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Project on Premier Dairies

Submitted To:
Mam IRAM TANVIR

Comsats Institute of Information and Technology

Executive Summary
This project is all about entrance in a new market or expansion of market with the existing products of PREMIER DAIRY. The main objective of this project is to identify the factors for the company Premium Dairy that how it compete its competitors in different market places. The IE matrix is showing that Premium Dairy falls in 5th quadrant. The strategies implement on this quadrant are Market Development and market penetration. These strategies emphasize more on investment to develop new market. The Grand strategy also shows the results like IE matrix. Company has to do something better to get a good position in respect to competitive position and to get a big market share. All the mathematical models show that PREMIUM DAIRY falls at a low level in competitive position. All other firms of dairy products like Nestle, Haleeb, Angro foods have huge market share and have a rapid market growth which is increasing their market share. First of all Company should increase its capacity of production by applying expansion strategies. Company should make marketing strategies to enter in a new market place. The process of working should be more effective. The company must follow the forecasting results for the production target. Company should invest more to increase its capacity. Company should focus on the product specifications to get competitive edge. The marketing mathematical models, tools and techniques were used in it like IFE, EFE, CPM, TOWS, IE MATRIX, and GRAND STRATEGY MODEL.

Table of Contents
Executive Summary....................................................................................................................................... 3 INTRODUCTION ............................................................................................................................................. 6 Product ...................................................................................................................................................... 7 VISION ........................................................................................................................................................... 8 MISSION STATEMENT ................................................................................................................................... 8 Industry Analysis ........................................................................................................................................... 9 PEST ANALYSIS ............................................................................................................................................ 10 POLITICAL CONDITIONS: ......................................................................................................................... 10 ECONOMICAL CONDITIONS: ................................................................................................................... 10 SOCIAL CONDITIONS: .............................................................................................................................. 10 TECHNOLOGICAL CONDITIONS: .............................................................................................................. 10 Poter Five Forces for Milk Processing ......................................................................................................... 11 Intensity of Rivalry: ................................................................................................................................. 11 Threat of New Entrance: ......................................................................................................................... 11 Threat of Substitute products: ................................................................................................................ 12 Threats of buyer bargaining power: ....................................................................................................... 12 Threats of supplier bargaining power: .................................................................................................... 12 SOWT .......................................................................................................................................................... 13 IFE ................................................................................................................................................................ 14 EFE ............................................................................................................................................................... 15 CPM ............................................................................................................................................................. 16 Total Weighted Score ...................................................................................................................... 17 BCG MATRIX ................................................................................................................................................ 18 Threats, Opportunities, Weakness, Strengths (TOWS) ............................................................................... 19 Ans of Product market development.......................................................................................................... 20 IE Matrix ...................................................................................................................................................... 21 Grand Strategy Matrix ................................................................................................................................ 23 Porters Business Strategies ......................................................................................................................... 25 Stage 3 Decision Stage ................................................................................................................................ 26 Quantitative Strategic Planning Matrix (QSPM) ..................................................................................... 26 Strategy Pyramid ......................................................................................................................................... 29 4

I. MARKET ANALYSIS.............................................................................................................................. 29 A. Target Market ................................................................................................................................. 29 B. Competition ................................................................................................................................... 30 C. Environment .................................................................................................................................. 31 II. PRODUCT OR SERVICE ANALYSIS ........................................................................................................ 32 A. Description ..................................................................................................................................... 32 B. Comparison .................................................................................................................................... 32 C. Some Considerations ..................................................................................................................... 32 III. MARKETING STRATEGIES - MARKET MIX ........................................................................................... 33 A. Image.............................................................................................................................................. 33 B. Features.......................................................................................................................................... 33 C. Pricing ............................................................................................................................................ 33 E. Advertising/Promotion................................................................................................................... 34 REFERENCES ................................................................................................................................................ 36

