Final

Project Management

Launching ofDairyKing Foods Ltd

BrandMilk.King

Submitted toDr. Sikandar Khan

Submitted by

1. Ans Ali Ashraf2. Muhammad Waqas Khan3. Ali Ashiq Kirmani4. Junaid Ilyas5. Mazhar Javed6. Salman siddique7. Inam ul Haq

INTRODUCTION

Milk is complete diet therefore it has a vital importance in our life as food. Currently there are two modes of milk is available in Pakistani Market. Firstly, being loose milk supply to house hold by milk man or bought from street milk shops. Other is Tetra Pak. Both of these modes has short coming and disadvantages.

Loose milk is prone to impurities germs, bad hygiene conditions variable fat level and adulteration. Buyers are never sure what they are getting what they are paying for , on the other hand tetra pack milk is known for adulteration through chemicals and different types of hazardous material which are injurious to human health. Secondly tetra pack milks high prices keep it out of reach of vast majority of people.

Keeping in mind the above mention gaps in the milk industry we have decided to launch a project of pure milk supply at door steps of customers at the low price and better quality.

Background

Pakistan with current estimates is the 4th largest milk producing country in the world with 33 Billion liters of milk produced annually. The potential is huge but the sector operates mostly in the informal economy and needs a consistent effort to formalize and be able to contribute better to the national economy. Out of the total milk produced, 97% is in the informal sector (i.e. loose milk consumed in the villages and or sold in the cities through "Gawallas" in unhygienic conditions and without any quality standards). There are 8 Million farming households in Pakistan with a total herd size of 50 million animals. 97% of these farmers are not linked to formal markets and hence are not progressing in economic terms.

The potential is estimated on the basis of the fact that livestock and agriculture sector contributes over 22% to the GDP, and a milk economy that in value terms is 27.7% of the total agriculture sector. 3 % of the milk is being supplied by the companies after processing in different ways. Showing lot of potential available in the market in this sector. Currently there are four major milk suppliers of tetra packed milk in country with market leader Nestle Pakistan and followers Engro Foods, Haleeb Foods, Noor Pur and Good Milk in some areas of country. Milk is 10 % of Human diet on daily basis, it is the necessity of life for a newly born baby to the old age people.

We have decided to launch the project with a dairy farm establishment leading to Milk pasteurization and then supply to the customers at door step. We have decided to launch this project to avail the opportunity of the gap available between the loose milk and Tetra Packed milk as loose milk is available readily at cheaper rate but hygienic problems along with adulteration issues involved in it. On the other hand Tetra packed milk with High Cost along with some news of adulteration in milk.

Project formulationRationale to start this project lies in the fact that there is a huge gap in Pakistani dairy market due to mistrust of customers in the quality and purity of loose milk and tetra pack milk. Milk being a necessity have an evergreen high demand potential which can

yield into high profits if done correctly. Therefore by implementing proper technology and management practices we can implement and run this project successfully and profitably.

Objectives and goalsFollowing is the brief description of our objectives and goals in this project.

1. Establish a dairy farm with imported cattle 2. Mechanize the dairy farm according to international standards3. Use technology to get maximum yield4. Setup a Pasteurization plant according to international health and safety standards5. Setup and fast, efficient and secure distribution network for our products 6. Build a strong brand 7. Achieve high levels of product quality and service.

DelimitationsOur main focus in this project would be on project management aspect. However we will be delivering brief details about the business and marketing aspect of the project. However financial details will kept to minimum as per the instructions of the instructor.

1. PROJECT SELECTION OR PROJECT JUSTIFICATIONProposed ProjectOur proposed project is to establish a company which will comprise of three main parts or units. These units will include a dairy farm, a pasteurization plant and a sales and distribution network for the milk and other dairy products.

Resources requiredThere are a multitude of resources for the completion and running of his project. As this project consists of three different units i.e. Dairy farm, Pasteurization plan and sales/distribution network therefore all these units require different types of resources. The resources required in dairy farm includes land, water sources (tube well,), tractor, generator, fodder cutter, fodder distributor, trolley, loader, milking parlor, separate sheds for cows and cubs, milk making machines for cubs etc. On the other hand resources required for pasteurization plant include pasteurization plant machinery, proper infrastructure for the installment of this machinery and the pipelines constructed properly for the save movement of milk in and out the plant. Our sales and distribution network requires packing machines, chilling vehicles, chillers, cold storage and distribution vans.

Value creationThis project has great value for all the stakeholders involved. Our customer will get pure and healthy dairy products every day. They will be able to get whatever quantity they like at any time they want. On the other hand keeping in view that demand and supply situation in the market and absence of quality dairy products indicates a great potential for us to earn profits and fill this gap taking first mover advantage in the pasteurized milk segment.

StakeholdersFollowing are the major stakeholder who may have their interests and different aspects of our project.

1. Investors 2. Customers3. Employees4. Government agencies 5. Suppliers 6. Distributors7. Locals

Project boardProject board will involve the following key people

1. CEO2. Head of Finance3. Head of Technical (Pasteurization Plant) 4. Head of Production (Dairy Farm)5. Head of Marketing & Sales6. G.M Admin

Project teamProject team will include the following people along with their roles described.

1. Project Manager2. Finance Manager3. Plant Manager4. Farm Incharge5. Marketing Manager6. MIS Manager7. Procurement Officer8. Quality Assurance Manager

Project organization chart

Project Manager

Finance Manager

Marketing Manager

MIS Manager

Farm Incharge

Plant Manager

Procurement Officer

Project Board

CEO Head of Finance Head of Technical Head of Production

Head of Marketing and Sales G.M Admin

2. PROJECT DESCRIPTION

PROJECT INITIATION DOCUMENT

Project Name Milk.King Dairy LimitedProject Sponsor Milk.King Dairy LimitedProject Manager Ans Ali AshrafGroup ProTeam Objective No.Date Started 01 January 2012 Completion Date 30 June 2012

Project PurposeTo establish pasteurized milk production and distribution company named MilkKing.

