Engro Foods vs Unilever Foods 2013

Case Study Submitted To:

Prof. Zia Ur Rehman

Group Members:

Aakif Ajmal B.C.09-740

Salman Daud B.C.09-735

Rashid Mehmood B.C.09-734

Saleh Rabbani B.C.09-752

Hasnain Rasheed B.C.09-725

Shakeel Nawaz B.C.09-729

Engro Foods vs Unilever Foods 2013

Hailey College Of Commerce

University Of The Punjab Lahore

Engro Foods vs Unilever Foods 2013

Economy Review of Pakistan

Pakistan’s economy can be characterized as semi-industrialized. The country’s industrial sector constitutes 24.3% of the country’s gross domestic product. Pakistan has a total labor force of 55.88 million (as of 2009)1. The largest industries of the country are textile, cement, agriculture, fertilizer, steel, tobacco, edible oil, pharmaceuticals, construction materials, shrimp, sugar, food processing, chemicals and machinery. Pakistan’s industrial sector experienced tremendous growth between 2008 and 2011 despite the shortage of electricity. However, it is worth noting that net foreign investment in industries of Pakistan constitutes only 2.5% of the country’s GDP.2

Food Industry in Pakistan

Food industry has become second largest economic sector sharing 17% of GDP in Pakistan. Despite the food shortage in the country, food industry in Pakistan has become the second largest industry sharing 17 percent of the gross domestic product (GDP) as Pakistanis are spending 42% of their total income on the food and beverages.3

There are 1,000 larger-scale food-processing enterprises in Pakistan and overall food retail and wholesale business accounts for 17 percent of the GDP.

Being a labor-intensive, agriculture-based country, it is no surprise that the food industry employs over 20 per cent of the country’s working population. Approximately 75 per cent population consists of farmers, orchard men, cattle men, fishermen and others involved in the production of raw materials.4

The food industry works in four phases; production, process, transportation and distribution. Thus we can see how it involves everyone right from a small farmer to a retail distributor. The linkages in this chain are very crucial and a slight disturbance in anyone phase can disrupt the entire cycle. The food industry has been classified as a major sector of food beverages and Tobacco. Thus apart from agricultural inputs like wheat, maize, cotton and sugarcane, fruits, vegetables and dairy also play a vital role.

Citrus fruits and Mango are the major fruit produced in Pakistan. The country stands among the top ten citrus fruit producers in the world and amongst the top five in mango production.

1 Government of Pakistan, Ministry Of finance.2 www.pakboi.com.pk3 Pakistan Council of Scientific & Industrial Research.4 http://en.wikipedia.org/wiki/Economy_of_Pakistan

Engro Foods vs Unilever Foods 2013

Introduction to Engro Pakistan

Engro Chemical Pakistan Limited is the second largest producer of Urea fertilizer in Pakistan. The company was incorporated in 1965 and was formerly Exxon Chemical Pakistan Limited until 1991, when Exxon decided to divest their fertilizer business on a global basis and sold off its equity of 75% shares in existent company. The Employees of Engro, in partnership with leading international and local financial institutions bought out Exxon’s equity and the company was renamed as Engro Chemical Pakistan Limited.5

Engro is a public limited company listed on the Stock Exchanges of Karachi, Lahore and Islamabad. The principal activity of the Company is manufacturing, purchasing and marketing of fertilizers. The Company is also involved in the production and marketing of seeds and has invested in joint ventures engaged in chemical related activities. As part of its diversification strategy, controlling interest was acquired in a company offering industrial solutions in automation and control. A new milk plant has been established at Sukkur the milk is branded as Olpers.

Back Ground Of Engro Food Limited

Established in 2005, a 100% owned subsidiary

The plant located at Sukkur on 23 acre land, has the raw milk reception capability of 300,000 liters per day and UHT milk capacity of 200,000 liters per day. The plant has been established at a cost of Rs. 1 billion which provides direct employment to 750 people. First investment of dairy plant Processed milk market is growing at approx. 20% per annum Olpers achieved peak market shares of 12.3% within 6 months of launch Other products launched Olpers Cream, Olwell.