INTRODUCTION

Premier Dairies was incorporated in 1999s. The Head Office & Plant is situated at 2-km Defence road, Off Raiwind Road Lahore. Commercial production of dry milk powder was started in 2000. The powder was introduced in the market in bulk form and in consumer packing. In year 2004, company lunched UHT packed milk and Desi Ghee in Tins. In order to improve its processes and make the system more visible and to identify the shortcomings, Premier Dairies decided to implement the concept of TQM. As an initial step, the management opted to acquire ISO 9000 certification. In 2000, it also started production of butter and ghee for its SHEREN MEHAL Outlets with brand name ANMOL. At start two types of powder were produced, SKIM Milk Powder & FULL CREAM Milk Powder. Later in 2001, Premier Dairies launched VEGETABLE FAT FILLED Milk Powder first time in Pakistan, which attracted many multinational companies In 2004, Premier Dairies installed UHT & Tetra Pak and launched its product with brand name VANIA Milk pack size of 250ml. Premier Dairies has its distribution network in all major cities of Punjab, NWFP and Baluchistan. Major customers of Premier Dairies Powder Products are LU Biscuits, EBM, Unilever, Walls Ice Cream, Hico Ice Cream, Silver Lake Foods, Asian Foods (Mayfair), Pakistan Army and many Pharmaceutical companies. Since 2000 Premier Dairies is working on the aspect of life to provide pasteurized milk in a healthy way. We collect best milk from its reliable resources. After its careful and diffe rent checking processes 'PURE & FRESH' milk is extracted and produced in the form of "VANIA" milk. Premier Dairies has other many valuable products too, mentioned below. For details follow the appropriate link.

Product
The wide range of pure dairy products has a significant impact on the improvement of health of people. Dairy brands of Premier Dairies play a major role in the nutritional building of human body. These instant and full of taste products help you growing faster and healthier Butter Vania milk Butter oil Cream Pure Desi Ghee instant skimmed milked powder(ISMP) Vegetable fat filled milk powder(VFFMP) Instant full cream milk powder(IFCMP)

Plant Establishment Overall Production Capacity Capacity for UHT MILK Capacity for POWDER MILK UHT Machines UHT MACHINE 1 Capacity UHT MACHINE 2 Capacity

Year 2000 250,000lit 60,000-70,000lit 200,000lit 2 200ml 250ml

VISION
Our vision is initially focus on dairy products and become a fast growing company in Pakistan that consumer enjoy our product in every home every day.

MISSION STATEMENT
To offer dairy products of high quality to the middle class, at affordable price and to facilitate our employees and society, while maximizing the stakeholders interest.

Industry Analysis

PEST ANALYSIS
POLITICAL CONDITIONS:
The political conditions are not very stable in the country, but this does not directly influence the trends and spending patterns of the customers. There are no restrictions or barriers on the growth of this industry. So the political conditions are favorable fir this market because food and dairy products are consumer goods and they have to purchase it in any condition.

ECONOMICAL CONDITIONS:
The economic conditions are not very favorable and the economy is facing problems, but it is directly influencing buying power of consumers it will further boost up growth of this industry, as people will feel more secure economically and it will further increase the attractiveness of the market.

SOCIAL CONDITIONS:
The social patterns are changing in the country, as the world is becoming a global village, and mutually share and accept patterns. People are becoming more attractive towards the branded products. It is becoming fashion and young generations as well as the children are getting more attracted towards this industry. People are moving towards branded food / dairy products due to hygienic reason

TECHNOLOGICAL CONDITIONS:
High technology is the basic requirement of dairy and food industry. The companies that are using latest technology have some cost benefits over the companies, which are not using latest technology. The key to survival for companies in this industry is using high technology for quality and cost purposes.

