Federal Urdu University of Arts Science and Technology Islamabad Marketing Plan Olpers Engro Food

Submitted to: Imran Mir Submitted By:

M.Shehriyar Khan Awais Safdar

Table of Contents
Acknowledgements ......................................................................................................................... 3 EXECUTIVE SUMMARY ............................................................................................................ 4 Milking the Market: ........................................................................................................................ 4 Engro Foods History...................................................................................................................... 5 From Esso to Engro: ................................................................................................................... 5 Vision .......................................................................................................................................... 6 Milk Procurement ....................................................................................................................... 6 Production ................................................................................................................................... 6 Supply and Distribution .............................................................................................................. 6 Segmenting Targeting and Positioning ........................................................................................... 6 Segmenting and targeting the market for Olpers ....................................................................... 6 Positioning the brand .................................................................................................................. 6 SWOT Analysis .............................................................................................................................. 7 Strengths ..................................................................................................................................... 7 Engros Back ............................................................................................................................... 7 PR with farmers .......................................................................................................................... 7 Positive response from customers ............................................................................................... 7 Third-Generation Plant ............................................................................................................... 7 Weaknesses ..................................................................................................................................... 7 Olwell TVC ................................................................................................................................. 7 Low Quality Milk ....................................................................................................................... 8 Packaging .................................................................................................................................... 8 Narrow brand portfolio ............................................................................................................... 8 Opportunities................................................................................................................................... 8 Increased funding by Government .............................................................................................. 8 Awareness ................................................................................................................................... 8 Third largest producer of milk .................................................................................................... 8 Threats............................................................................................................................................. 9 Competition................................................................................................................................. 9 Ads of Olwell also threat from Customer: .................................................................................. 9 Perceptions and Price Differentials ............................................................................................. 9

Marketing Mix ................................................................................................................................ 9 Product ........................................................................................................................................ 9 Olpers Milk Olpers Cream Olwell Hi-Cal Lo-Fat (HCFL) Milk Tarang: Omore Ice cream: ...................................................................... 9 ................................................................. 10 ............................................................... 10 ................................................... 11 ......................................................... 11

Placement & Distribution ......................................................................................................... 11 Price .......................................................................................................................................... 12 Milk Size (ml) and Prices ...................................................................................................... 12 Promotion & Advertising .......................................................................................................... 12 Media selection: .................................................................................................................... 12 Advertising: .......................................................................................................................... 13 Building customer based brand equity...................................................................................... 13 Measuring customer-based brand equity ...................................................................................... 14 Managing customer-based brand equity ................................................................................... 14 Sales Forecast: .............................................................................................................................. 14 Engro Foods expansion on a bigger scale ..................................................................................... 15 Future plans ................................................................................................................................... 15

Acknowledgements
I would like to thank Mr. Imran Mir for giving us the opportunity of working on this report on Olper. His guidelines have been very useful for us in preparing this report .He helped us find new ways of being innovative and creative This report has enabled us to apply all that we studied in class and gave us the chance to enhance our knowledge. This report would not have been possible without his cooperation and continuous direction. We would also like to thank Mr. Farrukh, Regional Sales Officer at ENGRO Foods who spare sometime for us so that we could conduct the interviews with him. It is true that his responses in the interview have been very helpful. Last but not the least we would like to thank our families for their incessant support and approval.

EXECUTIVE SUMMARY
This report is about the marketing of Olpers from the time when ENGRO foods came up with the idea of adding a new product line to their already well established and long set of product lines to the point that they are still heavily promoting their product. We start by giving a brief history about Olpers and how it came into existence. We talk about the corporate structure and organizational hierarchy of ENGRO Fertilizers, its mission statement and the vision. We move further with its goals that it has thought about for Olpers and eventually the type of organizational culture of the organization. We discuss the types of marketing research conducted by the company before introducing it to the market and how they have segmented its target market and positioned the product in the minds of the consumers. We discuss the SWOT analysis in which we talk about the strengths, weaknesses, opportunities, and threats the organization is facing since its product was launched. We move further to talk about a variety of marketing strategies employed at different stages of the product life cycle, that is promoting the product and making consumers aware of Olpers, using the 4 Ps to the best of their abilities. The report also confers about the role brand equity played in increasing the sales for Olpers. Firstly, there are the various ways employed by the brand managers to build and measure brand equity and once the customers start to accept it then how they have managed the brand equity of Olpers. We conclude the report by discussing the social responsibilities in which ENGRO Fertilizers is involved and the future plans of the organization for Olpers.