High Calcium Low Fat Milk (Premium Brand) Plans to expand product portfolio Milk processing capacity to increase by 200% to 200 million liters annually will become the only company in Pakistan covering the entire milk catchments area already has the second largest chilled milk collection system in the country distribution network to double from 58 tons to 119 tons by the end of 2007 with global food major in advanced stage of negotiation.6

Top quality brands like Olper’s, Olwell, Tarang, Omore and Owsum have been successfully launched under the helm of Company’s dairy products. To support these brands and their

5 www.engrochemicals.com

6 www.engro.com.pk\websearch\marketing-sales.apx.html

Engro Foods vs Unilever Foods 2013

highest standards of quality, Engro Foods has invested heavily in milk processing and milk collection infrastructure.

At a glance (as of December 2011)

Total Employees: 1,376 Total Revenue: Rs 29,859 Million7

Muhammad Aliuddin Ansari (Chairman)

Appointed President and CEO of Engro Corp in May 2012, Muhammad Aliuddin Ansari holds a degree in Business Administration, with a specialization in Finance and Investments. Ansari started his career as an Investment Manager at Bank of America in London which later became World invest after a management buyout.

Thereafter, he worked as CEO of Emerging Europe for Credit Lyonnais Securities Asia. He has also worked as CEO AKD Securities and Dewan Drilling, Pakistan’s first independent drilling company. Ansari currently holds directorships in all Engro companies, and is also a member of the Board of Directors of Dawood Hercules Corporation Limited, Dewan Drilling Limited, Dewan Petroleum Limited, Pakistan Chemical and Energy Sector Skill Development Company and Pakistan Business Council. He has also chaired a number of SECP committees and has served on the Boards of the Karachi Stock Exchange, NCCPL, Lucky Cement and Al Meezan Investment Management amongst others. He joined the Engro Corp Board in 2009.8

CEO’s Message

At Engro Foods, engro pride ourselves on going above and beyond what is expected of us. Despite facing a challenging business environment, 2012 proved to be an unmistakably outstanding year for Engro Foods as it grew in size, productivity and scalability by leaps and bounds. Through the year the primary focus was evident in our quest for performance driven efficiency, where we sought to weave efficiency as a binding thread running through every fabric of our business including our operational, logistical, capital and people management frameworks. With all key business areas optimized for maximum efficiency, we achieved significant growth and high returns on all our investments, a trend that will continue to drive our success in the coming years. In 2012, we made conscious efforts to reignite the mindset that sets us apart as an excellence driven organization by embedding innovation within every

7 Annual Report Engro Pakistan Limited 20118 Annual Report Engro Pakistan Limited 2012

Engro Foods vs Unilever Foods 2013

facet of our operations including our business, marketing, manufacturing and communication strategies. Deeply shared by our people, this passion for innovation continues to drive our business growth, making our brands sought after across Pakistan and beyond. As we strengthened our operations, sustaining our inclusive business model to impact lives and foster long-term economic growth remained a key area of focus for Engro Foods in 2012, as we sought to expand our footprint and create more opportunities for the small-hold dairy farmers who make an invaluable contribution to our business. This was in stark contrast to a CSR-focused approach where benefitting the peripheral rural community and bottom of the pyramid was made an intrinsic focus area of our business model. In our efforts to improve livelihoods and the quality of life for the thousands of dairy farmers who serve us, Engro Foods will continue to invest in productivity initiatives at the grassroots level to help farmers reap the full benefits of sustainable agriculture. To this end, we were amongst the winners of the G20 Challenge on Inclusive Business Innovation; further highlighting our commitment to pioneering business models which positively impact Pakistan’s marginalized rural communities.

During the year, there was tremendous emphasis on reigniting organizational innovation focus which has long remained a hallmark of our business operations.

Background of Unilever

The company under its present name of Unilever was founded in 1929 when two major companies, Margarine Unie and Lever Sunlight, merged. Margarine Unie was itself the result of a merger of two Dutch-based margarine companies, Van den Bergh and Jurgens. From the beginning, Unilever adopted a dual structure involving two headquarters—one in London (Unilever PLC) and one in Rotterdam (Unilever NV) and shared a common board of directors, with a British citizen always heading the British PLC branch and a Dutch citizen always heading the Dutch NV branch.

By 1930, a third major company merged with Unilever: the United Africa Company (UAC), basically a large trading conglomerate with very strong positions in the African export-import trade (mostly involving Western Africa). In 1929, the two parent companies already owned factories and trading subsidiaries in Asia and Africa. Both remained dependent on vegetable and marine oils for their margarine and soap products and so they expanded their activities into countries where they could acquire these basic raw materials.

