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Strategic of Marketing Project

on EngroFoods
Table of Contents
Table of Contents........................................................................................................ 1
Dedication.................................................................................................................. 3
Acknowledgement...................................................................................................... 3
Executive Summary.................................................................................................... 4
PEST Analysis.......................................................................................................... 5
PEST Conclusion...................................................................................................... 7
Porter Five Forces Model............................................................................................. 8
Threat of New Entrants:.......................................................................................... 8
Impact.................................................................................................................. 9
Bargaining Power of Suppliers.................................................................................9
Impact................................................................................................................ 10
Bargaining Power of Customers.............................................................................11
Impact................................................................................................................ 12
Threat of Substitute............................................................................................... 12
Impact................................................................................................................ 12
Competitive Rivalry............................................................................................... 13
Accumulating results.......................................................................................... 14
Critical Success Factors Analysis..............................................................................14
CSFs positioning Map.............................................................................................. 15
Competitive Profile Matrix (CPM)..............................................................................16
Company Introduction: Engro Foods.........................................................................17
Company profile.................................................................................................... 17
1

The group.............................................................................................................. 17
Shareholding structure.......................................................................................... 17
Company Value Chain Analysis................................................................................. 18
Primary Activities.................................................................................................. 18
Inbound Logistics............................................................................................... 18
Manufacturing.................................................................................................... 19
Outbound Logistics............................................................................................. 19
Sales & Marketing.............................................................................................. 20
Services.............................................................................................................. 21
Supporting Activities............................................................................................. 21
Efoods Value Chain: A Bigger Picture........................................................................23
SWOT Analysis.......................................................................................................... 23
TOWS Analysis.......................................................................................................... 24
Internal Factor Evaluation (IFE) Matrix......................................................................25
External Factor Evaluation (EFE) Matrix....................................................................26
General Electric Matrix............................................................................................. 27
Conclusion & Recommendations...........................................................................28
SPACE Matrix............................................................................................................ 28
Financial Strength.................................................................................................. 28
Competitive Advantage......................................................................................... 28
Environment Stability............................................................................................ 29
Industry Strength.................................................................................................. 29
Recommendations................................................................................................. 30
BCG Matrix............................................................................................................... 31
Recommendations:................................................................................................ 32
Current Perceptual Mapping..................................................................................... 33
For Dairy Products................................................................................................. 33
For Frozen Deserts................................................................................................. 34
Perceptual Map of Efoods Brand on the Basis of Quality & Price...........................35
Target Market Analysis.............................................................................................. 36
Product Wise Target Market................................................................................... 36
Strategic Fit.............................................................................................................. 37
Conclusion & Recommendations..............................................................................39

Dedication
THIS STUDY IS DEVOTED TO OUR RESPECTED PARENTS AND FAMILY WHOSE
PARAMOUNT LOVE, CARE AND STRUGGLE AGAINST ALL ODDS BROUGHT US TO THIS
HEIGHT OF KNOWLEDGE AND ENCOURAGED ME TO COMPLETE THIS DEGREE AND
WERE MAJOR DRIVING FORCE BEHIND MY ALL EFFORTS WITH THE BLESSINGS OF
ALMIGHTY ALLAH

Acknowledgement

e would thank Allah for giving us the opportunity and the resources to be
able to do something productive with our lives. Without His blessings we
would not have been able to come as far as we have.

We would like to thanks our Professor Mr. Syed Ali Bukhari, the most respectful
teacher & mentor, who gave this Project to us to. He helped us a lot in the making
of this Project.
Then our sincere thanks to the below people for helping us throughout this project.
Mr. Shahid Ata Nagi - Late (Pioneer of Dairy Products and Technology in
Pakistan) in Dairy
Mr. Omair Shahid (HR Lead, NBS),
Mr. Nabeel Ahmad Sheikh (Senior Brand Manager, Nestle),
Ms. Summayya Umer (Ex. Marketing Manager, Engro)
Their guidelines have been very useful for us in preparing this report. We feel great
pleasure in expressing our gratitude to them for providing all possible help and
encouragement in carrying out this Project. Last but not the least we would like to
thank our families for their incessant support and approval.

Executive Summary
Despite being one of the largest milk producing country of the world, Pakistan
seems to be unable in utilizing it excessive supply of milk. However, the major
barrier is the development of this sector is the fact that the major portion of this
sector is controlled by informal authorities or entities. Just to add into the problem,
government non serious attitude towards sector, lack of awareness lack of
integration between farmers and dairy value chains are among rest of the issues.
This disuse of one of the best blessing of Allah has led to many other issues and
among them are very huge untapped market and unfulfilled needs of a very huge
consumer market. This situation presents a wonderful opportunity for processed
dairy sector to come and play. Efoods, exploited this opportunity and now is one of
the biggest player in the processed milk market. But the market has grown more,
and companies cannot rely on just one product for a long period of time due to
changing need of the consumers.
The report aims to figure out the required strategies for the success in the market
through strategic marketing analysis tools. This report starts with the introduction of
milk industry of Pakistan and reveal the competitive attractiveness of the market
through Quantitative PEST Analysis and Porter Forces Model.
Next, the report tries to reveal the required value addition throughout the supply
chain in order to remain ahead of the competitors by achieving competitive
advantages. The report, then maps out the strategic position of Efoods through
SWOT/TOWS, GE Matrix and SPAVE Matrix and then compares it with the existing
strategies.
Efoods is on the right direction, this can be concluded at the end of this report using
Strategic Fit model. But there is always a room for improvement and Efoods can still
improve many things. Find out recommendations and conclusion at the end of this
report.

PEST Analysis
Dimension

Factor

Opportunity /
Threat

Probability of
sales tax rate to
be increased from
10% to 17%

Profit margin on
the product will be
impacted

Dairy sector is
neglected by
governments
Political

No laws
governing and
regulating sale of
the unprocessed
milk
Laws and
regulations
related to the
production of
processed foods
(dietary
regulations and
foods safety)

Farmers are
ignorant of
methods for
increase in
production,
preservation and
supply chain
Quality of the raw
milk varies on
daily basis
increasing
processing cost

Vender Partner
Program to
provide farmers
with vital
information about
milk production
and preservation.
Need state of the
art quality control
and assurance
system

Have to follow
regulations for
food safety and
others

Strengthen R&D
activities along
with quality
assurance and
control initiatives.

Economic
Rise of price due
to imposition of
sales tax
Households (more
than 93%) raising
cattle and
buffaloes in the
country are
smallholders (less
than10 animals)

Strategic Initiative
/ Response
Company will need
to gain economies
of scale in order to
compensate for
the increase in tax
rate

Cost passing on to
the consumer will
result in
decreased sales
Small scale farmer
do not have
financial and
technological
support to
preserve quality
ad better means of
supply chain as
having them may
require investment

Need to gain
economies of scale
in order to cut the
effect of tax while
maintaining profit
margin
Need to have
sharp focus of inbound supply
chain while
assisting and
supporting
farmers and
vendors for milk
preservation. This
would be an
5

or it may reduce
their profitability
Milk produced
(around 70%) in
the country is
consumed at
home. The
remaining 30% is
marketed through
various marketing
channels. Only 3
to 3.5% of milk is
processed in the
country

This situation may


lead to a situation
where the
availability of raw
milk can decrease
to an alarming
level

Availability of
Capital

Funding
opportunities are
available through
loans and existing
and potential
shareholders

Stable local
demand

Local demand for


processed milk is
stable, in fact it is
growing though
relatively by a
small percentage

Buying power of
consumers

Buying power of
the consumers is
towards increase

Saving vs.
Spending

The average rate


of savings is
currently at a
historic low of 8pc
of GDP. Pakistanis
are said to be one
who save the least
in the region

Vendors
perception about
dairy sector of

Decline in farmer
confidence leading
to exit from

Social

integral part of
vendor partner
program and
company may
need to invest
capital to provide
chillers to the
vendors.
There would be a
competition for
Procurement of
quality raw milk.

