaler as well as the retailer,. Consumer Wholesaler & Retailer Distributor

Distribution Situation:
Company is using 2 channels for distribution of milkpak

Retail outlets (indirect channel) Sales promotion officers (direct channel)

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Retail Outlets (indirect channel) : There are many retail outlets in all over
pakistan, which provide every day consumable items to the consumers.. 80 percent of the milks sales would be through indirect channels.

Direct Sales Promotion Channel milkpak is being distributed to institutions

like government institutes, offices, teashops, caters, schools , colleges and marriage halls. This channel will constitute 10 percent of the total milks sales.

Distribution Outlets: to increase the distribution of milkpak in all over Pakistan

these outlets are open..

Distribution
There are many authorized distributors of milkpak. Company has its own network of vans, which deliver the milk to all the retail outlets early morning. The number of vans operational in different cities and rather then this 135 local vans are also used to supply the milk in pakistan. Intermediaries: milkpak identifies the types of intermediaries available to carry on its channel works:

1. Company Sales Forces

milkpak expand its direct sales force, assigning the sales representative to territories to contact all prospects in pakistan

2. Stalls in BAZAAR

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The company also introducing stalls in Sunday Bazaar, Tuesday Bazaar and Friday Bazaar at different location of pakistan and especially to those areas where the sales volume of the milkpak would be low in order to encourage the consumer.

Integrated marketing communication:

Company have a complete imc plan in which they that how can the company will inform their consumer about the new, upcoming product and value added services to the existing product. The sources which can use by the company to inform their consumers are print, electronic as well as through their websites.

Unique selling proposition:

Milkpak is a trend setter in market. They first introduce the packed milk in market. The usp of milkpak is khalis he sub kuch hai. They provided their consumer pure milk and this the usp of nestle milkpak.

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Marketing strategies
Nestle is using 360 degree marketing. That is all employer of firm are marketing the values of firm to consumers. A person from finance department, and person from production department all are marketing for firm.

Core competencies and key successful factors

Ingredients of milk are unique in nature. They are providing iron and calcium in the milk which is a unique combination. Distribution channel and milk collection are also a key successful factor for firm. Firm have a highly sophisticated R and D department which has high budget then any firm in beverages.

Problems Faced By Nestle

Nestle is facing the problem that is regarding the quality of milk. It is being perceive that infant or child belonging to poor family who use low quantity of milk then required in daily use are getting affected. Price is also a factor. Milkpak comprises 50% of profit of firm. Thats why price compromise can not be done. Firm is not advertising the milkpak on its official web site in first view although it is giving highest profit to firm. High collection of milk is required along with the presence of competitors. Quality is not being satisfied and taste as well by new comers. There is no loyalty for as far as milk is considered. Credit system is not possible for firm as being given by local loose milk producer.

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Nestle is operating in a number of dairy products and milk allocation is first settled for other brand and then for milkpak.

Recommendations
Nestle must state in writing that it accepts that the international code and the subsequent relevant World Health Assembly Resolutions are minimum requirements for every country. Nestle must state in writing that it will make required changes to bring its Baby Food Marketing policy and practice into line with International Code and Resolutions. Marketing policy need to be change as far as bill board and TV commercial are concern. Enhance the milk collection procedure

Conclusion
Over all firms is doing its best but certain precaution need to be taken. Quality and processing of milk need to be change so that quality issue does not come. Firm has a strong financial position and highly sophisticated Research and Development program.

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