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.
Ø
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

Supply of fresh milk Supply of UHT milk

Year
(Million liters) (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

Annual Production Annual Consumption

Years
(million liters) (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

Annual Production Annual Consumption

Year
(million liters) (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 9

Dairy Queen 7

Good Milk 2

Nurpur 1

Market Share (%)

Good Milk 1

Milk Pak 45

Dairy Queen 9

Haleeb 22

Olpers 17

Nur Pur 4
 Others 2

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

Annual Production Annual Consumption

Year
(million liters) (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