BackgroundMilk is complete diet therefore it has a vital importance in our life as food. Currently there are two modes of milk is available in Pakistani Market. Firstly, being loose milk supply to house hold by milk man or bought from street milk shops. Other is Tetra Pak. Both of these modes has short coming and disadvantages.

Loose milk is prone to impurities germs, bad hygiene conditions variable fat level and adulteration. Buyers are never sure what they are getting what they are paying for , on the other hand tetra pack milk is known for adulteration through chemicals and different types of hazardous material which are injurious to human health. Secondly tetra pack milks high prices keep it out of reach of vast majority of people.

Keeping in mind the above mention gaps in the milk industry we have decided to launch a project of pure milk supply at door steps of customers at the low price and better quality.

Objectives1. Establish a dairy farm with imported cattle 2. Mechanize the dairy farm according to international standards3. Use technology to get maximum yield4. Setup a Pasteurization plant according to international health and safety standards5. Setup and fast, efficient and secure distribution network for our products 6. Build a strong brand 7. Achieve high levels of product quality and service.

Project ScopeThe following are within the scope of the project:

Establish a pasteurized milk production and distribution company Establish a dairy farm consisting of imported animals and latest technology Establish a transport system Establish a pasteurization plant Establish a marketing and sales network Establish a fully integrated administration and management system

Major Deliverables

1. Establish Milk.King Dairy Companya. Business Plan b. Company Registrationc. Legal Proceduresd. Brand Name registratione. Hiring Staff

2. Dairy Farma. Land Acquisitionb. Building & infrastructurec. Import of Animalsd. Import & installation of machinerye. Breeding treatment of animalsf. Hiring of staff

3. Pasteurization Planta. Import of Machineryb. Hiring staffc. Installation of machineryd. Quality assurancee. Maintenance and service schedule

4. Sales & Distributiona. Marketing Planb. Hiring & Training Staffc. Build Infrastructured. Marketing Campaign

Business Case (Benefits and Costs)This project will setup a new company with the brand name of “Milk.King” which will ensure the delivery of safe and healthy milk to the people of Pakistan(initially to Lahore). Eliminating hazards of loose and tetrapack milk and combining benefits of loose and tetrapack milk we will be taking the dairy business to new heights.

The total cost of the Phase I of Project i.e. dairy Farm Development is Rs.60, 000,000, out of which the capital cost of the project is Rs. 50,000,000 for purchasing the animals and constructing the building and the rest is used to meet the working capital requirement. The proposed Project is based on the assumption of 60:40 debt equity ratio. However this composition of debt and equity can be changed as per the requirement of the investor.

Assumptions Finances will be arranged successfully

Land will be available There will be no bureaucratic hurdles in imports of machinery and animals Skilled labor and staff will be available Competitors will not react too soon Market will respond favorably

Constraints Unstable political system Unfavorable social and economic conditions High inflation Currency Fluctuations High mark-ups on bank loans Lack of experience

Project OrganisationProject sponsor – Milkin.King Dairy LimitedProject Manager – Ans Ali AshrafFinance Manager – M.Waqas KhanPlant Manager – Mazhar JavedFarm InchargeMarketing Manager MIS ManagerProcurement OfficerQuality Assurance Manager

Risk Register The following are the most important identifiable risks to the Milk.King, to be discussed in the first project board meeting:

Non-availability of skilled staff Perishable nature of milk Rise in prices of animal feed Electricity shout down in summer causing storage issues Supply chain issues due to increase in fuel cost

Project ScheduleSr. no Description Start Date End Date

1 Business Plan - -

2 Company Registration 01-01-12 01-02-12

3 Legal Procedures 01-01-12 01-02-12

4 Brand Name registration 01-01-12 01-02-12

5 Hiring Staff 01-01-12 20-01-12

6 Land Acquisition 15-01-12 05-02-12

7 Building & infrastructure 15-02-12 15-05-12

8 Import of Animals 20-01-12 20-02-12

9 Import & installation of machinery 25-01-12 25-05-12

10 Breeding treatment of animals 30-01-12 30-06-12

11 Hiring of staff (Management) 10-01-12 20-01-12

12 Import of Machinery (Pasteurization) 15-04-12 15-05-12

13 Hiring staff (Pasteurization) 25-04-12 10-05-12

14 Installation of machinery 20-05-12 20-06-12

15 Quality assurance 01-06-12 25-06-12

16 Maintenance and service schedule 01-06-12 25-06-12

17 Marketing Plan 20-01-12 20-03-12

18 Hiring & Training Staff(Marketing & Sales) 10-02-12 10-03-12

19 Build Infrastructure(Marketing & Sales) 20-03-12 15-04-12

20 Marketing Campaign 15-05-12 15-07-12

21 Final Review/Testing 25-06-12 05-07-12

22 Completion - 15-07-12

Communication PlanDeliverable/Description Type Target

Audience(s)Delivery Method Delivery

FrequencyWho

Responsible?

Status Reports Mandatory Project Board Project Status Report template e-mailed to audience.