To work on
corporate social
responsibility to
provide general
public with the
benefits of using
processed milk will
be beneficial and
will make the
situation much
better.
The product would
not be necessarily
for the elites but
for the middle
class as well,
increasing the size
of market. As a
strategic
initiatives,
company will have
to monitor supplydemand in an
efficient matter.
Revitalize
community
confidence in
6

Pakistan

industry. Nearly
200 farmers are
reported to be
exited from the
market

Favorable
demographics

Market size is
huge with 80%
percent of
population
belonging to 0-50
years of age

Consumption
Pattern of the
consumers

The consumption
of processed milk
and related
products is
growing at the
rate of 12% per
year

High staff
turnover and
availability of
labor

Loss of labor
and/or skills to
other industries

Consumption of
Cheese and other
dairy products

Technologi
cal

Technological
support available
to farmers

In Pakistan 5000
tons cheese is
consumed
annually whereas
its production is
2500 tons per
annum.
Consumptions of
other products is
on high trend as
well
They also lack
technological
support. They
cant deliver milk
themselves to the
milk processing
plants and they

Dairy by becoming
a partner with
vendors and
providing them
financial and
technological
support

Need to focus
more on brand
positioning and
winning the trust
of consumers by
providing
consistent quality
products
Understand
industry workforce
needs, support
education
programs, and
assist the farmer
with HR
management.
There is a larger
market with high
demand that need
to be tapped.
Need to
aggressively tap
market with a
vision of being a
market leader.
Have to develop
milk collection
centers in
different areas
equipped with
chillers. This
maintains quality
7

Availability of
machinery for
product
manufacturing

dont have means


to maintain the
freshness of the
milk through
refrigeration
For technology
and dairy
machinery,
Pakistan is 100%
dependent on
other countries
and this comes
with high cost in
terms of duty and
taxes

but increase the


cost.

Reliable funding
and investment
sources are to be
identified and
selected

PEST Conclusion
Although Pakistan is among the top five milk producing countries in the world but
yet the introduction of value added dairy products of milk is limited due to lack of
knowledge and expertise for the production of cheese and other products. No
serious efforts have been made to transfer milk into value added products
especially cheese production. However, small work has been started for establishing
cheese manufacturing units in dairy industries for pizza and other fast food
industries.
In Pakistan 5000 tons cheese is consumed annually whereas its production is 2500
tons per annum. The production of Mozzarella in Pakistan is only 90100 tons. With
increasing the popularity of pizza, the use of Mozzarella cheese is increasing day by
day due to the opening of multinational pizza restaurants. The quality of locally
Mozzarella produce is not compatible with the imported cheese. Though import of
Mozzarella in Pakistan is not known exactly but statistics collected from large
multinational pizza restaurants shows that its import is more than 760 ton per
annum (PDDC, 2006).1
With such huge market and huge supply demand gap, it would be relatively easier
to penetrate in the market but that would be totally dependent on the quality and
the price. Things will get in pretty good shape in near future as the perception of
dairy product is changing and the imports reveals the increasing demand of quality
cheese as 1,215 tons of cheese was imported in year 2011 and the quantity is
increasing.
The statistics further provide an insight into the fact that much of domestic demand
is not met from the domestic dairy product supplies. This is either due to incapacity
to fully cater to the domestic requirements or that the country does not specialize in
1 Retrieved from: http://prr.hec.gov.pk/Chapters/146S-1.pdf
8

production of dairy products. There is one other reason and that is the high cost of
establishing dairy products manufacturing plants and their viability from a
sustainability point of view.
The trends also reflect that the gap would further widen due to increasing demand
for milk and insufficient domestic supplies to meet the requirements of a growing
population. In addition to this, other dairy value added products such as cream
powder, cheese, milk cream and butter are imported though these could easily be
prepared locally had the dairy industry been diversified to produce variety of value
added products.

Porter Five Forces Model


Threat of New Entrants:
Element
Startup cost

Question
Is startup cost or
capital cost of
establishment high
or low???

Product
Uniqueness

Is the product
unique?

Switching cost to
buyers

Is switching easy
of difficult?

Production process

Is production
process is complex
or easy?

Suppliers
Proximity

Are the suppliers


available for new
comer?

Economies of scale

Are economies of
scale required or
not?

Explanation
Startup cost is high in
terms of machinery and
other capital
expenditures
The product is unique in
the regions as there is
no such product. This
might become an issue
in future if some foreign
brand becomes
available in the market
The product is unique
and there are other
types of dairy products
available in the market
both local and foreign
brands, so switching is
relatively easy
Production process is
difficult rather complex
as it requires skills labor
and knowledge
There are huge number
of suppliers but they are
scattered and with very
less financial and
technical support
Economies of scale are
required as there may
come tax imposition in
near future.

Scale

Warehouse
Requirements

What are the


warehouse
requirements?

Warehouse cost would


be high for dairy
products. For Example
cheese is to be put in
cold storage for different
tenure as a production
process. Warehouse
would be required for
finished goods as well

Percentage Score

40%

The threat of new entrants is low because of the following factors:


1. Start-up cost is very high for this industry as one has to purchase machinery
for processing and packaging and it requires investment of billions
2. Consumers of UHT milk have less brand loyalty with the existing brands and
the newcomer has that advantage. It is difficult and expensive
3. The production process is not easily learned because of high tech
machineries. The other reason is that the quality of milk is different every day
and that need a flexible processing procedure and it is very difficult to
develop it.
4. Access to inputs is easy as there are larger numbers of supplier but its costly
to maintain them and the quality of the milk.
5. Switching is relatively low as there are only 4 or 5 brands in Pakistan
6. The product is unique in the terms of characteristics and the need it will serve
7. Economy of scale is high as due to the increase in the size or capacity the
efficiency increase and the newcomer has to produce more than the existing
companies.

Impact
Threat of New Entrants is low due to above mentioned reasons. In the industry,
there are many dairy products brands and it would require differentiation in
products and strategy in order to stand in the market. This thing shows the
oligopolistic structure of this industry. So there are few firms, producing very little
differentiated products and fighting for the market share. The rivalry is based on the
non-price competition, which focuses on the strategies for gaining or increasing
market share, marketing is main features of this competition.

Bargaining Power of Suppliers


Element
concentration

Question
Is number of
supplier high or
low?

Explanation
Suppliers are
greater in number
but they are
scattered and do
not have financial

Scale

10

Portion of supplier
business

Do business
represents a
greater portion of
supplier business?

Product
Uniqueness

Is product unique
or not?

Switching cost for


the buyer

Is switching easy?

Threat of forward
integration by the
supplier

Is there a
possibility that
supplier can
become their own
distributor

and technical
capital and
companies will
have to support
them to create a
better relation
Business
represents a
greater portion of
supplier business.
There are other
products that can
be made but they
need extensive
skills and capital
The product is not
unique and
supplier must have
to follow
guidelines
provided by the
buyer as buyer
have invested for
the development
of suppliers
Switching is not
easy because the
manufacturer has
developed an
expensive
collection system
in the area of
supplier(s) and
made investment
in terms of
technological and
knowledge support
Threat is there,
suppliers can go
for manufacturing
of other milk
products or they
may supply raw
milk for household
use but it would
need investment
and a proper setup

11

Percentage Score

64%

The bargaining power of the suppliers is moderate because:


1. There are large numbers of milk supplier in Pakistan as Pakistan is the 3 rd
largest milk producing country but they are scattered and do not have
technical resources.
2. The product is not unique; all the suppliers have the same product with little
difference in quality.
3. Switching to other suppliers is not so much difficult as the product or input
suppliers are offering is same but it would be a very difficult choice if
company has invested in the development of their suppliers
4. The input represents significant portion of the suppliers business with the
possibility of forward integration.

