You are on page 1of 48

Strategic Marketing

Project Report

On

NESTLE MILKPAK

Submitted To:

Mr. Jawad Saleem

Submitted By:

Naveed Ahmed 071191

Rehman Baig 071172 Tariq Waseem 071194 Mazhar Cheema 063171 Hamza
Ahmed 083606

Table of Contents

Executive Summary 4
NESTLE 5

HISTORY OF NESTLE 5

COMPANY VISION 5

COMPANY MISSION 5

PRODUCTS 6

NESTLE IN PAKISTAN 6

NESTLE MILKPAK 6

COMPETITORS 7

Competitive Advantage 7

Demographics of Pakistan 8

Pakistan Milk Market/Industrial Analysis 9

MILK Flow Channels in Pakistan 12

Industry SWOT Analysis 13


Strenghts 13

Weaknesses 13

Opportunities………………………………………………………………………13

Threats………………………………………………………………………………13

Milk Supply Chain in Pakistan 14

Milk Industry of India (SWOT)…………………………………………………....….15

Market Segmentaion of Nestle Milkpak 18

· Geographic Segmentation 18

· Demographic Segmentation 18

Targeting 18

Situation Analysis 18

Awareness: 18

Top of the mind recall 18


Market Share (%) 19

Market Trends 20

Market Potential 20

SWOT Analysis (Nestle Milkpak) 20

Strengths 20

WEAKNESSES 21

OPPORTUNITIES 21

THREATS 21

Positioning Strategy 22

Differentiation 22

Marketing Mix 22

PRODUCT 22

PRICE 22
PLACEMENT 23

Distribution Channels 23

PROMOTION 23

Marketing Strategy 23

Recommendations 23

BIBLIOGRAPHY 24

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. 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 Nestlé’s
famous UHT milk brand. Nestle Milkpak has south Asia’s 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 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

Ø Nestle is the largest food company in the world.

Ø It is present in all five continents, has an annual turnover of 74.7 billion


Swiss Frances.

Ø There are 509 factories are running in 83 countries, having 231,000


employs.

History Of Nestle

Ø Our story begins in 1867, when Henry Nestle developed a baby formula
that saved child’s life and marked the beginning of Nestle.

Ø 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.

Ø His first factory was located in Vevey.


Ø In 1875, He sold His Company and retired.

Ø In 1880, second factory was built in bercher

Ø In 1883, first time Nestle built a factory abroad, in Edlitz Grimmenstein

Ø In 1890, Vevey factory produced 28 billion cans of Milk food and 2.2 million
cans of condensed Milk.

Ø In 1912, Nestle begins it long relationship with South Asia when Nestle
condensed Milk company start.

Ø In 1979, Milkpak Ltd. Is founded by Syed Baber Ali. It manufactures UHT


Milk, Cream and Butter as well as fruit Juices.

Company Vision

Ø Vision of Nestle Milkpak is to expand business according to the increasing


demand of market.

Ø As per our company vision in 2020 production capacity of all plants working
in Pakistan is being increased.

Ø So extension of Kabirwala Plant is the example of our company vision.

Company Mission

Ø At Nestle, we believe that research can help us to make better food, so that
people live a better life.
Ø 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.

Products

• Bottled water

• Baby food

• Dairy products

• Breakfast cereals

• Nutrition

• Prepared food

 
Nestle In Pakistan

Ø Nestle have been serving Pakistani consumers since 1988 when the parent
company’ Switzerland based’ on Nestle first acquired share in Milkpak.

Ø Nestle acquires 40% share in Milkpak.

Ø In 1990, Sheikhupura factory started the production of Nido Milk Powder


cereals;

Ø 1n 1992, Nestle took over the running of company (Kabirwala plant) and
began to develop its Milk collection network.

Ø In 1996 Milkpak was renamed to Nestle Milkpak Ltd.

Ø In 1997, It becomes a fully owned unit of Nestle Pakistan.

Ø 1n 1998, Nestle Milk collection system in Punjab matures and company is


able to buy all its Milk from Farmers instead of relying on contractors.

Ø In 2005, Nestle Milkpak Ltd. Is renamed again Nestle Pakistan.

Nestle Milkpak

Ø “ Dhood ki Qudrati Ghizayat Pure, nutritious goodness of Milk”

Ø Pure, rich and delicious Nestle Milkpak standardized (UHT) benefits from
Nestle’s expertise in bringing you the best life has to offer and benefits from
140 years of consumers trust.

Ø Encourage your family to exercise regularly, eat a healthy, well balanced


diet and drink pure, nutritious Milk for good health.

Ø 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 followings:

Ø 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).

The contents of the above said products have the following fruitful benefits
for health improvement of Human body.

Ø Calcium

It is important for the growth of strong bones and teeth.

