DEDICATION We dedicate this project to our Parents, Teachers and to each other as a tribute to our teamwork during the past five-years in Bahria University. 1
DEDICATION
We dedicate this project to our Parents, Teachers and to each other as a tribute to our teamwork during the past five-
years in Bahria University.
1
ACKNOWLEDGEMENT
Praise and thanks to Allah, the lord of universe who is either of all knowledge and
wisdom to mankind. We bow our head in gratitude to almighty Allah who blessed us
with the capability to complete our project, which was a challenge for us.
“We the group members would like to avail this opportunity to thank our course
instructor of New Product Development, Mr. Pasha for his cooperation and support as
a teacher.”
We feel pleasure in expressing heart felt gratitude to our families for their
encouragement affection, support, constant help and prayers at all times without
which it was not possible for us to achieve this target.
NELUM SHEHZADE FAIZAN ALI ZIA
MARYAM CHOUDHARY
2
ABSTRACT:
Packaged milk industry is a fast growing industry in
Pakistan. Nestlé, presently is losing share at the hands of
competitors and is engaged in differentiation and value-
pricing strategies. Stiff competition from local players and
changing consumer preferences are the main hurdles in Nestlé
MilkPak’s efforts to regain its market leadership position
in the industry.
During our research we were able to access the lapse of
largest and pioneer tetra milk pack company; Nestlé MilkPak
Pakistan in this sector and opportunities that are ahead of
them.
We endeavor to identify the compatibility of the company's
basic marketing strategies to its resources, structure of
the company and ultimately the milk industry, and finally
about implementing their strategies and staying abreast with
everyday engorging competition. Through the analysis we
determined that there is a need for a change in the
dimensions and workings of Nestlé and how it can retain its
position in such a dynamic industry.
Table of Contents
3
CHAPTER 1: INTRODUCTION...................................8
BACKGROUND OF NESTLÉ AND MILK SEGMENT AND BROAD PROBLEM AREA:.................................................................................................................................8
PROBLEM STATEMENT:................................................................................................13
OBJECTIVES OF STUDY:...........................................................................................15
RESEARCH METHODOLOGY:.........................................................................................15
METHODS OF RESEARCH:.................................16
TYPE OF STUDY:.......................................16
POPULATION SAMPLE....................................18
INSTRUMENTS/SOURCES OF DATA COLLECTION:..............18
SCOPE & LIMITATIONS..................................19
CHAPTER 2: LITERATURE REVIEW.............................21
CHAPTER 3: INDUSTRY ANALYSIS.............................29
MILK INDUSTRY IN PAKISTAN...............................................................................29
CHAPTER 4: ORGANIZATION ANALYSIS.........................32
NESTLÉ MILKPAK PAKISTAN:..................................................................................32
SWOT ANALYSIS............................................................................................................33
PORTERS FIVE FORCES MODEL...............................................................................38
FIVE FORCES MODEL APPLICATION IN NESTLÉ............................................39
THREAT OF NEW ENTRY........................................................................................39
POWER OF BUYERS.................................................................................................40
POWER OF SUPPLIERS..........................................................................................41
THREAT OF SUBSTITUTES...................................................................................41
THE COMPETITIVE RIVALRY..............................................................................42
PEST ANALYSIS............................................................................................................42
POLITICAL FACTORS:...........................................................................................43
ECONOMICAL FACTORS:.........................................................................................43
SOCIAL FACTORS:...................................................................................................44
TECHNOLOGICAL FACTORS:..................................................................................44
NESTLÉ’S MARKETING STRATEGIES FOR ITS MILK PRODUCT LINE.......45
CONSUMER COMMUNICATION..................................................................................45
4
PRODUCT AVAILABILITY.......................................................................................45
BRANDING...................................................................................................................46
DIFFERENTIATION STRATEGY.............................................................................46
POSITIONING STRATEGY.......................................................................................46
MARKETING MIX.......................................................................................................47
MARKETING GROWTH STRATEGY...........................................................................50
CUSTOMERS’ ANALYSIS:...........................................................................................50
QUESTIONNAIRE ANALYSIS:....................................................................................55
COMPARISON OF NESTLE MILKPAK WITH OTHER BRANDS.............................73
CHAPTER 5: IDENTIFICATION OF KEY AND CONCLUSIVE RESULTS. .75
CHAPTER 6: RECOMMENDATIONS...............................77
CHAPTER 7: ACTION PLAN...................................79
BIBLIOGRAPHY.............................................81
ANNEXURES................................................83
5
List of Figures:
Figure 1: Product Concept.................................................................................................32Figure 2: Porters Five Forces Model.................................................................................38Figure 3:Five forces model application in nestlé...............................................................39Figure 4: Product Life Cycle.............................................................................................47Figure 5: Comparison of Prices and Packaging................................................................48Figure 6: Pie Chart of Gender ratio...................................................................................51Figure 7: Age Distribution in Customer Survey................................................................52Figure 8: Occupation Distribution in Customer Survey....................................................53Figure 9: Income Level Distribution in Customer Survey................................................54Figure 10: Ratio of Open Milk to Packaged Milk.............................................................55Figure 11: Preference to Nestlé MilkPak...........................................................................57Figure 12: Satisfaction with Nestlé MilkPak Quality........................................................58Figure 13: Need for Improvement in Nestlé MilkPak.......................................................59Figure 14: Taste of MilkPak as compared to other tetra pack milk...................................60Figure 15: Price of Nestlé MilkPak...................................................................................61Figure 16: Availability of Nestlé MilkPak........................................................................62Figure 17: Choice of Other Milk Brands..........................................................................63Figure 18: Recall of Nestlé Milk Advertisement...............................................................64Figure 19: Preference while purchasing tetra pack............................................................65Figure 20: Loyalty with the brand.....................................................................................66Figure 21: Recognition of Nestlé MilkPak brand..............................................................67Figure 22: Recognition of limited time packaging............................................................68Figure 23: Perceived Traditional Advertisement Image....................................................70Figure 24: Perceived Modern Advertisement Image.........................................................70Figure 25: Perceived Serious Advertisement Image.........................................................71Figure 26: Perceived Image that Brand fits to life style...................................................71
6
List of Tables:
Table 1 : Comparison of Prices and Packaging.................................................................48Table 2: Gender Ratio........................................................................................................50Table 3: Age Distribution in Customer Survey.................................................................51Table 4: Occupation Distribution in Customer Survey.....................................................52Table 5: Income Level Distribution in Customer Survey..................................................53Table 6 : Ratio of Open Milk to Packaged Milk...............................................................55Table 7: Preference to Nestlé MilkPak..............................................................................56Table 8: Satisfaction with Nestlé MilkPak Quality...........................................................57Table 9: Need for Improvement in Nestlé MilkPak..........................................................58Table 10: Taste of MilkPak compared to other tetra pack milk........................................59Table 11: Price of Nestlé MilkPak.....................................................................................60Table 12: Availability of Nestlé MilkPak..........................................................................61Table 13: Choice of Other Milk Brands...........................................................................63Table 14: Recall of Nestlé Milk Advertisement................................................................64Table 15: Preference while purchasing tetra pack.............................................................65Table 16: Loyalty with the brand.......................................................................................66Table 17: Recognition of Nestlé MilkPak Brand..............................................................67Table 18: Recognition of limited time packaging.............................................................68Table 19; Perceived Advertising Image............................................................................69
7
CHAPTER 1: INTRODUCTION
Packaged milk industry in Pakistan is a very fast growing
industry and through our research we’ll be able to access
the oversight of Nestlé in this sector and opportunities
that are ahead of them. Through the analysis we’ll determine
if there is a need for a change in the extents and workings
of Nestlé or in other words what is next for them, how they
are going to improve themselves further? How are they going
to retain their position in such a dynamic industry? What
are the strengths, threats, opportunities and weaknesses for
Nestlé in its Milk Line products? And we will analyze the
factors that will help them to regain their lost market
share and what other market segments they can cater.
BACKGROUND OF NESTLÉ AND MILK SEGMENT AND BROAD
PROBLEM AREA:
Nestlé was founded by Henri Nestlé in 1866 in Switzerland.
Nestlé was derived from word nest in Swiss German which also
is shown in the logo of Nestlé. Henri Nestlé came up with
the idea of developing something for infants those were not
able to accept their mother’s milk or any other substitute,
therefore to fight this problem of infant mortality he came
up with a product that was a combination of cow’s milk,
wheat flour and sugar and he called it Farine Lactee Nestlé
which was the first product of Nestlé being marketed in
Europe (Gupta).
In 1974, Jules Monnerat purchased Nestlé and launched a
condensed milk product of its own. In 1905, Nestlé got
merged with Anglo-Swiss condensed milk. After Nestlé got
fully established in Europe and everyone in Europe seem to
8
know what Nestlé is that’s when Nestlé decided to expand its
boundaries out of Europe, and to set up the plants around
the globe and become a multinational (Gupta).
