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ENGLISH BISCUIT MANUFACTURERS LIMITED
Submitted by: MAVISH ZAMAN
Table of Contents
EXECUTIVE SUMMARY............................................................................................................................6 ENGLISH BISCUIT MANUFCTURERS..................................................................................................10 AN OVER VIEW..........................................................................................................................................10 AN OVERVIEW...........................................................................................................................................11 PROBLEM STATEMENT..........................................................................................................................13 SWOT ANALYSIS.......................................................................................................................................15 STRENGTHS................................................................................................................................................16 WEAKNESSES.............................................................................................................................................16 THREATS.....................................................................................................................................................16 OPPORTUNITIES.......................................................................................................................................16 DEMOGRAPHICS ECONOMIC ENVIRONMENT NATURAL ENVIRONMENT TECHNOLOGY POLITICAL ENVIRONMENT CULTURAL ENVIRONMENT TASK ENVIRONMENT MARKETS EXPECTED MARKET SHARE10 DANE CBL 20 22 27 28 29 32 34 35 37
GROWTH STRATEGIES4 (KOTLER) 38 EBM HAS SEGMENTED ITS MARKET ON THE BASIS OF INCOME AND AGE AND LIFE-CYCLE STAGES, THUS ADOPTING A MULTIVARIATE DEMOGRAPHIC SEGMENTATION4 (KOTLER). INDIVIDUALS FROM DIFFERENT INCOME AND AGE GROUPS CONSUME EBM BRANDS AND EBM HAS DESIGNED ITS PRODUCTS ACCORDINGLY. FOR INSTANCE, THE COMPANY’S FRONT RUNNER BRANDS LIKE RIO, MARIE AND GLUCO ARE PRICED IN THE RANGE AFFORDABLE TO THE UPPER AND MIDDLE INCOME GROUPS. WHEREAS, THE LOWER INCOMED CONSUMERS GENERALLY GO FOR TICK PACKS, HALF ROLLS, ORDINARY AND PLAIN COMPANY BRANDS SUCH AS THE SALTISH COOKIES. SOOPER, PARTY ETC. 41 MARKET TARGETING 41 CUSTOMERS 43 NEED/WANT ANALYSIS 43 PUBLICS 58 MARKETING STRATEGY AUDIT..........................................................................................................60 MARKETING STRATEGY AUDIT..........................................................................................................61 BUSINESS MISSION MARKETING OBJECTIVES MARKETING STRATEGY BUDGETS 62 66 68 72
......................................................................................................................93 SYSTEMS ANALYSIS......................................................................................................................................................................................................................................116 PRODUCTS 117 BRANDING........................................................................................129 THE MESSAGE.....................................................................................................................................................................................................114 MARKETING FUNCTION AUDIT...................................................................................................................................................... SALES PROMOTION AND PUBLICITY 121 123 127 INCENTIVE PLAN FOR THE DISTRIBUTORS OF EBML33................................................................................118 PACKAGING ......................................................................93 MARKETING SYSTEMS ANALYSIS 94 LAUNCHING DECISIONS26 INTERVIEWS........................................................................................................................................115 MARKETING FUNCTION AUDIT.............................................................................................................................MARKETING ORGANIZATION AUDIT.................................................114 .......................128 BUDGETS(% CONSTRUCTION—FOOTNOTE)...................................................................................................120 PRICE DISTRIBUTION ADVERTISING........81 FORMAL STRUCTURE FUNCTIONAL EFFICIENCY INTERFACE EFFICIENCY 82 86 90 MARKET .........................................................................................................................................................................................................................................................................105 COST OF DIRECT LABOR...........94 SOURCES OF GETTING RELEVANT INFORMATION (KOTLER)..........130 SALES FORCE 131 THE SALES FORCE STRUCTURE ............................................................127 PERSUASIVE PROMOTION4 (KOTLER)................131 4 ..........................................................................................................................................................................................................................................80 MARKETING ORGANIZATION AUDIT................................................96 MARKETING PLANNING MARKETING CONTROL SYSTEM NEW PRODUCT DEVELOPMENT PROFITABILITY ANALYSIS COST EFFECTIVENESS 100 103 104 106 107 MARKETING PRODUCTIVITY AUDIT...............119 PRODUCT LINE..............................................................................................125 INFORMATIVE PROMOTION4 (KOTLER)..........................
..................................................................................................................................................................................136 5 ........................................................CONCLUSION............................................................................135 BIBLIOGRAPHY................................133 APPENDICES..........................................................................
EXECUTIVE SUMMARY 6 .
"Marketing Audit of English Biscuit Manufacturers (Pvt. The reason why we chose EBML is that the biscuit industry in Pakistan is currently experiencing high competition between the two major players. To regain its lost market leadership EBML has been forced to reconsider and replan its marketing strategies and reposition itself in the biscuit industry. systems. Finally we have given our recommendations and opinions which we have come up with after making our analysis." (EBML). is a project for our Principles of Marketing course in our 3rd Semester at the Institute of Business Administration. 7 . which we have learnt in our Principles of Marketing course. and strongly challenging its competitor for its lost share. we aim to identify the compatibility of the company's basic marketing strategies to its resources. its strengths and weaknesses. Baber Wahab. It has also given us a valuable chance to apply the concepts. Through this. structure of the company and ultimately the biscuit industry.EBML had been and is a major player in the biscuit industry. We have used this opportunity to put forth our own views and analyses of EBML's environment. the effectiveness of the company's control system and finally how they have actually gone about implementing their strategies. productivity and functions. Infact it had been the market leader until the arrival of Continental Biscuit Limited (CBL). that is EBML and LU. which is actively.EXECUTIVE SUMMARY Our Project This report. We conducted the report under the guidance of our instructor Mr. What Do We Aim To Present? Our main focus in this report is the Marketing Audit of EBML. organization. This has given us the opportunity to analyze a company.) Ltd. strategies. the makers of LU Biscuits.
the Marketing Organization and the Marketing System. functions and control systems. 8 . SWOT Analysis. Environmental Factors. price. These concepts have helped us in understanding the various strategies and functions being performed in EBML. We have in this respect started by applying the following marketing concepts and terms: • • • • • • • • The Core Marketing Concepts. Marketing Philosophies. We will then focus on the productivity and finally conclude by analyzing the marketing functions such as products. we have tried to apply the various concepts and strategies taught to us in our course. distribution. promotion and sales force. Analysis of EBML’s Portfolio. The Marketing Mix. Application of Concepts and Strategies By observing and analyzing EBML’s environment. Also included will be other alternatives and contingency plans. organization. Following the audit we will focus on our analysis and in turn will present our recommendations for EBML. Product/Market Expansion Grid. strategies.In this process we have began by analyzing EBML’s micro and macro environment. Characteristics affecting Consumer Behavior. This is then followed by an audit of EBML’s Marketing Strategy.
Branding. Recommendations In this respect we have tried to give our recommendations which we thought the company should consider. Product Mix. Packaging. 9 . In addition to that our recommendations have been based on the way we have approached company cases in our course. Product Support Services. Features and Design. Product Quality. This is obviously been based n our analysis and findings. Market Segmentation and Selection. These recommendations are given within the audit itself and relate to the concepts that we have identified relevant to EBML’s case. Demand Forecasting. Market Positioning.• • • • • • • • • • Types of Buying Decisions. Product ands Service Differentiation.
ENGLISH BISCUIT MANUFCTURERS AN OVER VIEW 10 .
which were not properly equipped to respond to EBM’s expansion strategies. enjoyed the position of market leader till the entry of Continental Biscuit Limited (CBL). The changing consumer preferences and wants provided the company to rethink its positioning in the market.ENGLISH BISCUIT MANUFACTURERS (PVT) LTD. Peek Freans and EBM. EBM successfully launched its mega brand EBM by stretching downwards with a lower quality than its Peek Freens brand1. Thus. however. 11 . The following brands entered in the Pakistani market: • • • • Meiji Biscuits LU Biscuits Wolf Biscuits Swiss Biscuits Competition was brought to an equilibrium state in the 90s with the establishment of Peek Freens and LU as the two main brands side by side. 2 The 80s. which also included international brands. after which it acted as a market challenger to actively regain its lost market share. An Overview Biscuit industry in Pakistan has been the center of fierce competition between two main competitors. Later in the 80s. set up in 1967. The company sells a wide variety of micro brands under two mega brands. marked the entry of new arrivals in the biscuit industry. EBM and CBL. English Biscuit Manufacturers. following a Brand extension as well as Line extension strategy to create greater brand equity. EBM faced competitors like Montgomery and AB in the 70s.
the company has undertaken a large-scale selling and promotion effort in order to increase its market share and create a stronger brand image. EBM has sponsored baby-contests and the Godzilla scheme in an attempt to attract more customers and to profitably reinforce its brands in the market. marketing strategies and action plans after the marketing audit. We later present a detailed analysis of it’s current situation. it also follows the Selling Concept. These are a few of our observations and findings related to the company operations. a comprehensive market plan which would include the company’s objectives and issues.EBM is currently following the Production Concept of management. Our recommendations and specific concepts related to EBM follow. 12 . In face of stiff competition. under which it produces products that are highly affordable and easily available in the market. threats and opportunities. Therefore.
PROBLEM STATEMENT 13 .
is engaged in differentiation and value-pricing strategies. capitalize on its Pied Piper icon and increase market share of its profitable front runner brands. currently a market challenger in the biscuit industry. stiff competition from LU and changing consumer preferences are the main hurdles in EBML’s efforts to regain its lost market leadership position in the industry. the wide product line of the company constituting various products in the decline stage is cannibalizing the front runner brands like Rio. 14 . Marie. desired position and the hurdles faced by it in its way to accomplish its desired position. Moreover. However. and Gluco.Problem Statement1 EBML. 1 The Problem Statement has been prepared by analyzing the company’s current situation.
SWOT ANALYSIS 15 .
SWOT Analysis3 Strengths • • • • • • • A wide product line The Pied Piper icon A strong distribution network Innovation in terms of new ingredients Value pricing A well implemented offensive strategy • Competitive advantage in terms of more varieties of biscuits • Established brand equity Ineffective innovation in production • • • Weaknesses Vague impression in the minds of the consumers of the relationship of Pied Piper with EBM & Peek Freans both Inability to capitalize on individual brand advertising A wide product line which is cannibalizing the front runner brands Threats • Stiff competition from LU in terms of • packaging. branding. and advertising • • Changing consumer preferences Availability of foreign brands. like • Oreo • Opportunities Converging the company’s distributors Availing more shelf space and enhancing distribution coverage More concentration on the “kids segment” 16 .
indicating it as a family brand (Smile. Ringo) THE MARKETING AUDIT 17 . Venice.• Fast losing market share brands • Capitalizing on its Pied Piper icon.
MARKETING ENVIRONMENT AUDIT Macro Environment • • • • • • Demographics Economic Natural Technology Political Cultural Task Environment • • • • • • Markets Customers Competitors Channels Suppliers Publics 18 .
MACRO-ENVIRONMENT 19 .
with major focus on Income and Age segmentation. • 4 Age composition: According to the Economic Survey of Pakistan (1997-98 issue). However. • 4 Migration of rural population to urban areas: With a huge majority of the rural population migrating to the urban centers of the country for employment purposes. the major focus of the distribution of packaged foods is the urban population now. The various changes in the demographic features of Pakistan over the past few years have affected the production and distribution activities of EBM. Changes in lifestyles and primarily the marketing and advertising efforts of the entire food industry have forced people to go for much healthier food. But according to EBM. the Kasur district in the province of Punjab is the biggest market for EBM brand Rio. this is because the distributors are strong in Kasur due to which Rio has a 100% market share in the area. macro-analysis is of utmost importance since it provides a bird’s eye view of a complex combination of all the factors that are outside the company itself but have the ability to affect the development of the company as a whole. 1998. whereas previously biscuit companies such as Meiji and Montgomery were consumed to a great extent in the less developed areas of the country. At EBM.024 million on Jan 1. The high 20 . segmentation has also been done on the bases of demographics. Such factors have also affected EBM and its production activities to a great extent.MACRO-ENVIRONMENT In the study of a company’s environment. Mehmood Nanji. VP Marketing presented a comprehensive picture of all the major factors as well as the issues and problems within which EBM currently operate. Demographic trends in Pakistan are basically a function of the age composition. the population of Pakistan stood at 139. In his interview Mr. A brief account of our observations and findings follows: DEMOGRAPHICS EBM describes biscuits as a food between meals and a favorite of snack for children.
41% 21 . In case of EBM within the Pakistani biscuit industry.024 Age structure <15 years 46.66% Female years 63 1998 est. EBM has also segmented the population of the country according to age composition. Since the major target of the biscuit industry.40 1000 persons per persons 15-64 49.expectancy as well as mortality rates in the country have slowed down the economic progress to a great extent. is the segment of the population under the age of 15 years and some in the 15 to 54 years age bracket. >65 3. To meet the demands of this market segment.2 36 1000 per 97. EBM provides its famous brands such as Rio. 1998 est.93% Density Population of Rate population Growth of Life Expectancy Crude Birth rate Infant Mortality rate 156 persons/sq. the major target market for its biscuits is constituted by the population less than 12 years of age. km 2. as regards to the age composition is concerned. 1998 est. therefore the prospects seem bright for the biscuit manufacturers. 5 Population (millions) 139.77% year per Male years 63. Gluco and Marie with high nutrition ingredients specifically for the school-going children.