In the early years, Unilever developed into a company with worldwide activities. It built or purchased factories in Japan (1909), Argentina (1928), Brazil (1929), Thailand and Indonesia (1932), India (1933). Between 1945 and 1980, expansion of Unilever activities took place mostly in Europe. Unilever diversified into new areas including frozen foods, fish production, fish restaurants, transport, animal feed, chemicals, and printing. This diversification took place

Engro Foods vs Unilever Foods 2013

mostly in Western Europe and specifically in its “home-countries” the UK, the Netherlands, and West Germany. Unilever’s soaps and detergents sectors expanded steadily worldwide, primarily through acquisitions. Meanwhile, Unilever’s food sector remained predominantly a Western European company.9

The 1890s, William Hesketh Lever (founder of Lever Bros) wrote down his ideas for Sunlight Soap, his revolutionary new product that helped popularize cleanliness and hygiene in Victorian England. It was to make cleanliness commonplace, to lessen work for women, to foster health and contribute to personal attractiveness, that life may be more enjoyable and rewarding for the people who use our products.

This was long before the phrase Corporate Mission” had been invented, but these ideas have stayed at the heart of Unilever business. Even, if their language and the notion of only women doing house work has become outdated.10

History of Unilever in PAKISTAN

It is the largest consumer products company in Pakistan, UPL is a part of the consumer products giant Unilever. UPL was established some fifty years ago in the then newly created Pakistan. The town of Rahim Yar Khan was the site chosen for setting up a vegetable oil factory in 1958 and that is where the first UPL manufacturing facility developed. The UPL Head Office was shifted to Karachi from the Rahim Yar Khan site in the mid 60's. By this time the once dusty and sleepy village was the hub of activities for UPL. A residential estate situated near the factory is the home of UPL employees at Rahim Yar Khan.11

Ehsan A.Malik (Chairman)

Ehsan joined the Board on August 31, 2006 and is also the Chairman and CEO of Unilever Pakistan Limited. Prior to this, Ehsan was Chairman and CEO of Unilever Sri Lanka Limited. His earlier international appointments covered Unilever’s regional business in Egypt, Lebanon, Jordan, Syria and Sudan as well as Unilever’s Head Office in the UK. Ehsan is a Fellow of the Institute of Chartered Accountants in England and Wales and alumni of the Wharton and Harvard Business Schools.12

CEO’s Message

9 http://en.wikipedia.org/wiki/Unilever#History10 www.unilever.com/history

11 www.unilever.pk/foundation

12 Anuual Report Unilever 2012

Engro Foods vs Unilever Foods 2013

The business aims to continue on its journey of profitable growth. This will not be easy due to various external challenges i.e. law and order conditions, currency depreciation, inflationary pressure, employee attrition, poor GDP growth and competitive intensity.

Unilever’s understands of consumers, access to Unilever’s global expertise, R&D Capability / Innovations and better customer service will help us to counter the aforementioned challenges. Besides, Unilever will continue to provide consumers with better value products driven by strong brand equity. As a means to achieve this, it will also leverage Unilever ability to attract, develop and retain the best talent in the country.

Competition

There is a strong competition exists between Engro Foods and Unilever Foods but in few products in common:

Unilever’s Foods Brands:

Ice Cream ( Cornetto, Fruttare, Walls Dessert, Magnam Classic, Peddle Pop) Knorr Blue Band

Engro Foods vs Unilever Foods 2013

Engro’s Foods Brands:

Omore Olper’s tarrka Omang Dobala

Engro Foods vs Unilever Foods 2013

Products Comparison (Unilever Vs Engro):

Unilever was dealing in the products such as ice cream, home kitchen item such as knorr and healthy morning diet blue band. There is a vast diversity in these products.

Cornetto

Cornetto, first produced in 1976 in Italy, has since risen to become one of Unilever’s Ice Cream power Brands worldwide. Cornetto was introduced in Pakistan in 1995.13

Fruttare

Fruttare’s mission is to inspire in people the freedom to indulge by providing both pleasure and health through the natural goodness of fruit without the guilt of too many calories. It was especially produced to attract the children.14

Knorr

Great flavor is at the heart of Knorr, it adds taste whatever you want in your food. Unilever’s biggest brand.15

13 http://www.unilever.pk/our-brands/detail/Cornetto/323310/?WT.contenttype=view%20brands14 http://www.unilever.pk/our-brands/detail/Fruttare/329260/?WT.contenttype=view%20brands15 http://www.unilever.pk/our-brands/detail/Knorr/338048/?WT.contenttype=view%20brands

