Applied Marketing Strategy

Case Study
K&N’s Health & Happiness for Pakistan

Submitted to: Mr. Kashir Asghar

Submitted by: Maham Rizwan

Date: 22nd November, 2019

Considering that there are few Halal Food brands what is a right strategy and
approach for K and N's to tap into the Global Halal Food Market?
K and N’s started its operations in Pakistan in 1964 with an objective of providing better nutrition
for nations’ health and happiness. The brand has almost 55 years of experience in poultry business
with its wide production ranging from poultry breed and feed milling to growing and processing
of chicken and value added premium chicken products. (K&N's, n.d.)

Global Halal food market is a fragmented market in terms of “Definition of Halal, Income Level,
Location and Population”. (Sungkar, 2009). For instance in terms of demographics it is estimated
that Muslim population is growing at the rate of 1.5% per annum until 2030 that is twice to the
Non-Muslim population. Hence making a total of 2.2 billion global Muslim population by the year
2030 (See Appendix 1). However within this, the market is further fragmented by disparity in
income level i.e. in some countries people have high income level in comparison to other countries
which impact their chicken consumption. In terms of consumer spending on food, global halal
food market represents potential growth segment. According to State of the Global Islamic
Economy, in 2015 consumers spend almost $1128 billion on food and beverages which highlights
the increasing spending power of consumers in global halal market. Also, meat products occupy
44.2% market share in global halal food market that is largest in terms of revenue. (insights, 2019)
Similarly in each country definition of Halal varies in their Halal certifications. All these factors
show lack of structure in this market which present it as an untapped market. Moreover, this global
halal segment offers huge business opportunities as it serves more than 10% of global merchandise
trade in comparison to traditional market segments that have become saturated. (Ashraf, 2019).

Halal concept is itself a quality assurance phenomenon which involves preparation of nutritious
item from permissible ingredients in a hygienic manner i.e. from slaughtering to the distribution.
This market represents a great opportunity for international businesses like K and N’s as it’s
becoming a global symbol of quality assurance and lifestyle choice which K and N’s aims to
deliver through its products. (Hanzaee, 2011). Halal food market has the highest overall share of
about 36% in overall halal industry as shown in Appendix 1 which highlights the upward trend if
this market segment globally.

However, this market has some critical challenges as well which K&N’s should consider before
implementing its strategy. These include reliance of importing countries on food products that are
produced domestically, hence making it difficult for international business to build credibility.
Moreover, as discussed previously this market is highly fragmented, lack of standardized body for
certification of halal products makes challenging for businesses to operate uniformly. The main
challenge for businesses is to identify which standards and certifications will provide them market
access. Further, people perceive that Halal food production certifications in Non-Muslim countries
have little regulatory monitoring. Expansion in this market requires presence of reliable logistics
network that must ensure consumer integrity in Halal status of the product. Also, companies
planning to expand internationally find it difficult to obtain Shariah-compliant funding. (Elasrag,
2016)

K&N’s needs to devise a right strategy in order to successfully tap in global halal food market with
respect to its opportunities and challenges. K&N’s should consider that for growing niche halal
meat market in global halal food market, the target market is not just limited to Muslim community.
It should consider the increasing demand of halal meat among Non-Muslim community who have
also developed preferences for such items because of the safety and ethical procedures adopted in
their processing. Demand of halal meat is highest in Middle East Region which is the hub of
Muslim countries where as in Asian Pacific region, Pakistan, Indonesia and Malaysia have shown
the most growth in the year 2009-2014. (KCCI, 2016). For example, Malaysia has become a global
hub in producing, marketing and certifying Halal products and services. K and Ns could transfer
its some of global production to Malaysia and then export the products to different countries to
meet the growing demand of certain products. Non-Muslim countries like Germany, France,
United Kingdom where Muslims are considered important minority acquisition of halal
certification plays an important role in order to ensure meeting of strict halal regulations. For that
purpose, it requires to understand the importance of acquiring halal certification through which
companies can use halal logos on their marketed products which is necessary for gaining consumer
confidence. In this perspective K&N’s already has an established brand name in the market. For
instance in Pakistan the brand has the highest level of familiarity and recognition among
consumers because of its reliable and quality products. K&N’s can utilize this brand recognition
factor to acquire the halal certifications.

Domestically K&N’s is following full integration strategy i.e. it has its own supply and distribution
network as well in addition to retailers. Being the largest poultry enterprise of Pakistan, K&N’s
fully integrated vertical strategy enables the company to produce and deliver quality products
which ultimately provides it with competitive advantage. Hence in order to tap in global halal food
market it should expand using its integrated supply chain network which makes it unique over
competitors.