Milking the Market:

In the recent few months, it seemed that everywhere one looked, there was either a billboard, a TVC or a radio jingle promoting a brand of milk whether it was Haleeb, Nurpur, Pakola,

Nirala, or, recently, Olpers. But perhaps this isnt surprising after all. Pakistan, according to recent statistics, is the third largest milk producing country in the world (32 billion liters per year from 50 million animals, with urban consumption at nearly seven billion liters). However, despite this high ranking, packaged milk, even according to the most optimistic estimates, has a mere four percent penetration.

Engro Foods History

From Esso to Engro:
The proposal was approved by the government in 1964, which led to a fertilizer plant agreement signed in December that year. Subsequently in 1965, the Esso Pakistan Fertilizer Company Limited was incorporated, with 75% of the shares owned by Esso and 25% by the general public. The construction of a urea plant commenced at Daharki the following year with the annual capacity of 173,000 tons and production commenced in 1968. At US $ 43 million, it was the single largest foreign investment by an MNC in the country. As part of an international name change program, Esso became Exxon in 1978 and the company was renamed Exxon Chemical Pakistan Limited. The company continued to prosper as it relentlessly pursued productivity gains and strived to attain professional excellence. In 1991, Exxon decided to divest its fertilizer business on a global basis. The employees of Exxon Chemical Pakistan Limited, in partnership with leading international and local financial institutions bought out Exxons 75 percent equity. This was at the time and perhaps still is the most successful employee buy-out in the corporate history of Pakistan. Renamed as Engro Chemical Pakistan Limited, the Company has gone from strength to strength, reflected in its consistent financial performance, growth of the core fertilizer business and diversification into other fields.

Engro Food:
Engro Foods (Pvt.) Limited (EFL) has been established in 2005 as part of a diversification process at the Engro Group. 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. Engro Foods has entered the Food business through milk processing and sale with the companys vision to pursue growth opportunities based on country fundamentals and own strength. It also positions the company to leverage its corporate social responsibility initiatives and work closely with rural communities to promote integrated farming and livestock development. This effort is expected to play a pivotal role in poverty alleviation and improving livelihoods of the poor in the milk collection areas.

Vision
"Our vision is to become a fast expanding mega foods company. To achieve our vision, the company will initially focus on dairy by investing a substantial amount in plant, milk collection capability and marketing. We are making concrete efforts to expand in and beyond Pakistan; through strategic international alliances, to eventually become global."

Milk Procurement
As all of our food products are milk based, the entire Milk Procurement department plays a critical role in defining the quality of the end product that reaches our customers. Ensuring regular collection of fresh and pure milk right from the farmer to the factory and ascertaining the freshness of milk all across the milk procurement process, is the responsibility of Milk Procurement department, consisting of food.

Production
Modern technology is part and parcel of Production at Engro Foods. The state-of-the-art plant set up near Sukkhar has a processing capacity of more than 300,000 litres of milk per day, making it one of the largest in the country. Professionally qualified human resource efficiently works night and day to maintain highest hygiene standards.

Supply and Distribution

This department ensures timely and effective distribution of the products to different shops and stores spread all across Pakistan. From transportation management to obtaining route permits and approvals, is done by this department.

Segmenting Targeting and Positioning

Segmenting and targeting the market for Olpers
It is difficult for any one company to engage in mass production, mass distribution and mass promotion for its product. The complexities arise from the proliferation of advertising and distribution channels and the high costs associated with reaching a mass audience. Therefore, companies segment the market so that they can target the group of customers who share similar needs and wants. The milk sector shows a market that has homogeneous preferences that is the consumers have similar preferences. They want milk to be white, carefully processed, and good for health and bones. Keeping these things in mind Olpers market has been segmented. The marketers at Olpers have had a number of options available to them when segmenting the market for their products. So far company has introduced three new products: Olpers milk, Olwell diet milk and Olpers cream.