Engro Foods vs Unilever Foods 2013

Magnum

Celebrate pleasure with the tempting Magnum range – an irresistible combination of thick, cracking chocolate with creamy vanilla ice cream.16

Walls deserts

Launched in 1995, brands across the In-home portfolio are built on the belief that all families need small moments of pleasure in their lives and treats that make them smile and lick their lips with delight. Who better to provide this but Wall’s, with its exclusive In-home range!17

Paddle pop

You only have to take a bite from one of the frozen desserts in the much-loved Wall’s kids' range to experience its true magic. But with so many yummy choices, the only problem is figuring out where to begin!18

Blue Band

Blue Band is a daily source of essential fats and vitamins that help children to grow develop and thrive. Blue Band was launched in Pakistan more than 20 years ago. It is a good source of 7 essential vitamins (A, B1, B2, B6, B12, D3 and E) that are necessary for healthy growth and development, both for children and adults.

1. Vitamin A helps maintain good vision and healthy skin.2. Vitamin B1 helps to boost energy in your body.3. Vitamin B2 provides energy from carbohydrates.4. Vitamin B6 helps nerves and forms red blood cells. 5. Vitamin D is good for bones and teeth.6. Vitamin E helps to protect against heart attack and cancer.19

Engro Foods launched different product but some of them are especially in competition of Unilever foods products.

16 http://www.unilever.pk/our-brands/detail/Magnum/329257/?WT.contenttype=view%20brands17 http://www.unilever.pk/our-brands/detail/Wall-s-Desserts/336688/?WT.contenttype=view%20brands18 http://www.unilever.pk/our-brands/detail/Wall-s-Kid-s-Range/330381/?WT.contenttype=view%20brands19 http://www.unilever.pk/our-brands/detail/Blue-Band/337778/?WT.contenttype=view%20brands

Engro Foods vs Unilever Foods 2013

Omung Dobala

Launched in 2012, Omung Dobala is our low priced, nutritional vegetable and dairy blend cream that offers an economical alternative to dairy-based UHT cream. Omung Dobala is also one of our leading brands in Afghanistan and is being used as a staple diet, as it provides consumers with an energetic start to their day!20

Olper’s Tarrka

Launched in 2007, Olper's Tarrka is our premium desi ghee distinct for its pure flavor and aroma. A leading asli desi ghee brand that is extracted from milk, a dash of Tarrka in your favorite cuisine is all it takes to bring out the flavor of your food and leave you craving more.21

Ice-cream

Launched in 2009, Omoré's scrumptious range of ice-cream and frozen desserts are a glorious treat for everyone, be it children or adults.

With its rich, creamy taste, high nutrition content and wide-range of flavors and formats, Omoré is a delectable ice-cream and frozen desserts brand that seeks to cater to a wide range of consumer groups and taste palettes. Available in more than 30 SKUs including ice-lollies, tubs, bricks, cups, cones, and sticks of different sizes, Omoré has become a household name across Pakistan.22

Other Differential Products

Unilever

Lipton Yellow Label

Lipton was launched in Pakistan in 1948 and is one of the oldest brands in the country. Our vast experience in the world of tea blending in Pakistan and around the world means only two things; Quality & Reliability.In the modern world, the tea category is often considered to be lacking excitement & thrill. Lipton plays the role of an energetic brand that aims to modify this perception and redefine the meaning of tea in people’s lives. By celebrating positivity in everyday life, Lipton helps its consumers incorporate confidence, optimism and cheerfulness in their lives.Lipton’s portfolio in Pakistan consists of Lipton Yellow Label Tea, Lipton Mega Daane, Lipton Teabags, Lipton Green Tea and Lipton Flavored Tea.23

20 http://www.engrofoods.com/dobala.html21 http://www.engrofoods.com/tarka.html22 http://www.engrofoods.com/icecream.html23 http://www.unilever.pk/our-brands/detail/Lipton/337236/?WT.contenttype=view%20brands

Engro Foods vs Unilever Foods 2013

Rafhan Desserts

Rafhan makes the best desserts and helps consumers celebrate all their special moments in a delicious and wholesome manner. Rafhan Desserts have gained the trust of their consumers due to its superior quality ingredients and cutting edge processes.Rafhan is present on every kitchen counter providing health, taste and a whole lot of energy from its range of delicious custards, colorful jellies, tasty Ice cream Powder, nutritious Corn Oil, and superior quality Cornflour. With its new packaging, Rafhan has enhanced its premium look and feel.24

Engro

Gaining the dairy edge!