Nestlé’s decision to become multinational turned out to be
fruitful. Today Nestlé has its own operating plants and
products in America, England, India, Brazil, Australia,
Pakistan, Hungary, France, Belgium, Italy, Spain and various
other countries around the globe. (Gupta), Nestlé has become
the world's leading food manufacturer and the market leader
around the globe in both coffee and mineral water, and the
wide range of products manufactured by Nestlé includes ready
to cook dishes and cooking aids, all kinds of milk based
products, cereals, instant coffee, pharmaceuticals and
ophthalmic goods, pet care products & baby foods and what
not. Nestlé specializes in the areas like Baby Milk, Food,
Mineral Water, and Pet Food.
Nestlé’ is a publicly owned company, it has subsidiaries
spread all around the world. Its website lists addresses in
104 countries. Nestlé has large number of annual sales which
are worth $ 71 billion and it has almost 30000 employees
around the globe. Nestlé has almost 8000 brands in total
around the world. Remarkably, there isn’t any country where
the products of Nestlé are not sold. Nestlé’s products are
perceived to be safe and high quality and this is also
symbolized from the logo of Nestlé which shows coat of arms,
the birds’ nest which refers to the brand name of Nestlé.
Nestlé places priority in developing high quality and safe
products for which it conducts extensive Research &
Development based innovation through which they build strong
brands (Gupta).
9
From the beginning, Nestlé was aware of the fact that the
food products have to be developed in a way that they link
closely with the eating and social habits of the local area
where they are introducing their products in. That is the
reason why Nestlé from the very start has always shown
respect for diverse cultures and traditions and developed
products according to their needs. Nestlé strives to
integrate its products with the local cultures and taste it
also brings its own set of values to the local environment
as well and merge both of them and come out with something
unique. Therefore, Nestlé embraces cultural and social
diversity and does not discriminate on the basis of origin,
nationality, religion, race, gender or age. Moreover, Nestlé
believes that if their actions are helpful to the local
community only then they can achieve long term profits for
their company. Precisely, the environment is changing very
swiftly and in particular consumers are looking for answers
to their health concerns. Nestlé applies the concept “Think
globally acts locally” in a real sense where ever it goes,
as well as thinking out the box idea and being
unconventional in their product and distribution with the
help of strategic global marketing. (M.Aslam).
INTRODUCTION TO NESTLÉ MILKPAK PAKISTAN:
Nestlé have been serving Pakistani consumers ever since
1988, that is when Nestlé based in Switzerland and a very
well established brand in the world acquired the share of
MilkPak in Pakistan following their strategy of acquiring
well established local firms. Nestlé acquired 40% share in
MilkPak initially. MilkPak was the first tetra pack milk
that was introduced in Pakistan in 1981 with green and white
10
packaging that is associated with Pakistani flag. It
promised natural and healthy milk from its name and
packaging. It further gained strength when it bought by
Nestlé which brought its core competencies with it and
helped MilkPak to expand. From the start MilkPak was very
well-received and the brand soon became synonymous with high
quality milk. MilkPak first face completion from Haleeb in
1986 which launched its uniquely packaged blue tetra packs
in the market.
Nestlé Switzerland from the very beginning of acquiring
MilkPak started investment in cooling tanks. Between 1988
and 1992, 100 milk tanks were installed in Pakistan by
Nestlé. 1992 onwards, with full support from the Nestlé
headquarters in Switzerland, restructuring of the milk
collection operation and the provision of agricultural
technical assistance became top priorities for Nestlé
MilkPak. The investment paid off and within a decade,
Nestlé's purchase of fresh milk had quadrupled, and the
number of small farmers selling milk to Nestlé tripled in
number. In 2008 MilkPak hit the market share of 40% in the
dairy milk category. (About Us, 2009)
MILK COLLECTION
As it is clear by the brand name of MilkPak, raw material of
Nestlé MilkPak is milk. Over the last Twenty Eight years of
its operation, Nestlé’s major concern has been to improve
the value and volume of milk for UHT processing and for
other milk based products. The company over the time has
very successfully established its own milk collection system
and stretched out its operations over a very large milk shed
11
area in Punjab. MilkPak has experienced very large growth in
the volume over the time for its high quality milk. Nestlé
MilkPak has a very long shelf life because of that and its
milk taste better than its competitors as been observed from
the survey.
Today, Nestlé MilkPak has the largest milk collection
network in Pakistan and its competitors cannot match it in
the size, efficiency of the plant and high productivity.
Nestlé collects milk from the huge network of village milk
centers and sub centers daily. As mentioned earlier Nestlé
from the very beginning invested in the chillers and these
chillers are installed at these centers where milk
temperature is reduced to 4 degree C to prevent it from any
kind of bacteria development during the long hauls to the
factories where it is processed. The milk is taken to the
factories by the large fleet of specifically build tankers.
Nestlé conducts and extensive education program for its
farmers and milk collection staff to maintain the high
quality in collection and milk loading and transportation
system. Nestlé MilkPak does not compromise on quality and
maintains high standards whether its milk collection,
transportation, processing or packaging and they pride
themselves in it.
12
Other brands of Nestlé in Pakistan:
Nestlé Juices
Nestlé Nesvita
Nestlé Yogurt
Bottled Water
Chocolate KitKat
Baby Food Brands
Maggi noodles
Nescafe
PROBLEM STATEMENT:
With the changing demographics and psychographics people are
becoming more conscious about their dietary habits specially
the hygienic aspect of the food quality. Milk industry is
still new and is growing industry at a good pace in Pakistan
and has a lot of scope for further advancement.
Nestlé MilkPak in fact had been the market leader in
Pakistan in terms of a strong brand recognition and quality
but recently it has been experiencing high level of
competition from the local major players like Olpers, Haleeb
and Nurpur and in tea whiteners it is facing competition
from Tarang whereas dry milk like and its various extensions
are still protected from massive competition. To stay as a
market leader Nestlé has re-evaluated its marketing plan
over the time. (About Us, 2009).
13
Nestlé’s main focus is differentiation on the basis of
quality, purity, high mineral content and rich iron and
vitamin C quantities than the competitors and value-pricing
and they use these strategies very effectively. Rigid
competition from local players and shifting consumer
preferences are the major hurdles in Nestlé’s efforts to
recuperate its market leadership position in the industry.
Nestlé’s requirement to beat the competition is to
capitalize on its brand name and come up with unique and
multiple different strategies, they need to do that to
overcome competition and gain back their lost share to the
competitors.
We also aim to identify the integration of Nestlé’s basic
marketing strategies with its structure and resources and
finally how they use them over all in the milk industry. We
also strive to know the strengths and weaknesses of the
company and how effectively they have used the control
system. And finally what they have done till now about
staying ahead of their competitors.
OBJECTIVES OF STUDY:
The project objectives include:
Analysis of present scenario of packaged milk industry
in Pakistan as a whole.
14
Analyses of present marketing strategies implemented by
Nestlé, to promote its milk product line.
Calculating the difference among the standards of the
local and foreign industry.
Suggesting new extent of competition for the Pakistani
milk industry.
Determine whether the change in the industry be in the
form of a new need, new form or new technology or the
general direction of Nestlé in this particular product
line.
RESEARCH METHODOLOGY:
This section will explain how the research was carried out
with research question, problem area, research technique,
gathering empirical data analysis of data and finally the
answer to the research question.
METHODS OF RESEARCH:
Two basic methods are used to collect and examine
experiential data. These are qualitative and quantitative.
Research methodology is chosen according to research
question, so that it should be help full to find out the
answer of research question (Maxwell, 1996).
TYPE OF STUDY:
Research Design is generally classified into two types of
research, exploratory research and conclusive research
(Malhotra, 2008). Exploratory research aims to present
insights into, and understanding of, the problems
15
confronting the research (Malhotra, 2008). The results and
insights out of exploratory research are then further used
in conclusive research, which can be further categorized
into descriptive and causal research (Malhotra, 2008).
Literature review in this report consists of exploratory
research. In this part, secondary research method including
analysis of news articles, government reports, scholarly
articles, industry reports and press releases were used to
gain insight of the recent and new developments in the dairy
milk sector of Pakistan. First the situation of the dairy
milk sector was analyzed through a secondary research
method. Then analysis of marketing strategies and
advertisement of the tetra pack milk providers was
conducted.
We will start our research by conducting exploratory
research in which we’ll observe the behavior of packaged
milk industry and marketing strategies implemented by
Nestlé. We will also try to search the existing findings
related to our topic.
Then we will move onto descriptive research. This is a type
of research that mainly focuses on providing an exact
description of the variables in the problem model. Examples
include market-potential studies, attitude surveys, media
research, and price studies etc. Descriptive research
describes “What is”. It looks at the present scenario. This
is what is being done in the study too. Using descriptive
research contributes quite a lot to the research, such as:
Descriptive research tells us about the problem area
and abnormal situations so that corrective measures can
16
be taken. This would help in providing the
recommendations at the end.
Descriptive research makes possible the prediction of
the future on the basis of results on prevailing
conditions, correlation and on the basis of people
toward a certain issue.
Descriptive research gives an improved and deeper
understanding of a phenomenon on the basis of an in-
depth study of the phenomenon.
Descriptive research is the premise of Providing a
basis for decision-making process.
Descriptive research helps fashion many of the tools
with which we do research
In the end data has been analyzed to infer results and based
on which recommendations and action plan has been suggested.
