Business Plan for

Shan Foods

2

Pakistan is the world’s ninth largest market with an estimated 150 million consumers.

3

7000 spices and salt grinding units Tremendous growth in last decade Factors behind increased demand

-- changing lifestyle-- sub-continental style of cooking (good spices means good food)

Unbranded spice industry Unethical Practices in the unbranded spice

industry-- Causing different ailments-- Contamination in Spices-- Bribes

Driving Forces-- Prices-- Brand Loyalty-- Lifestyles and Attitudes-- Product Innovation

Key Success Factors-- technology, manufacturing, distribution, marketing skills and organizational capability.

Economies of Scale and Learning curve effects.

MAJOR INDUSTRY PLAYERSShan FoodsNational foods

Other playersChef’s PrideMehran FoodsAhmed FoodsHabib FoodsZaiqa FoodsKitchen Secrets

came into existence in 1981 started exporting after a few years Repositioned as food brand deals in r

--recipe mixes, plain spices, dessert mixes, basmati rice, pickles and salts

presence in 60 countries

Where  All across Pakistan / abroad (for export)  What Needs  Nutritional and pleasure requirements. Tastes of food  Whose Needs  All segments of consumers.  Added Value  Recipe of different dishes Widely available almost everywhere. Adapting and implementing latest technologies to offer a variety of food products

while maintaining quality and safety standards at all times.  Business we are not in Other than spices.

Shan’s Vision--To be a global leader in food products and socially responsible company that attains its quality standards so that Shan stands for tradition, trust and good taste.

“To continuously develop and produce quality products that meet the customers and markets demands, compatible with applicable regulatory requirements. To be a consumer oriented company with keen insigne of food products ensuring quality panty consistency and authentic taste to operate with state of the art technology to obtain optimum results and retain highest quality standard thrived efficient and motivation human resource and inculcate in them a sense of participation and proved for personal goals and development.”

Market Structure

Market Segment Shan Products

Recipe Mix Biryani Masala, karhai Gosht Masala etcPlain Mix Lal Mirchi, Haldi Powder, etcSalt Shan NamakInstitution All The Products of Shan Export All the Products of Shan

Market Segment 2006 2007 2008 2009

Recipe Mix 19% 29% 36% 42%

Plain Mix 22% 28% 33% 46%

Salt 3% 4% 5% 7%

Institution 19% 24% 28% 38%

Export 9% 10% 15% 25%

Market Segment 2010 2011 2012 2013

Recipe Mix 42% 44% 50% 56%

Plain Mix 48% 51% 53% 55%

Salt 8% 9% 11% 13%

Institution 39% 44% 49% 53%

Export 28% 33% 40% 50%

Market Segment 2006 2007 2008 2009

Branded 3 4.25 6 8

Unbranded 8 10 12 15

Segment Life Cycle

Market / Product Segment Intro Growth Maturity Decline

Recipe Mix        

Plain Mix        

Salt        

Institution        

Export        

Shan’s Portfolio life Cycle

Market / Product Segment Intro Growth Maturity Decline

Recipe Mix        

Plain Mix        

Salt        

Institution        

Export        

Outlets A B C D Total

Total Outlets 407 3020 30205 147344 180976

Shan Outlets 360 2765 23995 22880 50000

Outlet Coverage 89% 92% 80% 16% 28%

Outlets Contribution 0.22% 1.67% 16.70% 81.40%  

2009 Market ReachRetail Volume Sales

Shan Foods 3.3 billion

Industry 8 billion

5

10

10

5

15

12

3

10

10

4

6

9

6

11

4

17

8

4

1

29

1

10

17

3

10

5

10

15

20

25

30

LEVEL OF IMPORTANCE

Most Unimportant

Unimportant

Important

Most Important

Factors considered important by customers

Customer analysis

21 1

2

18

5

1 1 1

02468

1012141618

Respondents

FIRST WORD Convenience

Taste

Shan ke tarhanhonay chayeExperiment withfoodShan

National

Food

Shan film actor

Dabay kaymasalay

17

12

1

4

11

11

321

2

4

6

9

5

212

0

5

10

15

20

25

30

Respondents

Shan National Taam Chef'spride

Personalspice mixes

Retailer'sbrand

PREFERENCE ORDER (SPECIAL SPICE MIX)

5

4

3

2

1

1 being for most preferred)

SUBSTITUTES

None, 3, 10%

National, 19, 63%

Personal Spice mix, 6, 20%

Chef's pride, 2, 7% None

NationalPersonal Spice mixChef's pride

5

9

6

10

6

14

8

2

7

10

5

8

1

8

6

15

4

10

10

6

7

15

3

5

19

10

1

0

5

10

15

20

25

30

Respondents

ACTION OF COMPETITORS

Most Unlikely

Unlikely

Likely

Most Likely

Strengths Shan food has a very strong heritage and legacy

behind it which has given it a strong goodwill in households.