Engro Foods have become a trusted name and the preferred choice in the dairy business. There dairy products redefine quality standards and enrich life for thousands of consumers in a multitude of ways every day such as Olpers milk, olpers lite, dairy omung, flavoured milk.25

Tarang

Pakistan's No. 1 tea-whitening brand, Tarang is a specialized tea creamer that makes the perfect cup of tea guaranteed to transport tea-lovers into a state of sheer bliss any time of the day. The only team-creamer that combines convenience with lasting quality and real value for money, Tarang is available in liquid and powder formats that further extend the brand's appeal to a wider audience.

With its distinctly fresh aroma, rich taste and strong focus on enhancing the tea-drinking experience for everyone, Tarang has evolved into our biggest and most profitable brand since its launch in 2007, after securing a firm place in the hearts of millions of tea-enthusiasts all across Pakistan.26

Strategic Management at Unilever Foods

Now we will proceed with strategies being pursued by the Lever Brothers Pakistan Limited at different organizational level. First we will discuss the corporate level strategy.

Corporate Level Strategy

24 http://www.unilever.pk/our-brands/detail/Rafhan/338051/?WT.contenttype=view%20brands25 http://www.engrofoods.com/ourbrands.html26 http://www.engrofoods.com/tarang.html

Engro Foods vs Unilever Foods 2013

At corporate level Lever Brothers Pakistan Limited is pursuing the strategy of vertical diversification i.e. driving away from the previously adopted strategy of vertical integration i.e. now they don’t want to perform more than one step of the processes involved in converting raw materials into a product delivered and ready for consumption. Lever Brothers Pakistan Limited’s operations are so complex and involve 200 brands in Pakistan so now they wanted to reduce the operational complexity and going for strategic alliances with their suppliers, instead of producing themselves and going into complex operations now they want their suppliers to produce for them.

Through vertical diversification they will be able to eliminate the operational complexity and costs of buying and selling i.e. the transactional costs. Now they mainly wanted to step away from operations and want to focus more on customers.

Business Level Strategy

At business level Lever Brothers Pakistan Limited is adopting a very unique and interesting set of strategies. First and foremost strategy they want to follow is the cost leadership. They wanted to control cost as much as possible and want to reduce cost by every mean.

First cost efficiency is achieved through outsourcing operations and stops producing themselves and goes for cost efficient subcontracting.

Second they want to achieve cost efficiency through responsive and cost efficient supply chain, want to be in touch with suppliers all the time and for that they have connected themselves with the suppliers and to their suppliers as well to minimize cost related to forecasting now, they want better forecasting through computer networks so to get the real time information about the inventory, stock, demand and supply. They are now reducing the inventory as well as average carrying the inventory of only 3 days and getting closer to the concept of just in time except for those products for which they have to brought in raw materials from far flung areas like tea and moreover routings of logistics as well like air routing or ship routing to curtail the costs other than cost efficiency, they have adopted the strategy of consumer connectivity i.e. Want to stay closer to consumers rather to operations and want to focus all alternations to consumers through more research and customer profiles and demographics and wants to explore new customers and usage of products.

Operational Level Strategy

At operational level, Lever Brothers Pakistan Limited has always adopted the strategy of TQM only never went for CPR i.e. they have not come up with a new brand in last few years. Only the improvements or new variants in existing brands or using the same old brand name to introduce a new product like Lifebuoy Shampoo or Fair & Lovely Soap. So it can easily be said that they believe more in adopting changes rather generative ones or go for single loop learning only because according to them its very expensive to introduce a new brand name.

Engro Foods vs Unilever Foods 2013

Strategic Management at Engro Foods

Corporate Level Strategy

Engro Foods is horizontally integrated itself and increase its number of products. At this time company has a lot number of products in the market.

Engro use the management strategy of pyramid, in which products are designed on the base of 3 main factors of any economy such as economy class products, middle class products and premium class products.

Economy class products refers to those product which can be purchased by a low income bracket group, those products includes dairy omung whose price starts from just 10 RS/- whereas tarang dobala & ice lollies as well fall in the same category. The main motive behind diversifying the products into economy class is to enhance the customer and gain more profit.