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Poter Five Forces for Milk Processing

Intensity of Rivalry:
The major competitors in the milk industry are Haleeb, Nestle, NurPur and Halla. We can say that Haleeb is a major rivalry of Premier Dairies and Premier Dairies is the Major rivalry of Haleeb as their market shares are high than some other companies. The target market of all these companies is same and to attract their target market they make strategies and due to these strategies the competition is becoming tough. And all the companies are trying to get more market share against their competitors.

Threat of New Entrance:

In this industry entry barriers are high for the new entrants; it is much difficult to enter in the market because the companies who have already big shares in this market can easily defeat the new and infants competitors. Another threat for new entrants is that they cannot survive in the market because the existing leading companies have strong brand name and it will take a long time for new entrance to make their brand image. The one of the threat in entrance is the need of high budget for starting the project or installing a plant for processing milk unit, the total cost of the project is estimated, by Smeda, to be about Rs 29.4 million, out of which the capital cost of the project is Rs 26.7 million. Total infrastructure cost of 13 thousand sqft would be about Rs 842,388. The high budget is also required for advertisement and creating awareness in public so these are the great threat for the new entrance. For the new Entrants there is another threat of Technology because for UHT milk new entrants should make their UHT plant which is the expensive deal.

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Threat of Substitute products:

The substitute of processed milk or pasteurized milk is gawala Milk. Even now almost 95% to 98% population is using gawalas milk. We can say that Gawalas are the biggest threat in shape of substitute. Processed milk/UHT milk, Pasteurized, powder milk and Gawala milk are the substitute of each other.

Threats of buyer bargaining power:

The buyers of mostly milk companies are mainly distributors. These distributors buy the products from manufacturers and sell it to the Retailers. The bargaining power of distributors is high because distributors are the only medium through which companies reaches to the retailers. And distributors are an outsider they are not the part of milk companies but Premier Diaries and nestle is now creating strategic relationship with its supplier. The buyers of tetra pack milk have a bargaining power in such a way like they can buy open milk which have relatively low price than the tetra pack milk. As there is no such difference in the prices of tetra pack or UHT milk and pasteurize so buyer of these brands can change their decision only on the basis of good quality offered by some brand.

Threats of supplier bargaining power:

The one of the supplier of Tetra Pak for tetra pack milk industry is Packages Ltd. who supplies the Tetra for the packaging of Milk. As Packages is providing a major material in shape of Tetra Pak, so due to this reason it has also high bargaining power. The other reason of higher bargaining power is that Packages is the only industry in Pakistan who is providing tetra Pak. So it means there is a threat for milk industry as they have low bargaining power and there is an opportunity for new investors to invest their money in the Tetra pack industry. But on the other hand the supplier power is low in sense of raw milk purchasing because the raw milk is major input in the milk processing plant. And in milk market there a lot of suppliers like Ruler milk trader, Milk collection center, Retailers, and Dairies Farm.

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SOWT
Strength
Low Cost Quality Links Government Tender Huge Market Share In KPK Powder Milk Tetra Milk Own Supplier

Opportunity

Punjab Market lower Middle Class New Technologies and production practices

Weakness
Market Share Production Capacity Mature Market Promotion Brand Image

Threat

Competitors Law & order (Transportation) Energy Crises

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IFE
Weight Rate Strength
Low Cost Quality Links Government Tender Huge Market Share In KPK Powder Milk Tetra Milk Own Supplier 0.1 0.15 0.08 0.08 0.1 0.08 0.08 0.05 4 3 4 3 4 3 3 3 0.4 0.45 0.32 0.24 0.4 0.24 0.24 0.15 Weight Score

Weakness
Market Share Production Capacity Mature Market Promotion Brand Image 0.07 0.05 0.03 0.05 0.08 1 2 1 2 2 1 0.14 0.05 0.06 0.1 0.08 2.87 Above Ave

1 2 3 4

Major Weakness Minor Weakness Minor Strength Major Strength

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EFE
Weight Score Weighted Score

Opportunity
Punjab Market lower Middle Class New Technologies and production practices 0.1 0.2 0.2 1 2 3 0.2 0.4 0.6