Appendix 2 shows the Bartlett and Ghoshal Model which identifies four different strategies that
businesses can use to manage their international operations in terms of “global integration” and
“Local responsiveness”. K&Ns has categorized its business in two areas i.e. K &N’s Poultry that
involves producing parent stock, chicks, feeds and broilers, and K&N’s Food in which it offers
variety of processed chicken, ready to cook and fully cooked chicken products. In order to tap in
global halal food market K&N’s can follow the “Transnational Strategy” in which businesses
keeps some of its practices standardized for instance brand name, logo etc. while customize other
practices in order to meet the local customer demand of each country where it is operating. Owing
to this perspective, in terms of global expansion strategy K&N’s should keep its basic practices
standardized which involve its brand name, logo, packaging, manufacturing processes same
whereas customizing other elements for instance its product line i.e. introducing new products or
changing flavors according to customer’s taste and preferences in a particular country. In this way
going global won’t adversely affect the quality standards of K&N’s through standardization of its
core competencies across multiple countries. On the other customization of its products would
help the company to gain advantage of changing consumers’ trends and needs around the globe
i..e increased demand for packaged food in Muslim countries as well as growing demand of safe
and healthy chicken among Non-Muslim community.

Company needs a multi-dimensional export development strategy to successfully penetrate the

growing global halal market. The company must ensure the competitiveness of production i.e. low
costs and must maintain the reputation for safe and high quality food production to differentiate
itself from other exporters and to enable international consumers trust the brand. Also it should
identify the growing markets where demand for halal meat products is growing. For this, company
can look for factors such as meat consumption, purchasing power of consumers as demand for
meat is directly related to purchasing power of people etc. and through this it should identify the
markets where there is ‘gap’ and expand accordingly.
Appendix 3 shows the market entry strategy framework to identify the strategy for K&N’s.
According to this framework, in terms of theoretical approach, K&N’s should follow “Uppsala or
Incremental Approach” i.e. Stage Model” according to which internationalization is the gradual
process that takes place in four steps. Initially no export activities are performed in new market,
then they are done through independent representatives, then through a sale and lastly an overseas
production facility is developed. (Carter, Lee, & Steve, 2012). In this perspective, firstly K&N’s
should expand through limited export in those countries where opportunity exists, in order to
identify the demand. In the next step after assessing the demand the company should further
expand through intermediaries i.e. retailers which include major grocery stores. And finally it
should build its own integration system like in Pakistan within the host country. Moreover, as far
as expansion in countries is concerned, K&N’s should consider the regional variation among
countries. For instance it should diversify the countries on the basis of Muslim population, which
means that first the company should expand in countries with large Muslim population where
obviously demand for Halal meat is high. Then it should identify the countries which are culturally
diverse, for instance they might include Non-Muslim customers as well who might prefer the halal
meat because of its safe processing. Hence they represent the new emerging segment for Halal
food products for example countries like Malaysia and Singapore. Finally company should target
those countries where Muslims are minorities for example Western countries i.e. UK, U.S etc.

Further, K&N’s should focus on developing the “Strategic Alliances” with popular grocery chains
as well as fast food restaurants in the countries where it expands. These alliances will make the
market entry easy for K&Ns as they help in promoting the products of the company in the local
markets and identifying the customers’ tastes and preferences. Also, they will help the company
in understanding and complying with the regulatory systems which vary from country to country.

Global Halal market represent immense opportunities for companies like K&N’s. With right
strategy and approach the company can utilize its competitive advantage to tap in the international
markets and overcome its challenges.
References
(n.d.). Retrieved from K&N's: https://www.kandns.pk/thebrand/index.html
Ashraf, M. (2019, June 10). Immense opportunities in global halal marketplace. Retrieved from
The Express Tribune : https://tribune.com.pk/story/1988764/2-immense-opportunities-
global-halal-marketplace/
Bell, D. E. (Oct, 2015). K & N's: health and happiness for Pakistan.
Carter, Lee, K., & Steve. (2012). Global marketing management. 3rd Editon. Oxford University
Press
Elasrag, H. (2016). Halal industry: Key challenges and opportunities.
Hanzaee, K. H. (2011). Intention to halal products in the world markets. Interdisciplinary Journal
of Research in Business, 1(5), . 1-7.
insights, C. m. (2019, June 17). global halal food market to reach us 2-billion by 2027. Coherent
market insights. Retrieved from www.prnewswire.com
KCCI. (2016). Halal-Meat-Sector-Time-to-make-the-most-of-the-Edge. Karachi Chamber of
Commerce.
nestle union network. (2006, 8 21). Retrieved from
http://www.iuf.org/nestle/2006/08/nestle_picks_malaysia_as_halal.html
Sungkar, I. R. (2009). The global halal food market and updates on global halal standards. In
Presenting atThe World BankFirst EAP Regional Agribusiness Trade and Investment
Conference “Agro-enterprise Without Borders” Holiday Inn Atrium, Singapore., (pp. 30-
31).
APPENDIX 1
Statistics of Global Halal Food Market
APPENDIX 2
Bartlett and Ghoshal Model
APPENDIX 3
Market Entry Strategies