The literacy rate in Pakistan is 38. Our interview with the VP Marketing revealed the following facts related to the economic factors affecting EBM. ECONOMIC ENVIRONMENT Many changing economic scenarios over the years have affected the biscuit market. EBM. maintenance of quality standards is the prime objective to provide value and satisfaction. population in the primary stage. Income size: Changes in the incomes of the households have brought along with them opportunities as well as problems for the entire packaged foods industry of Pakistan. savings and borrowing rate have had a great impact on the biscuit industry(Kotler). So marketers are seeing good opportunities to cater to such expanding markets. especially healthier and nutritious food. EBM has an advantage of catering to this specified and identified market for its major brands such as Gluco and Rio. i.e. A major chunk of the educated population in the country now go for packaged food and need quality assurance in the products they buy. According to the Economic Survey of Pakistan 1997-985. biscuits included in that category. Changes in the income level. which these value-oriented consumers want. For EBM. Increasing education level: The increasing education level has made the consumers more aware of quality-oriented products. interest rates prevailing in the country. Now more money is being allocated to non-essential products. 22 . Opportunities in the sense that now customers have greater purchasing power and they are spending more on almost every category of products that obviously includes food products thereby bringing about more spending in biscuits. with 806000 higher educated students.6 %. Consumers now are switching to fast foods especially recreational food products. With such a major portion of the educated population in the school going category. being a factor of biscuit market has also been affected4. Class 1.Class 5 constitutes 77% of the total educated population.
which are within the purchasing power of the common man.3 45 45. it is also important to produce a value for money. and obviously biscuits since biscuits are the main snack between meals.6 50. This has the indications that people now spend more on consumer goods.6 As seen from the table above.7 6. Trends in Household Income distribution in Pakistan (Source: Economic Survey of Pakistan)5 Year Household Combined: 20% 1987-88 1990-91 1992-93 1993-94 8 5. 23 .2 9. food being the most important one. hence new customers are entering the market and now markets are growing in terms of potential customers that can be catered to. the middle income group has gradually increased over the years. Also people who could not afford fast food before can now afford it. And EBM is doing just that.But in order to cater to the production of these packaged brands.2 Income Middle: 60% 48.
total foreign investment in the year 1996-97 was $949. With advances in transportation and distribution methods.5 million. consumers in these areas are also becoming increasingly aware of the value of their money. For example. biscuits of all types are now making their way into theses areas creating a new market but a smaller one as compared to the urban areas. Uplift of restrictions from foreign imports has created a problem by increasing competition and evoking a price war.) Source: Economic Survey of Pakistan 1997-985 Year 1990-91 1992-93 1993-94 Pakistan 3168 3590 3915 Urban 30701 4976 5571 Rural 2931 3070 3248 With the monthly average household income of rural areas is also on a rise.Monthly Average Household Rural/Urban Income (in Rs. Along with these foreign investors local 24 .9 Provisional Consumer Price Index 7. Oreo is now available in Pakistan.3 as % of GDP National Savings 14.5 as % of GDP Foreign competition: Foreign investors are also entering the Pakistani consumer market.8 Provisional Total Investments 17. Selected Macroeconomic Indicators (Source: SBP Annual Report 1997-98) GDP Deflator 8. According to the Economic Survey of Pakistan 1997-985.
58 to Rs. this flexibility does not come without investment. Over these years. and of course. Increased purchasing power and exposures to foreign products have bestowed customers with more rights to choose among different brands and companies. The price is about Rs. 4000 per day worth of Oreo and according to the store incharge. This calls for more flexibility and adjustment to the market. They now can select among at least a thousand different brands from a hundred different companies. The 25 . inflation ranged from 10.8% to 13%7. 3000 to Rs. the prices range from Rs. Clifton. Income and Inflation: Pakistan has experienced sustained inflation over the last 4 years. Bahlsen’s: Another foreign brand occupying a large shelf space in the store. Source: Cliff Cool Departmental Store. Cliff Cool. definitely that has been an effect on biscuit industry and one needs to become more flexible catering to larger customer base as is in the case of EBM. Baker’s Pride: Baker’s Pride also has many varieties and also offers chocolate rolls amongst other biscuits. as measured by the changes Consumer Price Index (CPI). 60. It has become a norm of the industry to adjust according to the needs and demands of consumers. a major departmental store in Clifton sells Rs. which include Clubs. The following the various foreign brands of biscuits. 100.production is also increasing and every now and then we hear of a new biscuitmanufacturing firm entering the market. This high inflation rate has enforced major economic and social costs and the persistence of double-digit inflation rate was of major threat to macro economic growth and stability. 98. So. Teddy’s etc. from 1993-94 to 1996-97. The brand has various varieties. 50 to Rs. ticky packs and crackers available in the market now: Oreo: the large pack sells for about Rs. Oreo is in great demand these days.
pricing and inflation have always had a pressuring on businesses for it makes credit terms difficult to be liberalized and eventually have an adverse effect on sales. 26 . bringing purchasing-side advantage to the company as it gets low-price benefits on bulk purchases (Kotler).2% in 1997-987. Brands that were once produced at 20 tons are now being produced at about a 100 tons. Also the wastage associated with production is being reduced to save money and the environment. these costs would be a lot less. Income. More transactions now are carried out in cash and credits are extended to only those customers whose worthiness has been proven. What EBM is doing in this respect is that it tries to avail every opportunity and tries to get the best out of it. This does cost the company problems concerning sales but it believes that if it maintains quality standards. now they have about twenty suppliers to reduce their dependence on them and to strike the best deal out of these suppliers. Catering to the expanding market EBM’s production has increased enormously. Addressing to the credit extension problem the company has decided to carry out all its sales and purchase transactions in cash. thereby. stood is 8. however. but it is also an opportunity for marketers. Inflation has led to increased prices and has made consumers more conscious of the value of their money and the ways in which they spend it7. 4 Economies of Scale in production: The production facilities at EBM give the company an advantage as it realizes economies of scale in its production. Initially it had one supplier.inflation rate in Pakistan.
which on an average produce 5. (Source: Economic Survey of Pakistan 1997-98)5. The company sets aside a portion of its revenue for meeting these unforeseen increases in energy costs. Wheat from Punjab has a different glutin base as compared to the wheat in Karachi or the wheat that is imported from the US. In Pakistan. among other companies. the biscuit industry has abundant availability of sugar and also at reasonable prices. • 4 Availability of raw material(Kotler): As far as the raw materials are concerned. the wheat used contains a glutin base. EBM is also facing a high energy cost but this increase in costs is not transferred onto the consumers. EBM fulfills most of its wheat requirements from abroad. are increasing constantly due to which.4 million tones of sugar as against a total aggregate demand of 2. especially those of electricity. butter and sugar. Therefore the scarcity of wheat has increased costs for the company but these costs are not passed on to the consumers. For manufacturing biscuits. EBM has the availability of sugar as well as butter or vegetable oil. the availability of wheat is a problem. Glutin is an ingredient used to keep the biscuits together so that they do not crumble. EBM has easy availability of sugar in the country. • 4 Costs of Energy:(Kotler) The major sources of energy for the food industry in Pakistan are electricity. However. 27 . EBM manufactures safe products and is involved in energy-efficient operations.9 million tones in the country. gas and petroleum for the running of the machinery. Energy costs. the natural resources include basic biscuit ingredients such as wheat. sugar is produced by 76 sugar mills. As far is sugar is concerned. • 4 Environment-friendly company(Kotler): The VP Marketing has described EBM as an environment friendly company in the sense that there is no spoilage in the production process and no disposal of harmful waste material. Moreover. Therefore. EBM also supports such public related causes as The Kidney Center Walk-a-Cause and sponsors other such causes to enhance its image amongst the general public.NATURAL ENVIRONMENT In the natural environment of the entire biscuit industry.
The rapid technological progress has eased the biscuit manufacturing process by introducing gas ovens. Even though technology plays an important role in the biscuit industry of Pakistan. viz. formation of the dough. yet it is not as fast paced as it is in other major industries. fire bricks Weighing scale Tools and equipment 28 . viz. brick ovens were used in the biscuit industry. The various machinery used in biscuit manufacturing is:8 (IRS-Report in the morning campus) • • • • • • • • Universal vertical mixer Sugar pulverizing crusher Rotary biscuits moulder Electric baking moulders Electric baking oven Baking oven. Previously. The ovens are of various types. 4 Responses to rapid technological changes in the environment shape a company’s destiny. (Kotler) Technology in the Biscuit Industry: Biscuit making is not a very high technology business. viz. packaging. The machinery that is installed is very expensive and involves complex ovens and other tools. a viz. a viz. But technological progress has surely brought a few dramatic changes in the way that biscuits are produced. technology plays a significant role in determining the competitive advantage of one organization over another. a viz.TECHNOLOGY In the fast paced world of today. making sheets in which the biscuits are packed.
e. 29 . The research at EBM only involves an analysis of the biscuit market and a quality control procedure. Moreover. Some governments favor the agricultural sector and formulate strategies accordingly i. we study the government laws and agencies and their influences on the overall running of the firm4(Kotler). which are helpful in the uplift of the manufacturing sector. private as well as public limited companies are faced with increased regulations and more pressuring laws. POLITICAL ENVIRONMENT In the political environment. Others may be tilted towards the manufacturing sector and so will formulate rules and strategies. new flavors introduced. new ingredients like nuts or almonds etc. EBM has recently finished an exercise on ISO 9000 under which it has to follow certain rules and regulations for quality control. the company has been certified as manufacturers of quality products ensuring hygiene and nutrition to its consumers. 4 R&D(Kotler): EBM does not spend a lot on R&D since biscuit making is not such a complex and vast industry. Taking advances in technology along. Taking technology in view. which experiences changing governments from time to time. the company has always indulged in cost efficient and environment friendly operations by understanding the ways in which technology has shaped the economies of the world and the consumers therein. EBM is basically aiming at economies of scale in its production processes as mentioned before. Celebrating 30 years of excellence. more resources are spent in improving and in the uplift of that sector. The company also concentrates on extensions in existing brands such as. Especially in the Pakistani political arena.
This constant change in economic policies has been very damaging for the development of the industrial sector.M carries out a cost benefit analysis that whether it will be able to pass on the higher costs to higher prices without lowering demand by much.M loses its low income customers and the extra revenue goes to the government. If the import duty is too high E. The reason why the business sector was resisting the launch of G. The reason is that E. depending on the stage of the production cycle.B. Each new government has its own way of running the country.B. is a good example. and also do the various import duties. which is affordable by the people of the segment it is targeting.M imports most of its biscuit manufacturing machinery. When it imports E.M has to pay an import duty on it. was that the end product to the customers will become expensive and businesses will experience a fall in demand.M.S. In the last eleven years three elected governments have been dissolved.M. A rise in import duty will increase the cost of machinery to the Company and so increase the cost of production. The recent imposition of G. The Company is forced to pass on the higher costs in the shape of higher prices to its customers.S.T (general sales tax) which is a tax levied at the retail stage.B. Increase in import duties can be both harmful and beneficial for E. Company has to set a reasonable price.B. and so it’s own unique set of policies. When prices rise E. So it is not only the customers who loses out by paying a higher price but also the Company which faces decline in sales and so a decline in profits.B. As a manufacturer it is has an unfavorable impact.T. • Taxes: As tax rates and import duties fluctuate it is very difficult for the firm to set stable price of its product. Tax rates keep changing.• Changing governments and policies: Unfortunately in Pakistan there has been a minimal amount of stability in government policies.B. If it 30 . All these have implications on a business like E.
Petrol prices have been rising steadily over the past several years. and also sometimes to increase its own revenue.M. All this devaluation leads to instability in prices. In this way E. Devaluation makes imports more expensive and exports cheaper.M can have a competitive advantage over its foreign competitors and can gain a greater market share. as imported brands become expensive in the local market.M is marketing its product.B. An increase in import duty will raise the price of all foreign brands competing in the local market.B. For example its import of heavy machinery will become expensive and also its basic raw material wheat is imported. • Devaluation: Devaluation has been a routine procedure in Pakistan. Also the factory runs on fuel and electricity an increase in price of either of these by the government will put pressure on the Company to increase its price which can well prove to be harmful for the sales.is feasible only then will it go ahead with the purchase decision. is the regulation of fuel and energy prices4 (Kotler). 31 . It includes both the costs of transporting the raw materials and delivering the finished product to the market. Another major sector.M imported resources become expensive. But devaluation can be beneficial in case of competition. which the government influences. • Import duty: An increase in import duty can also be beneficial when E. This increase in cost has to be covered by higher prices. So for E. It has both harmful and beneficial implications for E. After devaluation it will have to pay a higher to obtain materials.B.B. Governments in the past have resorted to strict import controls to reduce the balance of payment deficit. This causes the prices of transport to rise.
mothers are reckoning upon biscuits which 32 . Ticky packs of various biscuit companies are now available in the market. CULTURAL ENVIRONMENT Due to advertisement. • Traditions4 (Kotler): Tea parties have become a way of celebration and biscuits are a part of it.In order to be successful in this unstable political environment. LU’s Prince is the favorite lunch item for children in school. increased rate of literacy and easy access to information people are becoming increasingly aware of different products that available in the market today and are quality conscious and value-oriented consumers. so that it anticipates new government policies. To give a good nutrition to their children. They go for nutrition rather than taste. This can be seen as an opportunity as their trust in biscuit industry is increasing and more demand is following. For example. It should try and keep a reserve when revising its prices so that it does not have to change its price at every cost fluctuation. People now believe more in packaged foods. Company has to try and carry out sound planning. Concept of ‘heavy meal’ is diminishing and people take biscuits in between the meals at any hour of the day. ready to cook products that save time. Biscuits have been a part of the tradition here in Pakistan and are served in different ways. It helps them save their time and makes it free to allocate somewhere else. which provide economy and convenience to the consumers. EBM’s brand Rio is a specialty for tea parties. • Convenience for working mothers: An increase in the number of workers especially women has also increased the demand for fast food including biscuits.
• Media influence on the purchases and shifts in beliefs4 (Kotler): But changes in life styles have also brought with them problems. the biscuit industry in Pakistan is also under pressure to adopt new strategies to countering this foreign threat. Women on diet also take light food to maintain their fitness level. Hence. Openness of imports has brought in more competition. Beliefs regarding locally produced products have changed and as the Pakistani cultural and social environment becomes a prey to international media and culture. Therefore. hygienic food. 33 . for instance The Whole Wheat crackers produced by EBM are in great demand amongst the diet conscious consumers.children eat eagerly and ensure nutrition and health to them. Pakistani manufacturers of biscuits and other food items are now trying to reduce their production costs in order to offer their products at a much lower prices than those of the foreign products but offer the same quality of items. people have started giving more preference to foreign products. this brings them convenience and they are more satisfied that their children have taken good. Availability of imported packaged foods not only snacks but biscuits too have influenced packaged food industry in Pakistan.
TASK ENVIRONMENT 34 .
There are other manufacturers present in the market that have a considerably smaller volume of total sales. while the sales of LU and EBM are 10500 and 4500 tons respectively. they also sell packaged biscuits but they sell these at a very cheap price.THE TASK ENVIRONMENT Effective marketing involves maintaining healthy relationships with customers. which are Meiji. we analyze the closely linked microenvironment factors affecting the operations of English Biscuit Manufacturers. which is an industrial base sector. The unorganized consists of the biscuits made in the bakeries and in the in house manufacturers. The company has to see the attractiveness of each segment and then decide on the segment. MARKETS Every company has to identify the consumers that it can satisfy among all the consumers in the market. The unorganized sector is about 50% of the total market that is 25000tonnes. There are only four of these companies in Pakistan. The total sales of Meiji and Dane foods are about 1500-2000 tons each. The total size of the biscuit market in Pakistan is about 50000 tons estimated per annum. which they can serve in the best possible way and thus earn maximum profits4 (Kotler). EBM. the remaining 25000 tons is met by the organized sector. Success of marketers depends on a proper handling of these factors. The companies in the organized sector are called the “Professionally Managed-Marketed Marketing Companies”. suppliers and other such factors in the environment of the company. 10 interview 35 . Biscuit Market in Pakistan 9 The total market for biscuits in Pakistan into two distinct groups. LU and Dane Foods. retailers. In this section of the environment audit. which are the organized market and the unorganized market.