Middle class products refer to those products which can be purchased by the low income and middle income bracket’s people. Tarang, Olpers Milk, Tarkka and Owl el Milk fall in the category of middle class products.

Premium class products are referred to those products whose prices are comparatively high than economy and middle class. These products help engro to catch the market of elite class too.

27

Business Level Strategy

27 Macquarie research 2012http://xa.yimg.com/kq/groups/15240720/327693974/name/engrofoods240512e117710.pdf

Premium

Middle

Economy

Olw el Milk owsm Milk olfrute Omore (P) Olper Cream

Tarang Oplers Milk Tarkka Olw el Milk

Dairy omung Tarang dobala Ice lollies

Engro Foods vs Unilever Foods 2013

Engro Foods wants to achieve more market share than other competitors. In order to achieve the more competitive advantage company uses the differential strategy by differentiate its products from other competitors. Engro Foods differentiate itself in the form of taste, quality and availability of their product in the market e.g. most of the Engro Foods product are related to dairy such as milk while on the other hand most of Unilever foods product are related to tea. Engro Foods is trying to attain market share by launching differential products.28

Engro Foods Launches Omoré in Competition of Walls

Omoré Market segmentation

1. Geographic

At the start the only market Omoré served was Lahore. After the year they expanded their business and entered in other cities as well like Karachi. Omoré covers Punjabis cities more strongly because they are closer to its Sahiwal factory Omoré.

2. Demographic

Omoré has Ice cream for nearly all demographic segments. Take away packs and tubs for Families, Ice-cones for teenagers and cups and ice-pops for children. They also include all income groups as well.

3. Behavioral

Omoré is planned to be in among one of those Ice-cream companies who are offering diet Ice-cream for those people who have diabetes problem or are diet conscious when they newly enter in market .It is a large untapped market segment which they are plan to serve. In this segmentation, they choose occasional and benefit sought segmentation.

4. Target market

Omore choose Differentiated Marketing Strategy (develop different marketing mix for different segments) Families, Individuals (youth and adults), Children.

5. Market positioning

28 Annual report of Engro 2012

Engro Foods vs Unilever Foods 2013

Omore’s positioning strategy includes:

6. Promotion

When Omoré ice cream was initially launched they adopted a rather unique way of advertising. Flyers were thrown in different housing communities using airplanes. Promotion mix strategy: push strategy (trying to replace Walls deepfreezes with omore by offering incentives to retailers) Omore sponsor cooking shows. Also run Co-Branding Promotion Campaign with Shell. (Come to shell and enjoy free omore)

360° Marketing techniques was used when omore comes in 2009 which includes.

Outdoor billboards Vehicle Advertising Internet (social networking e.g. Facebook) Radio ads Ads on televisions Printed media

7. Public Relations

Benefits

Omore have an image of full cream milk which helps to build image of omore as icecream enriched with milk.

Competion

Walls n many other local products still dont have such image of producing dairy icecream.

Vision

Omore wants to build animage of being a product from brand which is the biggest achievement of a brand, whenever people think about icecream only omore´comes to their mind.

Engro Foods vs Unilever Foods 2013

Omore Besant Event Lahore Concerts Sea view festival in Karachi at launch

8. Pricing

Omoré Market penetration pricing (A new product pricing strategy to keep in view the competition (walls) to capture the market, their pricing strategy is based on ‘Competition-based Pricing’, the price of its competitor (Walls) is more or less the same.

Product line pricing classifies as: Frooze RS-(5-10-12-15) Range of family packs RS-(150-120-105), Range of individual ice creams (10-15-20-30) Rupees.

Price varies for different ice creams. Depending upon:

Cups = 20rs

Cones= 30rs

Ice Pop: 10rs

Soft service cream= Rs 10-50-1Ltr ice cream

Tub= Rs 150-2ltr ice-cream Tub = Rs 275

9. Place

Channels

Sells directly to the end user through retailers and shopkeepers. This is the trend in Pakistan followed by many FMCGs.

Coverage

Omore ice cream in starting is only available in limited areas in Punjab.

Transport

Ice cream is transported to retailer and shopkeeper through private transaction firms e.g. Abu Dawood Logistics and also through a few trucks owned by the company. This is done in order to remove transportation and vehicle costs.

Engro Foods vs Unilever Foods 2013

Location

Available at large/medium sized and small bakeries, grocery stores and pharmacies in many cities.