Shan foods enjoys an approximately 50% market share in the recipes mixes category.

Shan foods is a leading exporter of food items from Pakistan providing it an opportunity to tap the large global market which helps it to expand at a rapid pace.

Shan has a wide range of products and SKU’s available consolidating its presence in various niches and keeping its customers loyal to the brand.

Weaknesses Shan is not present in Jams and marmalades,

Ketchups categories like National foods thereby loosing an opportunity market. Many loyal Shan customers purchase National products in these categories which is causing loss of potential sales.

Shan has a low market share outside Karachi in the Punjab market where National enjoys market leadership. This is due to weak distribution of Shan products in Punjab market which is causing loss of potential sales.

Opportunities Shan can vertically integrate to produce its own

raw materials which will not only reduce costs but will also provide it more control over the quality of input.

Shan currently has a very low advertising spend in the FMCG industry. It can deploy brand activations and other innovative campaigns to switch customers from the loose/ unbranded segment to Shan products.

Shan can also horizontally expand its scope like national foods and enter the other related food categories where it can tap its loyal customers with minimal extra efforts.

Threats The biggest threat to Shan is the high inflation

in Pakistan coupled by a global recession which is putting pressure on the profits and sales.

The prevalence of counterfeit products is also threat to Shan causing loss in goodwill and potential sales.

The emergence of newer brand with deep pockets can also damage Shan’s market share due to heavy advertisement while keeping the product quality close to that of Shan.

QUALITY & PRICE ShanNational

Non Price Attributes affecting Customer Choice

WEIGHTAGE%

Product-Related %

1. Quality 25 22 222. Packaging 10 10 103. Variety 18 16 145. Brand Name 15 14 12

Service- Related %

1. Recipe 20 18 152. Availability 12 8 10

Market Segment Size Growth Products

Existing

Profitability Objectives New Product plan

Recipe Mix

Rs.25 billion

industry

40%Biryani

masala,

BBQ,

Qorma

Masala etc

10-15% 1.Include

more varieties

in portfolio

2.Capture

Market share

from branded

and un

branded

industry

Fish recipe

Italian recipe

Chinese recipe

Continental

Recipe

Plain Mix

Tez lal Mirch,

Kaali Mirch,

etc

Increase

usage small

towns and

suburbs

All varieties in

Sachet packing

Salt

Shan Namak Increase

awareness

among people

Institution

ALL Products Intensify

personal

selling efforts

Export All Products New markets

What How Who When

1.Include more varieties in

portfolio

2.Capture 30% Market share

from branded and un

branded industry

Adding new variants in

recipe mix

By Increasing selling efforts

and proper management of

trade channel

Production Department

Sales department

By end of 2010

By 2012

Increase usage in small

towns and suburbs by 10%

By increasing awareness

By effectively managing

trade members

Marketing Manager

Sales Department

By end of 2010

Increase awareness among

people

By targeting health conscious

people and making people

aware from hazardous effect

of loose salt

Marketing Department By 2011

Intensify personal selling

efforts

Selling efforts will be

intensified to build a good

client base with institutions

Sales Department By 2010

New markets Taping new markets /

increasing share in existing

countries

Sales Department

(international)

By 2012

Pricing

Product Competitor Bench Mark Price Positioning

Recipe Mix

Ranges from Rs.30 to 40 Pricing charged by competitors

depends upon SKUs and it uses

Parity Pricing

Pricing charged by Shan

depends upon SKUs and it uses

Parity PricingPlain

Depends on SKUs

Like 50 grams red chili powder

is available at a price of Rs.20

and150 grams at Rs.115

Salt

Iodized salt is priced at Rs.17

(800 grams) and plain salt at

Rs.15 (800 grams)

What How Who When

As the pricing policy depends upon the raw material and Shan uses Parity pricing so marketing department just have to look for how much is it costing them and hen accordingly they set the prices keeping in view the prices of competitors.

 

Channel Market This Company

This Year

2010 This Year

2010

Distributor / Retail

60% 60%65% 60%

Distributor/ Wholesaler

20% 15%15% 10%

Institutional Sales

12% 15%5% 10%

Export 8% 10%15% 20%

What How Who When

Distributor / Retail

By effectively managing

distribution network and

giving trade incentives

Marketing and Sales

Department

By start of 2010

Distributor/ Wholesaler

Cutting some proportion

of wholesaler and

diverting that proportion

to other channels

Marketing and sales

DepartmentBy 2010

Institutional Sales

By making more efforts

in building good clients

to generate more

institutional sales

Marketing and sales

Department

2010

Export

Taping new markets &

increasing sales in

existing countries

Marketing and sales

Department

2010

Rs.100 million for all their ATL and BTL activities in the year 2009

80% for ATL activities and 20% for BTL activities

Most of its marketing on seasonal basis The advertisements of Shan’s offerings

focus entirely on the females Rs. 12 million for one month advertisement

on GEO

Target Market--Females aging from 18-45

Objectives Business Objectives-- Integrity and best Quality-- Latest Technology ( v-look)-- Innovation-- Competition Marketing Objectives-- Ethical Advertising-- Focus on BTL-- Variety-- Focus on Research-- Focus on teenagers Growth -- 50% per annum growth-- 40% market share in branded spice