10 interview 36 . Creams and Crackers. LU has a considerable market share in the creams and cracker. and the rest are plain. EBM has a major share in the plains. at the moment the market can be divided into 35% creams 30% crackers.LU EBM Sales in Tonnage EBM LU 4500 10500 Categorize within the Biscuit Market The biscuit market in terms of the types of biscuits can be broken into 3 categories Plains.
etc. Wolf and Kims. This category will also include small manufacturers of unbranded products and Bakeries would be categorized under the unorganized sector of the industry.Expected Market Share10 We estimate the market share of EBM along with its competitors in the biscuit industry by comparing intended purchase by the consumers with the frequency of purchase. in the organized sector. 37 . Expected Market Share 16% 6% 24% EBML CBL Dane Foods Others 54% DANE CBL LU The other players in the biscuit industry are Meiji. Montgomery.
The Product/Market Expansion Grid Existing Products New Products Existing Markets Market Penetration Product development New Markets Market development Diversification 38 .Growth Strategies4 (Kotler) We would analyze EBML’s growth strategies regarding markets in the light of the Product/Market Expansion Grid.
Jumbo and Shell shops. CBL. With sales of Half rolls and ticky packs on the rise. it is important for EBM to estimate its market demand from time to time. The company should continue with this growth strategy. Ringo and Marie. thus combating the aggressive moves of its main competitor. especially Rio. we feel EBML is engaged in Market Penetration. This would attract customers of other biscuit brands and create greater consumer loyalty for EBML. Operating with a wide product portfolio. In this respect. EBM has been successful in developing new products from time to time. Recommendation: We would also recommend better store displays by EBM at busy departmental stores such as Agha’s. the company is doing by increasing the sales and promotion efforts of its front runner brands. EBML should continue with its Product Development strategy. the company launched Rio in direct competition to LU’s Prince and Tip Top as against 50-50.At present. This. offering new or modified products to current markets. making more sales to present customers without changing the products in any way. A general equation of estimating total market demand is: Q = (n) (q) (p) 39 . Estimating market demand4 (Kotler) For effective market targeting strategies.
Where Q is the total market demand n is the number of buyers in the market q is the quantity purchased by an average buyer per year p is the price of an average unit If. For estimating future demand. 4. keeping in view the country’s political arena and the economic situation in the country. then the total market demand for this biscuit industry would be Rs. for instance. the company can carry out a compared to the competitors. 4 (Kotler) 4 (Kotler) Survey of the buyers’ intentions regarding purchases and how they would rank the company products as Market Segmentation 40 .5 billion. It can also ask its salesforce to prepare estimates of future demands based on past patterns in demand and sales. 18. there are 10 million buyers in the market. purchasing an average of 25 biscuits packs every year with an average unit price of Rs.
the Industry Structure4 (Kotler) and the Segment Size and Growth are definitely in EBM’s favor. half rolls. Moreover. Party etc. thus adopting a Multivariate Demographic Segmentation4 (Kotler) . Individuals from different income and age groups consume EBM brands and EBM has designed its products accordingly. apart from LU EBM does not face any such stiff competition that would threaten the company’s present position in the market as a major market challenger. the company’s front runner brands like Rio. Whereas. Marie and Gluco are priced in the range affordable to the upper and middle income groups.EBM has segmented its market on the basis of Income and Age and Life-Cycle Stages. The biscuit industry in Pakistan is profitable and the current company segment sales and growth are also positive. Market Targeting The marker segments into which EBM has entered so far have proved to be favorable for the company. For instance. ordinary and plain company brands such as the Saltish cookies. Therefore. the lower incomed consumers generally go for tick packs. Market Coverage Strategies of EBM4 (Kotler) For the evaluation of different market segments. the company can adopt any of the three Market Coverage Strategies given below: • • • Undifferentiated Marketing Differentiated Marketing Concentrated Marketing 41 . Sooper.
EBM is currently engaged in the Differentiated Marketing Strategy11, offering separate marketing offers for different market segments and going after the market with different product lines. Choosing any of these strategies would involve a careful analysis of the company’s resources, product’s stage in the life cycle, and the competitors’ marketing strategies.
Market Positioning4 (Kotler)
The main task for EBM regarding market positioning is to position its products in such a way that it is able to create more consumer involvement in EBM products and to counteract LU’s strategies in this regard. The company can adopt any of the following positioning strategies: • On Product Attributes: The quality Of EBM’s products, 30 years of experience in the industry. • • • Benefits: hygiene and nourishment Classes of users: Rio for kids, Whole Wheat for health conscious consumers. Against LU: We are dedicated to providing you with more value at a standard price.
Recommendations: For positioning, we recommend the following strategies: •
EBML needs to focus more on the consumer segment of children. It requires a
careful study of the perception of the kids regarding the different biscuit brands. The company is missing on an important segment and needs development in this area. As
suggested before, the company can reposition its brands and redesign the products in the way that kids are attracted towards these brands due to their unique shapes (cartoon characters etc.) • Capitalizing on its Pied Piper icon and utilizing it as a symbol of an entire family of brands rather than simply a company identification.13 • More innovation in terms of packaging, the company should move away from the typical white packaging and bring out more colorful versions of the packages.13 • Should emphasize on its various taste elements in the different brands. For example, zeera in Click, peanuts in Peanut Pik and chocolate chips in Smile.
Customers consist of people who buy goods and services for personal consumption 4
For every business, it is necessary to identify the needs and wants of the consumers that the products fulfill. Accordingly, the products should be produced to satisfy these consumer needs to the greatest extent.
In case of a biscuit industry:
Biscuits would satisfy a person’s social needs. This is so because in every day use, biscuits are consumed with friends and are served to guests. Consumers can consume biscuits while socializing. We would not categorize biscuits as satisfying physiological needs because biscuits are not something a person cannot live without. As mentioned before, biscuits are considered to be food between meals, and therefore donot serve the purpose of satisfying physiological needs.
Consumers would search for a brand of biscuits that would give them the most value, quality, features and satisfaction for their money. Hence, as far as the wants of the consumers of biscuits are concerned, consumers seek quality and taste in biscuits. They want the product to provide nourishment and good taste at the same time.
Biscuits are usually eaten between meals, and so it is more of a lifestyle than a need. This lifestyle has been created by the various advertising campaign used by the biscuit manufacturers. The general concept that was held regarding biscuits was that children mainly consume biscuits. But with time the biscuit manufacturers were able to change this image through advertising and also by introducing new varieties to suit different age segments. Soon it was realized that biscuits also provided nourishment and health to adults.
The reason why people have accepted biscuits in their lifestyles is because of the growing concern for healthier food. In search of healthier foods, people prefer packaged food and biscuit manufacturers provide them that.
Catering to the special requirements of diet conscious consumers Diet conscious people do not eat biscuits because it is made up of butter and sugar and so contain lots of fats and cholesterol. For example EBM introduced Click. There are also some cheaper brands in the market but they are usually low in quality. For this segment EBM introduced its Whole-Wheat Slices. and this is because of the image it has created in the minds of people.EBM’s Dedication to Quality E. Whereas EBM has maintained a standard in quality and its main competitive advantage is its quality. people are ready to pay the extra price. It has achieved this position because of its continuous urge for quality. Also diabetic patients who because of medical reasons do not take extra sugar were the main consumers of this range of EBM’s brands. which was mostly considered to be for children. EBM has a significant market share. having fiber as its basic ingredients. Weight conscious consumers also preferred the whole-wheat crackers. its premium Zeera biscuit. 45 . EBM has tried to get more people to consume biscuits by bringing in more variations in accordance with their tastes. EBM has also brought about changes and improvements in its various range of biscuits. People are ready to pay an extra price in return of superior quality. This specially catered to the tastes and liking of the adult consumers. It has been quite successful in changing the culture of biscuits.M is one of the top biscuit manufacturers in Pakistan.B. a very light range of biscuits with minimal amount of fats. EBM has been able to capture a new and profitable segment. And as the trend is towards healthier living. In this way.
Prizes Hierarchy14 Watch Camera 46 .Special Offers for the Consumers14 Adopting the strategy of “Market Penetration”. With this market penetration strategy. In this respect. EBM has introduced special offers in the biscuit market with its product line. Coupons for prizes inside the packs. • The consumers have to buy any EBM/Peek Freans Biscuit special promotion packs to see what they have won. • • The company offers special prizes inside the packs. EBM claims: “Everyone is a Winner with The Pied Piper range of Biscuits” The following is a diagrammatic description of the Prizes Hierarchy offered by EBM through these special promotion packs. These prizes can be redeemed at the specified retail outlets.
With all the other commodities. The company over the years has tried to keep prices as stable as possible. In times of low costs this reserve builds up and can be used as a cover when costs rise suddenly.B. Also EBM has increased its contacts with various suppliers of raw materials and who ever gives the most reasonable deal gets the contract to supply. Sensing the 47 . The recent imposition of GST (general sales tax) has forced the prices to increase and eventually. To manage this. Also high tax rate pressurizes the company to increase its price. The normal biscuits packet has experienced an almost 100% rise in price over the last 5-6 years. EBM gets a competitive price. This is quite a difficult task because of the high inflation rate usually in double digits. biscuits have also become expensive.Poster Magic Marker Magnet Scale Stickers Imposition of the GST and the burden on the consumers E. it keeps a certain reserve when it revises its prices keeping in mind the future fluctuations.M lays heavy emphasis on the stability of prices as majority of the population of Pakistan belongs to the lower income group. Over the years people have become price conscious as inflation is continuously lowering their living standards. the consumers have to pay the extra amount. As this leads to a lot of competition in suppliers. So now it was becoming out of the reach of common man.
These contain two to four biscuits depending on the type and cost for around Rs. Characteristics Affecting Consumer Behavior in the Biscuit Market4 (Kotler) Different characteristics of the consumers affect their buying patterns and the way they perceive various marketing offers. A failure to do so will cause the company to be driven out of the market. By closely monitoring the target segments.fall in demand EBM launched its plastic wrapper pack. Keeping pace with changing consumer tastes The tastes and preferences of customers keep changing with time. This was launched mainly for the school going children. A company in order to be successful has to keep pace with it and bring in new variations in accordance with new tastes. which was without the normal cardboard packing. EBM took out cream biscuits like Chocolate Sandwich and then Rio. to encourage them to buy more nourishing food instead of candies. which were the most attractive products available to them. the price. 48 . The launch of the Ticky Packs Further focusing on the economy purchasers. As children prefer chocolates to biscuits. Children can easily buy these from their own pocket money.2. EBM launched the ticky packs. It is important for businesses to determine what types of characteristics affect the specific consumers of their products. This helped in reducing the packaging cost and eventually. company can better understand their taste preferences and so come up with successful products.
For instance.In case of the biscuit market generally. In case of biscuits. interests. all family members go for Prince by LU. he or she would prefer imported brands in biscuits mostly. The social class of a consumer greatly influences his or her buying behavior as well as brand preferences. Consumer Buying Roles4 (Kotler) 49 . Whereas. if the consumer comes from a higher social class. about nourishing ingredients or even company opinions. a consumer from the middle social class would generally prefer local brands and would definitely consider price differences. • Age and Life-Cycle Stage: consumers also change their preferences for biscuit brands over their lifetimes. Rio and Marie by EBM. 50-50 by LU and Chocolate sandwiches. Marie for a much lighter flavor and Tuc by LU. it is generally observed that on an average. • Lifestyles: Consumers of biscuits also vary in their lifestyles. For instance. In case of biscuits. • Family: Family members can exert influence on eachother in terms of buying decisions. whereas teenagers go for Peanut Pik. diet conscious consumers prefer Whole Wheat Slices and Tuc by LU. the following consumer buying behaviors should be taken into account: • Social class of the consumer: Members of a social class share similar beliefs. Some may differ in their opinions regarding salty and sweeter biscuits. Kids generally prefer Rio and Gluco and prince by LU to Whole Wheat Slices. Adults on the other hand prefer Whole Wheat Slices. indicating their patterns of living and their psychographics. brands that are generally liked by all members of the family are purchased. A consumer from the lower social class would go for ticky packs of local and cheap brands such as Montgomery. values and behaviors.
low consumer involvement but significant perceived brand differences. We give a brief account of these buying roles in relation to the specific product under consideration. This is because consumers are frequently engaged in brand switching and they would generally go for a new brand if it is initially successful and renowned. Four types of Buying Roles4 (Kotler) High Involvement Low involvement Significant differences between brands Complex Buying behavior Variety-seeking buying behavior Few differences between brands Dissonance reducing buying behavior Habitual buying behavior In case of biscuits. biscuits and then put up a few recommendations in this respect. 4 (Kotler) 50 .Consumers differ in buying behaviors in terms of involvement in the purchase of a product and perceiving brand differences. the type of consumer buying behavior involved would be Varietyseeking buying behavior.
should encourage variety seeking buying behavior by diverting the attention of the consumers from LU.Consumers generally chose biscuits according to their beliefs as well as according to what they had heard of the brand from other consumers. by offering free samples of a not-so-famous brand of the company. the consumer might want to try another brand simply because he wants variety in tastes. with every purchase of the company’s front-runner brands and by advertising the company values and encouraging consumers to seek variety and try something new. being a market challenger at the moment. like Sooper. 4 (Kotler) For his next purchase. 51 . Recommendation: EBM. They later evaluate the brand during the actual consumption and establish opinions about the brands in this manner. This the company can achieve by offering special deals like the free Click half roll with Lipton Tea purchase.
which has a significant share of the market in terms of sales volume. selling about 10000 cartons. Brief Profiles of the Main Competitors15 EBML’s main competitors in the biscuit industry are CBL and Dane Foods. in comes LU they make a better cream biscuit promote well enough and they become the market leaders. EBM has been in the market for thirty years and were the first to start the cream biscuits but did not promote them much.50. LU basically has five to six brands which it markets vigorously in comparison to English Biscuits Manufacturers which has about 53 brands under EB and about 44 brands under Coronet Foods Private Ltd. To this. The reason that LU is the market leader is because of their ability to study the trends in the market better and then adapt to them and thus capture a higher market share. the EBM management replied by introducing the brand TIP TOP which was so manufactured so as to taste like the 50-50 of LU but it was not up to the standard of 50-50 and thus was a failure. Meiji but the number one competitor is LU. Continental Biscuits Limited (CBL) 52 . LU introduced this range and promoted it really well. (CFL). Another example where LU took advantage of their understanding of the market was in the case of 50. which is the combined sale of a lot of brands in EBM. which were a bit sweet and a bit salty. Dane foods. EBM has discontinued the production of the TIP-TOP brand in the recent past.COMPETITORS The major competitors of English biscuits are LU.
comes the following renowned brands: • • • • • • Prince Milco LU Tuc Candi Gala 50-50 CBL has successfully applied “differentiation” to its market positioning strategies by capitalizing on its existing brands. Dane Foods Limited (DFL) Starting its operations in 1994.Starting its operations in 1986. maintaining & improving their quality. CBL soon established a firm position in the biscuit industry of Pakistan and is now considered as the market leader. advanced technology. Under the CBL mega brand. LU. DFL has quickly build up its image in he biscuit market through positioning its products as “Cookies” providing a taste of the homemade cookies to consumers. individual brand advertising emphasizing together the complete range of biscuits by LU thus building the unique family name LU. EBML lost its market leadership position to CBL mainly due to the fact that CBL introduced innovative products manufactured under advance technology and backed by sufficient resources to support its massive advertising and promotion efforts. This was a new concept in the Pakistani biscuit industry and DFL was 53 .
successful in attracting a moderate market share even in the presence of such biscuitmanufacturing giants as LU and EBML. zeera. chocolate chips. Competitive Advantage4 (Kotler) EBM can establish competitive advantage over its major competitor. more features may be introduced. through advertisements. LU. i. nuts. cup and pouch packs) and also communicating its efforts at developing a new product category in the biscuit market. it has been successful in its packaging strategies (gift packs. The lines along which differentiation should be adopted are explained below with reference to EBM: • Product Differentiation: Style and Design of a few biscuit lines may be altered. cookies. more and unique variety of flavors. 54 . EBM should keep identifying potential advantages and introduce these one by one to try to put LU off balance.e. by differentiating its offer. The famous brands of DFL include: • • • Royal Dane Butter Cookies Tivoli Coconut Cookies Hansel Chocolate Chip Cookies Even though Dane Foods failed at bringing about innovation in its product offers. for instance.