Bi-Monthly Project manager

Deliverable initiation reminder

Info Project Team e-mail, written Schedule twice weekly until all users covered

Project Manager

Deliverable status reports

Mandatory Project Manger

e-mail, written Bi-weekly Project Team

Deliverable Completion Reports

Mandatory Project Manager

e-mail, written On scheduled dates of completion

Project Manager

8. FEASIBILITY STUDY

Introduction Pakistan with current estimates is the 4th largest milk producing country in the world with 33 Billion litres of milk produced annually. The potential is huge but the sector operates mostly in the informal economy and needs a consistent effort to formalize and be able to contribute better to the national economy. Out of the total milk produced, 97% is in the informal sector (i.e. loose milk consumed in the villages and or sold in the cities through"Gawallas" in unhygienic conditions and without any qualitystandards). There are 8 Million farming households in Pakistan with a total herd size of 50 million animals. 97% of these farmers are not linked to formal markets and hence are not progressing in economic terms. The potential is estimated on the basis of the fact that livestock and agriculture sector contributes over 10% to the GDP, and a milk economy that in value terms is 27.7% of the total agriculture sector.3 % of the milk is being supplied by the companies after processing in different ways. Showing lot of potential available in the market in this sector. Currently there are four major milk suppliers of tetra packed milk in country with market leader Nestle Pakistan and followers Engro Foods,Haleeb Foods, Noor Pur and Good Milk in some areas of country. Milk is 10 % of Human diet on daily basis, it is the necessisty of life for a newly born baby to the old age peopleWe have decided to launch the project with a dairy farm establishment leading to Milk pasteurization and then supply to the customers at door step. We have decided to launch this project to avail the opportunity of the gap available between the loose milk and Tetra Packed

milk as loose milk is available readily at cheaper rate but hygenic problems along with adulteration issues involved in it.and Tetra packed milk with High Cost along with some news of adulteration in milk.

CRUCIAL FACTORS & STEPS IN DECISION MAKING FOR INVESTMENT

Dairy production is all-inclusive activity, related to animal care, reproduction, feeding, and management and supply chain issues. It is defined as all those aspects and activities relating to rising of dairy animals during their various phases of life to get wholesome milk then packing and finally delivery to customer. Before making the decision, whether to invest in the dairy and livestock farming or not, one should carefully analyze the associated risk factors. A SWOT analysis can help in analyzing these factors, which can play important role in making the decision.

SWOT Analysis

Strengths • Back bone and main stay of economy. Provides raw material for food & Leather industry. • Major source of food, Milk • Huge demand and supply gap in dairy sector • Customers mistrust over loose and tetra pack milk• Backward and forward integration will help to get maximum benefits

Weaknesses• No proper Infrastructure available• No local breeds available that will cause the problems for Animal Management.• Due to Economic Instability Price of the finished products will effect.• Lack of experience and knowledge

Opportunities Govt. of Pakistan & Sate Bank of Pakistan priority sector. Dairy products needs are 30% higher than supply. Commercially viable sector with great credit potential and absorption capacity. Vast range of area of operation, more needs and scope of development. Value added dairy products are in demand.

Threat: Sensitive sector as Food and Specially Milk is most sensitive to handle. International Prices of Powder Milk Competitors will respond aggressively Adaptability of imported animals In local environment

MARKET POTENTIAL

Livestock plays an important role in the economy of the country. Livestock sector contributed approximately 51.8 percent of the agriculture value added and 11.3 percent to national GDP during 2008-09.Gross value addition of livestock at current cost factor has increased form Rs. 1052 billion (2007-08) to Rs. 1287 billion (2008-09) showing an increase of 22.3 %. The value of livestock is 6.1% more than the combined value of major and minor crops. Government gives high priority to its development and is focused on private sector led development of livestock. Underpinning the importance of livestock, the government has placed livestock on national development agenda. It has formulated “Livestock Development Policy” and “Poultry Development Policy”. Both policies are aimed at private sector led development of livestock with Government providing enabling environment. The policies would provide a frame work for accelerated development of livestock.

To spearhead the development efforts through private sector, fully autonomous private sector-led, “Livestock and Dairy Development Board” and “Pakistan Dairy Development Company” have been established. These companies are serving as platform for investment in livestock sector. Apart form provincial Government programs, the federal government has substantially increased public sector investment in livestock sector and has initiated mega projects to the tune of Rs. 7.1 billion for strengthening livestock services for improved disease diagnosis & control; milk and meat production; breed improvement; animal husbandry and management practices in the country. In view of the importance of livestock in the economy as well as in the life of a common man, the Government is trying by all means to fix priorities to increase production of milk, to meet rising domestic demand of ever increasing population and produce exportable surplus as well. The major products of livestock are milk and meat.

High domestic demand Pakistan: 165 million people, high milk consuming tradition

• Irrigable land in Pakistan –20 million hectares • Fodder cultivated in 2.8 million hectares, i.e. only 14% • Fodder yield very low -24 Tones/hectare (Australia approx 70 Tones/hectare) • Largest irrigation network in the world • Animal herd 47million heads, though average size 3 head • Cheap farm labor, though unskilled

MARKET ENTRY TIMINGS The demand of milk in summer is high as compared to winter. That’s why the animals in summer are sold at a bit higher prices as compared to winter. So the proposed business can be started before the onset of summer season.

Capacity

We have planned an initial herd size of 200 Cows, which is economical to justify the overhead cost. The farm size will increase to approximately 1,000 cows within

10 years. Herd mix of 100% cows is recommended to get the maximum milk production round the year.

Animal Selection

Holstein-Friesian CowHolstein cattle (also known as Holstein-Friesian cattle or Friesian cattle) is a breed of cattle known today as the world's highest production dairy animal. Originating in Europe, Holsteins were bred in what is now the Netherlands and more specifically in the two northern provinces of North Holland and Friesland. The animals were the regional cattle of the Batavians and Frisians, two tribes who settled in the coastal Rhine region around 2,000 years ago.The Dutch breeders bred and oversaw the development of the breed with the aim of obtaining animals which would make best use of grass, the area's most abundant resource. The result, over the centuries, was an efficient, high-producing black-and-white dairy cow. It is black and white due to artificial selection by the breeders.