POPULATION SAMPLE
Population for a study is a group of people from which a
researcher wants to observe the reaction and draw
conclusions from (Babbie, 2005). It is never possible to
study all the members of the population that interest
researcher, in every case, researcher selects a particular
sample among the population (Babbie, 2005). The Rawalpindi &
Islamabad metropolitan area is the third largest in
Pakistan, with a population of over 4.5 million inhabitants
(Frantzeskakis). For customers survey the population has
been restricted to the city of Rawalpindi & Islamabad.
The target population of our project is the Nestlé’s milk
consumers. The sample for customers has been restricted to
200 respondents. Sample was selected using Convenience
17
Sampling. It refers to the collection of information from
members of the population who are suitably available to
provide it (Malhotra, 2008).
Population sample among packaged milk companies is
restricted to the major milk packaged companies of Pakistan
i.e. Olpers, Haleeb, Nurpur, GoodMilk and their respective
sub brands.
INSTRUMENTS/SOURCES OF DATA COLLECTION:
There are two sources of data collection, first is Primary
data while other is Secondary data. Primary data is
conducted by a researcher for the sole purpose of addressing
the problem at hand, whereas secondary data are data that
have already been collected by others for purpose other than
problem at hand (Malhotra, 2008).
Secondary data is presented in this report in form of
literature review, industry analysis, and background problem
area. This data is collected from various sources which
include news articles, government reports, scholarly
articles, industry reports, press releases and different
websites etc.
In this research primary data is gathered through
questionnaires and interviews. The questionnaire designed
had some closed-ended and open-ended questions. Structured
interview was used only to gain data from Nestlé’s
officials, for the accurate industry analysis.
18
SCOPE & LIMITATIONS
The likely outcome of our project would provide the insight
about the milk division of Nestlé, this would give the
reader/ user a general idea about how the things are being
monitored by Nestlé and what are the procedures that are
involved in milk production/ processing etc. Along with
that, we would find out the opportunities and the areas for
further improvement for Nestlé, like what are the areas
which are left exposed or are with the competitors and what
measures can be taken to ensure MilkPak covers those areas.
It will help us to understand if there is a further need of
product improvement or adding a new product to the existing
milk line etc. The competitor analysis will help us to do
find our parities and differences and help us to find ways
to gain competitive advantages and how and when to reshape
or modify our strategies. SWOT and PEST of the organization
will be helpful in gaining the understanding. Along with
that consumer preferences and their need requirements are
observed.
Most of our entire project would give us and the reader /
user the understanding of different marketing, management,
business development, and other concepts that are being
taught to us during our program of MBA. Our project covers
all the 7 Ps of marketing, branding strategies and the like.
Limitations are that this study like any other is to be
conducted within a specified period of time provided to us.
Consumer preferences outside that time limit may change over
the time. Moreover the extent of study of consumers is
limited to Rawalpindi/Islamabad with a set sample size. In
reality the market size of the packaged milk comprises many
19
cities of Pakistan. It can be assumed that some the
sensitive data is closest to reality for example advertising
budgets and customer churn.
On the whole this research is subject to certain limitations
pertaining to time and resources.
20
CHAPTER 2: LITERATURE REVIEW
Nestlé has a reputation to enter the growing markets before
any of the competitors reach those markets, and Nestlé
successfully builds a significant position in those markets.
Nestlé moves from niche levels to the upscale level as the
income level of the consumer increases. Nestlé, where ever
it reaches tries to localize its products for according to
the needs of local markets. It also localizes its
distribution and marketing strategy to the requirements of
the local market. Nestlé also never let go of any
opportunity to acquire any local firm whenever they find it
worth a good opportunity.
Nestlé’s organization structure is decentralized and the
operating decisions are made by to local units. There are
qualified managers that help in holding the organization
together in Nestlé.
To start up an industrial operation in the new and
undeveloped market requires a lot of attention and precision
in research; some factors affect the growth of the newly
developed sector in organization and turn it into a loss.
Such factors are as follows
The availability of raw material
Cost factor
Economic climate
Consumer purchasing power
Consumer tastes
21
Nestlé used procurement and project management on various
occasions to b able to cut major costs. But the relationship
of Nestlé suffered in a great deal because of the gap
between Nestlé’s global and local strategies. Nestlé’s
direction is very strategic in nature. There system was
called Globe which was directed by CEO. GLOBE was supposed
to standardize Nestlé’s activities around the world.
(Consumer Report, 2006).
From the analysis it is clear that Nestlé has taken
advantage from the economic factors as they have
collaborated with the local government of Pakistan to gain
access to the raw materials locally because of which they
don’t have to import the raw material from other countries.
By doing this Nestlé was able to cut down their costs and
increase production. (Consumer Report, 2006).
Nestlé has a history of having committed innovative product
technology centers all around the globe that carry out
extensive R & D. they also license-in their innovative
technology from external sources. Nestlé carries out this
process very carefully in a legal manner because the new
technology has critical effect on Nestlé’s products and
processes.
Nestlé has the following Business Principles in all
countries it operates in and it is very dedicated to these
principles, taking into account local legislation, cultural
and religious practices:
• Nestlé creates value for its consumers, shareholders,
employees, and business partners for a long term by
manufacturing and marketing its products in a unique way and
this value is persistent over time. (About Us, 2009).
22
• Nestlé is all about achieving the long term profits and
they do not compromise on it in any way. (About Us, 2009).
• Nestlé recognizes that its consumers place trust in the
name of it and its brands, therefore they carefully monitor
their behavior, beliefs and actions. (About Us, 2009).
Buffaloes are the main source of milk production in Pakistan
as they produce 70% of milk and rest of the 30% comes from
cattle. There are basically two generic types of milk
available in the Pakistani market:
UHT milk
Raw or unprocessed milk.
Raw and unprocessed milk own the major chunk of the market
which is 90% because of that quality measures are difficult
to impose. The milk is delivered by local milkman on their
bikes and they ride away after delivering therefore the
quality controls on them cannot be regulated. There are also
some retail outlets to provide open milk but they are not in
a very large number. (Development Policy Institute
Islamabad, 2008).
UHT milk has its own set of problems and quality issues.
Since UHT milk is made to b unaffected by many adulterations
and has longer shelf life, the main problem with it is price
which is slightly higher than the open milk. ( Development
Policy Institute Islamabad, 2008).
UHT milk market needs to be saturated in Pakistan. In
Pakistan the capacity of processing milk is much higher than
what is actually produced, the reason for it is that urban
consumer prefers using packaged milk but that is a very
limited market and the higher price of UHT milk creates
23
artificial ceiling for its distribution and usage in other
sectors of Pakistan. (Raja, 2008).
Brands like MilkPak which is owned by Nestlé and Haleeb Milk
owned by Haleeb Foods has been leading the dairy market of
the world’s fourth largest milk producing country for nearly
two decades very successfully. Engro Foods which is
basically a giant in fertilizers industry, in contrast, had
only been established for few years in Pakistan. Olpers is
the packaged milk brand owned by engro foods and no one in a
branding industry could imagine how Olpers was going to
distance itself from its parent company’s image. And Olpers
surprised every by its high turnover by the end of 2006,
sales for Olper’s Milk had reached Rs.1 billion
(approximately US$ 15 million) and in 2008, the brand has a
market share of close to 22 percent at present which is
second only to Milk Pak (estimated at 40 percent).
(Oppapers).
In Pakistan the packaged milk category at first was
originated in 1981 by Milk Pak, they were the pioneers of
packaged milk in Pakistan. The idea was to collect the milk
from rural areas across Punjab, process the milk that was
collected from different milkmen, through UHT (Ultra-High
Temperature Processing) treatment, and to sell it to
consumers across Pakistan in uniquely colored triangular and
rectangular packs that were designed to protract the milk’s
quality for a longer period of time then usually a milk can
be stored. Therefore when this idea was applies Milk Pak’s
“Milk Packs” were very well-received by the consumer and the
MilkPak in a very little time gained success and received as
a quality milk. Haleeb was MilkPak’s first real competitor,
24
which came into market in 1986 and introduced blue colored
packaged milk in the market. Milk Pak’s stance further grew
in standing when it merged with Nestlé in Pakistan. By the
figures of 2006, the dairy milk category in Pakistan was
growing at 20 percent annually, and Milk Pak and Haleeb were
well-received brands that have distinctive colors and those
brands brand promises to keep providing high quality,
natural and healthy milk in future as well, also all the
packaged milk branda are getting benefitted because of the
highly innovated advertisement of packages and Tetrapak.
(Oppapers).
We know and studied during the course of our MBA program
that advertising can increase sales through a certain
procedure that the buyers mind goes through. One of the most
popular models that explain this is the AIDA model. The
acronym stands for ("AIDA” of marketing, 2009):
A – Attention/Awareness: attract attention of the customer
towards a particular product.
I - Interest: customer’s interest is then increased by
focusing on and demonstrating advantages and benefits of the
product.
D - Desire: influence customers that they want and desire
the product or service and that it will gratify their needs.
A - Action: guide customers towards taking action and/or
purchasing.
The usefulness of promotion through advertising mainly the
TVCs basically relies on the attention or memory retention
25
of its audience. To see the effectiveness of advertising and
the risk of the loss of any new information that comes to
the consumer Daniel Schacter (2001) has pointed out seven
ways. These seven ways are transience, absent-mindedness,
blocking, misattribution, suggestibility, bias and
persistence. Flaws in memory can have marked influence on
the process of successful processing of advertising.