• Personnel Differentiation: In case of EBM. with a touch of these special mixes. it should continue to hire and train people to make an overall good impression of the company. we suggest that the company should adopt a Unique Selling Proposition. chocolate chips and peanuts into the product’s main ingredients and providing the tastes based on these ingredients. However. (Kotler) 4 picking one brand attribute and establishing that as a basis for building a competitive positioning. a USP could be its ability to blend different ingredients such as zeera. In EBM’s case. Recommendation: All these competitive positioning strategies are very important for the company.• Service Differentiation: EBM should continue to be efficient in its delivery of products to the distributors. 55 . The sales and the marketing staff should be given training regarding proper handling of contracts and distributors. It should also maintain healthy relationship with its suppliers and distributors. • Image Differentiation: It should sponsor celebrities for its advertisements and should continue to sponsor important events.
In Pakistan. interview 56 . EBM boasts sound footings as far this particular factor is concerned. they then are responsible for its timely supply to the retailers. EBM uses the services of Aftab Associates. EBM utilizes the services of Spectrum. This diminishes any possibility of shortages as far as EBM’s products are concerned. The distributors place orders with EBM and are given the biscuits. • Distributors: EBM relies on 400 distributors all over Pakistan to make its products available to the retailers and in turn the consumers. Although Interflow also handles a lot of advertising. wholesalers. which are used by EBM to enhance its production and distribution activities. As far as research is concerned. particularly in the biscuit industry. however that is reserved for the Peek Freans brands. • Resellers: EBM’s main strength as far as their performance is concerned are resellers. these are the people who actually make sales to the general public.CHANNELS4 (KOTLER) An efficient and effective network of marketing intermediaries is of vital importance to any firm to succeed. • Marketing Service Agencies: With regard to advertising. This is because. In Karachi EBM uses the services of Premiere Distributors. to conduct tests on focus groups so as to approximate the probable success of its brands like Marie. after all. Given below is an observation of the various networks. These resellers are made up of retailers and wholesalers. Therefore the hundreds of thousands of retailers scattered throughout the country are provided with as much biscuits as possible. How these retailers are provided with the best quality biscuits at the shortest possible time? The answer is below. marketing and financial agencies determine the success of the company. maintaining a workable web of intermediaries such as resellers.
consumers in Kasur district are only aware of the Rio brand in biscuits indicating a shortage of supply in that area of other major brands. Hence. Recommendations: We recommend the following channel strategies to be adopted by EBML: • Converging the major distributors of the company brands and allotting these distributors different zones to operate in.17 • Carefully monitoring the supply of Rio in the market as there is a serious supply shortage in majority of the areas of Karachi and other major cities whereas. The company’s distributor channel supports its operations owing to the fact that all sales are made on cash basis and the company provides the distributors with monthly sales targets.Channel Strategy EBM operates under a vast channel of distributors who are required to cover the breadth of retail stores as opposed to selling to few and selected stores.17 57 . the company follows the strategy of “Width Retailing”16. • The company needs to increase its interface with the market.
EBM also has to keep a steady financial position so as to please banks for it to obtain necessary credit or loans whenever needed. These delays can be of great danger to the company because they might result in factory shutdowns. inability of EBM to supply its products to its distributors punctually. stockholders. • Financial Publics: 4 (Kotler) These consist of banks. EBM being a private limited company has its stockholders.SUPPLIERS Suppliers are firms which provide the company with the raw materials the company needs. investment houses etc. thus leading to dissatisfied customers or even lost sales. However. 58 . This. In Pakistan. the basic structure in which companies like EBM operate is not very well developed. conflicts with the actual activities of the firm’s management. at times. there are some publics which are able to influence EBM in achieving its objectives. that is profitability. who obviously monitor whether the primary objective of the firm is being achieved. PUBLICS Publics are groups which have an interest in the company or may be able to influence its ability to achieve its objectives4 (Kotler) . EBM being involved in the food business it needs its raw materials to be supplied without delays. The efficiency of these suppliers determines the overall performance of the company.
This in turn facilitates a positive attitude between employees and encourages them to contribute more towards the overall company goals. 59 . On the manufacturing side its relatively new health oriented products such as the WholeWheat crackers has complimented this good image in the eyes of the masses.• General Publics: 4 (Kotler) EBM has built a pretty good reputation in the minds of the general public. Surely all employees seem to be satisfied with the company. • Internal Publics: 4 (Kotler) EBM has done a great job handling their employees. This is supported by the fact that in the last five to six years there has been no major disagreement between the management and the employees. employees are provided with a relaxed and friendly environment wherein they interact with their superiors freely and without any such formalities. This has been facilitated by EBM’s participation in various charities and social welfare programs such as the Kidney Center Walk a Cause. Our general observations at the company were that at EBM.
MARKETING STRATEGY AUDIT 60 .
MARKETING STRATEGY AUDIT • Business mission • Marketing objectives • Marketing Strategy • Budgets 61 .
4 (Kotler).Marketing strategy is the logic by which the business hopes to achieve its marketing objectives. what it wants to achieve in the larger environment 4 (Kotler) . employees work independently yet contribute their efforts to the overall company goals and objectives. A mission statement should point out the following questions: 4 (Kotler) • What is our business? • What is the product that we offer? • Who are our customers? • Who are our main competitors? • What do we aim to achieve? 62 . BUSINESS MISSION In the process of strategic planning the first and the most basic step is clearly defining the purpose of the company’s existence. defining the marketing objectives. It includes such areas as the business mission statement. Under a clearly laid out mission statement. planning the strategies for achieving these objectives and goals and the careful analysis of the budget to determine the possibilities of accomplishing the set objectives.
companies should define their mission statements in terms of the basic needs and wants that they are trying to satisfy. thus fulfilling esteem as well social needs • • Our main customers include retail stores. For our superior war machinery. Such statements are called market-oriented mission statements4 (Kotler) . We now present EBM’s mission statement and analyze it in light of its strengths and weaknesses.In case of EBM. 63 . Our soldiers are the field people. the manufacturers of LU. • • EBM is in the packaged foods business EBM offers food in between meals. Since market needs last forever. We claim that no competitor is geared to match our field operations structurally and manpower wise. We aim to deliver superior value to our customers through quality emphasis. MD’s Mission Statement18 “ Our battle ground is the market place. Dane Foods and Meiji • To regain EBM’s lost market leadership position in the biscuit industry. that is biscuits. which in turn sell to consumers EBM’s main competition is from CBL. professional training focusing on close to customer service and merchandising are quid-pro-non”.
The statement also relates the efficiency of the technology used and the company’s continued emphasis on customer satisfaction and that. these two assets of the company work side-by-side in accomplishing the company’s objectives of quality control and value-orientation. In other words. It identifies EBM’s flexible organizational structure. Through this technological efficiency it wants to gain a competitive edge over its competitors. that is it should be based on distinctive competencies. 4 (Kotler) The MD’s reference to an imaginary battleground is very much according to the present marketing environment in the biscuit industry and the prevalent cutthroat competition. and an efficient manpower. It takes into account its salesforce. the statement should also have focused on the consumer 64 . which is adaptable to the changing environment. the statement becomes a motivating4 (Kotler) force for the workforce. the statement satisfies one of the major requirements of an effective mission statement. It does not take into account the basic purpose of these operations. which reflects the company’s focus on success through employee satisfaction and hard work. Weaknesses However. Strengths The mission statement is powerful in the sense that it aims to identify its major sources of combating the stiff competition. it wants to achieve success through better and more efficient field operations. Hence. It thus gives due consideration to the efforts of the workforce to make each employee feel that his work is significant and contributes greatly to the overall company goals. the MD’s mission statement focuses on only the operational aspects of EBM and its field operations.This mission statement is defined more in technological terms in the way that it emphasizes the company’s functional aspects. Here.
Whatever happens the core need remains the same. in it self. if the mission had been customer oriented they would give all their efforts in trying to improve the product so that it could provide better value to its customers. etc. It may well happen in a course of time that consumers tastes and fashion change or some other product starts satisfying the same needs that the biscuits are satisfying in a better way. so it takes a very narrow view as far as competitors are concerned. EBM’s mission has been too broadly defined in the way that it does not give workable guidelines for achieving its mission. Before making its mission statement EBM must analyze what basic needs do biscuits satisfy. This includes candies. If this kind of orientation is given to them they will put all their efforts in trying to beat their competitors in whatever way possible. in ones pastime. The exact reference to what services are being considered here is missing. This. chocolates. On the other hand. and thus build a long term relationship with its customers. These tactics may or may not be beneficial for the customers. the term “close to customer service” seems vague and ambiguous. whether local or international. Biscuits are usually eaten between meals. they will still be requiring something to eat when they are relaxing or in their idle time. 65 . could be a major competitive advantage. So it is more of a pleasure need. the competitive scenario expands. EBM’s competitors include not only the other biscuit manufacturers but also other packaged foods. An alternate could have been “close to customer satisfaction”. The statement violates one of the requirements of an effective mission statement that is it should not be too broad rather it should be specific4 (Kotler) .demand and wants that EBM is trying to satisfy through its product line. Mission statement acts as a guiding force for the employees of an organization4 (Kotler). chips. They are eaten when a person is relaxing. Judging by this aspect.
Wheat crackers for adults and diet conscious 66 . which is marketoriented. MARKETING OBJECTIVES Marketing Objectives set clear and distinct goals for the marketing department to achieve. EBM is already engaged in positioning Peek Freans according to certain classes of users4 (Kotler) . This would involve setting a competitive positioning for the brand by identifying and capitalizing on its distinctive features and by creating a detailed marketing mix. is specific and guided by a vision. marketing mix. does not become outdated.Taking this into account. “To see Peek Freans once again take its rightful place as a leader in the marketplace and in the minds of the consumers” This vision clearly identifies the fact that the company is aiming to reposition its frontrunner brand. it broadly defines the marketing objectives in view of the next millennium. It includes specific goals for different brands of a company. Gluco for children. defining the market segment under consideration and target marketing. 4 (Kotler) The marketing department at EBM is very efficient in this respect in the way that the VP Marketing has put down a clear-cut vision for the company to achieve. however. Although this vision is mainly focused on one of the company’s main line. EBM must design a mission statement. positioning of the products. Peek Freans. For example.
would require a definite change in the image of the Peek Freans line. The company can also build its competitive advantage on its consistency to maintain quality. in case of EBM. we can identify a Shell logo anywhere even without the actual shell with the red and yellow colors. Style and design of biscuits can be an important factor. For instance. This is a very sensible tactic to use against competitors in the way that it creates brand recognition and loyalty as consumers are inspired by the lifestyles of their favorite celebrities.people. Repositioning4 (Kotler). In this respect. Research has shown that most consumers are not aware of the relationship of the Pied Piper to both the Peek Freans and the EBM brands. Tip Top a party biscuit in the advertisements. it should develop a new icon for its Peek Freans brands. Zaheer Abbas. It can make use of other fairy-tale characteristics or simply apply a symbol to the brand line. For example. Since the company maintains a good icon. Image differentiation4 (Kotler) can also be a contributing factor for establishing a competitive position. In the meantime. Faced with a stiff competition in this major line by LU. It can also emphasize biscuit consumption according to usage occasions4 (Kotler). EBM needs 67 . we suggest that it should also become associated to some specific colors4 (Kotler). Biscuits maybe shaped in different ways to attract children. EBM is successfully engaged in building its Marie brand around a famous celebrity. The company can also accomplish competitive positioning by identifying possible Product attributes4 (Kotler) . we suggest that the company should keep the Pied Piper icon for its EBM brands and as the main company symbol. This would definitely distinguish Peek Freans from the competitors’ brands. that of the Pied Piper. This could be a good starting point to building instant brand recognition.
We would categorize EBM’s position in the biscuit industry as that of a “market challenger4 (Kotler)”. In this respect. MARKETING STRATEGY Marketing strategies have been defined as the logic through which a firm hopes to achieve its marketing objectives4 relation to EBM. EBM should concentrate efforts and resources on repositioning the existing brands. CBL being the market leader. Faced with a stiff competition from LU. Adopting a marketing strategy involves an analysis of the company’s standing in the overall industry. It is important to analyze also the weaknesses of the competitors in order to build on them and deliver more value and satisfaction as compared to the competitors. EBM’s needs to gear its marketing its marketing strategies according to the needs and wants of the consumers and also study the strategies of competitors. EBM needs to do a comprehensive competitor analysis. it should adopt the market challenger strategies of aggressively attacking CBL with improved products to regain its lost market share. For repositioning. the company may need to change a few attributes of the Peek Freans line. the challenge may also affect low market share companies in the biscuit industry such as Dane Foods and Meiji. (Kotler) . We will apply this concept in EBM has identified three major steeping stones in its strategy analysis • Rationalization of the product portfolio. Therefore.to create further consumer loyalty and brand recognition. 68 . Instead of coming up with new brands.