Australian Friesian SahiwalThe Australian Friesian Sahiwal is an Australian breed of dairy cattle whose development commenced in the 1960s by the Queensland Government. It is a combination of the Sahiwal, a dairy breed of (Bos indicus) from Pakistan and Holstein (Bos taurus) breeds, designed for the tropical regions of Australia. Cows produce approximately 3,000 kg of milk per lactation. Under tropical pasture conditions with a high resistance to heat, humidity, ticks and other parasites.The AFS breed has now been successfully exported to many tropical countries of South East Asia, Central and South America and the Indian sub-continent.

Sahiwal COW Sahiwal are a breed of zebu cattle, primarily used in dairy production, from the Sahiwal district of Pakistan, a dry region of Punjab. They produce the most milk of all zebu breeds, followed by the very similar Red Sindhi and Butana breeds. They were once kept in large herds by professional herdsmen called "Junglies", but with the introduction of irrigation they began to be kept in smaller numbers by the farmers of the region, who used them as draft and dairy animals. They are claimed to be tick-resistant, heat-tolerant and noted for Their high resistance to parasites, both internal and external. The cows average 2,270 kg. of milk during a lactation, while suckling a calf, and much higher milk yields have been recorded. Their color can range from reddish brown to the more predominant red, with varying amounts of white on the neck, and the underline. In males the color darkens towards the extremities, such as the head, legs and tails.Among these three feasible breeds for dairy farming we decided to go for Holstein-Friesian Cow and Australian Friesian Sahiwal breeds because of the reason that these breed are considered to be the worlds largest milk producers and also are considered to be the cost effective in the regarding to the feed and also resistent to the deceases and also heat resistent .Heefers will be imported and will be breeded here in Pakistan so that in 10 Months they will be familiar to the atmosphere of Pakistan and will be adjusted in the pakistani atmosphere and will also produce amunity against germs and decises.

Project Investment

The total cost of the Phase I of Project i.e. dairy Farm Development is Rs.60, 000,000, out of which the capital cost of the project is Rs. 50,000,000 for purchasing the animals and constructing the building and the rest is used to meet the working capital requirement. The proposed Project is based on the assumption of 60:40 debt equity ratio. However this composition of debt and equity can be changed as per the requirement of the investor.

Viability Project IRR (%) 51%Pay Back Period (year) 3.40

Proposed Location

We have decided to establish a dairy farm of 200 animals( Imported Australian breed) initially in Qasoor.As Geographically we can have all the Agri Inputs available there like fodder,cheap labour,all the inputs required for dairy farm etc.also it is attached to lahore ,our target market for finished goods causing lesser transport cost and easy access to market.Initially we will aquire 25 Acres of Land with 5 Acre for Animal Shed and Remaining 20 Acres for Agriculture and other Inputs for Dairy Farm also Establish ment of Pasturization Plant for Milk Processing.

Key Success Factors

Commercial dairy farmers depend on land, labor and animals as the major resources. The thrust in modern dairy farming is on the increased use of capital and management. Successful dairy farming harnesses all available resources into productive and profitable unit. Dairy farming is highly complex as it includes breeding, management, feeding, housing, disease control and hygienic production of milk on farm. The judicial use of means and resources to achieve clearly defined goals is the key success factor in modern dairy farming i.e. the art of maximization and optimal utilization of resources and means for maximizing productivity and profits. The low yielder animals are uneconomical less then the annual average to keep, hence these should be culled. The over all genetic improvement of all the dairy animals is necessary for improved milk production. It involves milking records at equal intervals, selection of bull from high producing mothers, progeny testing of breeding bull and then making extensive use of these bulls by well-organized Artificial Insemination (AI) program. Timely vaccination against BVP, Black Quarter, Foot and Mouth Disease, Brucellosis along with the prevention of mastitis and parasitic control will also improve the over all performance of dairy herd. Hygienic milk can be produced by the clean and healthy animals through milking parlor. .

SECTOR & INDUSTRY ANALYSIS

Major Players

Dairy farming is not an organized sector in Pakistan. More than 90% of farming is done on subsistence level. There are very few progressive farmers, which are running the business of dairy farming in a professional manner. Milk processing was started in late1970s, which is still facing challenges due to competition with the unprocessed milk. The processed milk has captured only 3% of the total milk market. Processed milk is not the consumer's preference due to high price differential. There are 28 milk-processing plants in the country, which were installed in mid 1980s to promote usage of processed milk. Most of these milk plants are closed due to lack of professional management, inadequate milk supply and poor marketing campaign of the processed milk.

MARKET INFORMATION

Sector Characteristics

The size of this sector is still growing. Commercial Dairy farms have been set up in peri urban areas. Few of the commercial dairy farms are:

1. Sar Sabz Dairy Farm, Okara 2. Wahdath Dairies, Bhagtawal, Sargodha 3. Dairy Land, Dhab-e- Je- Karachi 4. Ever Fresh – Bhera, Motorway 5. Nestle, Dairy Farm, Skheki- Motorway 6. J.K Dairies, Rahim yar khan 7. Sweet water Dairy 8. CSK Dairies Kasur 9. Engro Dairies, Sukhur 10. Sapphire Dairies, Raiwaind , Lahore

FARM INPUTS

Land Requirement

About 5.0 acres of land will be purchased for building a dairy farm project of animals starting from 200 animals and at a target herd size of 1,000 animals in a period of 10 years. Majority of this land would be used for building sheds for the animals to protect them from severity of the weather. The area for fodder production can be acquired on lease, however we have planned 20 acres to be bought for fodder purpose later will help in expension plans the fodder will be purchased and stored when it is available in abundance at low price. However, agriculture land for fodder production can be acquired with an annual rent payments. It is assumed that around 0.33 acres of land would be required per animal for fodder production. Dairy Farm Development