10. Product

A wide range of dairy ice creams and frozen desserts introduced by omore when it enters in business. Some names of omore ice cream product, Froze ice pops, Nutty/ Caramel Cones, Strawberry/Mango/Vanilla Affair, Kulfi, Froze Cups etc.

11. Augmented product

Provides ingredients and nutrition information on the packaging and contact information for comments and queries.

12. Quality

Premium ice cream rich in calcium which is fresh every time and meets hygienic and nutritious standards.

13. Packing

High quality and eye catching packaging. Packaging color ranges from red, blue, yellow, orange and green. Packaging is colorful in order to attract children.

Unilever Defensive Strategy to Compete Omore

1. Marketing objectives of walls when Omore launched

Increase walls ice cream parlors in areas. 10% increase in sale volume. Positive growth of company is to be maintained. New innovative style of packaging developed to enhance the packaging and to attract

customers.

2. Market Segmentation of walls

Geographic

WALL’S have segmented its market in four sections in Demographic:

Engro Foods vs Unilever Foods 2013

Pakistan such as South, which is Karachi to Sadqabad and then Central from Sadqabad to Gujranwala and then North from Gujranwala to upside country.

Demographic

Demographic variables of WALL’S target market are mostly age and income based. WALL’S have created many sorts of ice creams to cater all age groups. The most popular ice creams amongst kids are Paddle pop, in teenagers Cornetto and Magnum, commercial packs are popular in families as whole. WALL’S cater both females and males in the society. If we consider the income segmentation, WALL’S is targeting upper, middle, and lower middle income levels.

Psychographic

The psychographic segmenting is done on the basis of the taste and health conscious consumer. WALL’S targeted its market by creating an image of high quality and hygienic products. WALL’S was for “anyone, anywhere and at any time”, this very well explains psychographic characteristic of WALL’S consumer. Also relating fun and Shugal with ice cream helps depicting the life style of its potential user.

Behavioral

The behavioral segmentation is done on three different variables that tend to define a particular behavior or attitude of a consumer. These are:

– Occasions Regular occasions and special occasions.– Usage rate

Thand hai to kya hua!!– Benefits

Quality, presentation and taste.

Promotion

Promotional strategies of WALL’s ice-cream are consistent. It uses Pull strategy for promoting its product because WALL’s spent a lot on advertising and consumer promotion to build up consumer demand. There are two main distribution strategies which are:

– Pull strategy – Push strategy

Walls have very effectively used both of their strategies and its distribution plan has elements of both of them when omore comes in 2009.

Engro Foods vs Unilever Foods 2013

Push Strategy

Features of push strategy include incentives like free deep freezers, discounts on bulk purchases for retailers and eligibility for schemes such as free camera tickets based on specific columns of ice creams sole and lucky draw toys gifts hampers for children.

Pull Strategy

Pull strategy is supported by advertising campaign that reminds and persuades customers to buy ice cream. This is facilitated by price off which are frequently offered by the company.

Promotional Tools

Following promotional tools used by walls.

– Advertising – Sales promotion – Publicity

Advertising

The theme of advertisement varies with the product image and positioning. But walls follow the same theme internally. The advertisement run on TV is made in for foreign countries but now they hire Nori, Call the band & other prominent stars for their promotion.

Sales Promotion

WALL’S has been going a number of sales promotion activities like the:

Cycling System

WALL’S started its cycling system for awareness but after that its task was modified into doing sales promotions for the company. And also cycling system has proved excellent in terms of sales and promotion.

Discount Coupons

WALL’S launches very low price products for the purpose of both market expansion and sales promotion. Like Solo for Rs.2 and Liter pack for Rs.45 was also to boost sales.

Discounts and Offerings

Wall’s offered 5% discount in off-season.

Engro Foods vs Unilever Foods 2013

Public Relations

For strengthening itself in relationship markets WALL’S is not only going for customer satisfaction but also stressing upon building strong public relations to compete omore newly coming competitor.