EB rolls. EBM faces the following problems and hindrances that require considerable attention from the management:20 • Unstable economic environment in the country. This would also help the company to: • Determine the advertising input in terms of tonnage growth. At present. it is meant that the company aims to achieve an approximately 70% of its total tonnage with the contribution of its focused and front runner brands.• Tonnage determination and the relevant support strategies. By the rationalization of the product portfolio. • Front runner and dedicated brands with their separate brand equities will be produced with more contributions and on more dedicated lines. EB commodities would constitute the rest of the 30 %. The others comprising of EB ticky packs. • Stiff competition in • Price related launches • Niche marketing • Price cuts • Advertising and promotion expenditures 69 . • Pied Piper larger than life.
• Branding • Production volume • Decreasing market share of brands (Smile. However. Tip Top. especially with the arrival of Ramazan in December. which is the peak season of biscuit production. such as Smile. As far as advertising is concerned. EBM’s pricing is primarily Cost-based pricing4 (Kotler). Ringo. EBM should plan its advertising and promotion according to the Product Life Cycle stage4 (Kotler) . New offers would require large advertising budgets such as Party and Sooper. A large chunk of the budget should also 70 . However. Marie being a mature brand can do with a relatively lower budget for advertising. under which it adds a standard markup to the product cost. Venice) • Me-too (Tip Top) brands giving false hopes • Decrease in consumption of biscuits in Ramazan. Party and Sooper. in face of stiff competition the company needs to change this pricing approach and apply the “Competition-based pricing21” for its front runner brands such as Rio. Marie and Gluco. These brands would necessitate the application of the Competition-based pricing under which consumers would judge the product’s value according to the prices charged by the competitors for similar products. At present. The pricing strategy should also differ in case of market-follower brands or the brands which are gradually losing their market share. • Provision for the General Sales Tax (GST) along with the Rupee-Dollar parity.
profits actually declined due to increased marketing outlays to defend the products against the aggressive competition. High-market share brands. EBM should modify its market by identify new market segments for its products. For adults. EBM also plans to achieve a 20% growth rate over the last 20 months average in the coming 16 months according to the VP Marketing. In this respect.be allotted for major contributors to the company’ s sales such as Smile and Rio. Handling the mature products require modifying markets4 (Kotler). and also the marketing mix. such as Ringo for adults. This the company plans to accomplish by outlining the following strategies:33 • Concentrate on top 10 brands in terms of tonnage. product modification4 (Kotler) would involve changing the features of the Ringo brand. products. thus modifying the marketing mix4 (Kotler) through promotion. Therefore. Ringo and Venice as being at the maturity stage4 (Kotler) of the Product Life-Cycle. may require larger advertising budgets to build on the existing marker share and for taking it away from the competitors. Ringo can be produced with wheat contents or with zeera and promoted as “Ringo. • Reproducing this category of top 10 brands to assign input budgets for focused productivity. We would categorize Smile. for a healthier you”. This would also lead to successful sales promotion with an all-new message strategy. 71 . EBM should continue to promote Rio with Godzilla sponsorship and other such endeavors. such as Gluco. This is time when the sales of these specific brands have declined.
EBML serves the needs of the different segments with a distinct marketing offer.Offering a wide variety of biscuits to different demographic segments. with income and age factors as the bases for this segmentation. We present and analyze EBM’s budgets related to tonnage. brand wise tonnage and growth and the Advertising & Promotion budgets. Budgets show the forecasted number of units to be produced and sold and average net prices. BUDGETS It was important for any company to prepare budgets for the successful implementation of its action plans. middle and lower income groups accordingly. It also gives a brief overview of the cost of production. sales. Hence. distribution. Segmentation based on income groups is also visible in case of EBML since it caters to the desires of the high. EBML is successfully pursuing “Broad based Differentiation” strategy11. advertising and other marketing procedures. overall the company seems to be following the “Multivariate strategy4 (Kotler)” of market segmentation. 72 . Accordingly.
Anomaly34 Tonnage 1997. Consumers generally affiliate the Pied Piper icon to Peek Freans only rather than to English Biscuits Manufacturers as a whole. This is mainly due to the fact that the company sees more growth prospects for Peek Freans. 73 .98 CFL Peek Freans English Biscuit Group 2818 3507 669 6994 1998-99 3223 4260 833 8316 As evident from the above production budget.Reality vs. Peek Freans as compared to English Biscuits and CFL. EBML allocates more of its total production budget to its leading brand. This is one the major reasons that has contributed to the immense success of the Peek Freans brands.
3 67.27 1998-99 23 44.6 57. Total Rs.43 Million 74 .67 35.Sales Budget: Net Sales34 In millions 1997.7 Million 43. 40.3 Improvement in contribution over 1997-98 due to: Volume Sales min.73 Million 2.98 CFL EB Group 21.
2. 40 Million Rs. 21 Million 75 . 60 Million Rs. 4. 1. 4. 15.05 Million Rs.95 Million Rs.53 Million Rs. 20 Million RINGO: GLUCO: CLICK: RIO: MARIE: TOTAL: OTHERS: Rs. 2.95 Million Rs.A&P BUDGET22 1998-99 Budget Spent Balance Rs.1 Million Rs. 5.62 Million Rs.75 Million Rs.
therefore the company has decided to incest more into ventures related to its Ringo brand. 76 . we have presented a comprehensive account of the company’s advertising and sales promotion strategies. 72 million for advertising and promotion for the year 1998-99. 51 million. However. 21 million left. A significant part of this A&P budget is allocated for the promotion of Ringo. the success of Rio in the market due to similar promotion and advertising efforts provided the company with an opportunity to penetrate into the existing Ringo market through increased promotion efforts. in terms of EBML’s main product lines CFL and EB. the way TIP TOP and 50-50 are positioned against eachother. follows. Brand wise budget in tons of EBM’s four major brands for the year 1998-99 is then presented.As indicated above. Moreover. A considerable portion of this budget was allocated to the Rio-Godzilla scheme and the remaining to Gluco baby contest and Ringo advertisements. Our interviews with EBML executives revealed the fact that since Ringo faced no direct competition for LU. The production budget in tons for the year 1998-99. In the later part of this audit. thus still having a balance of Rs. it ended up spending only Rs. we only restrict ourselves to the budget allocation of EBM to production and other operations. EBM estimated Rs. For now. EBML has budgeted sufficient resources for Advertising and Promotion efforts.
Creams Pkt.564 100.441 408.321 0 253.879 1597.31 EBM 0 3406.485 1366.353 29.194 247.397 0 990.745 46. Plains Pkt.649 77 .828 5093.172 495.662 175.769 54.821 366.707 848.826 0 4726.066 793.184 1031.242 41.425 25.385 78.Production in tons (1998-99)35 CFL Pkt. Crackers Total H/Roll Cream H/Roll plains H/Roll Crackers Total T/Pack Cream T/Pack Plain T/Pack Crackers Total All Categories Cream All Categories Plains All Categories Crackers Total Branded 366.759 206.203 3653.426 0 330.023 29.
H/Roll Total Rio Pkt. Gluco+ Pkt. H/Roll T/Pack Total 375 207 793 1375 462 231 847 1540 12% 551 263 911 1725 12% 598 328 1005 1931 12% 153 62 1019 168 74 1126 11% 185 89 1246 11% 204 108 1382 11% 804 884 972 1070 340 183 523 374 201 575 10% 415 229 644 12% 465 262 727 13% 1999-2000 Growth 2000-2001 Growth 2001-2002 78 .Forecasted Figures of Brands (tons)36 1998-99 Growth Click Pkt. H/Roll Total Gluco Pkt.
Marie Pkt. H/Roll T/Pack Total Total 444 88 28 560 3477 499 100 32 631 3872 13% 11% 549 114 36 699 4314 11% 11% 603 131 43 777 4817 11% 11%
MARKETING ORGANIZATION AUDIT
MARKETING ORGANIZATION AUDIT
• Formal Structure • Functional Efficiency • Interface Efficiency
In this section of the audit, we study the different aspects of the marketing department at EBM, its operations, marketing planning, analysis, implementation and control. The marketing department at EBML contains specialists who have made valuable contributions to the successes of the product line of the company in the consumer market.
A company’s organizational structure depicts the formal hierarchy pattern. It shows the various lines of interactions designed by the management to achieve the organizational goals. Large Company’s have complex structures with many levels of authority. They also tend to have large marketing departments The structure of the marketing department at EBM is designed as a combination of functional, geographic and product lines4 (Kotler). A functional organization occurs when a functional specialist heads different marketing departments. The top management at EBM has a functional organization. Under the M.D, Mr. Khawar M. Butt, there is the Director Operations, Mr. Saleem Chowdery. There are four major departments that have a functional organization. They are the Marketing and Sales department, Production and R&D department, Finance department, and the Administration. The Vice President Marketing, Mr. Mehmood Nanji, heads the Marketing department. Marketing is a very important department for a company like EBM. The reason being, that it has many strong competitors. So EBM must continuously monitor the changing consumer tastes and preferences. It always has to look for ways to gain a competitive edge over its competitors. To make this possible, the company needs a very dynamic marketing organizational structure, which can quickly adapt to the changing environment.
The Structure of the Marketing Department
EBM has a very elaborate Marketing department. Under the VP Marketing, comes the National Sales Manager, Syed Tahir Hussein. EBM uses a combination of “Product and Geographic organization4 (Kotler)”. As under the N.S.M there are the two G.R.M, (General Regional Managers), the G.P.M (General Product Manager) and the M.S.C. (Manager sales coordinator). Under the M.S.C comes the sales staff, which is responsible for the record keeping and other office activities of the sales department. The G.P.M is responsible for all the product decisions. For example, which brands to promote the most, the pricing decisions, introduction of new brands and phasing out of the old brands. Sometimes for market penetration, price of certain brands have to be reduced, to make them more attractive, in other situations the prices have to be raised if there are calls from the production department, the G.P.M has to check the feasibility and then make appropriate decisions. When introducing new brands the G.P.M formulates the appropriate strategies. For example, sometimes a new product may have to be tested in a few areas to see the consumer response and then go for mass production, as it may be a risk to start producing straight away. In all such areas the G.P.M has the authority to make decisions. Under the G.P.M there is the B.M (Brand Manager). Brand manager is responsible for all the brands E.B.M has in the market. He works for the success of all the brands. He tries to identify the threats and opportunities in the environment and gives his recommendations to the G.P.M about the possible improvements, which could be brought about in the biscuits Under the Brand Mangers are the A.B.M (Assistant Brand Managers). There are basically five ABMs, who have been assigned specific brands. They are solely responsible for the success of their own brands. The major brands of E.B.M have been divided among five ABMs. The ABMs decide on the distribution of specific brands in specific areas. Due to cultural differences there are differences in the tastes. These A.B.M have to make sure that the right biscuits reach the right areas.
M (General Regional Managers) EBM has divided the country into two zones the northern zone which includes Punjab.R. For example. Under the G.Also. The two zones the northern and the southern are further divided into four sub-zones. in Karachi due to a lot of competition in the creams line from LU’s Prince.M has been forced to limit its supply of Rio instead it concentrates on other brands in Karachi.R. A Zonal Manager heads each zone.M is responsible for the activities in their respective zones.M (Zonal Managers). they become more aware of the consumer’s preferences and can suggest some important improvements about the brands to the top management. 84 .M is in Rawalpindi.B. Here EBM has used “geographic organization4 (Kotler) ”. Both the Regional Managers are responsible for an efficient distribution of biscuits in their respective zones. because of the large area EBM is covering and also because there are people of different cultures in each province.M sits in Karachi and for the northern zone.R. which includes Sindh and southern parts of Baluchistan. Each Z. Their tastes and preferences differ and so it is important to adopt a more regionalized approach. G.R.S. and the southern zone. E. in some areas there may be strong competition for certain brands so they must see that too much supply does not reach there. It markets its Rio brand in Punjab where LU’s competition is weaker. For the southern zone. Also under the N. the G. They seek to maximize the company’s profitability in their zones.M are the Z.M are the heads of each of these zones. the G. NWFP and northern part of Baluchistan. They are Karachi and Hyderabad in the Southern Zone and Rawalpindi and Lahore Northern Zone.M are the two G. Sine they live in the same environment as the consumers. They are also responsible for the promotion of the different brands in their zones.R. There are four Zonal Managers.
I Q K D A U G C E T R I O N I FR I E N C A T N O C R E A O M U R N . K H A W E R . (The organization chart below has been taken from the company) O M A N A G I N G D I R E C T O R r .M and the customers. P S I R E A E R L C A E E T T O I O M LC A BA AT T C R N C O C IL Y S H R D O W D R G A N M . They try and make sure that most of the brands are available in their particular area’s retail outlets. J T A I NM G S H E A L I M O H A M M N S M M C S S O A A A O L E N L R S M A B M A S R N A E A A A T I O E N A L N S G GG E E RN E R A G E N L S P R O D U C RT E G D M I N A A N T A O G R E MR A N SB TR A A F N F DZ O A N A MG AE S A A I S N N NR A A MG LZ E R A L I O N A L A G E R O AE N NR A A MG LZ T F A I NE A DT F I E L D F I E L D L DF O R C FE O R C FE O R C G E R I E L D O R C E 85 . G L P M R G R M O AE N NR A E E A A MG F FE G N LZ N E R A L I O N A L A G E R O AE N NR A A G L E R R A O N r . IP N O A DN R . B U T T E R Y TG E C H ND II CR AE D N AR N& JD I A N D H A F FM A R R . As they are closest to the customers they give useful suggestions about how to bring about improvements in the product. M M A A H R M K O M A E E V T .Each Z. On an average there are six salesmen in a particular field force. M D O M V M R . They all are provided delivery vans in which they deliver the goods to the major retail outlets of the country. and so an important position.B. The field force is the last link between the E.M has a field force under him. P .
It becomes very important when the marketing heads are trying to allocate the advertising budget. the N. The research may be helpful in identifying the reasons for low sales and profits. This also leads to a very effective communication system. Also quick decisions can be made as this information is readily made available to the sales people. EBM has a limited advertising budget. 86 . the VP Marketing makes the major selling decisions. which is about 50% of its major competitor LU.M is directly under the VP marketing.FUNCTIONAL EFFICIENCY At EBM.S. Regular meetings are arranged between the top management and the lower level managers so that the different brand’s progress could be evaluated. Infact. the Marketing Heads need specific information about each brand in terms of its position in the market and not just the current sales figures. EBM tries to allocate this among the different brands to achieve the maximum benefit. Communication Upward communication4 (Kotler) is very important for any organization as some of the most dynamic ideas may come from someone lower down the hierarchy. there is a very good coordination between the marketing and the sales staff. This could be accessed from the sales managers lower down the hierarchy. To make on effective decision in such a situation. Because of the close interaction of the sales and the marketing people at EBML. The marketing staff often carries out market researches to analyze the major consumer trends and also to identify the opportunities in the market. this makes the company more adaptable to the changing environment. This is not been much of a problem. This leads to an effective interaction between the two areas. This information is very useful for the selling people as they can alter then strategies accordingly. In the formal hierarchy.