Dairy Farm will be developed on scientific basis with the help of dairy development board

During planning a dairy we pay attention to:  Local building regulations Subsoil Avoid influence of other buildings  The orientation of the buildings relative to the main wind direction Drainage Area development Future expansions  The position of the milking parlour to the barn Slurry storage Milk pick up, food delivery Best choice of milking parlour system Reduction of working hours Milking comfort Animal-friendly housing Group sizes of animals Optimal cow traffic in the whole dairy Cow comfort Integration of external buildings

FARM OUTPUT

Lactation Period

The lactation period is the period during which the animals yield milk. These animals are called wet animals. Generally the lactation period of cows is 305 days. For calculation, the feasibility has taken 80% of the total number of cows as wet cows. The calving interval in cow has 13 months. The average milk yield of cow is estimated at 20 x 305 = 6100 liters per lactation.

Phase II

Proper Dairy economics will be used to maximize the milking also advanced technologies will be used that will be advanced mechanized process of milking through milking parlour to reduce the bacteria load in milk further milk chillers will be attached to the milking lines to chill the milk and then it will shifted to the cylos attached to the pasteurization plant .

Collection from Farmers:

We have planned to collect milk of best quality from near by villages of our operational area to increase the productivity and also the meat the operational costs of the farm as well as the pasteurization and delivery to customers .A vehicle fleat will be managed by us to collect the milk and also a quality department will be established to make sure the quality of milk collected from the collection points. A Proper Supply chain will be managed to collect the milk and to enable the cost effectiveness of the milk purchased from ramers and later to supply the consumers.

Pasteurization:

Pasteurization is a process of heating a Milk,to a specific temperature for a definite length of time, and then cooling it immediately. This process slows microbial growth in Milk. The process of heating liquids to preserve it longer was known in China since AD.1117, but the modern version was created by the French chemist and microbiologist Louis Pasteur, after whom it is named. The first pasteurization test was completed by Louis Pasteur and Claude Bernard on April 20, 1864. The process was originally conceived as a way of preventing wine and beer from souring.

Pasteurization aims to reduce the number of viable pathogens so they are unlikely to cause disease (assuming the pasteurized product is stored as indicated and consumed before its expiration date). Commercial-scale sterilization of food is not common because it adversely affects the taste and quality of the product. Certain food products, like dairy products, are superheated to ensure pathogenic microbes are destroyed.

The ultimate goal in heat treating milk is the destruction of all pathogenic or disease-causing microbes. Usually (but not always), assuming the machinery is functioning properly, the process accomplishes this task effectively.

Numerous studies have shown, however, that bad bugs are not the only thing destroyed by the heat: delicate proteins, enzymes, immune factors, hormones, vitamins, mineral availability- all undergo definite changes during the heating process. No one seriously disputes this fact.

What is not clear though, due to conflicting science and belief systems, is to what extent the food value of the milk is actually impacted. When man-made nutrients (often inferior to their natural form) must be added back in to replace those destroyed by heat, there is no argument. The quality of the milk has suffered.

Marketing Plan

Company Mission

“To provide our customers, The Real Milk ”

Company’s Vision

“Become the Most Innovative and fastest growing food company offering safe and healthy products enjoyed in every home every day"

Company location

The Head Office of DAIRY KING is located in the evergreen city of Lahore at 111-Green Road. DAIRY KING is producing a number of food products both for consumers and industrial users. DAIRY KING will be striving to become market leader in the dairy milk industry.

Market Oriented Strategic Planning

It is the managerial process of developing and maintaining a viable fit between organization’s objectives, skills and resources and its changing market opportunities. The aim of strategic planning is to shape the company’s businesses ‘and products so that they yield target profits and growth.

Milk.King is pasteurized Milk with 3.5% fat and 8.9% solid non fats. At an affordable price it will win the hearts of consumers everywhere. It will be available in a fine glass bottled Packaging, introduced for the first time in Pakistan and will have 2 months shelf life. Shipping Units: 250 ml: 8 bottles per carton, 500 ml: 6 bottles per carton and 1000 ml: 4 bottles per carton.

Corporate and Division Level Planning Of DAIRY KINGCorporate Headquarter will be responsible for designing a corporate strategic plan to guide the whole enterprise; it makes decisions on the amount of resources to allocate to each division, as well as on which business to start or eliminate.

DAIRY KING will be striving to be the dairy milk industry of Pakistan. There host of product / brand portfolio in the packaged food category will have a significant role in the quality and innovation of distinct styles and quality of package as well as nutritional contents.

The four planning activities undertaken by DAIRY KING are as follows

1. Defining the corporate mission2. Establishing strategic business units (SBU) 3. Assigning resources to each SBU 4. Planning of new Business

The core values at DAIRY KING are:

1. Team work 2. Empowerment3. Trust4. Accountability5. Enterprise

Product and Application Scope: Milk.King:

Milk.King is the brand name of DAIRY KING's UHT milk. Milk.King is Pasteurized, Standardized, and Homogenized and Ultra Heat Treated milk of the highest standards. Pakistan Pure Food Laws standardize Milk.King to 3.5% butterfat and 8.9% SNF (Solids Non Fat) as prescribed. Safe, Economical and nourishing.

Market Segment ScopeAll the products are highly competitive in the market, as the prices are lower as Compared to its competitors. DAIRY KING is targeting all the segment of the society. The aim is to provide nutritive hygienic milk at lower price so that people refrain from loose (gawala) milk, which is unhygienic as well as tetra pack milk which is full of chemical contaminations. DAIRY KING manufactures milk in different sizes likes 1/4th liter, half liter and one liter packs so that all the segments of the market could benefit from the nutritive milk.