Ø Protein

It is necessary for cell and tissue growth.

Ø Phosphorous

It is important for healthy bones and teeth.


Ø Vitamin A

It improves vision and keeps skin and hair healthy

Competitors

The main competitors of Nestle Milkpak are:

Ø Haleeb Milk

Ø Olpers milk

Ø Good Milk

Ø Dairy Queen Milk

Competitive Advantage

Ø Nestle Milkpak never compromises on quality.

Ø Nestle Milkpak’s extensive milk collection system ensures that the milk you
get is of the finest quality.

Ø Nestle’s products are available in every city and town

Ø Nestle is using the latest technology in its production units.


Ø Nestle makes milk powder of the surplus milk in winter and converts this
milk powder into UHT milk in summer.

Demographics of Pakistan

Pakistan is a small country with limited resources. But the population of


Pakistan is 180,000,000. Pakistan has 6th number in population in the world.

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.)

Age Structure
· 0-14 years: 40% (male 33,293,428; female 31,434,314)

· 15-64 years: 56.9% (male 48,214,298; female 46,062,933)

· 65 years and over: 4.1% (male 3,256,065; female 3,542,522) (2007est.)

· Sex ratio at birth: 1.05 male(s)/female

· under 15 years: 1.06 male(s)/female

· 15-64 years: 1.05 male(s)/female

· 65 years and over: 0.92 male(s)/female

· Total population: 1.05 male(s)/female (2007 EST.)

Literacy:

Definition: Over the age of 15 and can read and write.

· Total population: 54% (2004 EST.)

· Male: 60%

· Female: 40%
 

Population of Major Cities of Pakistan

Cities

Population

Karachi
15 Million

Lahore

9 Million

Rawalpindi

3 Million

Faisalabad

2.6 Million

Multan

1.6 Million

Gujranwala

1.3 Million
Hyderabad

1.3 Million

Islamabad

1.3 Million

Peshawar

1.0 Million

Pakistan Milk Market/Industrial Analysis

Ø Pakistan’s economy is predominantly agrarian in nature.

Ø Agriculture accounts for 20.9 percent of the GDP.

Ø 43.4 percent of the total work force is from agriculture sector and it is the
main source of livelihood for 66 percent of the country’s population living in
rural areas.

Ø Growth in the agriculture sector registered a sharp recovery in 2006-07


and grew by 5%.

Ø Pakistan is the 5th largest milk producing country in the world.

Ø An estimated 33.25 billion liters of annual milk is produced.

Ø Approximately 50 million animals managed by 8 million farming


households.

Ø Contribution of the livestock sector to Pakistan’s GDP is at 11% while the


processed milk sector contributes about 0.43 per cent.

Ø The milk economy represents 27.7%2 of the total value of the

Agriculture sector.

Total Target Market Of Milk

180000000

Annual Production Of Milk

(Billion Liters)

33.25
Total market of Gawala (96%) Billion liters

31.92

Total EXISTING market of processed milk (4%) Billion Liters

1.33

Need Analysis (UHT and Loose Milk)

Predicted Supply of Fresh and UHT Milk

Year

Supply of fresh milk

(Million liters)

Supply of UHT milk

(Million liters)
2007-08

33805.10

557.72

2008-09

35495.25

648.43

Projections of Fresh Milk Production and Consumption Up to 2008 – 09

Years

Annual Production

(million liters)
Annual Consumption

(million liters)

2008-09

35495.25

36361.25

2009-10

37669.75

38188.92

About 1.02 billion liters milk is imported.

Projections of UHT Milk Production and Consumption up to 2008– 09


Year

Annual Production

(million liters)

Annual Consumption

(million liters)

2008-09

648.43

353.71

2009-10

753.89
372.05

Our projections show increasing deficits in fresh milk production and


increasing surpluses in UHT milk market in the run up to 2009-10, which
suggests that the industry should get ready to face challenges.

The analysis shows that Pakistan’s milk yields are very low, and even simple
management of feed (proper timing, proper mix and so on) can increase yield
substantially. This requires intervention at two levels:

a) The farmers need to have better knowledge of feed management. This can
be done by involving milk plants and provincial livestock departments who
can provide training and extension services to dairy farmers.

b) The feed industry needs to be developed substantially to provide better


quality animal feed at affordable prices. Currently we do not have sufficient
supply of high quality nutrients and additives, especially in rural areas. A
specific package needs to be developed with the help of the government and
in partnership with the private sector that would facilitate and encourage the
development of a modern feed industry. Further, the vast potential of using
molasses as concentrate in animal feed also need to be taped.