Impact
As calculated, this force is moderate in strength but still it exerts a tremendous
amount of pressure on the manufacturer of the processed milk. Though Pakistan is
4th largest milk producer in the world but it lacks technical expertise in the loose
milk segment. Because of this a huge amount of milk goes waste. The suppliers in
this segment are not qualified and they also lack quality standards and education,
so there is a quality issue too. Besides these two big issues, they arent financially
so strong to supply milk to milk processing units.
So companies have to develop a collection center in different areas and suppliers of
raw milk supply milk to those centers. These collection centers increase the cost.
To cope with the quality issue, companies have to impart some quality standards,
they have to create awareness. So managing suppliers perfectly supplier
relationship is the key to success.

Bargaining Power of Customers


Element

Question

concentration

Are the buyers


greater in
numbers?

Buyers
information

Do buyers have
information about
suppliers and their
prices?

Explanation
The buyers are greater
in numbers both in
household and
commercial segment.
The size of consumer is
greater with small
purchases so cost of
losing one customer
would not be so high.
Buyers do not have
direct approach to the
suppliers as they are
dispersed and based in
the rural areas of the

Scale

12

Price of product

Product
Uniqueness
Market info
Switching

region. Quality of the


finished product is also
known so if buyers even
know the prices of the
suppliers, it wont be a
big concern
Price of the product is
Is the price high or
high as compared to
low?
substitute/alternates
products.
The product is unique in
quality, taste and need
it would serve etc.
Buyers can evaluate the
brands.
Switching to competitor
Is switching easy or
brand and substitute is
difficult?
easy
Percentage Score

60%

Bargaining power of customers is moderate because:


1. The processed milk industry has only 4 to 5 brands that are offering less
differentiated products. But there are international brands available in the
market. So consumers have power to choose the brands
2. The product is expensive and that may limit the market size to just elite or
upper middle class.
3. Customers have access to the market and have the ability to evaluate the
products
4. The product is generally not unique and customer may purchase the
competitors products they easily and with little cost switch to competitor
products.

Impact
The people in Pakistan arent brand loyal and they can switch easily to other brands.
An excerpt from a research study shows that consumers while making purchase
intention are not highly involved in the brand itself and are more concerned with
the products usage, this situation go in favor of the company as the product to
be launched is totally unique in terms of needs to be served and the usage of the
product. As compared to the normal cheese with high fat, the low fat cheese will
definitely gain its market.
People arent brand loyal and awareness of brand doesnt guarantee repeat
purchase, this is almost a situation where push strategy is required and to be
successful in push strategy, economies of scale is required. There are high fixed

13

costs and economies of scale are required to reduce it. Moreover this makes
availability and quality as the key to success.

Threat of Substitute
Element
Switching

Market share

Question

Explanation
Switching is easy as
Is switching to
there are many other
substitute product
brands available in the
easy or not?
market.
Market share of
Is market share of
substitute product is high
substitute product as the substitute
is high or low?
products are available
since a very long time.
Percentage Score

Scale

80%

Substitutes are greater threat as


1. Customer can switch easily to the substitute or the alternate products as
there are many other brands available in the market with different tastes and
features
2. The market share of the substitute product, the raw milk, is very high as 96%
market belongs to that. Adding to that, the price of the substitute is also low.

Impact
This would be unique product so brand positioning will play a very key role from the
product acceptance to the product maturity. Difference and the superior features of
the products must be transfer to the consumers through media plans and
advertisements and this should be reinforced. Reinforcement would be required to
enable repeat purchase as there are high threats from the substitutes and alternate
products.

Competitive Rivalry
Element

Question

Number of
competitors

Are there many


competitors with
similar
capabilities?

Explanation
There are very few
competitor with
UHT Milk
manufacturing
abilities. The
important thing is
that they do not
have the ability
innovate

Scale

14

Industry Growth
rate

Product
Differentiation

Exit barriers

Is industry growing
at higher rate?

Are products
offered by
competitors
differentiated?
Is exit from the
market is easy or
there are high
strategic stakes?
Percentage Score

Industry is growing
but at a low pace.
97% of the raw
milk is being
consumed as it is
and only 3% is
being converted in
to value added
products

Product are not


differentiated as
such

Exit from the


market is not easy
as there is lot of
money is involved

60%

Competitive rivalry in the dairy industry in Pakistan is moderate due to the following
factors:
1. There are only few dominant brands trying to become market leader and they
experience intense rivalry
2. The firms cannot grow their market by taking the market share from their
competitors
3. The fixed cost of production is high
4. Product is homogeneous as all the companies are offering approximately the
same product
5. Customer can easily switch to other companys product
6. the cost of exit from the market is high

15

Accumulating results
Bargainin
g Power of
Buyers :
Moderat
e

Threat of
Substitute
:
High

Rivalry
amont
competito
rs:
Moderat
e

Threat of
New
Entrants:
Low

Bargainin
g Power of
Suppliers:
Moderat
e

Critical Success Factors Analysis


The key success factors as identified through the impact analysis of Porter Five
Forces Model are as follows:
1. Awareness & Brand Positioning: awareness about the differentiating
feature of the product is very important in order to make product successfully
penetrate in the market. There are many other types of cheese available in
the market so competition also includes them. Buyers are able to evaluate
market so they can switch easily. Different marketing and positioning
strategies would be required with focus on the differentiating features and
their benefits.
2. Quality: switching is very easy in this industry as proved through a research
saying, in the milk packaged industry brand awareness is not playing a
significant role to impact a commodity product such as milk to make a
repeated purchase, due to random switching purchase behavior the low
quality and unavailability are the two main reasons of this switching. So
consumer retention is another critical factor for success.
3. Availability: availability is utmost necessary to reduce consumer brand
switching
16

4. Economies of scale: there are two reasons behind taking economies of


scale as KSF. First, fixed costs are very high in packed milk industry. Second,
situation may get worse in terms of cost in feature so an economy of scale is
required.
5. Supplier relationship: as mentioned above, suppliers lack education,
technical expertise and financial strength and they cannot supply milk (raw)
directly to processor. So companies build collection centers and then
switching the suppliers is costly.
6. Brand Name/Reputation: as there is competition with international brands
and product price is on high side and the market for the product belongs to
the elite and upper middle/middle class of the society, all these reason
demand a very sound brand image. The perceived image of brand and quality
of the product should exceed the expectation of consumers so they accept
the price / value ratio.
7. Product Diversification: as the competition involves international brands
and as per their environments, they are very likely to innovate and come up
with new product/product range. So to cope with the future competition,
company will have to plan well ahead in terms of innovation or marketing
new range of products. This will help company in remaining in the market and
scoring a good market share. For this, investing in R&D initiative will be a
vital thing to succeed in this market.
Summing up the situation, the analysis reveals the following success factor for
packaged milk industry:
Critical Success Factors
Brand Image / Reputation
Becoming own supplier (Backward
Integration)
Ability to Position the new brand
Ability to spend huge on advertising
(awareness)
Economies of Scale
Ability to maintain quality
Supply Chain Integration (relations with Ability to retain consumers
suppliers and distributors)
Ability to innovate/introduce new
Huge Investment
product ranges

CSFs positioning Map


Time is to find where company stand in relation to the above identified CSF. Here is
the map:

17

Company position against the identified CSF is strong but still it needs to
work on few like ability to innovate and bring up new products range.
Introducing new products will not be necessary since the very beginning but
it will be a key factor in order to stand the competition. The case with CSF
economies of scale is little different. The business impact of gaining
economies of scale is very significant and will have greater impact on
business since beginning. So company needs to be doing effective planning
well ahead for making it a competitive advantage over other competitors.
For other CSF, company is able to invest huge amount both for production
facility and positioning, advertisement and creating awareness. Company is
already working in the milk industry and it already have relation with
suppliers. Current brands of the company have good reputation in the
market and this will have a very positive impact on new brands.