Vertical scopeCompany has its own farms and cattle so it is self-sufficient and doesn’t purchase raw materials. It has its own network of vans, which deliver the milk to all towns and city. DAIRY KING products reach to final consumers through retail stores and sales promotion officer. Company uses multi-channel distribution. The channel levels from raw material to final product and distribution of DAIRY KING is as follows:

1. Manufacturer (Own farms)2. Distributors3. Retailers4. Final Consumer5. Sales promotion officers

Geographical ScopeDAIRY KING is providing its innovative and hygienic products initially to Lahore. It’s not exporting any of the milk products. But in near future it will be expanding its distribution network to all over the Pakistan.

Situational Analysis

Product SituationMilk.King is the brand name of DAIRY KING's UHT milk. Milk.King is Pasteurized, Standardized, and homogenized and Ultra Heat Treated milk of the highest standards. Pakistan Pure Food Laws standardize Milk.King to 3.5% butterfat and 8.9% SNF (Solids Non Fat) as prescribed Safe, Economical and nourishing.

Key Benefits1. Guaranteed Clean/Bacteria Free2. Homogenized3. Standardized4. Economical5. Pasteurized

Market Objective

The following are the market objectives of Milk.King:

1. Expand consumer awareness of Milk.King from 5 to 25% over the planning period by spending 8 percent of the turnover on the promotional budget.

2. Aim for average price of 18 RS and create price uniformity.3. To achieve sales of 10 million RS by December 2012.4. To achieve the break even by October 2014.

Market SituationPakistan's dairy industry produces UHT, pasteurized, powdered and condensed milk, butter, yogurt, cheese, cream and some butter oil. Of a total of 38 dairy plants with a total daily rated capacity of 2,180,000 liters per day, 11 with a rated capacity of 948,000 liters per day have been in operation. The total milk consumption in Karachi is 3.8 million liters per day and the consumption of packed milk is 10% of 3.8 Million. Pakistan now produces an estimated 27.5 billion liters (or27.5 million metric tons) of milk annually, of which only one million liters is processed daily. Approximately half of this amount is processed into UHT milk, 40 percent into powdered milk, and the remaining 10 percent into pasteurized milk, yogurt, cheese and butter. The seasonal nature of supply as well as demand for milk powder from the bakeries and confectioneries, as well as dairy plants themselves, has necessitated the import of powdered milk.

Competitive analysisCurrently milk is sold either directly through milkmen or in tetra packs. The main problem with milkmen is that they mix substantial amount of water in the milk, which dilutes it, on the other hand tetra pack milk is contaminated with chemicals and preservatives making it vulnerable for the health thus affecting purity. Milk.King is launched to compete with loose milk and tetra pack as its priced at 18 RS per 250ml pack. The price is very competitive and there are no competitors in the market as no other milk is sold in glass bottled packing. Currently the Milk.King has three major competitors in the dairy industry:

1. Milk pack (Nestle Milk pack Limited) 2. Milk Flow3. Loose Milk Shops4. Powdered Milk (Various Brands)

The price of Milk.King is relatively lower than both the competitor brands but higher than the price of loose milk. Powder milk is also consumed heavily and all the companies are facing stiff competition with each other. The concept of purchasing milk from milkmen in our country is high because people prefer to buy because they think that tetra packs cost is relatively high and the quality of milk in tetra pack is not as fresh as milkmen milk.

Distribution SituationCompany is using 2 channels for distribution of Milk.King

1. Retail outlets (indirect channel)

2. Sales promotion officers (direct channel)

Retail Outlets (indirect channel):There are many outlets all over the country, which provide every day consumable items to the consumers. 50 percent of the milk’s sales would be through indirect channels.

Direct Sales Promotion Channel:Milk.King is being distributed to institutions like government institutes, offices, teashops, caters, schools, colleges and marriage halls. Company has a sales team of 10 members for the direct sales promotion. This channel will constitute 50 percent of the total milk’s sales.

Distribution and Warehousing:There are many authorized distributors of Milk.King each having more than 8 warehouses to store the milk. Company has its own network of vans, which deliver the milk to all the retail outlets early morning.

Financial AnalysisMilk.King is charged at 18Rs to the final consumer. Company has a trade margin of 6.84 %. Company to retailer trade margin is 4 percent.

Market Targeting Strategy

Target Market and segmenting strategyMilk.King has identified large group within the dairy market with similar wants, geographical location and buying attitudes and has segmented the market on the basis of geographic, demographics and Psychographic of the consumers.

PositioningMilk.King is positioned as “Fresh and hygienic drinking milk at a very reasonable price with new convenient packaging”.

Product LineMilk.King will be launched in 1/4th liter pack after one year of operation in themarket.

PriceMilk.King‘s price is below the competitor’s prices.

Distribution OutletsTo increase the distribution of milk in the 1000 untapped retail outlets.

Sales ForceInitial operational with 15 sales promotional officer who are responsible for thedirect sales to institutions, marriage halls, caters , offices ,schools, households and tea-shops.

Sales PromotionMilk.King has developed a new advertising campaign that supports the positioning strategies and has set the advertising budget by 10 percent.

Industry competition:Industry is a group of firms that offer a product or class of products that are close substitutes for each other. Industries are classified according to the number of sellers, degree of product differentiation, presence or absence of entry, mobility and exit barriers, cost structure, degree of vertical integration and degree of globalization.

The industry competition for Milk.King includes Tetra packed milk; loose milk offered by milk shops and powdered milk. All of these are close substitutes for each other. Dairy industry is monopolistic competition as there are many companies like Nestle, Milk flow some foreign brands who are offering milk in various forms and packaging and are able to differentiate their offerings on the basis of price and positioning. All these companies are focusing on market segments where they can meet customer’s needs in superior way and command a price premium.