(Griffiths, 1997). Even if a positive intention is formed
as a result of exposure to an advert, if a memory
malfunction interferes with that target, the advertising
will not be effective (Griffiths, 1997).
In response to this Larry Percy (2004) has identified
various ways while designing and applying advertising
campaign to avoid these seven risks associated with
human/audience memory. These include (Larry Percy, 2004):
Advertisers should integrate the message with the
perception of the brand very carefully (transience)
Advertisers should make those points more easy to
understand in which the target audience is interested
(transience)
Advertisers should apply personal references,
particularly to positive memories (bias)
Advertisers should involve current positive brand
attitudes are of long standing (bias)
Advertisers should make sure the correct emotions are
tied to the brands image (blocking, persistence)
Advertisers should use unique cues not likely to be
associated with other long term memories (absent-
mindedness)
26
Advertisers should create a distinctive brand benefit
claim link (misattribution)
Advertisers should institute links in memory to
appropriate need category (absentmindedness)
Advertisers should make sure those links are well
integrated with noticeable associations to the category
need (blocking)
Advertisers should ensure a consistent 'look and feel'
over time to encourage familiarity (absent-mindedness)
Advertisers should use strong visual images to create or
reinforce positive memories associated with the brand
(suggestibility)
Advertisers should exploit reminders of past problems
that could be evaded or solved by the brand
(persistence).
To evaluate the impact of advertising on the success, growth
in sales and switching behavior on any brand a research was
conducted by AC-Nielsen, and as a result it was assumed that
without the adequate support of advertising the brand can
shrink brand loyalty, brand equity, and premium pricing
(Johnny Panagiotidis, 15th May 2005). Even if there is no
ATL advertising is available and only BTL advertising is
there, even in that case sales growth has been observed, but
in that scenario consumers are more prone to switch the
brand (Johnny Panagiotidis, 15th May 2005).
The involvement of the authors of this project will pertain
to an in-depth analysis of the current situation of
Pakistan’s existing packaged milk providers and capacity of
Nestlé milk products to advance and stay abreast. Once an
overview is achieved it will be compared to the
27
international standards in order to verify if some
performance gaps or variances exist. The project is followed
by recommendations that will explain how Nestlé can gain its
lost market share.
CHAPTER 3: INDUSTRY ANALYSIS
MILK INDUSTRY IN PAKISTAN
In Pakistan the packaged milk category at first was
originated in 1981 by Milk Pak, they were the pioneers of
28
packaged milk in Pakistan. The idea was to collect the milk
from rural areas across Punjab, process the milk that was
collected from different milkmen, through UHT (Ultra-High
Temperature Processing) treatment, and to sell it to
consumers across Pakistan in uniquely colored triangular and
rectangular packs that were designed to protract the milk’s
quality for a longer period of time then usually a milk can
be stored. Therefore when this idea was applies Milk Pak’s
“Milk Packs” were very well-received by the consumer and the
MilkPak in a very little time gained success and received as
a quality milk. Haleeb was MilkPak’s first real competitor,
which came into market in 1986 and introduced blue colored
packaged milk in the market. Milk Pak’s stance further grew
in standing when it merged with Nestlé in Pakistan. By the
figures of 2006, the dairy milk category in Pakistan was
growing at 20 percent annually, and Milk Pak and Haleeb were
well-received brands that have distinctive colors and those
brands brand promises to keep providing high quality,
natural and healthy milk in future as well.
In the recent times, it seems that everywhere we look, there
is either a billboard, a TVC or a radio jingle promoting a
brand of packaged milk, regardless of the brand, whether
it’s Haleeb, Nurpur, Pakola, Nirala, MilkPak, Goodmilk or
Olper’s there is always some kind of advertisements going
on. But this isn’t surprising for a country like Pakistan
which is according to recent statistics, the fourth largest
milk producing country in the whole world which is 32
billion liters per year from 50 million animals, with urban
consumption at nearly seven billion liters per annum.
29
However, even though the rankings are high, packaged milk
according to the recent estimates, has only twenty percent
penetration in the total market. That is the reason why
processed milk companies (PLMCs) have been aggressively
advertising and marketing their brands in attempt to
increase the penetration in the market. Even though current
economic turnaround has contributed to the growth in the PLM
sector, but still the penetration in the market is fairly
less.
The reason for the growth in PLM sector because people are
becoming more and more aware of the health and hygiene
factor. This factor and increasing dissatisfaction with open
milk are the reasons for growth in this sector. However,
many challenges still have to be overcome by the PLMCs to
increase the penetration in the market.
Milk even amongst the most urbanized consumer is perceived
fresh, healthy and preservative free and straight from the
cow, if it is provided to them by doodhwala ( milkman )
early in the morning. Therefore this perception has to be
overcome, if increased penetration of packaged milk is to
occur at a significant rate in the market.
Another problem faced by packaged milk industry to make
people switch from loose milk to packaged milk is price.
Brands like Milk Pak which is owned by Nestlé and Haleeb
Milk owned by Haleeb Foods has been leading the dairy market
of the world’s fourth largest milk producing country for
nearly two decades very successfully. Engro Foods which is
basically a giant in fertilizers industry, in contrast, had
only been established for few years in Pakistan. Olpers is
the packaged milk brand owned by engro foods and no one in a
30
branding industry could imagine how Olpers was going to
distance itself from its parent company’s image. And Olpers
surprised every by its high turnover by the end of 2006,
sales for Olper’s Milk had reached Rs.1 billion
(approximately US$ 15 million) and in 2008, the brand has a
market share of close to 22 percent at present which is
second only to Milk Pak (estimated at 40 percent).
Though there are still a lot of hurdles like consumer
perceptions and price differentials between open and
packaged milk and they needed to overcome, the processed
milk market is set to grow. There is a still a very large
market size that needs to be converted, which is a huge
opportunity for PLMCs. If the economy remains stable for the
next five years, penetration in the market will increase at
an astonishing rate. (Dairy Industry in Pakistan, 2007).
CHAPTER 4: ORGANIZATION ANALYSIS
NESTLÉ MILKPAK PAKISTAN:
Today, Nestlé MilkPak produces its products in over 81
countries and achieves 98% of its turnover outside Europe.
Nestlé MilkPak is the world’s largest milk company. It has
an annual revenue of 70 billion Swiss francs, 522 new
31
factories in 81 countries, 200 operating companies, 1 basic
research outer and 20 technological development groups, has
more than 231,000 employees and more than 8000 products
around the globe. There are three main administrative
companies that co-ordinate the activities of more than 200
operating companies around the globe. (About Us: Nestlé,
2009).
Figure 1: Product Concept
Nestlé is perceived as the best quality product all over the
globe and the same idea is reflected and replicated in the
introduction and launch of Nestlé MilkPak. It became
reputable brand very soon in Pakistan and many other milk
producers later chased the same pattern to initiate their
milk brands in the same market which has now become
rigorously competitive.
MilkPak has been nominated as the best brand on the
attribute of sustaining quality. Familiarity with the brand
has been rated as the second most sought after features and
32
specify the superior quality of marketing and promotional
communications which are more aimed at consumers’ awareness
for consumption of packaged milk. Availability of the Nestlé
MilkPak has been rated as third in the sequence and
definitely indicates potential for further improvement.
Affordability has been graded as last by consumer voting
indicating consumers’ sensitivity to frequent upward pricing
of essential commodities. In an economy like today
affordability is a very important factor that affects the
spending on packaged milk.
SWOT ANALYSIS
A SWOT Analysis is carried out by the company so that it is
able to position itself to take advantage of particular
opportunities in the environment and to avoid or minimize
environmental threats. In doing so, the organization
attempts to emphasize its strengths and moderate the impact
of weaknesses and improving them.
SWOT Analysis of Nestlé MilkPak done by a research group (AC
Neilson) is as follows:
INTERNAL ANALYSIS
STRENGTHS
A socially responsible Company.
Nestlé MilkPak Limited’s products enjoy strong brand
image and market pull.
Innovative and constantly growing product line. Nestlé
33
MilkPak launched 17 new products, including variants of
existing products in recent past.
Sales force is the major resource strength in terms of
physical possessions of the company.
Marketing strategies employed by the company are
innovative and draw in customers.
Financial, marketing and sales strategies are devised
by gauging the customer demands.
Periodic research is carried out to judge market
trends.
It is a large scale multinational organization, with
copious funds and has the competence of acquiring
weaker firms by throwing them out of competition
Growing Sales and profits.
Major shareholder in the food industry of Pakistan.
Aggressive Marketing.
Efficient Distribution networks throughout the country.
Quality Products.
Environment Friendly.
Skilled labor.
Educated staff.
Large number of offerings.
Arrangement of events.
Brand name
Easy to approach outlets.
Physical evidence Strong Brand image
Quality product
Solid Financial position
Strong supply chain network
Qualified work force
Commitment to High Quality Products
34
Focus on research and development, estimations of UHT
Milk Production and Consumption up to 2008– 09
Year Annual Production
(million liters) Annual Consumption
(million liters)
2008-09 => 648.43 353.71
2009-10 => 753.89 372.05
WEAKNESSES:
Selective investment due to uncertain economic and
political conditions.