Competitive Profile Matrix (CPM)


No
.
1
2
3
4
5

Critical Success
Factors
Brand Image /
Reputation
Ability to Position the
new brand
Economies of Scale
Supply Chain
Integration (relations
with suppliers and
distributors)
Ability to
innovate/introduce new

Weight

Foreign
Brands
Rat
Score
e*

Local Brands

Efoods

Rate
*

Score

Rat
e*

Score

0.05

0.15

0.1

0.15

0.15

0.3

0.3

0.45

0.15

0.45

0.3

0.3

0.1

0.2

0.2

0.2

0.05

0.2

0.05

0.1

18

product ranges
6
7
8
9
10

Becoming Own
Suppliers (Backward
Integration)
Ability to spend huge
on advertising
(awareness)
Ability to maintain
quality
Ability to retain
consumers
Huge Investment
Total

0.03

0.03

0.03

0.06

0.12

0.12

0.24

0.36

0.1

0.2

0.3

0.3

0.15

0.3

0.45

0.45

0.1
1

2
22

0.2
2.15

1
19

0.1
2.07

3
26

0.3
2.67

* 1 = Major Weakness | 2 = Minor Weakness | 3 = Minor Strength | 4 = Major


Strength
As per the above analysis, company strategic position as compared to its
competitor is relatively very strong against all CSF. Foreign brands do have very
strong brand images and they can innovate and bring up with new products very
soon. But their ability to invest on advertisement in the local market is very low. All
such factors will be beneficial for them in their local market, situation here would be
different. There would be only 3 CSF thats will be applicable in the local market;
their brand image, ability to innovate new products, and ability to maintain quality.
All other factors will have impact in their local market.
Company position is again very strong as compared to local brands as well. There is
no large organization with the ability to invest huge capitals to enter into the
market. Besides their ability to innovate, brand new products, backward integration,
and positioning is low. This makes situation much better as company ability to work
on all CSF to convert them into competitive advantages. Concluding this, it can be
said with confidence that Efoods have any relative strengths against its rivals.

Company Introduction: Engro Foods


Company profile
Engro Foods started in CY06. Its principal activity is to produce, process and sell
dairy and other food products. Efoods has established plants at Sukkur and Sahiwal
for processing and selling branded UHT milk. It has a powdered milk plant in Sukkur
(with an annual capacity of 5,000 tons) and another is being built in Sahiwal (with
an annual capacity of 10,000 tons). It has an ice cream manufacturing facility in
Sahiwal, which has an annual capacity of 36m liters. It also has a fruit juice plant, a
dairy farm and more than 916 milk-collection centers spread across the provinces of
Punjab and Sindh. Efoods has attained clear market leadership in the Pakistan UHT
industry, with a share of 44% at the end of 2011. It has launched multiple new
products, including ice cream, flavored milk, fruit juices and milk powders that show
significant potential. As part of its growth strategy, Efoods is looking to become a
diversified food company with a complete range of products in all major segments,

19

from confectionary to culinary, infant foods and ready-to-cook meals. Efoods intends
to become the premier food company in Pakistan.
Efoods began in CY06, and in the short time since has achieved clear leadership in
the Pakistan UHT industry, with a market share of 44% at the end of 2011. It has
launched an array of new products such as ice cream and flavored milk which have
significant growth potential. We expect Efoods to report strong earnings growth in
CY12 and beyond, as the company taps into the 92% loose milk market and
ventures into other high-margin products.

The group
Engro Corporation (Engro), which owns 89% of Efoods, is a publicly listed company
and its shares are quoted on all three Pakistani stock exchanges. Engro is a
diversified conglomerate with interests in fertilizer, foods, PVC resin manufacturing,
energy and petrochemicals. It has also set up joint ventures in the chemical
terminal and energy businesses. Engro has over 3,200 employees and is one of the
largest investors in Pakistan, having invested US$1.7bn over the past five years.

Shareholding structure
Engro
Foods
Limited
currently has 752m shares
outstanding, 89% of which
are held by Engro Corp. It is
listed on all the Pakistani
stock
exchanges.
Engro
offered 27m shares to the
public
and
institutional
investors through an offerfor sale arrangement in
CY11, at the time of listing.
Efoods had earlier sold 48m
shares through a private
placement to fund different projects prior to its listing.

Company Value Chain Analysis


Primary Activities
Primary activities are as follows:
1.
2.
3.
4.
5.

Inbound Logistic
Manufacturing
Outbound Logistics
Sales & Marketing
Services

Primary activities of value chain are being explained in details below:

Inbound Logistics
Functions

Required Value

Value for Efoods


20

Addition
Milk collection from
farmers and
intermediaries along with
quality testing
Procurement of
packaging material
including R&D
Procurement of other raw
materials to be used in
the manufacturing
process
Procurement of indirect
materials

Management of
transportation for
incoming materials
especially raw milk

Management of raw
materials inventory and
planning for demand and
supply

Vendor Management
(contracts, risk
management, credits,
support to suppliers etc.)

Expertise and
financial/technical
support for farmers

R&D and procurement of


material keeping in mind
health and safety
standards and laws and
regulation of government
bodies
Routes and planning for
collection of milk in order
to optimize arrival time
and reduce costs along
with wastages. R&D for
methods of
transportation and
required assets
Reduction of wastages,
shortages or surplus by
efficiently forecasting
supply and demand.
Management of milk
storage system.
Management of supply of
milk during summers as
the production rate
significantly decrease
Identification of the best
supplier, long terms
relations with vendors
and providing support to
the vendors

1. High quality raw


material inputs
2. Conformance to the
regulation of
authorities for food
quality and safe and
healthy packaging
3. Continuous
improvements in the
transportation of raw
milk and other
materials
4. Cost control through
reducing warehouse
wastages, shortages
and surplus
5. Efficient system to
identify, manage and
support vendors for
long term partnership.
6. Competitive
advantage Cost
achieved

Manufacturing
Functions
Manufacturing of different
dairy products
Planning and deciding for
proportionate allocation of

Required Value
Addition
Conversion of raw
materials to value added
products
Making production more
balanced on the basis of

Value for Efoods


1. High quality products
made for consumers
with special efforts on
continuous
improvements
21

raw materials to different


units/products

R&D for new technologies


and formulation to make
production more efficient

Planning and execution of


waste reduction activities
while optimizing
production
Ensure safe and healthy
environment for labor/HR
Ensure the products are
hygienic, safe and healthy
for consumers with shelf
life as guaranteed
Production of by-Products

Packaging of finished
goods

market demand to reduce


excess production and
related costs
Making products much
better and healthy while
optimizing production
methods and
incorporation of new
technologies to reduce
costs and wastages and
to achieve economies of
scale
Reducing cost and
optimizing use of raw
materials to increase
profitability for company
To follow HSE rules and
regulation to create
Follow international
quality standards to
create hygienic, health
and safe products for
consumers
Conversion of whey and
other materials into value
added products
R&D on packaging to
come up with more
innovative packaging
solutions that create
values for customers as
well

2. Value creation for


internal customers
(employees) in terms
of providing better and
safe environment to
work in
3. Becoming more
technological advance
for efficient production
and to be able to
innovate and come up
with new products
4. Hunt for new, better
and safe methods for
production to reduce
cost wherever possible
5. Competitive
advantage Cost and
Differentiation
achieved
6. Use of more robust
and innovative
packaging solutions to
add ease in the
usability of the
products for different
purposes

Required Value
Addition
Identifying and adapting
efficient ways to transport
finished goods to
warehouse. Warehouse
management to reduce
inventory and to adopt
effective ways to reduce
wastage in terms of
product expiry
Hunting for cost effective

Value for Efoods

Outbound Logistics
Functions
Transportation of finished
goods to warehouse and
inventory management.