Threat
Competitors Law & order (Transportation) Energy Crises 0.2 0.2 0.1 1 1 3 2 0.2 0.6 0.2 2.2 Average Response

4 3 2 1

superior response above average response average response poor response

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CPM
Competitive profile matrix is an essential strategic management tool to compare the firm with the major players of the industry. Competitive profile matrix shows the clear picture to the firm about their strong points and weak points relative to their competitors. The CPM score is measured on basis of critical success factors, each factor is measured in same scale mean the weight remain same for every firm only rating varies. The best thing about CPM that it includes your firm and also facilitates to add other competitors make easier the comparative analysis. IFE matrix only internal factors are evaluated and in EFE matrix external factors are evaluated but CPM include both internal and external factors to evaluate overall position of the firm with respective to their major competitors.

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Total Weighted Score The sum of all weighted score is equal to the total weighted score final value of total weighted score should be between ranges 1.0 (low) to 4.0(high). The average weighted score for CPM matrix is 2.5 any company total weighted score fall below 2.5 consider as weak. The company total weighted score higher than 2.5 is consider as strong in position. The other dimension of CPM is the firm with higher total weighted score considered as the winner among the competitors. So from the above result the company is little bit strong from their competitors.

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BCG MATRIX

Market Share

Vania instant Milk

Vania Gift of Nature

Mojo Juice
Vania Pure Desi Ghee

Cream

Pure Gold (Skimmed Milk Powder)

Sunrise instant vegetable fat milk Cheetah Tea Whitener

Green Valley (full Cream Milk Powder)

Top Star Tea Whitener

Taza Dum

Butter

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Threats, Opportunities, Weakness, Strengths (TOWS)

TOWS

Strengths
1. 2. 3. 4. 5. 6. 7. 8. SO Low Cost Quality Links Government Tender Huge Market Share In KPK Powder Milk Tetra Milk Own Supplier

Weakness
A. Market Share B. Production Capacity C. Mature Market D. Promotion E. Brand Image

WO

Opportunities
I. II. III. Punjab Market lower Middle Class New Technologies and production practices 1, l = Market development strategy. 3, ll = Market penetration A, l = New Product development (concentric diversification) Market development B, lll = Product development

ST

WT

Threats
a. Competitors b. Law & order (Transportation) c. Energy Crises 1, a = Growth and built strategy A, a = Market Development B, a = Product development

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Ans of Product market development

New Product

Existing Product

New Market

New Product Development and Diversification Product Development

MARKET DEVELOPMEN

Existing Market

Market Penetration

Product

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IE Matrix
In this stage we find out the company standing position in the industry. And use the above information to determine the strategy. In this section we do two analyses first is IE matrix analysis and second is Grand Matrix analysis. IE matrix The Internal-External (IE) matrix is another strategic management tool used to analyze working conditions and strategic position of a business. The Internal External Matrix or short IE matrix is based on an analysis of internal and external business factors which are combined into one suggestive model. The IE matrix is a continuation of the EFE matrix and IFE matrix models. The IE matrix is based on the following two criteria: 1. Score from the EFE matrix -- this score is plotted on the y-axis 2. Score from the IFE matrix -- plotted on the x-axis The IE matrix works in a way that you plot the total weighted score from the EFE matrix on the y axis and draw a horizontal line across the plane. Then you take the score calculated in the IFE matrix, plot it on the x axis, and draw a vertical line across the plane. The point where your horizontal line meets your vertical line is the determinant of your strategy. This point shows the strategy that your company should follow. On the x axis of the IE Matrix, an IFE total weighted score of 1.0 to 1.99 represents a weak internal position. A score of 2.0 to 2.99 is considered average. A score of 3.0 to 4.0 is strong. On the y axis, an EFE total weighted score of 1.0 to 1.99 is considered low. A score of 2.0 to 2.99 is medium. A score of 3.0 to 4.0 is high.