Competitor’s profile

Nestle Milk pack limitedNestle Milk pack limited is a joint venture of the Nestle, Switzerland and Milk pack limited Lahore. The two companies entered into a joint venture in 1988 and today produces UHT milk, butter, cream, orange juice, fruit-based drinks, milk powder, infant cereals, infant milk, dairy whitener, pre-cooked noodles and confectionery. The joint venture then commenced local packing of imported coffee.

1. Nestle AG, the world's largest food company2. Nestlé is a well known name3. Consumers trust its quality4. It’s a multi-national company5. Financially strong

All above strengths were quoted by the research respondents. Competitive position: The competitive position of Nestle is strong as it takes independent decisions without endangering its long term position and can maintain its long term position regardless of its competitors.

Reaction Pattern:Nestle is one of the tigers in the Dairy industry in Pakistan. It will react swiftly andstrongly to any assault or move of DAIRY KING.

MARKET SEGMENTATION AND TARGETING:

Market Segmentation:Milk.King has identified large group within the dairy market with similar wants, geographical location and buying attitudes and has segmented the market on the basis of geographic, demographics and psychographics of the consumers.

Geographic:Milk.King is targeting Lahore City initially.

Demographics:Milk.King has segmented the market on the basis of their income level, social class and age group.

Social Class:Upper lower class, working class, middle class and upper class with particularemphasis on bread earners of the family (males) and decision makers of householdpurchases (housewives)

Income level:5000-10,000Rs11,000-25000Rs26,000Rs and up

Age groups:10-20 years21 –30 years31-60 years65 and up

Psychographics segmentation:Milk.King has used value segmentation scheme. Milk.King is providing best quality hygienic milk at an affordable price. Milk.King is providing value to its consumers by delivering the best at a lowest price.

Patterns of Market Segmentation:Consumers in the market have clustered preferences. The following are the preferences of consumers:

1. For drinking purpose2. For tea whitening3. For cooking desserts and other items

Milk.King has positioned itself in the largest market segment, concentrated market for drinking purposes.

MARKET TARGETING:

Single Segment Concentration:Company selecting single segment for marketing its product is called single segment concentration strategy. Milk.King is targeting consumers who prefer packed milk for drinking purpose. It is following concentrated marketing with the aim to achieve strong knowledge of thesegment’s need and strong market presence. Milk.King‘s aim is to achieve operation economics through specialization its production, distribution, and promotion. After capturing segment leadership, it can earn a high return on its investment. DAIRY KING Foods Limited has decided to promote two basic differences for Milk.King Milk, these are:

Cost:cost is most effective difference to promote Milk.King Milk consumer market is very price sensitive while. There are various brands available in the markets which are higher in price. DAIRY KING decided to promote Milk.King Milk on cost basis and has kept its costs competitive with loose milk available in the market.

Quality:In this competitive era customers are quality conscious Milk.King Milk is premium quality milk with fresh taste. Communicating the Company’s Positioning For communicating its differences DAIRY KING Foods Limited chooses effective media like radio, television, billboards, buses etc to target its customers.

Sales and Profits.

PRICING:Mark Up PricingThe most elementary pricing method is to add a standard markup to the product’s cost. DAIRY KING has a markup pricing of 20 % on their cost of good manufacturing.

Value Pricing:DAIRY KING have adopted value pricing, and is charging fairly low price for a high offering. It’s offering high value to its customers. Value pricing is not a matter of simply setting lower prices on one’s products compared to competitors it is a matter of reengineering the company’s operations to become a low- cost producer without sacrificing quality, and lowering prices significantly to attract a large number of value-conscious customers. An important type of value pricing is Everyday Low Pricing (EDLP), which takes place at the retail level. Milk.King is sold at Everyday low pricing as the price is kept low throughout the year.

Price Discounts and AllowanceDAIRY KING has used Quantity Discounts that is a price reduction to those buyers whobuy larger volume; it is offered on a non cumulative basis (on each order place)

DISTRIBUTION CHANNEL:

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

Channel Function and FlowsA marketing channel performs the work of moving goods from producer to consumers. It overcomes the time, place and possession gaps that separate goods and services from those that need or want them. It perform number of functions

1. They gathering information about potential and current customer, competitors, andother actors and forces in the marketing environment.

2. They develop and disseminate persuasive communication to stimulate purchasing3. They place an order to the company4. They provide for the successive storage and movement of the physical products.

Channel LevelIt is a two-level channel, DAIRY KING has its own distributors which are suppose to deliver the Milk.King milk to the wholesaler as well as to the retailer, through which it reach to the final buyer or consumer. Secondly and most importantly Milk.King will be delivered to consumers right at their doorstep through our home delivery service.

Multi Channel marketing system:With the proliferation of customer segments and channel possibilities, more companies have adapted multi channel marketing. DAIRY KING is using 2 marketing channels to reach different customer segments. The 2 different types of intermediaries of channels used by the company for the distribution of Milk.King is as follows:

Indirect channel:Company has a network of distributors and retailers who sell the milk to the final consumers. Milk.King has many authorized distributors throughout the city which distribute the milk to 1000 retail outlets in Lahore. Indirect channel constitutes 50% of total sales of Milk.King Milk.

Direct channel:DAIRY KING has several sales promotion officers in Lahore which are involved in directsales of the milk. Direct channel can be further divided into:

Direct:The sales force distributes Milk.King to government offices and institutions.

Indirect:Milk.King Milk is distributed to teashops, offices, schools, caters, marriage Halls and households etc by the direct sales distribution network of DAIRY KING. Direct channel constitutes of 50 % of the total sales of the Milk. In the future DAIRY KING has plans to expand the direct channel.