Transportation of finished

1. Availability of the
product is maximized
through using proper
channels and delivery
methods
2. Internal operation
related to product
handling, warehousing
is optimized by
reducing wastages
22

goods to the distribution


channels (wholesalers,
retailers and business
consumers)
Planning and deciding for
distribution channels
Management of
transportation for finished
products (vehicle
management, route
planning transportation
methods etc.)

Material handling, bulk


packaging of the goods to
be delivered

Vendor Management
(contracts, risk
management, credits,
support to distributors
etc.)

ways to transport
products. Identification of
vehicles and related
equipment for safe and
timely delivery
Distribution strategy to be
devised in order to ensure
full availability of the
product in the market
(place utility)
To do more cost effective
route planning with the
intention developing time
and place utility to tap
maximum market.
Identify more cost and
quality effective ways to
handle finished products
and to define bulk
packaging requirements
(cartons, pallets, lifters,
conveyers etc.)
Developing relationship
with distributors while
providing product
information and benefits
so they can become a
branding partner

3. Strengthened
relationship with
distributors who
ultimately work as
marketer to promote
brand
4. Access to real-time
market information by
developing
relationship with
distributors to get an
insight about the
market drivers
5. Competitive
advantage of Cost and
Differentiation
achieved

Sales & Marketing


Functions

Market Research

Branding
Marketing and Branding
strategy formulation

Required Value
Addition
Identification of the gaps
in dairy sector of the
market through market
research. Getting
customer feedback
through different sources
in order to improve the
product(s)
Position of company
products to differentiate
products from other
products available in the
market. Marketing and
branding strategy is to be

Value for Efoods


1. A good brand image
and perception of
Efoods as a name of
quality and trust.
2. A better insight about
consumer and their
needs in order to serve
them in a proper
manner
3. Effective use of media
to create brand
awareness, brand
image and to increase
sales, market share

23

Competitor Analysis

Trend Analysis

Sales and pricing strategy

Customer Relationships

devised to better
understand market and its
needs and how to fulfill
that needs. Deciding the
media to use for
Using
business and bring
advertisements
intelligence techniques to
gain insight about the
competitors and their
future plans and
strategies in order to
remain ahead of them.
To identify the latest
trends both local and
international related to
products, consumers,
market needs, marketing,
branding and selling.
Formulation of
appropriate selling and
pricing strategy to attract
consumers and increase
sales of the company
products resulting in high
revenues and profitability.
Developing Promotion
strategy to promote
company products.
Develop good relation
with consumers by
approaching directly to
them in order to better
understand their needs,
requirements and whether
company is targeting the
right consumer segment
or not.

customer satisfaction
and customer
retention
4. Revenue generation
for the company and
increased
sustainability

5. Ability to remain
ahead of competitors
through competitor
analysis and business
intelligence
6. Come up with
innovative ideas to
market/position the
product to create a
good brand image.
7. Competitive
advantage of Cost and
Differentiation
achieved

Services
Functions

Required Value
Addition

Value for Efoods

24

Providing after sales


services to the consumers
Answering customers
queries and resolution of
complaints
Coordination with other
department (marketing
and manufacturing) in
order to communicate and
resolve issues facing by
customers

Listening to consumers
(retailers, distributors and
other) queries and
complaints and providing
optimal solution to resolve
them. Coordination with
other departments in
order to use case of
replacements and other
issues.

1. Better relationship
with consumer
2. Decreased in cases of
replacements through
better coordination
with departments

Supporting Activities
Supporting activities are as follows:
1.
2.
3.
4.
5.

Human Resource Management


Information Technology
Research and Development
Procurement
Firms Infrastructure

Details are as follows:

Activity

Required Value
Addition

Human resource
management

Hire talented resource,


train them as per
business needs and retain
them by providing
reasons to work with the
company

Research & development

R&D throughout the value


chain in order to achieve
competitive advantage
over competitors in terms
of either cost, process,
work flows, procurement,
technology, product and
product formulations etc.

Information technology

Bringing technology

Value for Efoods


Competitive advantage in
terms of people, skills,
learning abilities by hiring,
training and retaining
employees while
providing them a standard
of living in terms of perks
and benefits.
Competitive advantage
through R&D in product
development, technology,
product formulations,
development of suppliers,
marketing and positioning
the products. Better
products through better
process, technology,
better identification of
consumers and their
needs.
Better and innovative
25

throughout the supply


chain in order to better
use information

Procurement

Identify vendors and


develop relationship with
them. Strategies from
vendor identification to
raw material delivery to
the production Unit

Firm Infrastructure

Develop a learning
organization with close
coordination among
departments and smooth
flow of information.

ways to gather internal


(Production related) and
external information (ERP)
and use information to
create value. Create IT
infrastructure to visualize
organizational data so
further strategies can be
optimized
Competitive advantage in
getting quality raw
materials through
developing milk suppliers,
providing them financial
and technological
support. Bringing up cost
effective strategies
(vehicle, machinery,
routes etc.) for raw
material collection in
order to gain cost
advantage.
Close coordination within
departments and different
business units (IT to
enable that) while
reducing internal politics
and creating a culture of
innovation, values and
improvement

Efoods Value Chain: A Bigger Picture


Bigger picture of Efoods value chain can be viewed through the following image:

Farms and
suppliers
development
Strategi
c
Respons
e/
Initiativ
e

Expertise and
support for
farmers

Manufacturi
ng and
Processing
Providing R&D
and Expertise
to milk
suppliers

Investing in
local
manufacturing
plants

Products &
Consumers

Building brands
through
responsible
marketing

Increasing
value and sales
volume

26

Value
for
Efoods

Securing
supplies and
raw material
(milk) of high
quality

Improving
quality,
community
relationship and
developing
industry

Lowering
manufacturing
and distribution
costs

Entering new
and emerging
markets with
extraordinary
products

Achieving
competitive
position, market
share and
sustainability

Value
for
Society

Improving
production and
income level

Improving
quality and
consumption of
natural
resource

Creation of jobs
and raise in the
standard of
living

Ease in access
to nutritional
and safe
products

Generation of
local
investment and
economic
growth

SWOT Analysis
The following table shows the SWOT Analysis for Efoods:
Strengths
1) Strong and well-established brand
2) Proactive management
3) Strong distribution network
4) Latest technology for production
5) 2 milk processing plant with
capacity of processing 1.4 million
liters of milk per day
6) Dedicated research & development
(R&D) facility
7) Extensive milk collection chain
8) Ability to create skilled workforce

Opportunities
1) Huge potential in dairy products
(only few companies in Pakistan)
2) Opportunity to go for related
diversification in future
3) Export of dairy products to other
countries
4) Backward integration (may go for
becoming its own supplier of raw
milk)
5) Westernization of Pakistani foods
with increased usage of dairy
products
6) Growing awareness towards dairy
products
7) Excessive supply of raw milk