Feasibility of new products needs to be analyzed, e.g.
Nestea was launched some years back but it failed
because no customer demand for it existed.
Relatively a new company in comparison to its rivals
e.g. Lever Brothers.
Low levels of inventory maintained can be dangerous.
No credit sales.
Low sales margins due to highly value added products.
They cannot launch many of its expensive international
brands due to the lower income groups.
Physically impossibility to have target market.
There is weak marketing of MilkPak as there is no
advertisement of MilkPak on official website.
Lack of awareness among the target market.
It Dependency on others (govt. & sponsors) for the
arrangement of events. The target market of Nestlé
MilkPak is upper middle and high class because lower
middle and poor class cannot afford to buy UHT milk due
to its premium price.
It is a main weakness of MilkPak that there are
different companies of milk but the name of Nestlé
35
MilkPak is always stand in the last because of low
advertising and marketing.
EXTERNAL ANALYSIS
OPPORTUNITIES:
Pakistan is the seventh largest producer of milk in the
world with annual output of over 22 billion liters.
There are substantial growth opportunities considering
the average capitulate of Pakistani animals at only
1,100 liters/annum as compared to 6,000 liters/annum
for animals in Europe and USA. There are nearly 20
million milk producing animals in the country, mostly
in Punjab (80%).
The overall milk market in Pakistan is 20 billion
liters, out of which processed milk contributes only 3
million liters. Nestlé MilkPak along with other
processed milk businesses makes a payment of only 2% to
this large market.
Nestlé MilkPak has stretched out its product range by
entering the cold dairy market recently by launching
Nestlé plain yogurt and now fruit yogurt is also added
to it.
To expand the cold dairy products range, Nestlé fruit
yogurt is the latest addition to this group.
The cold dairy market offers many opportunities for the
company which can capitalize these products by banking
on its superior quality milk.
The coffee brand also offers many opportunities for the
company to expand by tuning the taste of the masses
towards coffee.
Credit policy can be implemented to increase sales.
36
THREATS
Price fluctuations due to rupee devaluation as raw
material are imported.
The uncertainty of economic conditions poses a great
threat as the major funds invested in the country come
from outside Pakistan.
The present economic crisis in the world, led to the
withdrawal of foreign management from the company and
the investment has come to a halt.
Competition with Nestlé’s owns smuggled brands.
Effect of Seasonality’s upon sales.
Imported raw material, in some of the company’s
products.
Major player may enter target market
Legal and ethical issues.
Market segment growth could attract new entrants.
PORTERS FIVE FORCES MODEL
The Porter’s Five Forces Analysis helps the marketer to
contrast a spirited competitive environment. It has
similarities with other tools for environmental audit, such
as PEST analysis, but tends to focus on the single, stand
alone, business or SBU (Strategic Business Unit) rather than
a single product or range of products. (Porter's Five Forces
Model).
37
Figure 2: Porters Five Forces Model
Five forces analysis looks at five key areas namely the
threat of entry, the power of buyers, the power of
suppliers, the threat of substitutes, and competitive
rivalry.
FIVE FORCES MODEL APPLICATION IN NESTLÉ.
In our project of Nestlé milk product line the application
of Porters five forces model is as follows.
38
Figure 3:Five forces model application in nestlé
THREAT OF NEW ENTRY.
In the scenario of packaged milk industry of Pakistan, there
is a lot of potential as the consumers are switching their
preferences from conventional Gawala milk to the packaged
milk. The new entrants that have some resources or
experience are entering into milk industry. As the data from
last 5- 10 years show that the only two dominant brands of
packaged milk available were the Nestlé MilkPak, and Haleeb
Milk by Haleeb foods (formely Chaudhary daries limited). But
in the last decade new brands came like Nirala Milk from the
owners of Nirala Sweets , Nurpur milk from Noon group of
companies, Halla milk which has currently closed its
operations. And in the recent last few years two new brands
came that have significantly captured a large market share
that are Good Milk from Shakar ganj group, and Olpers by
Engro foods.
Now what Olpers and Good milk has done is that they hired
the management from Haleeb and Nestlé at high wages and at
39
their expertise they captured the market, these companies
have high budgets so they done intense and out of the box
marketing and made their name in market. As earlier, there
were only two players in milk industry; Nestlé and Haleeb so
the government does not have strict policy , new brands came
in to make healthy competition which has ultimately given
benefit to the consumer. And as the industry is growing so
new entrants have potential in the market. The
differentiation these companies are doing is by their
marketing and distribution only like if a company for
example Olpers have strong distribution in Chakwal it will
capture the market in that area and vice versa.
POWER OF BUYERS.
The power of buyers is high when there are only few firms in
the industry providing their services. In the milk industry
the buyers have more choices now with the entry of new
brands like Oplers and Good milk. Like previously the buyers
have only two choices either Haleeb or Nestlé. But now the
situation has changed, buyers have many choices if any brand
doesn’t performs good in terms of quality, convenience or
pricing they switch to other brand. For example a restaurant
that buys milk from Haleeb doesn’t get favorable terms of
credit from company can now switch to any of other brands
like Nestlé, Olpers , Good milk. There is a cut throat
competition and each of them is striving for its market
share.
POWER OF SUPPLIERS.
Now with more brands the switching cost is also low as
buyers have increased choices.
40
The power of suppliers is stronger than powers of buyers.
The dairy farms that had been supplying milk to packaged
milk brands have more choices now as they can sell their
milk to any of prevalent packaged milk brands who offer more
prices and favorable terms of payments etc.
Other thing is that the switching costs of buyers is high
and also matters like it will cost high when switching from
one supplier to another requires more complex procedures.
Like if Nestlé buy milk from one buyer and switch to other
it had to re make its policies and negotiation terms and
conditions , along with that it also had to make other
changes etc.
THREAT OF SUBSTITUTES.
The substitutes options to the packaged milk are very less
yet very strong in the market, the substitutes are the
conventional open milk, and the dry powdered milk. One
important thing is that milk is the generic product so to
make its substitutes is a difficult thing. So threat of
substitute is low.
THE COMPETITIVE RIVALRY.
This is very high in this industry, there are many cases
when one brand has bought or hired the sales force of other
company, there are many promotions and marketing campaigns
going on to capture the market share. The only way to
compete is on the basis of marketing as the prices are
almost same. The different brands have done their
positioning differently as:
Nestlé. Purity is everything.
41
Haleeb. The thickest milk.
Olpers. A complete milk.
Good milk. Healthy life.
PEST ANALYSIS
In analyzing the macro-environment, it is significant to
discover the factors that might in turn affect a number of
imperative variables that are likely to influence the
organization’s supply and demand levels and its costs
(Kotter and Schlesinger, 1991; Johnson and Scholes, 1993). A
number of checklists have been developed as ways of sorting
the vast number of possible issues that might affect an
industry. A PEST analysis is one of them that is merely a
framework that categorizes environmental influences as
political, economic, social and technological forces. The
analysis examines the impact of each of these factors (and
their interplay with each other) on the business. The
results can then be used to take gain of opportunities and
to make contingency plans for threats when preparing
business and strategic plans.
Kotler (1998) claims that PEST analysis is a useful
strategic tool for understanding market growth or decline,
business position, potential and direction for operations.
PEST also ensures that company’s performance is aligned
positively with the powerful forces of change that are
affecting business environment (Porter, 1985).PEST is useful
when a company decides to enter its business operations into
new markets and new countries. PEST analysis of Nestlé
MilkPak Pakistan has following points:
42
POLITICAL FACTORS:
The rules of government of Pakistan do affect the company
and its brand. The company policies are affected and its
budget is also affected .Nestlé paid 15% sales tax and 18%
excise duty when they directly imported chiller from the
other country but mostly they purchase chillers inside the
country. Increased prices of electricity and petrol cause
transportation and other cost heavily which results in the
increased prices of processed milk.
On the other hand, these days Government provides chillers
to the Nestlé MilkPak at interest free installment through
UNDP and PDDP projects. This process reduces the pressure on
milk industry and increase the productivity.
ECONOMICAL FACTORS:
Pakistan is blessed with good potential for dairy
development, buffalo being the principal source of milk. But
due to problems such as poor nutrition, mismanagement,
failure to control disease, unavailability of veterinary and
poor animal husbandry, only 5% milk is used for processing.
Nestlé MilkPak is playing an important role in the economic
growth of Pakistan. They earn a lot of profit and also trust
its profit in social welfare by making schools or helping
with funds during earthquake in Azad Kashmir. Nestlé
Pakistan also helps educating the farmers how to get maximum
quantity of milk from the animals by providing them
sufficient food. They also provide job opportunities to the
people of rural areas by giving them animal on interest free
installments.
43
Now a days, our economy is on recession due to this the
prices of processing milk has been increased day by day.
SOCIAL FACTORS:
People in Pakistan mostly prefer fresh and open milk & rely
less on processed milk because they understand processing
milk companies add chemicals and preservatives in milk
during process. But Nestlé MilkPak try to change this trend
through heavy advertisement and awareness programs.
Processing milk is mostly used in large cities or towns.
Companies try to win large number of customers by providing
them quality and value.
