University of Management

& Technology

Shakarganj Foods Products Ltd (Good Milk) [The Market Plan Analysis ]

By:Omair Shahid NagiAhmad Farooq ButtArooj NaseemZaira Hassan

Date: 4/12/2009

Shakarganj Food Products Ltd

(GOOD MILK)

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ContentsIntroduction of Company................................................................4Vision & Mission of Company.........................................................4Current Market Situation Analysis..................................................6Marketing Goals & Objectives (SMART)..........................................8Hierarchy Details Of Sales Department of Good Milk.....................9Market Segmentation & Targeting Strategy.................................10FAB Analysis, Product Line – Product Depth.................................12Pricing Strategy............................................................................13Market Distribution and Channel Strategy...................................13Competitive Position.....................................................................15Marketing Strategies....................................................................18Marketing Financials.....................................................................19Problem Analysis..........................................................................19Rectification.................................................................................21

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Shakarganj Food Products Limited

Introduction of Company

SFPL is a public limited company (unquoted) set up by the Crescent Group with the objective to diversify its business activities. The group has been conducting business in the region for over 100 years and has a varied industry portfolio in sugar, textile, steel and farming. Its head office is located at Lahore, Pakistan while the production plants are in central Punjab - the main fruit growing and milk supplying region of the country.

Vision & Mission of CompanyThe company is professionally run by experienced management. The CEO of the company is also the serving Chairman of the Pakistan Dairy Association. SFPL's human resource has a vast experience in the dairy and food industries. Continuous development and skill enhancement are an integral part of the employee development program at Shakarganj. Shakarganj is working hand in hand with the Dairy Industry of Pakistan to improve milk productivity and animal health.

“Shakarganj Food Products Limited strives to be among the leading

companies in the food industry and is committed to manufacturing and

selling consistent, high quality

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Current Market Situation AnalysisGAP & SWOT Analysis

SWOT Analysis Lid

Strengths: The strengths of Shakarganj Good Milk according to their marketing plan are:

Convenient: the product is easy to use. They pack of Good Milk have a lid for the handiness to the customers.

Premium Positioning: the other strength is their premium positioning of Good Milk. According to them they are positioning Good Milk in the best way and it is their strength. They are engaging in the kind of advertisement which make them to position themselves in a unique manner.

Available Everywhere: they are using the best distribution strategy and the good milk is available everywhere.

Weaknesses:The weaknesses of Shakarganj Good Milk according to their market plan are:

Budget: the one and only weakness is their low budget then their competitors.

Opportunities: Large Potential Market: according to their market research,

80% of the total market is using Gwala Milk which is more beneficial according to them. Shakarganj Good Milk have a large potential market which is the opportunity to grown their business.

Threats:The threats for Shakarganj Good Milk are as follows:

Other Companies: other companies like Nestle, Haleeb and Olpers are their competitors and the big threats for

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Shakarganj Food Products Ltd. Their budgets are also higher then Shakarganj.

Organized Gwala companies: there are some organized Gwala Companies which deliver the milk which have low shelf life and people perceive the milk of low shelf life as a fresh product.

GAP AnalysisIn business and economics, gap analysis is a business resource assessment tool enabling a company to compare its actual performance with its potential performance. At its core are two questions: "Where are we?" and "Where do we want to be?" If a company or organization is under-utilizing its current resources or is forgoing investment in capital or technology, then it may be producing or performing at a level below its potential. This concept is similar to the base case of being below one's production possibilities frontier.

The goal of gap analysis is to identify the gap between the optimized allocation and integration of the inputs, and the current level of allocation. This helps provide the company with insight into areas which could be improved. The gap analysis process involves determining, documenting and approving the variance between business requirements and current capabilities. Gap analysis naturally flows from benchmarking and other assessments. Once the general expectation of performance in the industry is understood, it is possible to compare that expectation with the company's current level of performance. This comparison becomes the gap analysis. Such analysis can be performed at the strategic or operational level of an organization.

The management of Shakarganj Foods product Ltd conducted the GAP Analysis regarding Good Milk (2008) which came up with a very positive result. According to them their actual performance is better then their expected performance and they got 20% more then their goals.