Weakness
1) Less experience in dairy sector, as
other competitors has been present
in this sector for one to many
decades
2) Needs significant investment in
research and development of
products, unlike Nestle which mainly
relies on parent company for
research (parent company product
portfolio)
3) Penetration in rural areas would be
difficult
4) Complexity of manufacturing
operations and HR skill gap
5) Diversified portfolio at time make
decision process difficult
Threats
1) Competing with world class
companies like Happy Cow and Kraft
2) Risk of price war in dairy products as
others are may be enjoying higher
economies of scale
3) Due to high return prospects, other
players may try to enter this
segment
4) Commercialization of the product
can be difficult due to high price and
current preference of foreign brands
and/or bad perceived quality of local
brands
5) Rate of changes in dietary trends
and consumer preferences is slow

27

TOWS Analysis

TOWN Analysis

External Opportunities

1) Huge potential in dairy


products (only few
companies in Pakistan)
2) Opportunity to go for
related diversification in
future
3) Export of dairy products to
other countries
4) Backward integration (may
go for becoming its own
supplier of raw milk)
5) Westernization of Pakistani
foods with increased usage
of dairy products
6) Growing awareness
towards dairy products
7) Excessive supply of raw
milk

Internal Strengths

Internal Weaknesses

1) Strong and wellestablished brand


2) Proactive management
3) Strong distribution
network
4) Latest technology for
production
5) 2 milk processing plant
with capacity of
processing 1.4 million
liters of milk per day
6) Dedicated research &
development (R&D)
facility
7) Extensive milk
collection chain
8) Ability to create skilled
workforce

1) Less experience in dairy


sector, as other
competitors has been
present in this sector for
one to many decades
2) Needs significant
investment in research
and development of
products, unlike Nestle
which mainly relies on
parent company for
research (parent
company product
portfolio)
3) Penetration in rural areas
would be difficult
4) Complexity of
manufacturing operations
and HR skill gap
5) Diversified portfolio at
time make decision
process difficult

SO Strategies

WO Strategies

1) Develop and produce


multiproduct
(diversified) product line
with option in different
price categories in order
to increase market
presence (S2, S4, S5,
O1, O5)
2) USE R&D and other
programs to ensure
quality in supply of raw
milk (S6, O7, O4)
3) Achieve competitive
advantage through HR
(by hiring, training and
retaining talent) in tap
the potential market
and to create
awareness about dairy
products (S8, O1, O6)
4) Build production more
efficient and enable
product diversification
(S4, S5, O2, O3)

1) Carefully study market


behaviors and trends
through market research,
competitor analysis,
benchmarking in order to
understand and serve it
better as there is huge
potential (W1, O1, O5)
2) Reduce HR skill gap by
providing employees
related trainings and real
time market information
(W4, O1)
3) R&D is a costly job, so
other cost must be
reduced in order to
remain profitable (W2,
O1, O2)
4) Develop products of
difference price class in
order to easily penetrate
in the market (W3, O1,
O2, O6)
5) Launch awareness
programs to penetrate in
the rural areas to
increase presenc

External Threats

ST Strategies

WT Strategies

1) Competing with world class

1) Focus on quality of

1) Pay special attention to

28

2)

3)

4)

5)

companies like Happy Cow


and Kraft
Risk of price war in dairy
products as others are be
enjoying higher economies
of scale
Due to high return
prospects, other players
may try to enter this
segment
Commercialization of the
product can be difficult due
to high price and current
preference of foreign
brands and/or bad
perceived quality of local
brands
Rate of changes in dietary
trends and consumer
preferences is slow

products in order to
compete with foreign
brands (S1, S4, S5, S6,
T1, T4)
2) Achieve economies of
scale in order to
compete with other
producer in terms of
costs and revenue (S4,
S5, S2, S3)
3) Introduce diversified
product range in order
to aggressively
penetrate in the market
and reduce the threat of
slow commercialization
(S1, S2, S4, S5, S6, O4)
4) Proactively study
market behavior and
trends and create
flexible strategies to the
possible extent in order
to cope with the
changing trends of the
market (S2, S6, O5, O2)

competitor analysis and


business intelligence as
they are in the market
since long, benchmark
successful organization in
order to succeed. (W1,
T1, T, T3)
2) Introduce diversified
products serving different
segments of market in
order to penetrate the
market. (W2, W3, T2, T3)
3) Reduce skill gaps in the
areas of market research,
R&D, production and
market penetration (W4,
T4)
4) Market products using
famous celebrity
endorser as influential
character to increase
product acceptability and
improve product image in
order to compete with
the competitors

Internal Factor Evaluation (IFE) Matrix


No.

Internal Factors

Strengths
1
Strong and wellestablished brand
2
Proactive management
3
Strong distribution
network
4
Latest technology for
production
5
2 milk processing plant
with capacity of
processing 1.4 million
liters of milk per day
6
Dedicated research &
development (R&D)
facility
7
Extensive milk collection
chain
8
Ability to create Skilled

Rating (R)

Weight (W)

Weighted
Score
(R x W)

13

52

21

21

10

30

10

10

30

15

20
29

workforce
Weakness
1
Less experience in dairy
sector, as other
competitors has been
present in this sector for
one to many decades
2
Needs significant
investment in research
and development of
products, unlike Nestle
which mainly relies on
parent company for
research (parent
company product
portfolio)
3
Penetration in rural areas
would be difficult
4
Complexity of
manufacturing operations
and HR skill gap
5
Diversified portfolio at
time make decision
process difficult
Total
IFE Score

10

16

10

10

10

100
280
280 / 100 = 2.80

External Factor Evaluation (EFE) Matrix


No.

External Factors

Opportunities
Huge potential in dairy
1
products (only few
companies in Pakistan
Opportunity to go for
2
related diversification in
future
Export of dairy products
3
to other countries
Backward integration
(may go for becoming
4
its own supplier of raw
milk)
5
Westernization of
Pakistani foods with

Rating (R)

Weight (W)

Weighted
Score
(R x W)

10

40

20

15

10

30

10

30
30

increased usage of dairy


products
Growing awareness
6
towards dairy products
Excessive supply of raw
7
milk
Threats
Competing with world
1
class companies like
Happy Cow and Kraft
Risk of price war in
dairy products as others
2
are be enjoying higher
economies of scale
Due to high return
prospects, other players
3
may try to enter this
segment
Commercialization of
the product can be
difficult due to high
price and current
4
preference of foreign
brands and/or bad
perceived quality of
local brands
Rate of changes in
dietary trends and
5
consumer preferences is
slow
Total
EFE Score

10

40

15

60

10

20

10

10

10

10

30

100
310
310 / 100 = 3.10

General Electric Matrix


As per the analysis shown in IFE and EFE, we get the following GE Matrix if we draw
the results of IFE & EFE on GE screen:

31

Conclusion & Recommendations


As per the above analysis (IFE, EFE & GE Matrix), the business is in the ideal
conditions with other research factors in PEST analysis indicating positive future
prospects. The market hold a lots of promises but there are other factor that make
the market stay just below the ideal condition. These factor include recently born
awareness / preferences towards dairy products, high prices for consumers and
better quality of imported products available in the markets and many other factors.
Efoods have the ability to overcome its weakness which are mostly due to a total
new line of products and can be taken care of once into the business. A huge
market size consisting of young food lovers whose needs are being fulfilled by less
than 5 local dairy product manufacturers, a market where local production isnt
enough to fulfill the market needs and the imported products are out-of-budget of
majority of the population, a market where food is entering into an era of
westernization and a market where people are waiting for range of products to fulfill
their needs, its a perfect time to enter the market to enjoy huge volume of sales.
This is the only way to make market more attractive.

