Group Members Muhammad

Zubair MT-05-45

Tariq Shehzad MT-05-02

Mussadiq AmeerMT-05-22

Yasir Mushtq MT-05-08

Engro Foods (Pvt.) Limited (EFL) has been

established in 2005 as part of a diversification process at the Engro Group.

EFL launched its first dairy product, Olper’s Milk on March20, 2006

Engro Foods’ History

"Our vision is to become a fast expanding mega

foods company. To achieve our vision, the company will initially focus on dairy by investing a substantial amount in plant, milk collection capability and marketing. We are making concrete efforts to expand in and beyond Pakistan; through strategic international alliances, to eventually become global."

Vision

1. Leadership2. Innovation 3. Diversity and International focus 4. Quality and continuous Improvement5. Candid and open communications6. Individual growth and development 7. Enthusiastic pursuit of profit8. Ethics and integrity9. Safety, Health and Environment

Core Values

A.C Nielson that carried out the marketing research for ENGRO foods when the idea of diversifying into a new market was introduced.

ENGRO wanted to setup a new fertilization plant but due to certain

constraints from the government wasn’t able to do so.

They came up with several options including telecommunications and power plant but they found out that the food industry held the greatest promise.

Marketing Research conducted by ENGRO Foods

Marketing Research conducted by ENGRO Foods

They also went though the list of at least 1,200 names

Olper’s is promoted as the milk for all-purposes.

Segmenting and targeting the market for Olper’s

Olper’s products are not bounded to any particular age, gender or lifecycle stage. The brand is meant for all the users in higher upper or middle class families

Demographic segmentation

Segmenting and targeting the market for Olper’s

Olper’s have segmented the market more towards achievers who are goal-oriented and focused on their careers, and experiencers those who are seeking variety in the milk sector.

Psychographic segmentation

Segmenting and targeting the market for Olper’s

Olper’s products have been segmented on the basis of benefits that consumers seek in the milk

People look for a brand that can be used for all purposes from drinking to tea whiteners as well to feed the animals.

Behavioral segmentation

SWOT Analysis

Engro’s Back PR with farmers Positive response from customers Strong consumer & product research Third-Generation Plant

Strengths

WeaknessesOlwell

Olwell ad which is based on Western life style, ENGRO foods brand management showed a man who put off his clothes & remain just in his undergarments, or half nude lady in a cat walk or men admiring the figures of a lady in mix gender health club.

Weaknesses

EFL is not having its own dairy farms; it largely collects loose milk from farmers & gwalas through its 40 milk collection centers, which sometimes is of low quality and impure because they add vegetable oil to milk to get higher prices

Low Quality Milk

Milk collection & distribution costs

EFL’s 34 out of 40 milk-collection centers are located in Punjab, whereas its only milk processing facility is situated near Sukkhur (Sindh). It increases the milk collection &distribution costs

Narrow brand portfolio

EFL’s brand portfolio still consists of just 3 products i.e. Olper’s Milk, Olwell Milk and Olper’s Cream. Whereas its competitors like Nestle and Haleeb Foods have a much diversified line of dairy products.

Weaknesses

Owning Red Color

Weaknesses

The company has not owned the color red like Nestle has a green Milkpak; Haleeb has a blue carton etc. This may create problems because when a consumer enters a grocery shop, then he/she might have problems in recalling the brand

Packaging

EFL is dependent upon Tetra Pak for the packaging of its entire dairy products. Tetra Pak is the only option available to Olper’s for packaging because it is having monopoly in the packaging sector in Pakistan

Opportunities

1. Increased funding by Government2. Increased consumption of PLM3. Awareness 4. Improving Economy

Opportunities

Pakistan is the Third largest producer of milk in the world with a total production of 32 billion liter of milk a year, whose value is more than that of the combined value of wheat and cotton, from a total herd size of 50 million milk animals (buffaloes and cows). Livestock accounts for 46.8 percent of agricultural value added and about 10.8 percent of the GDP.

Third largest producer of milk

ThreatsCompetition

Nestle Haleeb

These brands have been in the milk industry far too long and have left a mark in the minds of consumers in terms of quality.

Threats

Consumer’s preferences change with time and prices might create certain barriers in terms of the profit margins for Olper’s. For example, lose milk is still cheaper than packaged milk and that is also one factor that people still prefer to buy lose milk.

Perceptions and Price Differentials

Production Plants

Sahiwal Sukkhar

The plant located at Sukkur on 23 acre land, has the raw milk reception capability of 300,000 liters per day and UHT milk capacity of 200,000 liters per day. The plant has been established at a cost of Rs. 1 billion which provides direct employment to 750 people.

Products

Olper’sMilk

Olper’s Cream

Olwell Lo-Fat

Launched on March 20, 2006,

launched on September, 2006

Launched on December 15, 2006

Distribution Channels

Having kicked off simultaneously in 20 cities across Pakistan

currently Olper’s is available in 80 cities across Pakistan

Distribution Channels

Karachi Lahore Islamabad Peshawar Multan

Distribution Regions

Distribution Channels

Financial Strength of Distributor Efficient Infrastructure Logistic Fleet Efficient and Trained Sales Force Past Experience of Distributor Market Knowledge The use of new Technology (IT)

Selection criteria of Olpers for Distributors Selection

Distribution Channels

Olpers doesn’t negotiate on price with distributors there is a fix Mark-up/Commission which is 4% for all distributors

Negotiations on Price with Distributors

Distribution Channels

Monthly sales targets are established after discussing the market requirement with the distributors.

For the month of November the sales target for the Multan region was 56000 liters

Sales Targets for Distributors

Distribution Channels

Training Bonuses Share in the Sales Force Salaries Share in Maintenance cost of

Transportation Fleet

Incentives for the Distributors and Sales Force

Distribution Channels

Distributor’s credibility and goodwill is not used as a tool to pressurize the retailer but they are taken into confidence by first introduction to the product features and brand and then distributor repute plays a value addition role

Customer feedback is acquired for further planning which is the responsibility of the distributor to provide to Olpers’ team

Using the Distributor’s Goodwill/Credibility

Distribution Channels

1st 6 months of its launch, Olpers’ gained the 13% market share of Nestle

Brand has become the second largest in overall ranking in term of sales in the country leaving Haleeb

Blochistan a potentional market where other competitors have not worked over due to security and safety concern

Distribution Channels which makes Olpers, a success story

Olpers’ Distribution in Multan EFL hire the Mehmood & Co Pvt Ltd for

the distribution of Olpers’ They are in this business from almost 43

years Divided the Multan city into 52 sub sectors

for the ease of operations, scheduling of the salesman visits etc. they visit weekly and biweekly

6 salesmen with 8 delivery vans for the distribution of Olpers’ in Multan city

Future plans Rs 2.0 billion investments in capacity expansion

and marketing, including setting up of a plant in Central Punjab.

ENGRO Foods is making concrete efforts to expand in and beyond Pakistan; through strategic international alliances

ENGRO Foods coming up with new products / brands to expand its portfolio in the dairy industry

Signing a micro-financing model for dairy farming with Pakistan Poverty Alleviation Fund (PPAF).