ADVERTISING:Ads are cost effective way to disseminate message, build brand preference or to educate people. Most companies use an outside agency to help create advertising campaigns and select and purchase media. DAIRY KING Food Limited has contract with the agencies to develop advertising campaign. DAIRY KING Food Limited has three advertising agencies which guides the company what should be the next move and also give feedback regarding the market and competitors. DAIRY KING has three agencies:

1. Orient McCann2. MPL3. Asiatic Advertising

1. Setting the Advertising ObjectivesThe advertising objectives must flow from prior decisions on target market, market positioning, and marketing mix. Advertising objectives can be classified according to whether the company aims is to inform, persuade, or remind.

Informative Advertising:In the introduction stage DAIRY KING will give detailed informative advertising aboutMilk.King Milk. At this stage the advertising duration in television will be of 45seconds.

Persuasive advertising:After getting awareness in the market, DAIRY KING will emphasize on persuasive and comparative advertising to present additional and competitive features of Milk.King. At this stage the media channels will remain same, but tenure in television will be shorter than before.

Reminder Advertising:At the maturity stage of Milk.King, DAIRY KING will give only reminder advertising to its customers that Milk.King exists in the market. At this stage the DAIRY KING will reduce thefrequency of its ads in television and in radio and will shortlist the billboards and advertise only at rush and potential areas.

2. Deciding the Advertising BudgetDeciding about advertising budget is a crucial decision. Following are the factors,which a company should consider:

Stages in the Product Life Cycle: The advertising budget should be appropriate according to the product life cycle; it varies with the different stages i.e. introductory, growth, maturity and decline. Milk.King is newly launched product it will require huge advertising budget to build awareness and to gain consumer attention.

Market Share and Consumer Base: High market share brands like Haleeb require less advertising to maintain market share. Usually it is perceived that higher the advertising frequency higher would be the consumer’s reaction and higher the sales. Milk.King will be advertised heavily by using radio, print media, televisions, billboard, metro buses etc to attract a large market.

Competition and culture:There are large number of competitors in the market, so in their presence, DAIRY KINGWill have to advertise Milk.King heavily to counter competition.

Advertising Frequency:At initial stage of Milk.King in the market, repetitive advertising will be persuaded and ad will run three times in a day for 5 days a week in first three months of the re launch .

Promotional BudgetEstimated promotional budget of DAIRY KING for Milk.King Milk:

Billboards 15, 00,000 RupeesPrint ads 10, 00,000 RupeesTV advertising 20, 00,000 RupeesSecond phase advertising 20, 00,000 RupeesTotal 72, 00,000 Rupees

3. Choosing Advertising MessageAdvertising campaign vary in their creativity. The creativity factor can is more important than the number of rupees spent. Advertising goes through four stages to develop a creative strategy:

Message Generation:The product benefit message should be decided as part of developing the product concept. As Milk.King is milk product, it will give the nutritional, rational, sensory message to its customers, which will appeal them to buy it.

“DOODH PEIGIAEY, DOODH HAZAR NEIMAT HE, GHIZIAT SEBHARPOOR, MUNASIB QEEMAT DOODH BEHTREEN MILK.KING”

Message ExecutionThe message impact depends not only upon what is said but also on how it is said. For executing the message there are different cohesive styles, tone, words and format.

A. Execution Style:The advertisement of Milk.King Milk will be executed with striking musical jingle, famous personality (pretty models), showing cows, buffaloes and farm houses to give a natural image.

B. Execution Tone:The executed tone of the ad will be positive and inkling towards Milk.King, humor will be avoided as it takes attention away from the message.

C. Execution Words:The memorable and attention-getting words will be used in the advertising of Milk.King Milk, (HAR DAM TAZA, BEHTREEN ZAIQA, MUNASIB QEEMAT DOODH BEHTREEN, MILK.KING……….) so that the consumers could remember the ad.

D. Execution Format:TV advertisements will use attractive color combinations (the background and presentation) with appealing musical jingle. Print ads will be using colorful pictures (Dairy Farm) with product packaging and its information.

Selecting Specific Vehicles:The media planner must search for the most cost effective, dominant, and frequent vehicles within each chosen media type. The planner has to rely on media measurement service that provide estimate of audience size, composition, and media cost. As DAIRY KING Foods Limited is a customer-oriented company; its aim is to serve maximum number of customers. For advertising its products it has chosen advertising vehicles that are cost effective, covering large number of audience. The vehicles, which are chosen by DAIRY KING, are:

Electronic Media:The electronic media will be only Radio and Television. DAIRY KING has decided to advertise in FM 100, FM 101, and Radio Pakistan Lahore, Ads will be aired on PTV, PTV World, Geo Television (Cable), and at ARY Gold (Cable).

Print Media:The print media used will be Newspapers (Front Quarter page), i.e. Jang, The News, Dawn, and Magazines (Quarter page) i.e. Akhbar-e-Jehan, Family magazine, Khwateen Digest, Sunday magazine.

Billboards:DAIRY KING had decided to advertise “Milk.King “milk on several billboards atvarious locations covering the whole city.

4. Deciding on Media TimingDAIRY KING Foods Limited has decided to adversities Milk.King on TV thrice a day and 5 days a week in first three months. The ad will go on air in the prime time broadcasting like Drama hours; it will also be advertised daily in the mid break of KHARBANAMA. Milk.King will also be advertised in the sports matches like Cricket Matches, which has a very large viewer ship.

5. Deciding on Geographical AllocationThe company has to decide how to allocate its advertising budget over space as well as over time. Milk.King will be advertised on a national level on all the national radio and TV channels, national newspapers and magazines.

9. PROJECT PRESENTATIONProject summaryDeliverables, etc.

10. CONCLUSIONS AND RECOMMENDATIONS

REFERENCESANNEXES