32

SPACE Matrix
Financial Strength
Scale: 1 = Low | 5 = High

Factor
Return on Investment
Return on Equity
Inventory Turnover
Return on Capital
Cash Flow
Debt to Equity (Long
Term)
Ease of Exit from Market
Huge growth in Net Profit

Rating

Actual Value

1
1
1
1
1

2
2
2
2
2

3
3
3
3
3

4
4
4
4
4

5
5
5
5
5

1
1

2
2

3
3

4
4

5
5

Total

28 / 8 =

12%
21%
11.3
18.40%
Negative
17.50%
Difficult
256%

3.5

Competitive Advantage
Scale: 1 = High | 5 = Low

Factor
Market Share
Product Quality
Product Shelf Life
Backward Integration
Relationship with
Suppliers
Technological Skills
Control over suppliers

Rating

Actual Value

-1
-1
-1
-1

-2
-2
-2
-2

-3
-3
-3
-3

-4
-4
-4
-4

-5
-5
-5
-5

-1

-2

-3

-4

-5

-1

-2

-3

-4

-5

-1

-2

-3

-4

-5

Total

-13 / 7 =

55% for Dairy and 29% for Ice-cream


High
High
No
Incorporating technology to collect
milk (automation)
Latest machinery and 2 manufacturing
units
Strong supplier network

-1.86

Environment Stability
Scale: 1 = High | 5 = Low

Factor
Technological Changes
Demand variability
Barriers to entry in Market

Rating

Actual Value

-1
-1

-2
-2

-3
-3

-4
-4

-5
-5

-1

-2

-3

-4

-5

Competition on the basis


of Price

-1

-2

-3

-4

-5

Competitive Pressure

-1

-2

-3

-4

-5

Total

No abrupt technological changes


There is variation in demand
Entry is tough due to huge capital
requirements
Substitute and alternate products are
available so price will be a dominant
factor and will have impact on
demand/sales and subsequently,
competitive pressure will be high

-10 /5 = -2
33

Industry Strength
Scale: 1 = Low | 5 = High

Factor
Growth Potential
Profit

Rating

Actual Value

20 / 5 =

Financial Stability

Ease of entry into the


market
Capital Intensity
Total

processed milk covers only 3-6% of


market as yet and expected is to cover
20-25% by 2025
Profit margin is high but expected to
decrease in case of tax imposition
Financial stability and sustainability
requires time and efforts. But it is
highly profitable business specially I
milk related products
Entry is tough due to huge capital
requirements
High (machinery, R&D, Warehouse,
Land, Buildings etc.)

SPACE Matrix
6

-6

-4

-2

-2

-4

-6

34

Recommendations
It is very evident from the above analysis that current position of the company is in
the first quadrant which suggest to be an aggressive player in the market.
Aggressive in product development, product positioning, R&D, competitor analysis,
backward integration, tapping untapped markets, product diversification and any
other strategy to remain ahead of the competitors in each and every area of
competition. SPACE Analysis recommends that businesses in such a strong position
take the following actions:
1. Constant focus and investment on R&D in areas like product formulation,
product development, market research, technology, supply chain in order to
attain sustainable competitive advantage
2. Keep an eye on competitors, their strategies and their moves through
business and competitor intelligence, real-time market analysis to formulate
alternative competitive advantage strategies.
3. Regularly study market behavior and trends, identify untapped needs and
gaps and close off every appropriate opportunity to a differentiated value
proposition resulting in improved brand image.
4. Achieve economies of scale by increasing level of production in order to
reduce costs and price, ultimately, and make it difficult for competitors to
match the price.
5. Alternatively, keep on innovating and introducing different products of
different price levels for different markets to make it difficult for competitors
to come up with same horizontal of innovation and product diversification.
This will result in increased market share and penetration for the company.
6. Go for backward integration to get high quality raw milk at relatively lower
price compared to other manufacturer resulting in increased margins and
profitability.
7. Aggressively tap the related markets with high quality products and top-rated
brand image which will ultimately complement the existing position of the
company. This strategy will help in product and market development.

BCG Matrix
BCG matrix is being drawn here by dividing Efoods products into two categories.
These are:
1. Dairy Products (Brands included: Olpers, Dairy Omung, Omung Dobala,
Olpers Lassi & Cream)
2. Frozen Products (Omore)
The market Share and growth rate are as follows:
No.

Category

1
2

Dairy Products
Frozen Products

Market Growth
Rate
12%
14%

35

No.

Category

1
2

Dairy Products
Frozen Products

Largest
Competitor
Market Share
Nestle 40%
Walls 58%

Efoods
Market Share

Relative
Market Share

50%
29%

1
0.5

Recommendations:
It is crystal clear from the above quantitative analysis of BCG that both categories of
Efoods are in the starts category of BCG matrix. But the point to be noted is that the
market share of the frozen products of Efoods is quite low and this category lies on
the edge of Stars and Question Mark. Efoods needs to consistently work on the
market share of the frozen products. Quality of the brand must be improved through
innovative marketing strategies and improving quality of the product. Efoods needs
to aggressively market the product through advertisement because, as compared to
competitors, Efoods lacks advertisement and campaign focused on the targeted
audience. Though Efoods have second largest player in the market but as compared
to the largest rival, it market share is very low. Following strategic option are
available in order to keep the frozen products in stars category while increasing
market share:
1. Product Development: Focus on product quality, coming up with new
products/flavors, or redesigning the product in response to the market
conditions
2. Market Penetration: Aggressively advertise the product and enter into new
markets in order to penetrate and increase market share

36

3.

37

Current Perceptual Mapping


For Dairy Products
For dairy products (UHT Mil, UHT Cream and others), perceptual map will be created
considering following variables:
1.
2.
3.
4.
5.

Brand Image
Perceived Quality
Nutrition values
Social Acceptance
Taste

This would be a multidimensional perceptual map and will be based on the


perceived values of the above mentioned variables.
Brand Image
Perceived
Quality

Social Map
Current Perceptual
Acceptance

Nutritional
Value

Taste
Perception

There are gaps in three


variables that need to be
improved. Social awareness,
perceived nutritional values
and perception of taste may
hinder the way to market and
product penetration. Company
have a very good brand image
and good perceived quality,
but in order to penetrate the
huge untapped market, it is
necessary to create awareness
about the nutritional value and
remove any misconception

Brand Image
Perceived
Quality

Nutritional
Value

Recommended Perceptual Map

Social
Acceptance

Taste
Perception

38

For Frozen Deserts


Variables would be:
1.
2.
3.
4.
5.

Brand Image
Pleasure
Healthfulness
Taste
Quality

Brand Image

Pleasure
Healthfulness

Current Perceptual Map


Taste

Available
Flavors

There are gaps in perceived


taste and the availability of
the different flavors. Flavors
availability are, may be, is
perceived to be low because
of less advertisement and lack
of positioning activities as
compared to competitor who
often
launch
focused
positioning
and
branding
activities on multiple media
which is ultimately increasing
their
market
penetration.
Quality of the product must be

Brand Image

Pleasure
Healthfulness
Recommended Perceptual Map

Taste

Available
Flavors

39

Perceptual Map of Efoods Brand on the Basis of Quality & Price


Perceptual map of the following Efoods brands on the basis of perceived quality and
price (on both extremes) is given below. Brands are:
1.
2.
3.
4.
5.
6.
7.
8.