1. Customers

– Price discounts– Quantity discounts

2. Distributors

– Shares 50% of the distributors' expenses– Off season discounts: 5%

3. Retailers

– Free freezers to retailers– Investment on each retailer: Rs. 22,000– Free freezers’ maintenance

4. Street Vendors

– Free Tikes – To strengthen its relationship with the various public and customers WALL’s

sponsors an Art exhibition

Engro Foods vs Unilever Foods 2013

Financial Analysis of Unilever Foods Vs Engro Foods

Sales Comparison29

Year Unilever Foods % Change Engro Foods % Change

2007 2,376,408 100% 3,631,000 100%

2008 3,081,879 129.68% 8,173,000 225.08%

2009 3,376,511 109.56% 14,665,000 179.43%

2010 4,040,887 119.67% 20,945,000 142.82%

2011 4,940,251 122.25% 29,859,000 142.55%

2012 5,861,096 118.63% 40,179,000 134.74%

As the entrance of engro in foods reduced the percentage increase in sales of Unilever food. In 2008 engroo sales increased up to great extent which affected on Unliver foods sales. After 2008 Uniliver adopted defensive strategy to enhance to sustain his sales growth that resulted in stability of Uniliver sales but decrease the aggressive upward trend of engro foods sales, however in 2012 still the increasing trend in sales is greater than Uniliver sale.

29 Annual Report of Unilever foods & Engro Foods 2012

Engro Foods vs Unilever Foods 2013

Profit & Losses30

Year Unilever Foods Engro Foods

2007 224,492,000 (620,000,000)

2008 348,546,000 (554,000,000)

2009 176,792,000 (433,000,000)

2010 437,463,000 176,000,000

2011 616,695,000 891,000,000

2012 715,172,000 2,595,000,000

As in 2007 and 2008 the engro foods was under establishment the operating expenses of engro foods was quite greater that resulted net loss to engro foods however there sales were very high. Engro foods was in loss upto 2009..after 2009 the balance between sales and operating expenses substantially come into harmony and engro food obtained the profit of 176,000 thousands rupees. And the very next year its profit increased upto 500% by previous year profit. The sudden increasing profit trend of engro in 2011 made inverse effect to unilever profit trend.

Forecast Sales

Year Unilever Foods Engro Foods31

2013 71,450,000 53,394,000

2014 84,300,000 66,154,000

2015 91,600,000 75,543,000

30 Annual Report of Unilever foods & Engro Foods 201231 http://www.4-traders.com/ENGRO-FOODS-LTD-10879055/financials/

Engro Foods vs Unilever Foods 2013

Product Range of Both Companies32

Product Range Walls Omore

Price Range Price Range

Ice-Lollies Rs.15/- to Rs.25/- Rs.8/- to Rs.25/-

Tubs Rs.240/- (1 Ltr) to Rs.375/-(2 Ltr) Rs.325/- to Rs.450/-(2 Ltr)

Bricks Rs.100/- to Rs.175/- Rs.100/- to Rs.175/-(1.5 Ltr)

Cups Rs.15/- Rs.15/- to Rs.35/-

Cones Rs.35/- to Rs.40/- Rs.35/- to Rs.40/-

Sticks Rs.10/- to Rs.85/- Rs.8/- to Rs.25/-

The product ranges are shown in above table. Omore ice cream is little expensive in tubs rates, where as the other are almost same except in sticks. Omore most expensive stick is Rs. 25 where as walls had Rs.85.

  Suggestions and recommendation for Engro Foods

Following are the suggestions and recommendations for EFL.

The co-ordination between different departments of EFL should be improved it will lessen the bureaucratic cost and increase the efficiency of the company.

The activities like customer satisfaction day should be performed on regular basis so the company should know the feedback and satisfaction level of customers regarding the product and the image of the company.

The shopkeeper complains that EFL is not providing replacement for the expired products, EFL should provide proper replacement to the shopkeeper to enhance the image of the company, and create better working relations with such an important stakeholders.

32 Personally visit to store and gather the price information.

Engro Foods vs Unilever Foods 2013

EFL has shifted to branding concept but it really has not adopted it fully, for smoother working of the different brands, the sales teams should merged with respective brand management.

There is no check on the performance of the distributor, and this has led to huge problems in the delivery of many products in some areas of the city

They should also start to manufacture powder milk in order to meet the domestic demand and so that it can be helpful in saving the foreign exchange that is expensed in import in the powder milk from foreign countries.

The company should explore the market potential in a way, so that it can utilize its full capacity in order to gain economies of scale in the production.

At the moment the company is using focus marketing approach that only that segment is approached which highly attractive for the company but it should also develop the marketing program that distinguishes the characteristics of existing available substitutes to their highly quality & hygiene oriented product.

The company should also develop an integrated awareness plan in order to aware the people about the quality of the UHT milk as compared to other pasteurized or loose/fresh milk.