 
 

Milk Flow Channels in Pakistan

Dairy Farmer

Formal sector 4% Share

Informal Sector 96 % Share

Gawala (Milkman)
 

Retailer

Milk Collector

Distributor/Retailer

Milk Processing Plant

Milk Collection Agency

Customer

Industry SWOT Analysis

Strenghts:

· Pakistan dairy industry is the World’s fifth largest industry

· Pakistan Dairy Industry is Cheaper than Austrai, America and other


deveolped countries.

· Farmers are engaged in agriculture and dairy at the same time.


· By-product of Agriculture is used in Dairy

· By-product of dairy is used in agriculture.

Weaknesses:

· Poor profitability for farmers.

· Lack of contact for farmers to the market mechanism.

· Poor dairy infrastructure in rural areas.

· Lack of education among the farmers is making it difficult to change farm


and dairy management systems.

· Lack of knowledge about optimal feed.

· Lack of a cold chain to protect milk quality.

· Lack of access to well trained support service staff such as

Veterinarians.

· Despite the huge volume of milk produced in Pakistan, processors find it


hard to procure sufficient milk to meet future consumer demand.

· Increasing demand for imported products.


· The product range offered to consumers is not well developed.

· Production of milk falls to 55% of peak production at its lowest point in mid-
June.

· The demand increases 60% during June compared to December when the
milk supply is ample.

Opportunities:

· There is an opportunity for companies to introduce value-added products


like shrikhand, ice creams, paneer, khoya, flavored milk, dairy sweets, etc.

· There is a phenomenal scope for innovations in product development,


packaging and presentation.

Threats:

· Very low quality milk is provided by the milkmen to dairy farms which is a
very big threat for the entire market.

· The shortage of milk providing animals is also a threat for entire milk
industry.

Milk Supply Chain in Pakistan

 
 

Consumer

Gawala (Milkman)

Halwai (sweet shop)

De-creamer

Milk Collector

Dairy Farmer

 
 

Retailer

 
 

Milk Industry of Neighbour Country (India ):

Strenghths:

· Demand profile:

Absolutely optimistic

Margins:
Quite reasonable, even on packed liquid milk.

· Flexibility of

product mix:

Tremendous with balancing equipment, you can keep on adding to your


product line.

· Availability of raw material:

Presently, more than 80 per cent of milk produced is flowing into the
unorganized sector, which requires proper channelization.

· Technical manpower:

Professionally-trained, technical human resource pool, built over last 30


years.

Weaknesses:

· Perishability:

Pasteurization has overcome this weakness partially. UHT gives milk long life.
Surely, many new processes will follow to improve milk quality and extend its
shelf life.

· Lack of control over yield:


Theoretically, there is little control over milk yield. However, increased
awareness of developments like embryo transplant, artificial insemination
and properly managed animal husbandry practices, coupled with higher
income to rural milk producers should automatically lead to improvement in
milk yields.

· Logistics of procurement:

Woes of bad roads and inadequate transportation facility make milk


procurement problematic. But with the overall economic improvement in
India, these problems would also get solved.

· Problematic distribution:

Yes, all is not well with distribution. But then if ice creams can be sold
virtually at every nook and corner, why can’t we sell other dairy products
too? Moreover, it is only a matter of time before we see the emergence of a
cold chain linking the producer to the refrigerator at the consumer’s home!

· Competition:

With so many newcomers entering this industry, competition is becoming


tougher day by day. But then competition has to be faced as a ground reality.
The market is large enough for many to carve out their niche.

Opportunities:

"Failure is never final, and success never ending”. Dr Kurien bears out this
statement perfectly. He entered the industry when there were only threats.
He met failure head-on, and now he clearly is an example of ‘never ending
successes! If dairy entrepreneurs are looking for opportunities in India, the
following areas must be tapped:

· Value addition:

There is a phenomenal scope for innovations in product development,


packaging and presentation.

Given below are potential areas of value addition:

o Steps should be taken to introduce value-added products like shrikhand, ice


creams, paneer, khoa, flavored milk, dairy sweets, etc. This will lead to a
greater presence and flexibility in the market place along with opportunities
in the field of brand building.

o Addition of cultured products like yoghurt and cheese lend further strength
- both in terms of utilization of resources and presence in the market place.

o A lateral view opens up opportunities in milk proteins through casein, and


other dietary proteins, further opening up export opportunities.

o Yet another aspect can be the addition of infant foods, geriatric foods and
nutritional.

· Export potential:

Efforts to exploit export potential are already on. Amul is exporting to


Bangladesh, Sri Lanka, Nigeria, and the Middle East. Following the new GATT
treaty, opportunities will increase tremendously for the export of agri-
products in general and dairy products in particular.
Threats:

· Milk vendors, the un-organized sector:

Today milk vendors are occupying the pride of place in the industry.
Organized dissemination of information about the harm that they are doing to
producers and consumers should see a steady decline in their importance.