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Marketing Goals & Objectives (SMART)

SMART OBJECTIVES

All businesses need to set objectives for themselves or for the products or services they are launching. What does your company, product or service hope to achieve?Setting objectives are important; it focuses the company on specific aims over a period of time and can motivate staff to meet the objectives set.A simple acronym used to set objectives is called SMART objectives. SMART stands for:

1. Specific – Objectives should specify what they want to achieve.

2. Measurable – You should be able to measure whether you are meeting the objectives or not.

3. Achievable - Are the objectives you set, achievable and attainable?

4. Realistic – Can you realistically achieve the objectives with the resources you have?

5. Time – When do you want to achieve the set objectives?

Marketing Objectives of Shakarganj Good Milk

The marketing objectives of Shakarganj Good Milk are as follows:1. To gain 8% of Market Share in 20092. To create higher recall of our brand among consumers3. To diversify into other categories of Packed Milk, in the

beginning of 2008 they had 2 categories and now they have 44. To Increase in the availability percentage of our brand In the

beginning of year 2008 we had 100 distributors and now we have 140 distributors

5. To increase the shop coverage over period of year 2009 by 20%

6. To increase our milk processing capacity with the time

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6

Sales Setup

Organogram

CSM

RSM(PWR)

RSM(RWP)

RSM(LHE)

RSM(KHI)

ASM ASMASM ASMASMASM ASM ASM

SOs SOs SOs SOs SOs SOs SOs SOs

SOMSCo 1CA 1

RSM(FBD)

ASM ASM

SOs SOs

ASM ASM ASM

SOs SOs SOs

Hierarchy Details Of Sales Department of Good Milk

The hierarchy detail of Sales Department of Shakarganj Good Milk is shown in the following diagram:

Market Segmentation & Targeting Strategy

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Figure 1: The Hierarchy Details of Sales Department, Shakarganj Good Milk

It is difficult for any one company to engage in mass production, mass distribution and mass promotion for its product. The complexities arise from the proliferation of advertising and distribution channels and the high costs associated with reaching a mass audience. Therefore, companies segment the market so that they can target the group of customers who share similar needs and wants. The milk sector shows a market that has homogeneous preferences that is the consumers have similar preferences. They want milk to be white, carefully processed, and good for health and bones. Keeping these things in mind Good Milk’s market has been segmented. Demographic segmentation

Good Milk’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. Even though the brand calls for a small percentage of an individual’s income but lower class wouldn’t want to buy the brand maybe because they are price sensitive or because they believe lose milk is better than processed milk and has all the nutrients that the processed milk lacks. However all the companies in the milk sector are trying to change the image of processed milk as non-nutritionist milk. Therefore it can be said that Good Milk’s has been positioned as a brand for high income earners. Due to the income factor involved it can be said that Good Milk’s milk target a specific social class who are health conscious and concerned about their weight.

Psychographic segmentation

On the basis of psychographics, factors such as personality traits, lifestyles and values, the marketers at Good Milk’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. The Good Milk’s products have targeted experiencers because the company has given them a new set of brand and so many will make their first purchase because they want to try something new. Good Milk’s ads also target believers, traditional conservative people with concrete beliefs. The ads for Good Milk’s show the beliefs of healthy life with processed milk and plays on the emotional aspect more.

Behavioral segmentation Good Milk’s products have been segmented on the basis of benefits that consumers seek in the milk. In this case, people look for a brand that can be used for all purposes from drinking to tea

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whiteners as well for any other use. The ads also show that consumers should increase their milk consumption for example with every tea they should use Good Milk’s, every morning they should drink Good Milk’s and everyday they should feed their pets with Good Milk’s milk. There may be some hard core loyal in the milk sector. Loyalty maybe towards such established brands as Nestle and Haleeb. There might even be switchers and shifting loyal in the milk sectors that are either price sensitive or want variety. As a result, the marketers need to find ways to make the hard core loyal attracted to the Good Milk’s brand and shifting loyal and switchers to convert into hard core loyal as well.

Targeting Marketing:According to the Brand manager of Shakarganj Good Milk their product (Good Milk) is for everyone and for every purpose. We are targeting everyone who use our product either child, teenagers, young adult, elder, male or female, for every use like for tea, coffee, for cereals, as a plain milk, for shakes or for other milk products.

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FAB Analysis, Product Line – Product Depth

Sr #

Features Advantages Benefits

1 Quality core competency Consumer love quality

2 Lid on the top Convenient Increase handiness for customers

3 High calcium percentage

Differentiate Good for bones

4 Safe packaging More healthier then loose milk

Get more energy

Product Line & Depth Strategy

Product Line(Group of products sharing a common, managed set of features that satisfy specific needs of a selected market or mission.)Good Milk Lies in the product line of UHT milk.

Product depth (The number of product items offered within each product line)In Shakarganj, there are number of products offered in the product line of UHT Milk, like Good Milk Slim and Flavored Milks and Chaika.(for tea)

USP – Unique Selling PrepositionAccording to the brand manager the USP of our product Good Milk is its Premium Quality.

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Pricing Strategy

According the marketing plan of Shakarganj Good Milk, they are using Premium Pricing Strategy the reason behind the premium pricing is that they are producing Premium quality product and they are doing premium positioning of their product, so, they are using premium pricing strategy for their product.