Positioning the brand

Positioning involves designing the product and image that will occupy a distinctive place in the minds of the target market. As can be seen, nestle milkpak and Haleeb have the largest profit margins and market share in the milk industry. Thus the marketers at Olpers have decided to

create its own unique image and then strengthen the position in the customers minds. They have done this by taking a number of following steps: 1. Packaging of Olpers milk and Olwell in red color and Olpers cream packed in purple color are quite different and distinctive from the typical green and blue packing used by other competitors.

SWOT Analysis
Strengths Engros Back
Olpers is a brand of ENGRO foods. This means that consumers can relate their former image of ENGRO foods to Olpers. ENGRO is a well established brand name in Fertilizer, IT and infrastructure business. It can also distribute the brand through better channels because of its long term relationship with distributors in the agriculture sector.

PR with farmers
ENGRO has been interacting with the farmers for fertilizers and has gained quite a good reputation over the years. It has led to a strong bond and long term relationship with the farmers who are willing to supply milk to the company. This is an added advantage and strength for the company.

Positive response from customers

In first year, EFL crossed 1.4 billion sales figure which shows customers satisfaction upon EFLs products. Its taste, quality proposition and world-class quality proposition system.

Third-Generation Plant
EFL only, has the third-generation UHT milk plant in the country. EFL plant is the only plant in Pakistan that uses Bactofuge technology to virtually eliminate bacteria and ensure premium quality and hygiene. Moreover, it is also setting up another milk processing plant in Central Punjab (Sahiwal) with an investment of Rs. 2 billion (US $ 33 million).

Weaknesses
Olwell TVC
Olwell ad which is based on Western life style, ENGRO foods brand management showed a man who put off his clothes & remain just in his undergarments, or half nude lady in a cat walk or men admiring the figures of a lady in mix gender health club. In this ad they are creating associations with the brand through the stripes, which is a highlight of Olwell packaging. Half naked people have been shown with tattoos of the same stripes in order to show that they are loyal consumers of Olwell. Also, the talent, situations and locations connects well with the ad to give Olwell a premium positioning. The brilliant marketing people at ENGRO Foods failed to

analyze is that the market they are targeted the ad on, is Pakistan, where practicing Muslims reside, who have strong religious beliefs.

Low Quality Milk

EFL is not having its own dairy farms; it largely collects loose milk from farmers & gwalas through its 40 milk collection centers, which sometimes is of low quality and impure because they add vegetable oil to milk to get higher prices.

Packaging
EFL is dependent upon Tetra Pak for the packaging of its entire dairy products. Tetra Pak is the only option available to Olpers for packaging because it is having monopoly in the packaging sector in Pakistan. Due to this reason, Tetra Pak can charge them higher and it could increase the production costs.

Narrow brand portfolio

It has been more than a year now, when EFL launched its first dairy product, Olpers Milk on March20, 2006. But EFLs brand portfolio still consists of just 3 products i.e. Olpers Milk, Olwell Milk and Olpers Cream. Whereas its competitors like Nestle and Haleeb Foods have a much diversified line of dairy products.But now they lauched Tarang and Omore Ice cream which is still slow growth to compete their competiotor.

Opportunities
Increased funding by Government
Government has decided to increase farmers funding. This is an opportunity for ENGRO foods because previously due to weather conditions and other reasons there was lots of wastage of milk but now that can be reduced as farmers will be better able to store milk for longer time periods.

Awareness
Growing dissatisfaction with loose milk and increasing awareness about health and hygiene issues have led to increased processed milk consumption.