The study of this SWOT analysis shows that the ‘strengths’ and
‘opportunities’ far outweigh ‘weaknesses’ and ‘threats’. Strengths and
opportunities are fundamental and weaknesses and threats are transitory.
Any investment idea can do well only when you have three essential
ingredients: entrepreneurship (the ability to take risks), innovative approach
(in product lines and marketing) and values (of quality/ethics).

The Indian dairy industry, following its deli censing, has been attracting a
large number of entrepreneurs. Their success in dairying depends on factors
such as an efficient yet economical procurement network, hygienic and cost-
effective processing facilities and innovativeness in the market place.

All that needs to be done is: to innovate, convert products into commercially
exploitable ideas. All the time keep reminding yourself: Benjamin Franklin
discovered electricity, but it was the man who invented the meter that really
made the money.

Market Segmentaion of Nestle Milkpak

· Geographic Segmentation:
Milkpak has segmented the market on the basis of Geographic segmentation
and its target market is major populated cities of pakistan

· Demographic Segmentation:

Nestle Milkpak is also segementing the market on the basis of Income level of
the people. Three Income level has been defined; Higher, middle and lower
income classes.

Targeting

Ø Urabn areas of the country

Ø Upper and Middle income class

Situation Analysis

Awareness:

Top of the mind recall

Due to strong brand positioning and effective advertising, Milkpak has


highest awareness level.

Brand
Awareness (%)

Milkpak

43

Haleeb

38

Olpers

Dairy Queen

Good Milk

2
Nurpur

Market Share (%)

Good Milk

Milk Pak

45

Dairy Queen

Haleeb
22

Olpers

17

Nur Pur

Others

The table shows that Milkpak has the highest market share due to its
consistent quality.

 
 

Market Trends

• The growth of processed milk is increasing by 20% annually

• People are getting more quality and health conscious with the passage of
time

• Due to impurities of Gawala milk, people are attracting towards processed


milk

Key factors are:

• Changing lifestyle

• Influence of foreign media

Market Potential

• At an average, a Pakistani consumer spends 42 % of income on food

• Consumer often prefer branded food items for both quality and status
reasons

• Per capita real GDP has increased at an average of 5.6 % per annum during
the last three years
• This increase has led to a rise in average income of people and an increase
in consumer spending.

SWOT Analysis (Nestle Milkpak)

Strengths:

· Strong Brand image:

Nestle has been serving the Pakistani consumers since 1988, and it has built
a strong brand image due to its quality products.

· Quality product:

Nestle Milkpak is known as the best UHT milk in Pakistan due to consistency
in quality.

· Solid Financial position:

Nestle Milkpak’s annual turnover is Rs.30 Billion which provides it a financial


edge over its competitors.

 
· Strong supply chain network:

Nestle collects Milk directly form the farmers instead of relying on the
contractors. And it distribution is also very strong. In this way it has a
complete control over its supply chain.

· Qualified work force

· Commitment to High Quality Products

· Focus on research and development

Weaknesses:

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. This is the only weakness of Milkpak.

Opportunities:

Estimations of UHT Milk Production and Consumption up to 2008– 09

Year

Annual Production
(million liters)

Annual Consumption

(million liters)

2008-09

648.43

353.71

2009-10

753.89

372.05

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:

• 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.

Positioning Strategy

• Functional Positioning

Nestle Milkpak has adopted the functional positioning strategy like:

“Khaalis He Sab Kuch Hai”

“Wohi Qudarti Maza”

“Jaan Banaoo”
Differentiation

Addition of IRON and Vitamin “A & C”

Marketing Mix

Product:

• Quality Product

Nestle Milkpak has the largest market share due to its consistent quality.

• Product Style and logo

Nestle Milkpak is available in different product range and stylish packaging.

• Product Lifecycle

Nestle Milkpak has been in the market for a very ling time and it is at
maturity stage.

Price:
• Competition Based Pricing

Milkpak is holding a large share in the market due to its quality at same price
as compared to competitors.

Placement:

Distribution Channels:

Milkpak is not sold directly to consumers and the complete distribution


process is followed. It uses indirect channels for distribution like:

ManufactureràDistributoràWholesaleràRetaileràConsumer

Promotion:

• Focusing on health conscious people in their advertisement.

Promotion Mix

• Advertisement

• Public relations

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.

Recommendations

· 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.

Bibliography

Mr. Imran Rasool: Executive Marketing, Nestle MilkPak.


Mr. Shehzad Anwar: Assistant Area Sales Executive Nestle Milkpak.

Mr. Mustafa Zaidi: Joint Director Research and Development, Lahore Chamber
of Commerce.

Dairy reports:

White Revolution by Pakistan Dairy Development Company

Year book 2006-07, By Ministry of Food, Agriculture and Livestock.

Websites:

http://www.google.com

http://www.wikipedia.com