Market Distribution and Channel Strategy

Market Distribution strategy:

Shakarganj Good Milk more prefers the Numerical Distribution Strategy rather then weighted Distribution Strategy. What they are doing is that if there are ten shops in a row they will distribute their product (Good Milk) in all the shops rather then distributing in, say five shops in bigger quantity.

Market Channel Strategy: A market channel performs the work of moving goods from producers to consumers. It overcomes the time, place, and possession gaps that separate goods and services from those who need or want them. The producer and the final consumer are the part of every channel.Shakarganj Good Milk is using all the channel level like:

Zero Level Channel:Shakarganj is selling their product (Good Milk) directly to the final customers as they are engage in TV selling, Internet selling and company owned stores (Fair Price Shops)

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One Level:A one channel contains one selling intermediary such as retailers, and Shakarganj is using this strategy.

Two Level Two level channels contain two selling intermediaries and these are retailers and wholesaler, and SFPL is using this strategy

Three Level Strategy:Three level channels contain three selling intermediaries and these are retailers, wholesaler and jobbers, and SFPL is using this strategy.

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Manufacturer Manufacturer ManufacturerManufacturer

Consumers Consumers Consumers Consumers

Retailers

Wholesalers

Retailers

Jobbers

Wholesaler

Retailers

Competitive PositionSWOT Analysis

Core Competencies

SWOT Analysis.

PR with farmers SHAKARGANJ has been interacting with the farmers for fertilizers and has gained quite a good reputation over the years. It has led to a strong bond and long term relationship with the farmers who are willing to supply milk to the company. This is an added advantage and strength for the company because it will never be short of milk production. The farmers also won’t have to look elsewhere to sell their milk.

Positive response from customers In first year, SFPL crossed 1.4 billion sales figure which shows customers’ satisfaction upon SFPL’s products. Its taste, quality proposition and world-class quality proposition system.

Strong consumer & product research Good Milk’s done a strong consumer & product research before and after launching the product. This has provided them the perfect launching pad to eventually emerge as a global player in the food industry. To develop its future portfolios, SFPL has hired various global research partners like AC Nielsen, Mindshare, JWT Asiatic and MARS marketing and advertising agencies.

Latest Plant SFPL has the Latest UHT milk plant. SFPL plant is the plant in Pakistan that uses Bactofuge technology to virtually eliminate bacteria and ensure premium quality and hygiene.

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WeaknessesLow Quality Milk SFPL 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.

Packaging SFPL is dependent upon Tetra Pak for the packaging of its entire dairy products. Tetra Pak is the only option available to Good Milk’s for packaging because it is having monopoly in the packaging sector in Pakistan. Due to this reason, Tetra Pak can charge them higher and it could increase the production costs.

Milk collection & distribution costs SFPL’s 34 out of 40 milk-collection centers are located in Punjab, whereas its only milk processing facility is situated at Jaranwala, near Faisalabad. It increases the milk collection & distribution costs; and also increases the chances of milk getting spoiled because of increased traveling time.

Opportunities

Increased funding by Government Government has decided to increase farmers’ funding. This is an opportunity for SHAKARGANJ foods because previously due to weather conditions and other reasons there was lots of wastage of milk but now that can be reduced as farmers will be better able to store milk for longer time periods.

Increased consumption of PLM Competition may create opportunities for the company because each competitor in the milk industry wants to increase penetration of processed liquid milk and so they will create awareness for consumers through different advertising media. This will ensure the increase in the consumption of processed milk instead of lose milk and so will in turn lead to increase in sales for the company. Therefore there will be an opportunity for accelerated growth.

Awareness Growing dissatisfaction with loose milk and increasing awareness about health and hygiene issues have led to increased processed milk consumption.

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Threats

Competition Competition may pose a threat because the company will have to maintain its leadership in an expanding market so that it doesn’t lose its market share to its competitors. For Good Milk’s it might be difficult to penetrate in a market where the loyalties exist for such brands as Nestle and 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. Competition seems to be getting tougher as a result of new players entering the dairy market.

Perceptions and Price Differentials Consumers’ perceptions and price differentials can cause a threat for the company. It is important that Good Milk’s comes up to the expectations of the customers and fulfills its conformance quality that is the company meets its promised specifications. Consumer’s preferences change with time and prices might create certain barriers in terms of the profit margins for Good Milk’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.

Core Competencies

Core competency is something that a firm can do well and that meets the following three conditions:

1. It provides consumer benefits 2. It is not easy for competitors to imitate 3. It can be leveraged widely to many products and markets.