THE WORLD OF SHAN FOODS1) Supply Chain2) Information Technology3) MIS4) Procurement5) Engineering & Services6) Production 7) Communication8) Human Resource9) Export10) Import11) Quality Control12) Research & Development13) Sales14) Marketing

Quality control since 1981 Quality assurance system since 2000 Food safety management system since of

2007 Total quality management target if 2010 Third party lab certification target of 2012 ISO 22000, the ISO version of HACCP

(Hazard Analysis And Critical Control Point)

Demographic Factors:-- Females 18+-- Middle lower class and above

Geographic Factors:-- 500+ distributors all over pakistan-- Regional preferences of different brands

Behavioral factors-- True Pakistani taste-- Catering to changing lifestyles-- Purchase pattern varies according to seasons

To the confident and convenience seeking woman of today, our wide range of Shan spice mixes offer premium quality products, made with the finest ingredients like no other

Portfolio Roles-- strategic brands

Plain Spices and Pickle

-- Silver bullets Plain spices (Tez Lal Mirch etc b/c separate

brands)

-- linchpin brand The Garlic Pickle

-- cash cows Recipe Mixes

Products introduced only after testing Portfolio comprises 6 broad categories like

recipe mixes, plain spices, dessert mixes, basmati rice, pickles and salts.

Offering for Every occasion and every type of taste

Top of the mind and top if the heart brand for Recipe mixes spice Mix category

Pricing generally depends on SKUs and is parity pricing.

Recipe Mix: The Recipe mixes range from Rs.30 to 40 Plain Spices: Pricing of Plain spices varies SKU wise. For example, 50

grams red chilli powder is available at a price of Rs.20 and150 grams at Rs.115

Dessert Mixes: Desserts are all priced at Rs.35 Pickles: Pickle pricing is Rs.170 for 1000 grams, pricing varies as

per SKU Salts: Iodized salt is priced at Rs.17 (800 grams) and plain salt

at Rs.15 (800 grams)

Presence in 60 countries Focus on International Modern trade and

Local Modern Trade Sales teams monitored by TSMs and RSMs Area wise policy of distribution 500 + distributors in pakistan alone Focusing on retail, wholesale, hypermarkets

and international chains.

modern factory covering an estimated area of 100,000 sq. feet, equipped with lates in house lab facilities

estimated investment of Rs.100 crores almost 1000 employees working diligently Recipient of many national and

international awards More than 50% growth rate with sales of Rs.

2 Billion

Product Strategy-- Market Development Strategy

Product Line to new customers-- Product Development Strategy

Product Lines (Spices, Pickles, etc)Vegetable mixes for country like

IndiaMeat Mixes for Pakistan

-- Penetration StrategiesCater the Untapped marketsGenuine flavors in spice mixesNiches like Diet conscious people

Obtain regular feedback from customers◦ Integrated focus on customer service and

satisfaction◦ Taking regular feedbacks to transform

unsatisfied customers Dedicated call centers

◦ gathers current customer perceptions continuously

◦ will help compare and align Shan’s business service standards with

its objectives The customer attitudes

Monitoring marketing performance◦ By both top management & marketing

management◦ allows direct marketing management to

Take immediate and timely corrective actions, Concurrently allows top management to have the

necessary visibility but only from a control perspective.

Regular marketing audits of Shan Foods’ marketing activities The goal of identifying possible opportunities as well

as potential challenges Help the organization think pro-actively Evaluate the success of the corrective actions.

Extending use of ERP system◦ utilizing a customized ERP system.◦ They have running modules in:

Inventory management Material resource planning Production planning Sales Accounts HR

Marketing dashboard – A tool used to simplify marketing reporting and analysis. ◦ It continuously tracks

marketing metrics related information Trends

presents everything on a one page report ◦ will help Shan Foods by

Staying a step ahead and focused Providing a better insight into marketing related

problems Communicating information to everyone involved Saving management valuable time Measuring marketing effectiveness Making smart decisions Continuously tracking marketing activities and metrics

like◦ sales per customer, product, region, industry, etc◦ sales from new products / customers

Profit and margins per customer, product, region, industry, etc.