Third largest producer of milk

Pakistan is the Third largest producer of milk in the world with a total production of 32 billion liter of milk a year, whose value is more than that of the combined value of wheat and cotton, from a total herd size of 50 million milch animals (buffaloes and cows). Livestock accounts for 46.8 percent of agricultural value added and about 10.8 percent of the GDP. Milk is the largest commodity from the livestock sector accounting for 51 percent of the total value of the sector. Due to the steps taken by the government and private sector, countrys annual milk production is expected to grow at an additional 3 billion litres in the next few years. This is quite an opportunity for ENGRO foods as there is lot of growth in this part of the sector.

Threats
Competition
Competition may pose a threat because the company will have to maintain its leadership in an expanding market so that it doesnt lose its market share to its competitors. For Olpers it might be difficult to penetrate in a market where the loyalties exist for such brands as Nestle and Haleeb. These brands have been in the milk industry far too long and have left a mark in the minds of consumers in terms of quality.

Ads of Olwell also threat from Customer:

The Ad of Olwell also threat from Customer because Olwell ad which is based on Western life style, ENGRO foods brand management showed a man who put off his clothes & remain just in his undergarments,our country is Islamic country, and it is against of our Islamic studies.

Perceptions and Price Differentials

Consumers perceptions and price differentials can cause a threat for the company. It is important that Olpers comes up to the expectations of the customers and fulfills its conformance quality that is the company meets its promised specifications. Consumers preferences change with time and prices might create certain barriers in terms of the profit margins for Olpers. For example, lose milk is still heaper than packaged milk and that is also one factor that people still prefer to buy lose. Despite these marketing endeavours, perceptions cannot change overnight; this requires patience and continuous investment to educate consumers on the benefits of packaged milk. Every products lifecycle consists of an introductory phase, growth phase and maturity phase. It takes time to change attitudes, especially in a culture where the concept of fresh milk is healthier option.

Marketing Mix
Product

Olpers Milk
Launched on March 20, 2006, Olpers milk is EFLs standardized and homogenized pure UHT (Ultra heat treated) milk with 3.5 % fat and 8.9 % solid non-fats. It is EFLs premier

brand, and the choice of quality-conscious consumers who only go for the best. It is available in easy-to-open, 6-layered Tetra Pak Brick Aseptic red packaging and comes with a 3 months shelf life.

Shipping Units
1 Litre (1000 ml ) : 12 packs per carton Litre (500 ml) : 12 packs per shrink-wrapped tray Litre (250 ml) : 27 packs per shrink-wrapped tray

Olpers Cream
The premium cream processed hygienically from pure fresh milk, Olpers Cream is luxuriously rich in its thickness & nutritional value. It promises the richest & scrumptious assortment of tempting toppings, delicious desserts and creamiest coffee with its unique taste, also great for eating with bread etc. It was launched on September, 2006 and comes in 6-layered Tetra Pak Brick aseptic purple color packaging with 6 months shelf life.

Shipping Units
Litre (250 ml) : 27 packs per shrink-wrapped tray

Olwell Hi-Cal Lo-Fat (HCFL) Milk

Launched on December 15, 2006, Olwell is a low-fat, high-calcium milk with the richness of pure milk. It is an ideal choice for weight-watchers and heart patients. It is also high in calcium content, which prevents osteoporosis. Packed in 6-layered Tetra Pak Brick Aseptic red packaging with easy-to-open plastic cap, it comes with a 3 months shelf life.

Shipping Units
1 Litre (1000 ml ) : 12 packs per carton Litre (500 ml) : 12 packs per shrink-wrapped tray

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Tarang:
The new Tarang is a fat free tea whitener, naturally low in cholesterol yet high in calcium. It is offering a premium valued milk that brings out a special taste in tea, and is now available in 200 & 500 ml packs. This tea whitener is 99 percent sugar free, has 70 percent less fat, and 30 percent less calories.

Omore Ice cream:

Sarfaraz A Rehman, Chief Executive of Engro Foods Limited, the producers of Olpers milk, knows very well these are tough times for businesses in Pakistan. And that it can be even more difficult when marketing a product like ice cream in times of never-ending power breakdowns across the country. Omore is the newest ice cream brand to hit the market and is the latest offering by Engro Foods. The brand, launched in March amidst soaring temperature, has brought new challenges for Rehman and his team. There is every possibility that the ice cream will melt when there is no electricity to run a refrigerator, he said in an interview with The News. But a bigger worry is that a retailer will not be willing to open the door of his shops refrigerator when there is a power cut. That could badly hurt sales, especially of a new brand.