A core competency can take various forms, including technical/subject matter know how, a reliable process, and/or close relationships with customers and suppliers (Mascarenhas et al. 1998). It may also include product development or culture, such as employee dedication.

Core competencies are particular strengths relative to other organizations in the industry which provide the fundamental basis for the provision of added value.

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According to Brand Manager of Good Milk, Mr. Sajid Sufi the core competencies of Shakarganj Good Milk are:

1. Milk Collection System: the milk collection system of Good Milk is according to them is the one core competency of SFPL.

2. Good Packaging: the packaging is another core competency of SFPL as it is very safe and reliable.

Key Success FactorsAccording to the company the key success factors are:

Slow & Steady Progress Solid relations with their suppliers, distributors, partners and consumers

Marketing Strategies

According to the marketing goals of Shakarganj Good Milk, they want to increase their market share and increase the sale volume by entering new segments and by introducing new products, actually they are in the growth stage and they are using the following strategies to gain market share:

1. They are improving the distribution strategy2. They are increasing the shop coverage3. They are improving the distribution channels.4. They are improving the product quality and its features5. They are adding flavors to their main product (Good Milk).6. They are introducing new products7. They are entering new market segments8. They are spending nearly same amount on promotions

schemes

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Marketing Financials

Marketing financials is a very confidential thing which can not be known by the people outside the organizations and it is the responsibility of the employees takes care of this information.

We have been given a rough idea about the marketing financials of Shakarganj Good Milk. The marketing financials of Shakarganj Good Milk is about Rs 100 million.

Problem Analysis

The problem analysis according to the Company:

The problems that are being face by the company are discussed above in the section of SWOT Analysis (Threats & Weaknesses)

The problem analysis according to our Group:

Good milk lacks a powerful brand name.

Good milk is good as a milk choice but its name is not good. For all stakeholders it’s sure, that good milk will not play in short innings. The brand name endorses the product and boosts its life over a long period. However, good milk came up with a low naming that can not hook customer mind for long. In the short term, they just need good milk’s Positioning and a new market creation to survive, yet survival is not enough. When this mission is successfully accomplished, the next mission is to feed brand for the long term.

Customers get sophisticated with the passage of time, they learn and adapt. In the long term the brand name is the only weapon to attack on your competitor to gain market share, the ultimate goal of your company. Hence, there's only one difference, it's your brand,

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and your competitor's brand. All brands provide similar benefits but it’s the “brand name” that actually effect consumer buying behavior.

Good milk is making big, big, big mistakes in two ways, one is, as you might suspect, Brand Extension and the other is Generic Names (not brand names) Good milk is a weak generic name. Here’re Good milk’s brands, going no where:

1. Cream (generic name)2. Khalis Desi Ghee (generic name)3. innow Concentrate (generic name)4. Mango Puree (generic name)5. Oolala (brand name, however, Line Extended)

If they had launched these brands with specific brand name, they would have worked out a good strategy. The "brought to you by Good milk or Shakarganj" strategy can work and then develop your sibling brands with separate Positioning.

In early era, generic names did not matter as that was a time of competition or less competition, but today the environment is ultra competitive. Good milk should build strong brand name that last for long.

Shakarganj good milk is an FMCG that stands on almost every household store shelves. Good milk has been promoted a lot from the day of its establishment but still it is facing few problems. The problems are analyzed keeping in view the fast trends in today’s market and consumer buying behavior patterns.

“Roz roz good milk piya kero” the TV ad does not clearly target to drink SHAKARGANJ GOOD MILK. In analyzing the competitive market it’s not worthy to promote an ad with a jingle speaking of good milk only. The ad stresses on taking milk in any form to boost energy. Again the generic name affects the promotion.

The holistic marketing approach the concept of societal responsibility is at forefront. There are advertisement launched by companies for broader prospects such as ethical, environmental and social context of marketing activities and programs. Keeping the view of societal marketing, the good milk ads do not clarify the benefits of drinking Shakarganj good milk or making a habit of drinking milk is good.

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Another problem faced by good milk is its taste perception. The taste is bit sweater and its quality feels lighter. The after taste of milk is not pleasing. The other brands milk packs have a similar taste. The perception of Shakarganj perceives it sweeter in taste

Rectification

RECTIFICATION:

The problems regarding good milk could be rectified if they build a stronger product image. It’s over the period of time that with marketing campaigns good milk can stand with better image. It should emphasize more on the commercial ads as the advertisement has a direct affect on consumers buying patterns. This is to be sure that good milk is not playing a short term business; therefore, the management should be well focused in handling the product.

An effective sales distribution analysis should be drawn and prime focus must be the ultimate consumer, so that to proof good milk really GOOD.

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