Olpers Milk
Olpers Cream
Tarang
Dairy Omung
Olpers Lassi
Icecreams Cups
Icecreams Sticks
Icecreams Cones

Target Market Analysis


Target Market profile for Efoods (company as a whole) is given in the following table:
40

Business Consumers
Direct
Restaurants, Hotels, Fast Food Chains
Consumer
Indirect
Retailers, Wholesalers, Grocery Stores, Bakeries
Consumers
Influential
Cooking TV Channels
Groups
End Consumers
Age
5 60 Years
Gender
Both Male & Female
Income / Social
Different Products for all social classes and income groups
Class
Geographic
Major Cities of Pakistan

Product Wise Target Market


Target Market profile for Efoods (product wise) is given in the following table:
Products

Olpers Milk &


Cream

Tarang

Omung Milk &


Lassi

Y Juice

Ice-cream

Target Market
Business: Wholesalers, retailers, bakeries
Social Class: Upper and Upper Middle Class
Target Audience: Youngsters, Children, Families Mothers &
House Wives
Geographic: Major cities of Pakistan
Age: 5 60+
Business: Wholesalers, retailers
Social Class: Lower, Lower Middle and Middle class
Target Audience: Tea Lovers, Youngsters, Aged Person, House
Wives
Geographic: Major cities of Pakistan
Age: 20 60+
Business: Wholesalers, retailers
Social Class: Lower Middle and Middle class
Target Audience: Tea Lovers, Youngsters, Children, Aged
Person, House Wives
Geographic: Major cities of Pakistan
Age: 5 60+
Business: Wholesalers, retailers
Social Class: Lower Middle and Middle class
Target Audience: Youngsters, Children, Mothers
Geographic: Major cities of Pakistan
Age: 10 20+
Business: Wholesalers, retailers, Restaurants
Social Class: Lower Middle, Middle class, Upper Middle and
High
Target Audience: Youngsters, Children, Mothers
Geographic: Major cities of Pakistan
Age: 10 20+
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Strategic Fit
Through the analysis done in this project, some factors have been identified that are
very critical in the success in the dairy industry. The success depends upon the level
of accuracy of the formulated strategies based on those factors, it means any gap
will take company away from achieving the potential the market promises. But there
is no apparent gap in the recommended and actual strategies of Engro Foods.
Heres how:
Note: Actual Strategic response is taken from Engro Foods financial
statement of year 2015 and from company corporate website
(www.engrofoods.com)
No
1

Factor
Relation with
Suppliers

Required Strategic
Response
1. Provide them financial
and technological
support
2. Backward Integration in
order to reduce risks
associated with raw
milk supply
3. Get engaged with
suppliers and spread
awareness to improve
milk quality

Actual Strategic Response


1. The Companys Nara Dairy Farm
continued to remain a rich and
nutritious source of quality milk for
dairy segment. The farm currently
produces 35,095 (2014: 33,108)
liters per day with a total herd size
of 5,429 animals of which 2,739
are part of the milking cycle. Due
to improved production yield the
Nara farm significantly improved
its results with a profit of Rs. 12.5
million in 2015 as opposed to a
loss of Rs. 31.4 million in 2014.
2. Engro Foods extensively works with
farmers across rural Sindh and
Punjab. Having a milk collection
network of approx. 1,600 MCCs,
Engro Foods arduously works to
reach the smallholder dairy farmer
and provide extension services
along with an opportunity of
buying milk from them. In this
context, Engro had partnered with
USAID in 2011 to reach a large
number of smallholder dairy
women farmers and build their
capacity. The project Women
Empowerment Through Livestock
Development resulted in training
of 18,000+ women farmers and
creation of 600 women
entrepreneurs in the rural market
to provide essential services like
livestock vaccinations and
treatment for basic ailments and

42

Research &
Development

Continued focus of R&D on


the following:
1. Product Formulation
2. New Product
Development
3. Technological
Enhancement
4. Suppliers Development
5. Quality Assurance
6. Dairy Trends

Product
Diversification

Tapping markets with


innovative and diversified
products in order to be a
market leader and
enjoying high market share
and penetration ultimately
leading to profitability and
sustainability.

Spreading
Awareness

There is huge untapped


market with
misconceptions about the
dairy/processed products.
The key is to spread
awareness and negate
those misconception.

Innovation &
Risk Taking

1. Create a culture of
learning and open
communication with
smooth coordination
and flow of information
among different teams
throughout the

milk collection
1. EFL has a dedicated research
facility on the premises of its
Sahiwal plant. The Research &
Development team has played a
key part in cracking various new
recipes that have enabled EFL to
provide consumers with a steady
stream of innovative products.
Adhering strictly to high quality
standards, products in the pipeline,
go through several rounds of
tasting and testing before getting
the final seal of approval.
2. The scale of production at Engros
plants continued to reflect an
upwards trend for 2015 with key
areas of focus being research and
development to bring efficiency in
the system to reduce costs.
1. The Company continued its
aggressive business strategy of
growth and diversification and
achieved market share of 55% in
2015. Building on its promise of
elevating consumer delight, the
business diversified into popularly
priced, high quality product
category with the launch of Dairy
Omung - a nutritious and
affordable dairy product for lower
income consumers. Innovation
remained at the core of the
business's product expansion
strategies this year and we also
introduced Olper's variants of
Badam Zafran and Rose flavors
which were well received by the
market.
EFL has launched many awareness
campaigns through different channels.
The invited media to their plant to give
them a glimpse of the quality of Engro
Milk and other products. They also
visited schools and other institution to
spread awareness and Engro thirst for
awareness in never-ending.
1. Success requires us to continually
strive to produce breakthrough
ideas that result in improved
solutions and services. We
encourage challenges to the status
quo and seek organizational
environments in which ideas are

43

company.
2. Encourage new ideas
and bring innovation in
the following:
Product Offering
(features, formula,
packaging)
Brand positioning
Product
Development
Understanding
Markets
Product
Differentiation

generated, nurtured and


developed. Engro appreciates
employees for well thought out
risks taken in all realms of business
and for the results achieved due to
them, acknowledging the fact that
not all risks will result in success.
2. Engro Foods is a company that
prides itself on being the market
leader in innovative new offerings.
From Tarang to the new Olper's
Lassi, EFL has established this
cutting edge by gauging consumer
needs in the market and offering
products differentiated on their
quality and value proposition. The
emphasis on fostering creativity
and successfully implementing
those ideas translates into our
unique product portfolio, which
sets us apart from our competitors.

Conclusion & Recommendations


Efoods has set itself a vision of leadership within the global dairy industry. The
company enjoys skilled human resources, advanced processing assets and valuable
brands and alliances. However it operates in a complex environment. Factors
include the geographically dispersed suppliers, high transportation cost, enforced
technical and financial support for suppliers, consolidating customer base, access
barriers and an increasing cost base.
Engros legacy organization has been successful in establishing a competitive
market position in a very short time based on its control over supplier and
relationships with them to ensure low cost and high quality milk supply which has
earned the organization leadership position. Due to strategic requirement of
topnotch R&D throughout supply chain activities, its ability to maintain lowest cost
status is threatened, suggesting this core strategy (Cost Cutting) is not a complete
environmental fit.
Market holds a lot of promises in terms of growth rate and potential market size. .
Market is changing and growing, trend is changing in direction suitable for the
company, consumer are becoming more aware about the benefits of processed milk
and related products and companys capabilities in R&D, innovations, risk taking,
and manufacturing abilities make it a strong player in the market. Besides the
existing strategies of Efoods are aligned with the required strategic responses
leading to success.

44

But still there is a large untapped market and Efoods is aggressive in its strategies
and will avail any chance and opportunity to become a leader of Pakistan Processed
milk industry.

45