B. Like for example if the company is going to introduce a new brand. the strong points of the firm products and its competitive advantages 4 (Kotler) . supervised. They also need to know about the customers and competitions characteristics. motivated and evaluated. There is no formal training being given to the marketing and selling people but a thorough orientation about the company is given to them at the time of recruitment. 87 .M. Clear cut targets are given to each member in the chain. the sales people must know this in advance as they can provide important information about the feasibility of such a plan. is also very well organized.Downward communication4 (Kotler) at E. Supervision is needed to see that whether the marketing and sales people are spending their time effectively and achieving sufficient amount of sales. Top management makes sure that all the relevant information reaches down the hierarchy without any distortion. Good quality of supervision directs and motivates the sales force to do a better job. Other important information about the top management’s future plans regarding specific brands must be made know to the sales people. Incentives are also attached at distinct levels of performance and so everyone knows what is expected of them4 (Kotler). the future of the existing brands is made known to the sales people as they have time to alter their strategies in advance. Supervision and Orientation The VP marketing also makes sure that the marketing staff is well trained. Complete information about the different brands EBM deals in is provided to them. These usually are in quantitative terms for the lower level management and in profitability terms for the middle management. Also.
EBM has set specific sales targets for its sales people. which makes them feel more important in the organization. They also develop social contacts with their fellow employees. or to celebrate a major success of a particular brand. they are quite lower down the hierarchy. as they feel free to give their suggestions. as they often have to be provided encouragement to do a good job. which encourages teamwork and co-operation between them. As in the case of the field force. This also results in providing them motivation. This helps to boost their morale. This helps to instill a feeling of competition among other members of the organization. These gatherings give the subordinates a chance to interact informally with their bosses. They know exactly what is expected of them.Sales Force The top management tries to provide proper motivation to its sales force. Frequent meetings are held between the lower management and the upper management. and also provide the necessary direction. Distinguished performers of a particular year are also honored. Also functions are arranged on Eid. Monetary incentives are attached at distinct levels of performance. Social gatherings of employees are also organized. There are rewards for each level in the formal hierarchy. but still they are an integral part of the sales process as they are closest link EBM has with the customers. So it is important that the top management makes them feel important within the organization. Rewards and Incentives The top management also realizes the importance of rewards and incentives in motivating its salesforce. 88 . These gatherings are usually held at special occasions such as at a launch of a new brand. which will enhance their efficiency in the long run. This is usually done by providing them with more decision making power in their areas and delegating more responsibility4 (Kotler).
when comparing performance of the N. Evaluation takes place based on the sales figure of each sales performance. For example.Evaluation Procedures Periodic evaluation of the sales people is very important to see whether the desired sales targets are being achieved. they try and look back at their shortcomings. LU has a strong hold in the creams-line in Karachi because of its better advertising. The necessary information i. is when performance of different sales people at a similar level is confirmed.M. 89 .S. this clearly shows their level of competence. This requires regular information from sales people. the exact sales figures are obtained from the sales department under the M. But different market conditions of different areas are kept in mind.S. So it will not be a good evaluation if you compare a sales person in Karachi with the other in Punjab. First.e. Sales people also get helpful feedback. EBM’s top management communicates its clear standards regarding sales targets. The other method of evaluation is when current year’s sales figures are compared with that of the past years.R. There are basically two methods of evaluating performance20 interview .P. like people in the field force or the zonal managers. Through this formal evaluation. They also get a chance to explain their position and also may give suggestions about the possible changes in the advertising or quality improvement.M and G. This is practiced when comparing the sales targets of the middle management. G. For example.C.M.
it is important that all these departments have a close interaction. Usually a consensus is sought before taking major product decisions. The Marketing department must prepare a cost and benefit analysis. 2. Finance Department Finance is concerned with finding and using funds to carry out the marketing plan. They are: 1. All these departments are equally important for the overall success of the company.INTERFACE EFFICIENCY EBM is basically divided into four major departments. 4. 3. The Marketing department may have brilliant plans. Before the major marketing plans are made all other departments are taken into consideration. but it always has to be seen that whether the company has enough resources to take a risk. For example. Finance Department Technical and R&D Department Marketing Department Administration For the success of the company. and should work in the same direction. It has to satisfy the Finance Directors about the chances of its success. Marketing department on its own cannot get the approval from the top management. 90 . if it wants to introduce a new brand.
They try to find out what exactly do the consumers want. as to whether a particular biscuit brand could be produced in the desired price range. This information is conveyed to the R&D section. The production manager’s views also are taken. and the resulting costs may be too high. The Production Manager informs the marketing department if the costs will be high. The Marketing department does market research. • Marketing Department The Marketing department has to work closely with the R&D to develop good products. as costs may vary with level of production. On issues such as pricing of products the production and the marketing department have to work closely especially when the aim is to bring down costs. The quality of the product depends on the quality of market research provided by the marketing department. Even sometimes it may not be feasible to produce a particular brand in the deserved quantity as this may be too low. and also manufacturing of the products. or for a good quality will have to be higher raised.The Technical & R&D Department The Technical and R&D department is concerned with both developing of new brands. which tries to produce such products. which are according to the preferences of the people. 91 .
• Administration The Administration department of EBM is concerned with recruiting people. when deciding on the number of applicants to be recruited in the particular area. the V. Selecting the right people for right areas is of utmost importance for the success of any form. or the number of people in a particular field force. Other functions of the administration are record keeping of all the company’s archive data. He will try and explain why the need is arisen for the additional recruitment. The interviewees consist of executives from Administration and also representatives of the Marketing department. Also in a typical sales force. 92 . For recruitment. detailed interviews are conducted. the top 30% of the sales people might bring in 60% of the sales. For the Marketing department. Also. sales superstars at EBM sell an average of 1. for example on deciding the number of zonal managers. They try and see whether the applicant can fit in the role desired to be filled.5 to 2 times more than the average salesperson. it is important to have very efficient sales people. Human Resource Management is an extremely important area for all the companies. Thus overall sales person selection can greatly increase overall sales force performance. The performance difference between an average salesperson and a top salesperson can be substantial.P Marketing will try and consult the director administration. According to studies.
MARKET SYSTEMS ANALYSIS 93 .
Packaging decision. Forecasting. Media planning. and Promotion. especially when launching a new product is the prime issue. Launching Decisions26 interviews Regarding launching decision. Ranging from the type of cream sandwiched to the crispiness and other attributes of the biscuit there are thousands of decisions that are to be made. the major area of concern is what product to bring to market and which particular segment to cater to. Packaging 20 interviews Packaging is another important area in which decisions are made. The type of packaging heavily depends upon the specific market they want to cater to. information that a manager needs is complete geographical bio-data including demographics. Mr. Answering specifically to the question Mr. Types of Decisions Generally Made at EBML. In this regard. For children. spending patterns. cartoons and myth features are 94 .MARKETING SYSTEMS ANALYSIS MARKETING INFORMATION SYSTEMS A good marketing information system always balances the information that managers would like to have against what they really need and what is feasible to offer. Jamil told us that while launching a new product EBM has to take care of all the necessary elements of production and product itself. and consumer's lifestyle. Jamil said that the general types of decision made by the marketing department at EBM are Launching decision.
another important field of decision-making regards which segment EBM should target. What segments to target 26 interview Depending upon the information available. from 8 to 80. enjoying the company and eating biscuits by EBM. biscuit. Advertisement26 interview Another decision that is made frequently and checked upon from time to time is the type of advertisement to attract different consumer groups. cream. Normally. Currently. sober packaging is a better option. advertisement aimed at children and adults is shown during the hours of children. But it attacks different age groups with different packaging. and advertisement. Children are usually targeted with cartoons or by showing dancing and happy children who eat EBM's biscuits. The type of advertisement aimed at children is totally different from what adults are targeted with. Another important aspect is the time when the advertisement is shown. While the advertisement aimed at adults usually shows happy people at parties or with friends. EBM is catering to a large range of age. 95 .and adult programs respectively. Time to time care is also taken of the packaging which are becoming outdated and they are changed slightly and gradually. For adults.usually more attractive.
SOURCES OF GETTING RELEVANT INFORMATION (Kotler) EBML uses many a system to accumulate information it needs to make all decisions. It has a continuous flow system of information to keep abreast with any change in the environment. at EBM. Major decisions regarding production and promotion are based upon this forecastingkotler Promotion26 interview How much to invest in promotion and what weight to be given to which method of promotion is another decision frequently made at EBM. Usually regards decisions concerning how much advertisement at television should be shown and what coverage should be in newspapers and magazine. In this regard. magazines and posters also get attention.making. is obtained by external sources.Media planning26 interview Media planning is another major area of decision. It is done by analyzing the statistical data for the next year which. The major source of promotion comes from television advertisement followed by salespersons. the functional departments have been divided into information accumulation 96 . Newspapers. Steps are taken to ensure that right information reaches right person at the right time. Forecasting20 interview Forecasting the sales. This is done by developing a special system of information inflow. demand and other relevant factors is also very important.
strategic changes. It also includes time to time changes in the overall strategy. 26 interview The Management Information System at EBML has track of all relevant facts and figures for the past twenty-five years including sales figures. it is sent to the specific information center where this information is needed and which the information is relevant to. 97 . For example. information related to sales having the last week sales figures and other such information is directed to the marketing department. standards. 26 interview Form the specific department. The accumulation of this information majorly is the responsibility of the central information system. goes to the specific person who is responsible for dealing with that information and making related decisions accordingly. budgets. television. The flow of this information is mainly from newspapers. sales force and retailers. and variances. demographic divisions. From here. This department has been separated out and has been given the status of a separate entity called the MIS system. whereas information regarding raw material prices heads towards the purchasing department. statistical data about the costs and cost structure. information about the market conditions. information about the overall economic conditions and even facts and figures concerning competitors’ standing on these basis. changes in the market share. Here it is evaluated as being relevant and reliable. The responsibility of the Management Information System (MIS) is to keep all records available to be used by the management and to keep track of all important and relevant changes in the environment (Mega and Micro both). the information that has been subdivided according to the category to which it belongs. All the information coming in is accumulated in the main information center.centers. Special measures are taken to ensure the flow of information to the specific person and that it does not go elsewhere. This information comprises daily information required to make day-to-day decisions.
Besides this many other sources of information are also used at EBML while making a decision. marketing intelligence. 26 interview Marketing Intelligence(kotler) The everyday information about the development in the marketing environment is called marketing intelligence. executives. new information is collected through company's own personnel. Unless there is some criteria to evaluate validity and reliability the incoming information may prove to be hazardous. This may include information about the everyday aspect of market. i. product managers and general employees. But there is a potential hazard in practicing open-door policy and that is of incorrect information. Apart from the internal records that keep track of the past. For this EBML has developed a report base system which would be explained later in the report. This not only helps collect information but also helps keep employee morale high. sampling. There are many a sources we see at EBML that are used to collect information. Another benefit of internal records is that they can be accessed very quickly and their cost is very low as compared to other sources of collecting information. 26 interview 98 . Strategic changes over the last ten years and their resulting impact on the performance of the firm helps make new strategic changes. These include internal records. competitors strategy or some new law been enacted. These internal records are very important while making a decision. For this an open-door policy is followed at EBML to ensure timely arrival of any related information. Sales figures for a specific season during the last two or three years help forecast sales for the next period. 26 interview Internal Records(kotler) As discussed earlier the company keeps an internal record for information regarding fact and figures for more than 25 years.e. concerning current market share. and through report base system.
Marketing Research(kotler) Marketing research at EBML is not very much organized. economic conditions. time-to-time research is also get done through these research companies.Sampling(kotler) Sampling is there when managers draw conclusion about large group of consumers by looking at a small proportion of total consumer population. Whenever the firm comes to launch a new product it contacts a research company to analyze the marketing conditions for it. Daily information coming from sales body is used to induct or to draw conclusion about changing consumer taste. Correct information is then directed to the information center from where it goes to the specific person26 interview. Apart from this research which is conducted when a new product is about to launch. At EBML sampling is done through sales force. etc. reliability of the information is a matter of concern. This is done by evaluating the daily performance of each brand as sold by the sales force. Feedback is generally given to sales people who come up with ideas about the changing preferences. 99 . The main source of marketing research is through research companies. Another important issue is the timely arrival of this information. They do not follow any particular method to do marketing research. research to get information about the general changes in trends. timely and accurate information regarding these changes is important26 interview. For this purpose they have special contracts with research firm. Since the continuous changes in the environment may lead to a decline. But here too.
It does not follow mass marketing because it does not target the entire market with single marketing offer. It offers to market a wide variety of biscuit. Currently EBML is pursuing a strategy that requires it to cater to different market segment ranging from higher-income segment to upper. Multiple Segmentation27 In other words we can say that EBML is following a multiple segmentation strategy.and middle-income segment. as the company offers differentiated product to different market segments.MARKETING PLANNING The company is very efficient in this regard that it prepares periodic long-term and shortterm strategic plans and periodically revises it. plain. Even within the defined category differentiation is present such as cream biscuits are available in different flavors like chocolate. and does not follow market segmentation because it does not target only one or few segments by offering one distinctive marketing offer. upper income. 100 . there can be seen an obvious discrimination within its packaged biscuit consumers. These segments are primarily segmented on the basis of their income level. i. and higher income segments26 interview. thus we can say that each segment is catered to differently and not only this but each segment receives a distinction marketing offer26 interview. there is an amalgam of both the mass marketing and market segmentation. thereby providing access to a larger proportion of the overall market as well as serving the needs of different groups of customers effectively27. thereby serving to the needs of different biscuit buyers.. at EBML. Here we see that the company neither follows ‘mass marketing’ 27 nor does it follow ‘market segmentation’. Rather we see. geographical and age. the middle income.e. and salty biscuits. etc. So there is product differentiation with cream. coconuts. Although the company's brands primarily cater to the top end of the market. Under this strategy EBML caters to different segments with totally different products. Taste difference is also taken into account.
and ‘Dane ‘ brand ranges in the biscuit market28. The same logo also helps better the communication between the product lines thus increasing the overall efficiency28&26 interview. integrating the Pide Piper with the two brand ranges by placing the icon on ‘Peak-Freans’ and ‘EBM Brands’ packages. Multi-Flagship Brands28 The company is now using different brand names with its recent addition of EBM as another category of its brands. this Multiple Segmentation strategy places great demand on EBML's business for high skills and greater resources and high cost. Now all the brand categories are advertised under the same logo thus providing a platform for better and unified positioning of the company as a whole. The company has integrated these different brand categories under the corporate logo ‘Pide Piper’ icon.Nevertheless. This campaign is thus referred to as ‘The Pide Piper Institutional Campaign’. Product Differentiation Strategy EBML has attacked a very wide segment of the current market with its single product ‘Biscuit’. This has also helped EBML to create a better positioning of its other brands as the logo is very well positioned on the minds of the consumers who attach attributes like high quality and better taste to the ‘Pide Piper’ logo28. This mass marketing cannot help it generate high profits if it does not take into 101 . ‘LU’. EBML has placed its new EBM brand category as a new competitor among the already existing ‘Peak Freans’. However we can conclude that higher performance in each segment would result not only in higher profit and if not comparable profits within the segment and a higher overall profit that would exceed profits achieved by either mass marketing or market segmentation.