TECHNOLOGICAL FACTORS:
Nestlé uses latest technology and high quality machinery in
the production of milk or other products, it also fulfill
the customer’s requirement. For example, Nestlé recently
opened Asia’s largest factory in Kabirwala. Nestlé MilkPak
now uses machinery that produced 1800 to 2000 tones milk
daily.
NESTLÉ’S MARKETING STRATEGIES FOR ITS MILK PRODUCT
LINE
The corporate strategy of Nestlé Pakistan is growth. The
operational strategies of Nestlé in Pakistan are as follows:
o Consumer communication
o Product availability and development
o Quality strategy
o Branding strategy
o Differentiation strategy
44
o Positioning strategy
o Marketing Mix Strategy
CONSUMER COMMUNICATION
The taste of the customer and awareness is brought among
people about healthy and delightful eating with the help of
electronic media, advertisements boards, banners,
advertising on newspapers, pamphlets, brochures, handouts
and by the stall activity of marketing department. Customer
feedback is also very important for Nestlé MilkPak and to
cater this it has setup a special call centre. Good to know
is the tag line Nestlé use for customer communication and
satisfaction.
PRODUCT AVAILABILITY
From time to time activities such as area storming,
determining new places or areas are being done. Thus, making
the distribution of MilkPak everywhere.
BRANDING
Nestlé is a strong brand so while catering to Pakistani
market of Milk it has developed a broad branding strategy.
The packaging of the MilkPak is in green and white color in
lieu of the colors of flag of Pakistan thus following
Glocalization. It is because of this branding that Nestlé
MilkPak is a major producer of packaged milk and very
45
successful in high brand recognition and brand recall and
product quality in Pakistani market.
DIFFERENTIATION STRATEGY
Nestlé has differentiate itself in terms of nutrients in
MilkPak e.g. “Addition of IRON and Vitamin “A & C” and
purity “Khalis hi sab kuch hay”.
POSITIONING STRATEGY
Nestlé MilkPak has adopted the functional positioning
strategy like:
“Khaalis He Sab Kuch Hai”
“Wohi Qudarti Maza”
“Jaan Banaoo”
MARKETING MIX
Product:
• Quality Product
Nestlé MilkPak has the largest market share
due to its consistent quality.
46
• Product Packaging
Nestlé MilkPak is available in different product
consumption range and stylish packaging.
• Product Lifecycle
Nestlé MilkPak has been in the market for more
than two decades and it is at continual growth
stage.
Figure 4: Product Life Cycle
Initial growth Continuous growth
Decline Maturity
Price:
• Competitive Pricing
MilkPak has a large share in the market. The price
of MilkPak is competitive with other brands in
market.
47
Table 1 : Comparison of Prices and Packaging
Figure 5: Comparison of Prices and Packaging
Placement:
• Distribution Channels:
48
MilkPak is not sold directly to consumers. A
complete distribution process is followed. It uses
indirect channels for distribution like:
Manufacturer
Distributor
Wholesaler
Retailer
Consumer
Promotion:
• Spotlighting on health conscious people in their
advertisement.
Promotion Mix
• Advertisement
• Public relations
MARKETING GROWTH STRATEGY
Nestlé is pursing growth strategy. They have invested $ 70
billion at Kabirwala Plant and they are planning to invest $
381 billion in the milk business in coming years.
49
CUSTOMERS’ ANALYSIS:
To meticulously considering the response Nestlé MilkPak
customers were from Rawalpindi and Islamabad, belonging to
varying demographics i.e. different age groups, occupation
and income levels were surveyed. This survey was in form of
questionnaire, a sample of which is attached in Appendix.
At start, let’s look at how the total population of survey
is distributed in terms of gender, age, occupation and
income level; we have taken gender and income level as the
major criteria for our sample selection. Following tables
and charts show the distribution of respondents over these
categories:
GENDER: Overall 54% of our respondents were female, and rest
46% were males.
Table 2: Gender Ratio
Gender
Male Female
93 107
Figure 6: Pie Chart of Gender ratio
50
AGE: While being totally neutral in selection of sample, it
is seen that most of the MilkPak users are between 26-35yrs
age group. This is because they belong to the current
generation, who has an eye over every thing, conscious about
health and are working class and has lack of time. below 15
years is just 2% of the total population sample, but in
future it seems to be really attractive age group for
MilkPak customers because children are the best influencers
for selling.
Table 3: Age Distribution in Customer Survey
Age Group
Category Below 15 15 to 25 26 to 35 36 to 45 Above 45
No. Of Respondents 4 40 88 42 26
Figure 7: Age Distribution in Customer Survey
OCCUPATION: In terms of occupation the sample was
distributed in three categories namely, low income,
employed/having own business and retired / housewives /
financially dependent family members. While being unbiased
in selection of sample, it is witnessed that the last two
categories consume packaged milk more.
51
Table 4: Occupation Distribution in Customer Survey
Occupation
Low income Employed / have my own businessRetired /housewife /financially
dependent family member
33 102 65
Figure 8: Occupation Distribution in Customer Survey
INCOME LEVEL: This category is divided into five divisions
from below Rs.10,000 to above Rs.75,000, keeping in mind the
social income groups prevailing in Rawalpindi and Islamabad.
The respondent’s income levels indicate that MilkPak users
belong to every income group.
Hidden Trend: It is seen that the above Rs 50,000 income
level people tend to show their preferences for Packaged
Milk more because of various reasons e.g. shopping in malls
and convenience, availability of packaged milk its long
life.
Table 5: Income Level Distribution in Customer Survey
Income Level (in Rs.)
Below 10,000 10,000 to 25,000 25,000 to 50,000 50,000 to 75,000 Above 75,000
4 12 34 72 78
52
Figure 9: Income Level Distribution in Customer Survey
Now in the second phase of our analysis, lets dissect the
responses on main questions and try to figure out the hidden
and/or clearly visible, registered trends.
53
Questionnaire analysis:
1. What is your preference: open milk or tetra pack?
Table 6 : Ratio of Open Milk to Packaged Milk
Ratio of Open Milk to Packaged Milk
Options Open Milk Tetra Pack Both
Responses 48 96 56
Figure 10: Ratio of Open Milk to Packaged Milk
Out of the sample size of 200 respondents from Rawalpindi
and Islamabad showed a mixed trend. Total Fifty one percent
of the consumers in market use either open milk or open milk
and packaged milk simultaneously. Packaged milk has
54
28%
48%
24%
OPEN MILK
TETRA PACKMILK
COMBINATIONOF BOTH
penetrated deeply in market especially in cities and the 48%
of the people prefer tetra pack milk in comparison to 28%
people who are stick to conventional open milk only in all
sorts of circumstances and don’t like packaged milk at all.
High Price perceptions also prevails in this 28% of sample.
Whereas the 24% people use packaged milk as substitute of
open milk n this shows the growth potential in market.
2. If you buy packaged milk then would you prefer Nestlé
MilkPak?
Table 7: Preference to Nestlé MilkPak
Preference to Nestlé MilkPak
Options Yes No Up to some extent
Responses 120 46 34
Figure 11: Preference to Nestlé MilkPak
60%23%
17%
YES
NO
UP TO SOMEEXTENT
55
Here in this case when the respondents were asked about
their preference of the Nestlé MilkPak over other tetra
packs 60% of them responded in favor of MilkPak, 23% of the
respondents choose other tetra pack milks and 17% were
neutral and according to them they purchase whatever brand
is available. This analysis shows the higher preference of
MilkPak over other brands.
3. Are you satisfied with quality of MilkPak?
Table 8: Satisfaction with Nestlé MilkPak Quality
Satisfaction with Nestlé MilkPak Quality
Options Yes No
Responses 182 18
Figure 12: Satisfaction with Nestlé MilkPak Quality
91%
9%
YES
NO
56
The response to this question is related with the response
of the question that if respondents prefer MilkPak over
other tetra pack brands. One reason of the high percentage
of preference could be its taste, as out of the sample of
200 respondents, 91% of them replied that they like the
taste of it better than any other brands and only 9% replied
that they prefer the taste of other milk brands which shows
the better taste is one of the reason of MilkPak being the
market leader.
4. Would you like to have improvement in MilkPak?
Table 9: Need for Improvement in Nestlé MilkPak
Need for Improvement in Nestlé MilkPak
Options Yes No
Responses 182 18
Figure 13: Need for Improvement in Nestlé MilkPak
91%
9%
YES
NO
57
The response to this question is similar to the last one the
reason being that it was about the taste of MilkPak. The
people that prefer the taste of Nestlé MilkPak does not want
it to be changed and the people that does not prefer its
present taste thinks it should be changed. Therefore 91% of
the respondents do not want the taste to change and 9% of
the respondents want it to change.
5. Rate the taste of MilkPak as compared to other tetra pack
milk?
Table 10: Taste of MilkPak compared to other tetra pack milk
Taste of MilkPak compared to other tetra pack milk
options Very bad Bad moderate good Very good
responses 0 0 46 92 62
Figure 14: Taste of MilkPak as compared to other tetra pack milk
0%0%
23%
46%
31%very bad
Bad
Moderate
Good
Very Good
58
According to the responses to this question as much as 31%
of the respondents think that the taste off Nestlé MilkPak
is very good as compared to any other tetra pack milk. 46%
of the respondents think it’s good and 23 % think its
moderate as compared to other tetra pack milks. None of the
respondents think that the taste of MilkPak is worst or not
as good as any other tetra pack milk.