Placement & Distribution

According to Mr. Ali Akbar, Director Marketing EFL, In order to succeed, you should ALWAYS capitalize on your STRENGHTS and NEVER on your COMPETITORS WEAKNESS! Engro Foods did exactly that. They used their decades of PR with farmers and used it to provide world-class supply-chain management for delivering the ultimate quality milk in Pakistan. Having kicked off simultaneously in 20 cities across Pakistan, the launch has been ambitious and currently Olpers is available in 80 cities across Pakistan. It reflects the companys intention to become a big player in the industry, both on a national and international level. EFL has divided Pakistan into five regions for milk distribution namely: Karachi, Lahore, Islamabad, Peshawar

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and Multan.,Olpers has gained a proper shelf placement in the presence of competitors like Nestle and Haleeb .

Price
EFL is pursuing the competitive pricing strategy for its products. In competitive pricing the price of the product is determined considering the price of major competitors like Nestle, Haleeb etc.

Milk Size (ml)

and Prices

Size ml 1000 500 250

Olpers 58 32 15

NestleMilkpak 58 32 15

Haleeb 58 32 15

HaleebDairyQuen 52 28 12

Olpers Cream Size (ml)

Size 250 Olpers 50

Price (Rs.)

Nestle 50

Haleeb Cream 50

Promotion & Advertising

Olpers launch was, perhaps one of the most aggressive as far as processed liquid milk (PLM) is concerned, with TVCs, print ads, radio commercials, billboards.Activities including direct consumer and shop branding activities. Due to this aggressive marketing campaign, the competition seems to be getting tougher. This can be gauged from the fact that Nestle relaunched its product packaging and marketing campaign just before Olpers launch.

Media selection:
They are typically using more than one communication media at a time; a behaviour that is often called multitasking. This group of consumers doesnt give its full attention to one single

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message, but rather uses continuous partial attention to scan the media. Marketers can still communicate with Generation Y by using a variety of targeted promotional tools.

Advertising:
Refer to APPENDIX H for detailed explanations
Output Television Radio Magazines Internet Outdoors Examples GeoTv,Indus Music,HumTV, AjTV FM 99.40, FM 100 ,FM 89,90 For girls: Akhbare jahah, Shuwa digest For boys: Sports Illustrated (or Kids edition) Banners on select websites (gaming, sports, etc.) Official promotional website: www.engro.com Billboards and prints in select areas including: Campuses, transportation (bus, metro, stations) Tourist areas in high seasonal periods Outskirts of key cities in geographical reach Not relevant Direct contact with retailers, sales kit strategies to be explained later in the text. Stands or special displays and events in schools, malls, sports events sponsorship activities Conferences, press releases (print and online), through TV coverage

Others Personal selling Public relations Publicity

Building customer based brand equity

Brand equity can be defined as the effects that marketing activities have on a particular brand. There are different types of brand equity but the one that the marketers are most concerned about the customer-based brand equity. Customer-based brand equity is an important element that marketers have to keep in mind before marketing any brand. Once the brand is introduced into the market it is important to build brand equity. This helps to improve sales and has long term benefits. ENGRO, although a separate name from Olpers has a very strong impact on the sales of Olpers. People know ENGRO because of its well established reputation in fertilization sector. Therefore, they hold a strong association in their minds for Olpers as well. There are different nodes that connect ENGRO to Olpers in the customers minds. The ads for Olpers do not show any link with ENGRO foods but the HR managers keep mentioning ENGRO in every press release of Olpers. .that is how people have associated Olpers with ENGRO. The sales figure for the first eight months of Olpers launch showed a number in billions. This is evidence that people have accepted the brand and liked it. Thus marketers have been successful in creating customer-based brand equity for Olpers. This could be due to strong associations with ENGRO in the minds of customers.