To cope with the problem EBML has divided the total market into smaller fragment and has come up with product differentiation to serve to the different needs and demands of these different segments. The company offers its products in various forms of packaging such as regular packs and rolls. Therefore. It is practically almost impossible. EBML manufactures and markets the widest variety of biscuits in Pakistan biscuit market. The basic strategy is to cater to different segments with variations in the core product. Aggressive Promotion Strategy EBML has since its origin following an aggressive promotion strategy. The packaging is regarded by its consumers as of good quality.) Ltd. It manufactures and markets fifty-three (53)25 different product varieties under EBM. and forty-four (44)25 variations under Coronet Food (Pvt. Now when it has well position itself on customer minds.). especially in today’s environment to serve different needs put forth by the consumer with a single unified product no matter how complete and unique the product may be4 (kotler)-26-interview. taste fluctuations (cream-biscuits. plain.account the differing needs and demands of the market. These variations includes price variations. salty and 50-50). half rolls and ticky packs. (CFL). Thus it makes it possible to cater to such a wide variety of consumers. For example. Ticky packs. packaging differences (Family packs. it still has not given up its tendency towards aggressive promotion. Every year a lot of money is allocated to promotion. we can well conclude that EBML has developed its product variation keeping in mind the fluctuating and ever changing consumer demand. EBML attracts children with cream biscuits while offering salty biscuits to the segment which likes salty tastes. family/jumbo packs. 102 . etc.
sales volume. Profitability. Special attention is given to make sure that these objectives are attainable but at the same time it is made sure that these standards are still challenging. They believe that a standard that was challenging a year before.MARKETING CONTROL SYSTEM EBML has always set standards (objectives) for all departments. too. 103 . might have become very easy now. This also includes marketing department for which at the beginning of every period objectives for the period are set. The company also tells its sales force the standards they have set for them. In the interim and at the end of the period specifically the performance of this sale force is matched against the objectives and they are appraised on the basis of this. thereby. the target sales they have to achieve and also what kind of help they can expect from management. Objectives for the sales force are also set. First of all they are given a budgeted amount of funds within which they are expected to achieve their objectives for the next period. due to some technological advancement. For marketing department targets are set. Another important aspect of objective setting at EBML is that they keep on revising these standards. They are also told what type of advertisement EBML is going to have during the next period and all other related information is given to them. Evaluation is carried about by matching the actuals against the budgeted ones. cost and spending analysis is done every six months. Incentives are given to motivate workers to achieve these objectives. Every six months internal reports are made to help managers understand the variances. These budgets have always been challenging but feasible.
Interview Surveys are also conducted to assess the need of developing a new product and to know what type of product are customers looking for. It sees in them the attributes that have contributed to the success of these brands. The company EBML takes the idea for product development from its current successful biscuit brands. It realizes the need of a new product line with the realization of changing consumer taste and preferences. EBML has developed most of its new product (product differentiation) on the basis of deferring consumer needs. Interview Customer themselves are another good source of getting such information. 104 . The successful brands of rivals provide a good source of generating ideas about a new brand.NEW PRODUCT DEVELOPMENT As discussed earlier the company EBML produces and markets a wide range of products to cater to the different needs and demands of its different segments. packaging and other attributes that satisfy consumer needs. Company's sales force also provides good information about the changing customer preferences and gives good ideas not only about coming up with a new product but also about how to improve on the existing brands. preferences and tastes from more close. New product development reached its climax during July-December 1997 when tit launched eight varieties with in a duration of only six months28. Finally market segment at EBML gets ideas about new products from its rivals. Also there is a research and development center that has the responsibility of coming up with new flavors. At EBML when research is conducted through the external company. consumers are also asked question regarding information about the improvement on the current line and the attribute they would look for in a new brand line. During the last four years (1996-99) the company has on its debit eight new different products (differentiated). The attributes of these successful brands are studied by the research and development center to know the consumer taste better. These changes are deducted from the research done through research companies every time the company assesses a need for it.
MARKETING PRODUCTIVITY AUDIT 105 .
middle income segment. CBL which has launched their LU range of 106 . This strategy has provided EBML with the perfect opportunity to be accessible to a larger market and also the chance to cater to different classes of consumers27. 25 EBML and CFL combined have about 44 and 53 brands and their extensions respectively. High inflation in recent years have caused the growth of the standard packs to ease up while at the same time the demand for the small packs that is the ticky packs and the half rolls has increased dramatically due to greater customer acceptability and thus are enjoying greater growth9. The brand "English Biscuits" has been positioned in the minds of the consumers as a value for money brand which is being offered to the lower. Other companies. Their main competitor and the market leader CBL has only about 7 major brands and they back these brands by aggressive and creative. Wolf. Even though the company has been experiencing growth in its sales but at the same time the market seems to be growing at a higher rate. including Dane. CBL has the highest market share at about 20%. where as in comparison with their competitors this is a huge amount. a good performance in each of the segments would enable the company to maintain the profit margins that they have set for themselves according to their market segmentation strategy.PROFITABILITY ANALYSIS Biscuit Company in the organized biscuit industry has lost its market leader ship position to CBL. The flagship brand. Montgomery etc. Nonetheless. EBML has distributed its various brands according to the different income brackets within the country. . Meiji. with overall profit generally exceeding that achieved by either mass marketing or market segmentation27&28. which is "Peek Freans". comprise of the rest of the organized sectors sales. Though this strategy may prove to be fruitful in the long run but in the immediate future this strategy could be very costly and put great demands on EBML in terms of additional resources being diverted to make this move a successful one. and the newly launched "EBM" brands have been priced for the higher income bracket. The capacity of the total organized sector is estimated around the 42000 tons per annum. which came into the market in the late 80's. followed by EBML/CFL group with 15%.
The compound growth in contribution margin and the net contribution margin is 42% and 109% respectively. COST EFFECTIVENESS The Manufacturing Process31 The production procedures of all the biscuit manufacturers are the same.5 million rupees and the contribution was 104 million rupees. The average annual contribution and the net contribution margin is Rs.biscuits under licensing from Generale Biscuits of France which later on merged with Danone group. The major brands of EBML are Marie. however. Departments in the Production Process The following departments are involved in the production processes of biscuit manufacturing: • Production department 107 . Click. Gluco and Rio and the total sales of these 4 combined was in excess of 3600 tons and their advertising and promotion expenditure was 49.54 million Rs. 121. one of the largest food conglomerates in France. The average annual contribution and the net contribution margin growth is 14% and 36% respectively30.8 million and 85. respectively. We g8ive a brief overview of a few steps involved in the production process of biscuits and an analysis of the cost effectiveness and profitability of EBML in this section. since they do not have those kinds of resources but they can take their major brands in terms of sales and spend most of the advertising budget on those brands. in terms of packaging and branding these operations may differ from company to company. EBML cannot match the advertising capabilities of their rival.
• Service department Production Departments Production departments are directly in the production process and these involve the proper allocation of materials and conversion costs to production. PRODUCTION PROCESS FLOW31 108 .
Technical department 109 .P S Q U E A C W M A R L H A I N V I C I T Y D E N S R T D E I C E C P A T L D E P I N E T G D O E N P T S T R O L R O M D I X U C I N T I O G D N E P T D E P T S T E C U T T I N G D E P T T O R E / H O U S D E P T E E N P A T N C B A K I N G D E P T P A C K A G I N G D E P T In case of EBM. Quality control department B. the production departments are: • • • • Mixing department Cutting department Baking department Packaging department Service Departments Service departments are not directly related to the production of an item. in the way that their contributions cannot be directly traced to the produced items as such. since they benefit from the services provided. EBM has the following service departments: A. The cost of service departments is allocated to production departments.
e. The production of the different types of biscuits is carried on side by side. it is also crucial for EBM to maintain its quality standards even under tightly controlled and accurate production activities. Internal Reporting31 At EBM. The production activities of one department are dependent on the degree of completion of production activities in the preceding departments. the output of one department is the input for the other department. therefore.C. the process flow is “Sequential”. i. 110 . If any one department fails to do what it is required or the production does not meet the required quality standards then the production process flow would stop. reports are prepared on a monthly quarterly and yearly basis. This pool is used for making forecasts for the next production year as well as allocating budgets to different production activities. It is. essential for the company to keep a constant flow of the production process to achieve economies of scale. Maintenance department Process Flow31 Under the manufacturing departments. Store / warehousing department D. Cost Accounting Pool EBM uses the accounting pool for forecasting and projection of data. In this respect.
finished goods. EBM’s cost accumulation system is very extensive. Common decision making procedures at EBM include: • • • • Replacements: Expenditures necessary to replace worn out or damaged machinery used in the production process. At EBM. This helps in accumulating product cost data through the inventory accounts that provide continuous information about raw materials. it is essential for all companies to maintain an effective and accurate network of reporting procedures. cost of goods manufactured. Expansion of existing product line or markets: expenditures to increase output related to What selling prices should we set Should we diversify our product line EBM uses the perpetual cost accumulation system. the cost accumulation system is especially important for the maintenance of quality standards and keeping a constant track of resource usage. Cost Accumulation System31 Cost accumulation is the organized collection of cost data through a set of procedures or systems.Evaluation of performance and comparison of actual costs to budgeted costs in order to determine the production variances are also taken into consideration in the internal reporting procedures. work in process inventory. cost of goods sold. The main aims are: 111 . The evaluations of prices of products as well as the future consequences of certain costing decisions are also taken into account under this cost accumulation system. For an effective cost accumulation system.
There is no major difference in the production process of each type. It produces different types of biscuits and these are manufactured by mass production techniques.• • Accumulation of total cost Calculation of unit coast Process Cost Accumulation System EBM uses process costing. 112 .
35000000 30000000 25000000 20000000 15000000 10000000 5000000 0 JAN98-MAR98 APR98-JUN98 JUL98-SEP98 OCT98-DEC98 TOTAL COST IN RS PER KG COST IN RS PRODUCTION IN RS COST OF DIRECT MATERIALS (MATERIALS) 5000000 4500000 4000000 3500000 3000000 2500000 2000000 1500000 1000000 500000 0 JAN98-MAR98 APR98-JUN98 JUL98-SEP98 OCT98-DEC98 TOTAL COST IN RS PER KG COST IN RS PRODUCTION IN RS 113 .
18000000 16000000 14000000 12000000 10000000 8000000 6000000 4000000 2000000 0 JAN98-MAR98 APR98-JUN98 JUL98-SEP98 OCT98-DEC98 TOTAL COST IN RS PER KG COST IN RS PRODUCTION IN RS COST OF DIRECT LABOR COST OF PACKAGING 7000000 6000000 5000000 4000000 3000000 2000000 1000000 0 JAN98-MAR98 APR98-JUN98 JUL98-SEP98 OCT98-DEC98 FACTORYOVERHEAD IN RS PER KG IN RS PRODUCTION IN RS 114 .
MARKETING FUNCTION AUDIT 115 .
sales promotion and publicity • Sales Force 116 .MARKETING FUNCTION AUDIT • Products • Price • Distribution • Advertising.
packaging and the Pied Piper icon. We give an account of these tools used by EBM to market its product line in the appropriate and well-defined market segments. In case of EBM. The “Marketing Mix” consists of marketing tools that a firm blends to produce the response it wants in its target market. PRODUCTS A product consists of any good or service that can be offered to the market to satisfy a need or want 4 (Kotler).The Marketing Function Audit consists of an analysis of the marketing mix defined by the company for its operations. Actual Product: The high quality level. Applying the three levels of product in case of EBM4 (Kotler): • • Core Product: Biscuits. and shapes of the biscuits. the products are the biscuits produced by the company. 117 . as food-between-meals. • Augmented Product: EBML provides nourishment and hygiene as well as nutritional ingredients. different tastes.
yet we would still consider biscuits to be convenience products.M and the Pied Piper logo. For EBML.B. immediately and with minimum of comparison and buying effort. consumers do give preferences to certain brands and compare quality from one brand to another. It has successfully applied this strategy to its brand. EBML desires to maintain consumer loyalty and these brands are adding value to EBML’s products by making the company’s product line a member of a family under these brands. symbol or design or a combination of these intended to identify the goods or services of a seller or a group of sellers and differentiate them from their competitors4 (Kotler). Applying the concept of Product Quality. Product Design4 (Kotler) may also be considered in case of EBM. Although in case of the Pakistani biscuit market. as they require minimum search effort and little planning. Here also EBM has made a good effort of communicating this strategy of a change in the style to the consumers through advertisements. They are widely available and within the category of convenience products. This is the image the company wants to build in the minds of the consumers. EBM should alter the style of a few of its product lines in order to attract more attention. Branding A brand is a term. products which consumers buy frequently. sign. it is essential for EBM to pursue Strategic Quality4 (Kotler) . the brands are E.Biscuits may generally be categorized as Convenience Products4 (Kotler). gaining an edge over the competitors by consistently monitoring consumers’ changing needs and wants and delivering better quality and satisfaction through improved products. Ringo. 118 . which has been shaped in the form of rings as the name suggests. they come under Impulse Products4 (Kotler).
Half Rolls and Family Packs. for example Marie. Each of these Mega brands has numerous products. the classics. good quality and good taste that cater to the wants of the consumers. it still was different from the regular EBML packaging. • Personality4 (Kotler) : A legend. The same is the case with the other packaging forms. The Family Packs usually have many promotion strategies associated with that particular brand. 119 . Under this brand. But now. Packaging As far as packaging is concerned of EBML’s biscuits. or Click. For a consumer this brand projects a sense of loyalty to the best.What does EBML want to relay to its consumers through its brand? • Attributes4 (Kotler) : Provider of biscuits made from the finest raw materials on high quality plants under strict quality control. whichever brand is used is generally in a typical card box. Although this was in response to LU’s 50-50. a leader in all aspects. English Biscuits and EBM Brands. • • Benefits4 (Kotler): Good tasting biscuits and crackers. The Half Rolls introduced for Tip Top was in a shiny silver syllophene paper. Value4 (Kotler) : Hygiene. which within them have Micro brands. EBML’s biscuits are available as Ticky Packs. EBML has various categories or sub-brands such as Peek Freans.