6. Is the price of Milk Pak rational?
Table 11: Price of Nestlé MilkPak
Price of Nestlé MilkPak
Options Yes No
Responses 172 28
Figure 15: Price of Nestlé MilkPak
86%
14%
YES
NO
59
A huge population of our sample as 86% responded that the
price of Nestlé MilkPak is competitive and justified in
comparison to other tetra milk packs. 14% felt that the
MilkPak is over-priced. The thinking might be in comparison
to the price of open milk.
7. Is MilkPak readily available to you?
Table 12: Availability of Nestlé MilkPak
Availability of Nestlé MilkPak
Options Yes No
Responses 172 28
Figure 16: Availability of Nestlé MilkPak
86%
14%
YES
NO
60
86% of our sample size of population is contended with the
availability of the Nestlé MilkPak and its intensive
distribution. It is available every where in cities, super
markets, grocery shops and in kiosks also. The convenient
availability of the Nestlé MilkPak is backed by the strong
and efficient supply chain management system of Nestlé
Pakistan. However there are many areas where milk Pack is
not available and 14% people reported that they could not
have the access to Nestlé MilkPak.
8. Which brand of tetra pack you will buy in case of
unavailability of MilkPak?
Table 13: Choice of Other Milk Brands
Choice of Other Milk Brands
Options Olpers Haleeb Good milk Any other
Responses 82 62 28 28
61
Figure 17: Choice of Other Milk Brands
41%
31%
14%
14%
OLPER'S
HALEEB
GOOD MILK
ANY OTHER
When the sample of 200 respondents were asked the question
that which other tetra pack they would prefer if MilkPak is
not available to them, 41% of the respondents replied that
they would go for Olpers if they don’t find MilkPak, 31%
prefer Haleeb in case they can’t find MilkPak, 14% replied
in the favor of good milk and 14% of the population replied
other brands. This shows that Olpers is a very close
competitor of MilkPak and even if people can’t find MilkPak
majority would go with Olpers and Haleeb.
9. Do you recall the ad of Nestlé when you see Nestlé milk
at the store?
62
Table 14: Recall of Nestlé Milk Advertisement
Recall of Nestlé Milk Advertisement
Options Yes No
Responses 110 90
Figure 18: Recall of Nestlé Milk Advertisement
The recall of Nestlé MilkPak advertisement is not very
high and encouraging.55% of the sample population could
recall advertisement in contrast to 45% who did not. The
reason being that Nestlé’s strategy about advertisement
is not very intensive. Nestlé believes on providing good
quality products and knowing customers better and
communication with the customers than merely
advertisement on TVCS.
10. What you prefer while buying packaged milk?
63
Table 15: Preference while purchasing tetra pack
Preference while purchasing tetra pack
options Purity/quality price Convenience availability
responses 82 76 24 18
Figure 19: Preference while purchasing tetra pack
41% of the people emphasized on purity and quality of the
milk while choosing different brands. Price of the brand is
also a major reason of switching to different milk brands.
38% of the people in our sample were price conscious.
Convenience of packaged milk and availability were minor
issues in regard to quality as milk is a food item.
11. If Nestlé milk isn’t available at shop/ out of stock
you ask the shopkeeper about its reason or switch to
other available brand of milk?
64
Table 16: Loyalty with the brand
Loyalty with the brand
Options Other brand Ask reasons
Responses 142 58
Figure 20: Loyalty with the brand
In the previous question we have seen that quality is
foremost important to people while buying edible products
such as milk. But as milk is very generic product and there
aren’t many substitutes available so people as 71% responded
that due to the non availability of Nestlé in market they
will go for other brands for some time though in spite of
their strong loyalty with Nestlé Milk.
12. Can you remember and recognize the colors of Nestlé
MilkPak (white & green) at billboard?
65
Table 17: Recognition of Nestlé MilkPak Brand
Recognition of Nestlé MilkPak through colors
Options Yes No Don’t know
Responses 178 18 4
Figure 21: Recognition of Nestlé MilkPak brand
Nestlé is a very quality perceived and trusted strong brand.
In Pakistan MilkPak has green and white colors representing
colors of the land.89% of respondents claim that they can
recognize Nestlé MilkPak.
13. Nestlé has been changing its packing with the events
like Independence day pack with Pak flag and Ramadan
packs, have you seen such packs on the shelves of shops
as it is for a limited time offer with high turnover of
milk.?
66
Table 18: Recognition of limited time packaging
Recognition of limited time packaging
Options Yes No
Responses 126 74
Figure 22: Recognition of limited time packaging
Nestlé’s sales promotion strategy is intensive during the
special events like Ramdan, Jashan Azadi and the Eids.
Special packaging is introduced to emphasis the relationship
Nestlé shares with its consumers. Nestlé is quite successful
in this regard as 63% of the population sample responded
that they can recall and recognize the special packaging and
colors of the brands.
67
14. How you perceive brand image from the Television
advertising for each company?
Table 19; Perceived Advertising Image
Perceived Advertising Image
Nestlé Olpers Goodmilk Haleeb Nurpur
Traditional 82 54 36 45 26
Modern 49 81 12 24 24
Serious Image 85 60 31 52 38
Fits my Life
Style36 84 34 29 22
Quality
service72 75 48 36 11
Economical
Service70 82 31 17 74
Trustworthy 69 82 32 35 8
Wide Range of
products76 69 14 34 30
Innovative 29 108 54 9 29
68
Figure 23: Perceived Traditional Advertisement Image
Figure 24: Perceived Modern Advertisement Image
69
Figure 25: Perceived Serious Advertisement Image
Figure 26: Perceived Image that Brand fits to life style
This is one of the most comprehensive questions of this
questionnaire in terms of the perceived advertising image of
the key players of tetra pack milk industry of Pakistan. In
this question all the respondents were asked to mark the key
players of this industry i.e. Nestlé, Olpers, Haleeb,
Goodmilk, Nurpur. with reference to 8 characteristics i.e.
70
traditional, modern, serious image, fits my life style,
quality service, economical service, trustworthy, wide range
of products and innovative. Above table shows the ranking of
each company in percentages with respect to the above stated
12 characteristics.
The above table shows the power of advertisement used by
Olpers. As it has the highest ranking among other players in
the industry and Nestlé is right behind it. Olpers is
leading in many given aspects like modern, trustworthy and
innovative etc and Nestlé is right behind it whereas other
three brands are way behind them in all the aspects.
Comparison of Nestle MilkPak with other brands
Attributes/Brands Nestle Olpers Haleeb GoodMilk Open Milk
71
Brand Image Pure Strong Thick Drinking Milk
Pure
Brand Positioning Purity is everything
All Purpose milk
Thickest Milk
Drink Good Milk everyday
Fresh and Pure
Brand Recall Strong Strong Strong None ---Consistent Quality Always Always Always Always DependsPrice Rs. 58 Rs. 57 Rs. 57 Rs. 57 50-60/kgDistribution(cities) Intensive Intensive Intensive Less IntensiveDistribution(rural) Intensive Intensive Less Less IntensiveAdvertisement Frequency
Less Intensive Medium Medium None
Promotion Tvcs, News
Tvcs,radio,Billboards,Shows
Tvcs, Home to Home
Tvcs, News
None
Advertisement Appeals
Emotional, Emotional, Emotional, Emotional None
Taste Natural Good Creamy Sweet NaturalConvenience Yes Yes Yes Yes No Market Research Nestle
Research laboratories
Market Research Unit
Timely Timely None
Target Market Middle, upper middle, health conscious people
Middle, upper middle, health conscious people
Middle, upper middle,
Middle, upper middle,
Everyone
Packaging 0.25L,0.5L1.0L
0.25L,0.5L1.0L, 1.5L
0.25L,0.5L1.0L
1.0L Depends
Brand History 1981 2006 1986 2007 AlwaysFinancials Backed by
NestleBacked by Engro Foods
Now Less Stable
Backed by Shakarganj Foods
---
Product Differentiations
Purity, Rich Iron, Vitamin C
All purpose
Good for tea and desserts
Drinking Milk
---
Sub Brands Nesvita,Nido Olwell Dairy Queen
--- ---
72
Marketing Objectives
To be market leader
To be market leader
To be market leader
To attain 20% share
---
Market Share of packaged milk industry
40% 25% 35% other brands ----
Total Market share
8%(40%of 20%)
5%(25% of 20%)
7%(35% of 20%)
80%
73
CHAPTER 5: IDENTIFICATION OF KEY AND CONCLUSIVE RESULTS
Thoroughly considering the theoretical process of how Nestlé
impacts consumer behavior, analyzing closely each Strategy
of Nestlé taking up for its milk product line and examining
the data collected through customer survey to have a handle
on the customers’ respective perspectives, and alignment of
strategies with Nestlé MilkPak’s marketing following results
were deduced:
Nestlé MilkPak is quite able-bodied in the market. It has a
good image among the consumers. It is legendary for its
quality and being the pioneer of safe and good quality milk.