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The functional benefits include healthy bones, high calcium, good taste, while experiential benefits are that every morning starts with Olpers milk that is the tag line subah Bakhair Zindagi. Other experiential benefit is the variety that has come into the milk sector due to another brand entering the market. Olpers itself is a very distinctive name that is easy to remember and one that will stay in the memory for a long period of time.

Measuring customer-based brand equity

HR managers used questionnaires to find how customers feel about the brand. They used the indirect approach with different qualitative and projective techniques (the questionnaire contained some questions related to sentence completion and brand personality description). They used this to understand customers feelings for the brand. The managers agree that ENGRO Foods has helped improve the image for Olpers. They assessed the leverage of secondary associations in this case by comparing the companys characteristic with the characteristics of Olpers.

Managing customer-based brand equity

The organization is managing the customer based brand equity because they realize the significance of marketing activities and their effect on creating more value for the brand, and so by influencing brand knowledge, sales can be improved. Olpers is concentrating on the emotional aspect in their ads in order to focus on the core need of customers that can be satisfied. Olpers has also funded Womens exhibition in Karachi a few months ago and currently is sponsoring cricket World Cup 2007, and further adding more value to the brand and managing customer-based brand equity.

Sales Forecast:
Brands like Milk Pak (owned by Nestle) and Haleeb Milk (from Haleeb Foods) had led the dairy market in the worlds fourth largest milk producing country for nearly two decadeswithout any real sustained competition. Engro Foods, in contrast, had only recently been established by Engroa traditional giant in Pakistan's chemical and fertilizer (yes, chemical and fertilizer) industry. Branding experts could not imagine how Olpers could distance itself from its parent companys incredibly unappetizing, chemical-laden, and non-edible roots. Yet, by the end of 2006, sales for Olpers Milk had reached Rs.1 billion (approximately US$ 15 million) and in 2008, the brand has a market share of close to 22 percentsecond only to Milk Pak (estimated at 40 percent). The critics had to grudgingly accept that the new entrant to the multi-billion rupee packaged milk category meant business.

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Engro Foods expansion on a bigger scale

Engro Foods Limited who had recently set up Dairy industry in Central Sindh (UHT Milk plant) by investing about Rs one billion, further plans to set up a similar set up in Central Punjab and also emerging as Food Giant firstly on National Level and secondly as world class International Food Giant by adding a large number of other food products through investment of $200 million plus, probably envying to emerge as an international food company on similar lines as NESTLE did. The company plans exporting its products to central Asia and Middle East. An exciting new venture is the diversification of dairy portfolio into ice cream. Work has commenced for detailed engineering and market study with a view to launch of first ice cream in 2009. Also on EFL slate is the establishment of a modern dairy farm with milking expected to start in second quarter 2009.

Future plans
Engro Foods Limited (EFL) announced its vision to emerge as a global player in the food industry with a proposed initial spending of over $200 million. The vision announced at a press conference in Karachi aims at transforming the company within the next five years into first national food industry giant, then into a regional force and finally into a global player. For the year 2007, the Board of the Company has already approved Rs 2.0 billion investments in capacity expansion and marketing, including setting up of a plant in Central Punjab. While unfurling its future plans, ENGRO Foods CEO Sarfraz Rehman stated, "Our vision is to become a fast expanding mega foods company. To achieve our vision, the company will initially focus on dairy by investing a substantial amount in plant, milk collection capability and marketing. We firmly believe that there is a big dairy opportunity available and with our strong entry in UHT milk category, with Olpers milk, we have placed ourselves ahead of others in terms of quality and consumer-understanding. It is our belief that we can get the maximum out of this opportunity by focusing on innovation and quality." Press release "ENGRO Foods is making concrete efforts to expand in and beyond Pakistan; through strategic international alliances, our vision is to eventually become global." He said that dairies have entered the market in the past but failed due to lack of technical expertise and financial soundness. Elaborating further, he mentioned that ENGRO's 40-year-old relationship with the farmer also gives ENGRO Foods another edge over the competitors.

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