This will surely lead to profitable brands that can actually aggressively compete with LU. In turn. that is Peek Freans. Beside these they have various commodity biscuits such as Chocolati Sandwich and Munna Biscuits. EBML can regain its lost market leadership position. 120 . As far as Product Line Extension is concerned. Thus we can say that EBML has stretched both ways. by being able to compete effectively and efficiently. The company is maintaining such a large variety of products that it actually can not focus on all of them effectively. In total EBML produces 9725 types of biscuits In terms of flavor.Product Line EBML’s product line consists of numerous brands under the three major brands. different brands etc. size of packages. In our opinion EBML has spread its wings too far. Only by reducing its spread of brands will the company be able to enhance its promotional activities for its more profitable and front runner brands. EBML has a wide “products line length4 (Kotler) ” with regard to increased quality level and increased price level and vice versa. that is it has come up with products which are better in quality and those which cater to those masses with a smaller level of disposable income. There is a serious need for EBML to revise and rethink its strategy in terms of which products or brands to continue and which ones to discontinue. Dane Foods and Meiji. English Biscuits and CFL.
for example Rio vs. Therefore. have been priced using the “Good Value Strategy”. The price (Rs8. Competitors’ prices and the Value given to a brand by the consumers. In EBML’s case. has a comparatively lower price.00) is due to the “Survival Objective4 (Kotler)”. and “Gluco Plus” launched in July 1997. we see that different brands have different objectives according to which they are being priced. It largely bases its price on competitors’ prices specifically for those products that are facing direct competition by brands which are very similar. This is because of the high competition EBML is facing with LU. A brand like Tip Top which is facing great difficulty in competing with 50-50.PRICE Price is the amount of money charged for a product or service. we also observe that EBML is following “Competition Based Pricing”. EBML’s launches in the past such as “Sooper” launched in August 1996. The reason for this is that today’s consumer has become more price conscious. has been priced below the price of Prince in order to attract more consumers. Prince. thereby minimizing costs over the long run thereby increasing the profit margin. In addition to this. in turn maximize its profits. The management at EBML believes that cost efficiency would lead to higher price margins even though the price is kept lower than the competitors. or the sum of the values that consumers exchange for the benefits of having or using the product or service4 (Kotler). This is specially seen in the case of Gluco Plus 121 . New Products As far as new product launches are concerned. EBML bases its price on the Cost Structure. The company wants to obtain Market Share Leadership. the price does play a very important part in the product mix it offers its consumers. Going over the various brands EBML offers. EBML has to set the right price for the right product. Rio. which is currently fighting for market share against Prince by LU in the creams category.
one can say that EBML does give its products a “Psychological Price4 (Kotler)”. 122 . such as the wafers and cream biscuits. They are priced differently under the same category. Plus the fact that when one wishes to buy this any brand in the form of a packet it does not become a hassle in the sense that two ten rupee notes do the job. They are grouped in packaging categories such as: • • • Packets Half Rolls Ticky Packs These categories are usually under the same price range with a few exceptions.as it is currently priced at the same rate as the original Gluco biscuit. that is they do not have large price gaps between them. EBML’s various brands are not widely priced.00.00. the ticky packs are priced at Rs2. Commenting on the type of prices these products are given. Keeping in mind that these products are convenience products. Now as far as those consumers who are price conscious are concerned. we see that the rolls are once again priced at an easy to remember and handle price of Rs15.00. the given prices do seem to be easy to remember.50 to Rs3. It gives of an impression that EBML is pricing a better product at the same regular price at which it prices the original Gluco biscuit. Looking over the prices of the various products. Product Mix Pricing Strategies EBML’s Product Mix Pricing Strategies can be categorized as “Product Line Pricing4 (Kotler) ”. nearly all under the category of Packets are priced at Rs20.
EBML also wants to get its manufactured biscuit on the shelves of the millions of retailers all over the country and in turn in the hands of the consumers. and the best managerial expertise. (Kotler) ”. These distributors make the biscuits made by EBML available to the final consumers. We feel in this regard that EBML should rethink the prices of some of its brands specially the Tip Top brand and consider new alternatives in responding to this lack of market share. DISTRIBUTION A company opens a plant and makes its products. that is it has intermediaries (distributors) between the company itself and the retailers who in turn provide their 123 . How does the product manufactured by the company reach its consumers? The answer is distribution channels. It uses the best materials. independent or company owned. Here EBML uses “Indirect Marketing Channels4 products to the final consumers. But is that enough? Definitely not. the most efficient machinery. So it uses distributors who can cater to the size of EBML and its consumer base.EBML also uses “Promotional Pricing4 (Kotler)”. This is visible in case of Tip Top where EBML wants this brand to create a market share for itself against LU’s 50-50. as we have mentioned above. As far as “Value Pricing4 (Kotler)” is concerned. EBML is trying to create an impression of itself as a provider of good quality products at reasonable prices (Gluco).
Customer marketing Channel of EBM Manufacturers Distributors Retailers Consumer In actual there are 509 distributors.EBML’s product flow through in its channel of distribution is depicted in the following diagram. We believe that on one hand this leads to healthy competition. 124 . Besides making available the products of EBML to consumers they also provide valuable information regarding the demand in different regions for different products in the various packing they come in. that is EBML’s products reach retailers fairly quickly. evaluate and promote. These distributors break up the large consumer base into regions and territories that they cover. Optimally there should be lesser if not few distributors who are big and capable enough to cover distinct regions efficiently and effectively. In turn they cut down on the time taken for the products to reach the final consumers. It is also important to mention that due to the large number of distributors often the regions they cover overlap and they start competing against each other to get their hands on retailers in their region. Not only will this cater to the needs of the retailers and in turn the consumers but also will be more convenient for EBML to deal with. Furthermore they also promote the name and products of EBML as well as fight for shelve space. But on the other hand the coverage made by these distributors is being duplicated or wasted.
Incentive Plan for the Distributors of EBML33 EBML considers and infact calls its distributors its “Business Partners”. It should try to mold its distribution channel into a “Vertical Marketing System (VMS) 4 (Kotler) ” where EBML. But this incentive plan was not made operative. These categories are as follows: • • • 12 Million plus per annum 6 Million to 12 Million per annum 3 Million to 6 Million per annum 125 . its distributors and retailers would work together towards a unified goal that is maximum profits for all. Under this plan. To enhance the performance of its distributors. EBML had worked out an incentive program for 1997-98.Ideally EBML should progress from this conventional distribution channel where every link in the chain from EBML to its consumers seeks to maximize its own profits. which amounted up to 10% on achievement of sales targets. An outline is given below. EBML has classified its distributors under categories of sales volume. However. currently EBML is taking steps to enhance the efficiency of its distributors through incentive programs. In this respect EBML should try to operate a contractual VMS whereby its distributors could organize the various retailers such that they become more effective and competitive thus benefiting themselves and EBML in return. for 1998-99 its has formulated a new incentive program. The reason is that the company’s growth and profitability depends so much on the performance of its distributors. Now.
Now this is lesser than last years proposed incentives to EBML’s distributors. 126 . which is the reason why this new incentive plan is being brought up. but is still substantial. the management at EBML is of the view that they can do a better job. As far as the performance of these distributors is concerned.6 Million to 1.15 % of the Net Sales Volume. second and third positions are determined on the basis of the marks secured out of the total 40 Marks. which comes to 0. The company believes that an increase in the performance level of these distributors can and surely will help EBML in regaining its lost market share.2 Million to 3 Million per annum 0. Estimated total annual prizes for EBML’s distributors amounted to 1. The parameters are as follows: • • • • • Sales Growth Sales Volume Market Penetration / Product Service Payment / Stock Inventory Suggestions / Feedback TOTAL32 15 Marks 10 Marks 05 Marks 05 Marks 05 Marks 40 Marks Under these parameters first. This is based on a Point System based on parameters.2 Million per annum Under these categories there are various prizes and perks given to those distributors who perform better than the rest under the same category.0 Million.• • 1.
ADVERTISING. So what is EBML’s promotional objectives. (Kotler) ” that actually tell the consumers Informative Promotion4 (Kotler) Recently EBML has decided to concentrate on its leading products. its taste etc. In addition to this all new products EBML launches have to be presented to the public highlighting its features. SALES PROMOTION AND PUBLICITY What makes a company’s products known to its consumers? Its physical existence on the shelves of the store around the corner…. but that’s not all. Yes. sales promotion activities. What is EBML’s Promotional Mix? It is a combination of its advertising. publicity campaigns and personal selling tactics. 127 . But this promotional mix comes from the overall promotional objective of EBML. However. its has to continue to inform the masses of the various new perks and promotions it associates with its other existing products. It is the company’s promotional activities or the “Promotion Mix4 about the company’s product and its attributes.
Comparison Promotion4 (Kotler) Once again. This has to be done in the wake of the competition that has taken away EBML’s leadership in the market. Example: The Rio Godzilla Consumer Campaign had a clear objective. Its association with Lipton Tea also tried to make it a biscuit to be eaten with tea. comparison promotion is extremely important because every new or existing product of EBML. Example: The promotion for Gluco which shows a baby growing into a healthy young boy who is running is basically persuading the masses to buy this product as a health oriented biscuit for young kids. that is to increase the sale of family packets in the short run and to increase brand loyalty for Rio’s Sandwich Biscuit in the long run. Considering the tough competition it faces from LU. that is the Cream Biscuit category. Along with that EBML’s aggressive V for Vanilla campaign for Rio also pitted Rio in comparison to LU’s Prince biscuit. Persuasive Promotion4 (Kotler) Various promotional activities conducted by EBML are centered towards persuasion. which is competing against LU’s product. a comparison. EBML has to convince people into switching to or building preference for its brands. and a foothold. In EBML’s case. has to be given an edge. Although the success achieved from these campaigns is not as was expected but it was a bold move towards attacking the competition in their own stronghold.Example: The promotion of Click biscuit as a biscuit for health conscious people tried to build its share in that health conscious segment of the market. in the wake of competition EBML has to directly or indirectly position its products against other products in the market. 128 .
50% 11. although has been there since a very long time but current performances do say that it still grows slowly. its Market Share and the Competition it faces.00% 22. Thus it satisfies the 11. billboards.50% 22.00% 13.50% But how does EBML’s management allocate these funds? What are the criteria? EBML’s allocation depends on various factors such as the State of the Produc4 (Kotler)t. as evident through its advertisements. The remaining has been allocated to the various leading products of EBML as mentioned before that EBML is and will be focusing on specific products.50% 07.Budgets(% construction—footnote) EBML. These leading products of EBML and their approximated allocations are as follows22: RINGO GLUCO CLICK RIO MARIE OTHERS 23. spends quite a lot on advertisements and promotion. Marie which one might think to be in the maturity stage. percentage of the 129 . for the year 1998-99 the budget is around Rs60 Million. In fact.50%22-constructed remaining budget allocated to Marie. approximately Rs40 Million has been spent. sponsorships and other promotional activities. Of this.
Rio we see a brand that is fighting to build a market share in the wake of a strong competitor. Focusing on Rio we see that their main activity was advertisement followed by the Karachi Attack plan which was the Rio Vanilla Campaign with the pop group Awaz. But in Gluco’s case. we can judge whether these promotional activities have come out with the desired results. Gluco’s situation has also been observed in Marie’s case where the allocated expenditures have resulted in an increase in sales.50% allocation is once again justified. Taking these allocated funds and observing the various particular activities they are spent in. The same is the case with Gluco where advertising is the major mode of expenditure. But the results have been quite subtle. THE MESSAGE “The Legend Leads” 130 . Thus the 22. that is Prince by LU. This has resulted in the impressive increase in sales of Rio from approximately 540 to 950 tons. This therefore does require a high budget allocation as far as advertising and promotion are concerned. as sales have remained more or less constant at approximately 155 tons24. Coming to Click. we see that nearly 77% of the allocated promotion expenditures have been spent in advertising. this has resulted in an increase in sales from 380 to 430 tons.
sales representatives. Over all the Pied Piper is legend that leads23. (Kotler) ”. it uses a “Territorial Sales Force Structure4 through these sales people.This message. is a blend of various message execution styles such as Fantasy. account executives. the sales force serves as a critical link between the company and its customers. It shows a classic lifestyle of comfort and luxury. quality. sales consultants. these depict a Lifestyle4 (Kotler). As far as the Marie advertisements are concerned. The Sales Force Structure EBM offers a wide product line to consumers in different geographic locations within the country. district managers and marketing representatives4 (Kotler) . Under this structure. agents. At EBM. That is what Marie is depicted as. But EBML has made the Pied Piper into a hero figure who carries the qualities of fun. In this case. “A Classic”. sales engineers. strength. The story of the Pied Piper is a sad one where all the children of the town are lost as they follow the Pied Piper into some cave. They show a lady singing a song saying that she has looked far and wide for the best taste but she has concluded that it is Marie which is the best. good taste. EBM has assigned sales persons to each of its well-defined zones and sells 131 . SALES FORCE The sales force consists of salespeople. Image. Musical4 (Kotler) and most importantly a Personality Symbol. which is focused on the Pied Piper.
it should aim for “Service Differentiation4 (Kotler)” by hiring personnel and providing training to the sales force for operations within the company as well as field operations. Recommendation: It is recommended that the company provide adequate training to its sales force. Sales people must know EBML’s product line inside out. LU. Since EBML is faced with tough competition from its major competitor. should be aware of the entire production process. they need to know the strategies and characteristics of the competitors and should possess an adequate knowledge of the needs and wants of the consumers. 132 .EBM only operates through “Inside Sales Force4 (Kotler)” which conducts business from offices and business deals with distributors.
CONCLUSION 133 .
134 . Our audit on EBML is an analysis of its environment and the various Marketing Functions that assist the company in its goal of higher market share and profits. Currently EBML is trying to regain that position and increase its profitability by focusing on few brands that are either profitable or they are promising. Eventually EBML was removed from its leadership position. Divest brands that are low market share holders and loss makers. we would like to identify the following points of importance in this report: • • • • • Focus on profitable brands. It was in the late 1980s when Continental Biscuit Limited came into the market with their brand LU. However. Promote promising brands as long as they do not cannibalize the existing front runners. The analysis that we have done and the recommendations incorporated in them are based on our perception of what we think EBML should do.CONCLUSION EBML had been the market leader in the biscuit industry since a long time. Converge the existing multi based distributors into large based high coverage channels. Concentrate more on Value Based Pricing Strategy. It is important to know that any step or recommendation which is implemented should be compatible with the internal as well as the external conditions prevailing in the firm and the market.
APPENDICES 135 .
BIBLIOGRAPHY 136 .
B. ♦ Cost Report by Zehra Rizvi. 1997-98. Seventh Edition By Philip Kotler and Gary Armstrong.A report by Lahore University of Management Sciences. BBA III (Hon) Morning. ♦ Economic Survey of Pakistan. ♦ Excerpts from Board Presentations of the Marketing Department. ♦ Principles of Marketing. 137 . EBML.BIBLIOGRAPHY ♦ Strategic Analysis of EBML’s Brands Vs Competing Brands An M. ♦ State Bank of Pakistan Annual Report. 1997-98.
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