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The IE matrix can be divided into three major regions that have different strategy implications. Cells I, II, and III suggest the grow and build strategy. This means intensive and aggressive tactical strategies. Your strategies should focus on market penetration, market development, and product development. From the operational perspective, a backward integration, forward integration, and horizontal integration should also be considered. Cells IV, V, and VI suggest the hold and maintain strategy. In this case, your tactical strategies should focus on market penetration and product development. Cells VII, VIII, and IX are characterized with the harvest or exit strategy. If costs for rejuvenating the business are low, then it should be attempted to revitalize the business. In other cases, aggressive cost management is a way to play the end game. So according to above fig Premier Dairies falls in cell no. 5. The strategy which we use is below there Market Penetration Product Development Market Development

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Grand Strategy Matrix

Grand Strategy Selection Matrix has become an effective tool in devising alternative strategies. The matrix is based on the following four important elements. Rapid market growth Slow market growth Strong competitive position Weak competitive position. With the result, the matrix can be adapted to choose the best strategy based on the current growth and competitive state of the company. A huge company with many divisions can also plot its divisions in these four quadrants Grand Strategy Matrix by formulating the best strategy for each division. The management must select the strategy that is cohesive with the market and competitive position. Broadly speaking the four elements of GSSM can be described as two evaluative dimensions of market growth and competitive position.

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Qurdant-2 contains that companys weak competitive situation and High market growth. The firms fall in this quadrant compete in high-growth industries and have weak competitive positions. These firms must make some drastic changes quickly to avoid further demise and possible liquidation. Market Development and Product Development should be pursued first. An alternative strategy is to shift resources away from the current business into different areas. The strategy which we fellow in quadrant 2 is given below New product development Market Development Horizontal/Vertical integration Liquidation/ Divestiture

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Porters Business Strategies

Cost

Differentiation

Broad

Cost Leadership

Differentiation

Narrow

Cost Focus

Focus Strategy

Premier Dairies Fall in Cost Focus Strategy because company is in growing stage and they focus on cost their product price is low from their competitors.

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Stage 3 Decision Stage

The third and final stage of the strategic analysis of the company is the decision stage. Here the input from stage 1 and matching results from stage 2 are used and analyzed to decide among alternative strategies. Following models are used at this stage:

Porters Generic Strategies QSPM Implementation Payoff Matrix

Quantitative Strategic Planning Matrix (QSPM)

The Quantitative Strategic Planning Matrix or a QSPM approach attempts to objectively select the best strategy using inputs from stage 1 analyses, matches them with results from stage 2 analyses, and then decides objectively among alternative strategies.

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QSPM (Premier Dairies)

Weight Key Factors Strengths
Low Cost Quality Links Government Tender Huge Market Share In KPK Powder Milk Tetra Milk Own Supplier 0.1 0.15 0.08 0.08 0.1 0.08 0.08 0.05 4 4 4 3 3 2 4 3 0.4 0.6 0.32 0.24 0.3 0.16 0.32 0.15 4 4 1 1 1 1 2 1 0.4 0.6 0.08 0.08 0.1 0.08 0.16 0.05

Market Development AS TAS

Product Development AS TAS

Weaknesses
Market Share Production Capacity Mature Market Promotion Brand Image Sum 0.07 0.05 0.03 0.05 0.08 1 4 3 3 3 4 0.28 0.15 0.09 0.15 0.32 4 4 3 1 3 0.28 0.2 0.09 0.05 0.24

Opportunities Punjab Market 0.1 4 lower Middle Class 0.2 3 New Technologies and production 0.2 practices 1 Threats Competitors Law & order (Transportation) Energy Crises Sum

0.4 0.6 0.2

3 1 4

0.3 0.2 0.8

0.2 0.2 0.1 1

4 1 1

0.8 0.2 0.1

4 1 3

0.8 0.2 0.3

Total Attractiveness Score

5.98

>

5.01

0 Not Relevant 1 Not Acceptable 2 Possibly Acceptable 3 Probably Acceptable 4 Most Acceptable

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The QSPM analysis shows that the Premier Dairies Limited should follow the Market Development strategy. The score for Market Development is greater than the score for Product Development strategy.