It is selling well. The marketing of it is also being done
quite well. Even though Nestlé’s overall performance is
quite well in the market but there is always a room for
improvement as the market is always very dynamic and so the
management of Nestlé has to align the strategies according
to the changing demands of the market.
Nestlé MilkPak’s management must also be careful and abreast
of Olper’s as it has managed to provide stiff competition to
MilkPak and Haleeb in a very short span of time.
Brand awareness and brand recognition are present and Nestlé
MilkPak can capitalize on it in all ways. Marketing is
aligned with the strategies of Nestlé MilkPak.
All brands acknowledge that the intention behind their huge
marketing investments specifically in terms of TVCs is to
74
attract new customers, retain existing customers and make
competitors customers switch to their Brand. Customer churn
is acknowledged by all the brands to be a common problem
threatening each of them and TVCs is being used as a major
tool/medium to overcome this problem.
75
CHAPTER 6: RECOMMENDATIONS
Nestlé MilkPak is a success story in Pakistani market. It
has maximum market share. There is not a lot to recommend to
a brand name as strong as Nestlé. Few of the
recommendations that we found out during surveys and
research are as follows:
o As we have analyzed Nestlé MilkPak has 360 degrees
promotions and involves in various ATL and BTL
activities. The ATL activities comprising of broadcast
media are not very aggressive. Nestlé MilkPak has made
only few TVCs and special occasion advertisement is
missing specially when other brands like Olpers and
Haleeb Link themselves with local occasions
aggressively.
o Nestlé need to improve its strategies related to
advertisement because the market is very dynamic and
vibrant and interactive advertisements attract new
customers and retain the old ones
o Branding and packaging is a reflection of the
production and the marketing process. A package that is
perceived as attractive by the people will undoubtedly
have a favorable impact on the buyer. Although firms
already pay a lot of attention to branding and
packaging and use it to their benefit, there might
still be room for innovation and research in this field
especially since, in our time marketing is very
important. Due to excess availability of different and
76
innovative things, good marketing is required in order
to get what any user wants.
o Nestlé should engage in more guerilla marketing
techniques to attract more customers and retain the
existing customers.
o Nestlé must have to promote its Everyday; liquid tea
whitener brand.
o Nestlés only flavored milk brand is Milo, it had to
come up with new flavored milk brands as demand for
such milk is rising in new generation, there are
already brands available by Olpers , and Shakarganj
group etc.
o Further marketing campaigns on TVCs should be adopted
by Nestlé to compete with Olpers, what we have observed
is that the intense marketing of Olpers had made it a
strong brand in a short span of time.
o Nestlé MilkPak should have to make its distribution
channel strong, in order to get maximum shelve space at
stores, so people would have no choices for other
brands. What we have observed that in a shop if Nestlé
milk is not available people buy other brands like
Olpers and Haleeb.
o The producing firm should differentiate between the
needs, desires and perceptions of the various consumer
groups, which can be separated into groups on the basis
of age, gender, personality, income and many other
demographic variables. Thus, the firm can focus on the
target market that is relevant for its product, and
make the brand and package suitably. Different other
sub brands and flavored milk segment can be targeted as
it is an untapped market till now.
77
CHAPTER 7: ACTION PLAN
To implement the recommendations made to produce effective
results following is the plan of action:
o Nestlé MilkPak need to make few of new TVCs and special
occasion advertisements as they are missing especially
when other brands like Olpers and Haleeb Link
themselves with local occasions aggressively.
o Nestlé can to do activity in schools for young children
about the Nestlé milks telling them about its Nido
brand and the importance of calcium to the growth and
nutrition of these children.
o Another important area for Nestlé is that its brand
Nido’s subdivision like nido 1 +, and nido 3, this
market is untapped, Nestlé can reposition itself in
these sub brands as medicated toddlers Milks and do
activity to tell mothers the importance of such milk.
As it has good market potential.
o Nestlé can do marketing activities like what Olpers had
done in Ramadan, it distributed the Roh-Azfza flavored
milk and dates as Aftari, it was a good marketing
activity at the same time corporate social
responsibility. These smaller yet powerful guerilla
maketing techniques are also aligned with Nestlé
MilkPak’s strategy.
78
o The market of tea whitener is already developed by
Tarang and Tea Max, Nestlé can capture the market using
its strong brand name and marketing as the tea whitener
market is already developed at the expense of Tarang
and Tea Max. The events of valentine day, Mothers day
etc. approaches, Nestlé’s brand Everyday has strong
association with the love and relationships, Nestlé can
capitalize on this event to capture the market for its
Everyday brand.
79
BIBLIOGRAPHY
FGriffiths, R. (1997). What Emotions Really Are. The University of Chicago Press.
Gupta, V. Nestlé's Brand Management Strategies.
About Us. Retrieved November 20, 2009, from http://www.Nestlé.pk/brands/Nestlé-milkpack.aspx
About Us. Retrieved 2009, from Oppapers: http://www.oppapers.com
Development Policy Institute Islamabad. (2008). Report of Sustainable Development Policy Institute Islamabad, Pakistan. Islamabad: SDPI.
"AIDA” of marketing. (2009, June 16). Retrieved August 26, 2009, from www.barrypopik.com... Attention-Interest-Desire-Action): http://www.barrypopik.com/index.php/new_york_city/entry/attention_interest_desire_action_aida_of_marketing/
About Us. (2009, November 11). About Us: Nestlé Pakistan. Retrieved November 11, 2009, from Nestlé Pakistan: http://www.Nestlé.pk/brands/Nestlé-milkpack.aspx
About Us. (2009, November 28). Nestlé. Retrieved November 28, 2009, from Nestlé Pakistan: http://www.Nestlé.pk
About Us. (2009, December 20). Nestlé. Retrieved December 20, 2009, from Nestlé: http://www.Nestlé.com
Dairy Industry in Pakistan (2007).
Daniel L.Schacter (2001). The Seven Sins of memory. New York, Houghton, Mifflin.
FGriffiths, R. (1997). What Emotions Really Are. The University of Chicago Press. Gupta, V. Nestlé's Brand Management Strategies.
J. Ranaweera, C. P. (2003). The Influence of SatisfactionTrust and Switching barriers on customer retention in a continuous purchasing setting. International Journal of Service Industry Management , 14, 374-395.
Kotler, P. (2005). Marketing Management (Eleventh Edition ed.). Prentice-Hall, Hemel Hempstead.
Larry Percy, C. B. (2004). Advertising And The Seven Sins Of Memory. International Journal of Advertising , Vol. 23, No. 4.
80
M.Aslam, S. NESTLÉ: A name of wide range of world class products.
Malhotra, N. K. (2008). Marketing Research (Fifth Edition ed.).
Maxwell, A. J. (1996). Qualitative design research. Sage publications applied Social research Methods series Vol. 41 ISBN 0-8039-738-2.
O'Barr, W. M. What Is Advertising? ADVERTISING & SOCIETY REVIEW. Retrieved from www.muse.jhe.edu: http://muse.jhu.edu/journals/asr/v006/6.3unit01.htmlPorter's Five Forces Model. (n.d.). Retrieved December 29, 2009, from Marketing Teacher: http://www.marketingteacher.com
Raja, R. (2008). Pakistan smallholder dairy production and marketing.
81
ANNEXURES
82
Questionnaire:
1. What is your preference: open milk or tetra pack?
A: Open Milk
B: Tetra Pack
C: Both
2. If you buy packaged milk then would you prefer Nestlé
MilkPak?
A:Yes
B:No
C:Up to Extent
3. Are you satisfied with MilkPak quality?
A:Yes
B: NO
4. Would you like to have improvement in MilkPak?
A:Yes
B: NO
5. Rate the taste of MilkPak as compared to other tetra
pack milk?
A: Very Bad
B: Bad
C: Moderate
83
D: Good
E: Very Good
6. Is the price of Milk Pak rational?
A: Yes
B: NO
7. Is MilkPak is readily available to you?
A: Yes
B: No
8. Which brand of milk you will buy if MilkPak is
unavailable?
A: Olpers
B: Haleeb
C: GoodMIlk
D: Other
9. Do you recall the ad of Nestlé when you see Nestlé milk
at the store?
A: Yes
B: No
84
10. What you prefer while buying packaged milk?
A: Purity, Quality
B: Price
C: Convenience
D: Availability
11. If Nestlé milk isn’t available at shop/ out of
stock you ask the shopkeeper about its reason or switch
to other available brand of milk?
A: Yes
B: No
12. Do you have strong recognition of Nestlé milk,
like you remember the colors (white & green) at
billboard that’s not visible to you clearly you
recognize its Nestlé?
A:Yes
B:No
C:Don’t Know
13. Nestlé has been changing its packing with the
events like Independence day pack with Pak flag and
Ramadan packs, have you seen such packs on the shelves
of shops as it is for a limited time offer with high
turnover of milk.?
85
A: Yes
B: No
14. How you perceive brand image from the Television
advertising for each company?
Perceived Advertising Image
Nestlé Olpers Goodmilk Haleeb Nurpur
Traditional
Modern
Serious Image
Fits my Life
Style
Quality
service
Economical
Service
Trustworthy
Wide Range of
products
Innovative
Rate from 1 to 5.
5 being highest and 1 being lowest
86