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Strategy Pyramid

I. MARKET ANALYSIS
A. Target Market - LAHORE

1. We will be selling primarily to..

Total Percent of Business a. Wholesalers b. Retailers c. Government d. Other 35 25 30 10 % % % %

2. We will be targeting customers by: a. Product line we will target specific lines Powder Milk and Tetra Pack Milk
b. Geographic area? Which areas?

1. Side Areas of Raiwand Road 2. West Area of Canal Road. These areas include the followings i. ii. iii. iv. v. vi. Mugalpura Shadman Shalamar Baghbanpura Alama iqbal Town Side areas of Multan Roads

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vii. viii. ix.

Shahdra Garhi Shahu Krishen nager

c. Sales? We will target sales of 1. Vania Milk 2. Instant Skimmed milk powder (ISMP) 3. Instant full cream Milk Powder (IFCMP)
3. How much will our selected market spend on our type of product or service this coming year? $_______________

B. Competition
1. Who are our competitors? NAME Address

Nestle Milkpak Limited Sheikhupura 1981

46%

Years in business Market share

NAME ADDRESS

Haleeb Foods Limited Bhai Pheru 1986

42%

Years in business Market share

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2.

How competitive is the market? Highly Competitive

C. Environment
1. The following are some important economic factors that will affect our product 1. Per Capita income 2. Energy Prices 3. Taxes
4.

Economic Trends

2. The following are some important government factors: Political Stability Governmental Policies and Regulation Law and Order

4. The following are other environmental factors that will affect our market, but over which we have no control: Natural Disasters Political Conditions

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II. PRODUCT OR SERVICE ANALYSIS

A. Description 1. Describe here what the product is Tetra Pack Milk and Powder Milk 1. Health satisfaction requirement 2. Serve as a tea whitener B. Comparison 1. What advantages does our product have over those of the competition? 1. Quality 2. Price 3. Taste
4.

Special Planning

2. What disadvantages does it have? 1. Customer Know How 2. Market Share C. Some Considerations 1. Where will you get your materials and supplies? Self-Collection Units (Okara, Chechawatnee, Sahiwal)

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2. List other considerations: Production Capacity

III. MARKETING STRATEGIES - MARKET MIX

A. Image 1. First, what kind of image do we want to have? Cheap but good Customer-oriented
B. Features

1. List the features we will emphasize: a. Nutritional building of human body b. Freshness of milk c. Quality of diet

C. Pricing 1. We will be using the following pricing strategy: a. Markup on cost b. Suggested price c. Competitive d. Below competition e. Premium price ____ ____ ____ ____ ____ What % markup? ______

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2. Are our prices in line with our image? YES___ NO___

3. Do our prices cover costs and leave a margin of profit? YES___ NO___

E. Advertising/Promotion 1. These are the things we wish to say about the business: Premier Dairy does not spending money on advertisement and promotions. To enter into a market having intense competition it should have to spend on advertisement in order to create product awareness and Brand image.

2. We will use the following advertising/promotion sources: 1. Television 2. Radio 3. Direct mail 4. Personal contacts 5. Trade associations 6. Newspaper 7. Magazines 8. Yellow Pages 9. Billboard 10. Other 0 0 0 4 0 3 1 0 2 1

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Ranking are 1 to 5 3. The following are the reasons why we consider the media we have chosen to be the most effective: All the medias we have chosen are less expensive. They will allow us to target the specific areas according to our requirements. A large portion of the market can be targeted through these medias They will incur less cost to the organization

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REFERENCES
www.premierdairies.com www.google.com www.sameda.org

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