HABIB OIL MILLS

MARKETING PROJECT

HABIB OIL MILLS

NAZISH MUBASHAR.
Prog. M.B.A.
PAK-AIMS
 ACKNOWLEDGEMENT

I thanks to Allah, the Almighty for his guidance and divine

support that this report is finally complete as a result of
continuous and persistent effort.
 PREFACE

First of all I would like to thank our instructor Mr. Ahsan Umer for
providing me the opportunity to look into various marketing strategies
of Habib Oil Mills Pvt (Ltd). This project has given me a complete
knowledge and practical experience, which will help me in future. I am
also thankful to Mr. Ali Azfar, assistant sales manager of HOM for
sharing his experience and knowledge regarding the marketing
strategies of HOM. His help has enabled me to prepare this report. I
hope that this report will provide you the required information
regarding the marketing strategies of HOM.
 ABOUT COMPANY

Habib Oil Mills (Pvt.) Ltd. "HOM" is the largest FMCG Company
exclusively in the vegetable oil & fats sector in Pakistan. The company
produces premium brand cooking oils and Hydrogenated cooking mediums,
and markets the products through its own distribution network, which covers
almost all commercially viable markets nationwide.

The company has strong financial background and has sizable infrastructure
managed by professional staff. It has proven track record in this business
and has plans for targeted prosperous growth in future.

The marketing policy of the company envisages development of brand

loyalties among the customers and consumers through their continued
involvement and participation in series of several promotional activities run
by professional staffs and consultants.

The monthly national cookery contest being the most popular marketing
activity of the company which brings valuable prizes to the winning recipes
every month started 10 years ago and has celebrated its 120th diamond
jubilee contest in Feb. 1999.
 MISSION STATEMENT

The company has five years look ahead strategic plan for
progressive target achievement of manufacturing and marketing
89,000 tons of cooking oil and banaspati per annum by year 2003.
Development of necessary infrastructures and staffing for the
above targets including establishment of a new factory at port
Qasim are completing scheduled milestones successfully.
 HISTORY OF GROWTH

Incorporated in 1954-55, Habib Oil Mills (Pvt.) Limited was initially

established as an oil expelling unit. The present management took over the
unit in 1978 when it was producing only 5000 metric tons of cooking oil
annually.

The new management carried over major expansion and modernization of

the unit over the years, and converted it into an integrated unit for edible oil
refining, cooking oil blending and production of hydrogenated cooking
medium. The unit after subsequent expansion and modernization has now an
installed production capacity of 58,000 metric tons of cooking oil and
Banaspati per annum.

The products enjoy vast popularity and brand loyalties, and stands first in
terms of market share in this sector nationwide.

The company has achieved a growth of 500% in a ten-year span, which is

primarily attributed to its consistent quality care, and driving successes
from application of needed market strategies.
 FINANCIAL BACKGROUND AND
BANKERS

The company has strong financial background and is considered liquid on

all financial considerations throughout its performances. It is enjoying
excellent relations with its Bankers and is having all needed credit limits
and banking facilities at most competitive terms. The followings are the
existing bankers of the company.

 Habib Bank Limited

 United Bank Limited
 Muslim Commercial Bank Limited
 ABN AMRO Bank Limited
 Askari Commercial Bank Limited
 Union Bank Limited
 Prime Commercial Bank Limited
 Bank Al-Falah Limited
 TABLE OF CONTENTS

CURRENT MARKETING SITUATION:

 Marketing situation
 Product situation
 Competitive situation
 Distribution situation
 Microenvironment situation

SWOT analysis:
 Strengths.
 Weaknesses.
 Opportunities.
 Threats.

OBJECTS
 Marketing Objects.
 Financial Objects.

MARKETING STRATEGY:
ACTION PROGRAMS:
 CURRENT MARKETING SITUATION:

Marketing situation:

Habib oil/ghee is imported stuff that is why it cannot be calculated in terms

of Rupees. Total market size of oil/ghee is 1.5 million tons annually. Total
market size is not growing as it should be, but total market size /growing
rate of Habib oil is 5% per year.

The total market size of the Habib oil/ghee in previous years:

Years Growth rate

1998 35 thsd.tons

1999 40 thsd.tons

2000 50 thsd.tons

2001 53 thsd.tons

2002 58 thsd.tons

So the total sale is about 60 thsd. Tons per year. Habib oil is blended oil.
The buyers of this product belong to upper-upper, upper, and middle classes.
Who want good taste in their foods.
 Consumption pattern of Habib oil/ghee in country:

Area Banaspati Oil

Punjab 60% 40%

Sindh/Balo. 40% 60%

NWFP 70% 30%

The reason of this consumption pattern which is different from one another
is, literacy rate of sindh/balochistan is higher than other provinces, people
belong to these area know which is better for health oil or ghee. But case is
opposite in Punjab and NWFP. Fat consumption in NWFP is very high but it
is fat from animal (mutton, beef).

COMPETITIVE SITUATION:
 Major competitors of Habib oil mills are;

The main and strong competitor of HOM is Dalda. There is also an

Indirect effect on competition apart from the people, who use to make
Ghee at home or the people who uses Desi Ghee

Dalda Uni-lever.

Tallo Wazir ali industry.

Seasons Wali oil mills.

Sufi Hamza vegetable.

Kisan Madina enterprises.

SWOT ANALYSIS
Strengths and Weaknesses of Habib Oil Mills
 There are certain strengths and weaknesses of HOM, which are
discussed as under:

STRENGTHS
ISO 9002 Certified:-
The company has a well-defined quality policy and has successfully
obtained the ISO-9002 quality system certification in the year 1997.
"HOM" is the first company to receive such certification in Pakistan in the
vegetable oil & fats sector.

Good Market Reputation.

The company has good market repute, due its good and consistent quality
products. The logo of the company is “Quality Products at Moderate
Price”.

Market Leader
Another major strength of HOM is its market share. At the present time
they are the market leaders in edible oil industry with avery good market
share of 42%.

Wide Product Range

Another major strength of HOM is that, it is the only edible oil producing
company, which has that much wide range of products in the market.

Quality products.
It is HOM’s policy to provide good quality products to customers at
reasonable prices. It makes all efforts to involve every employee of the
company in the achievement of this objective.

Nation Wide Distribution.

The company has 350 plus distributors all over Pakistan and a fleet of
delivery vehicles consisting of Hino Trucks and Mazda Trucks to cover its
entire supplies. The distribution staffing is designed to have a strong link
between the senior sales staff and the end consumers. This staffing is further
reinforced with CSF (customer sales force) to enhance the contact with the
customers and the market.
Professional Management.
A team of Professional Managers with the following leadership practices
performs the day to day administration of the company. Find opportunities
for constantly challenging and improving personal performance. Reward
and celebrate significant and creative achievement.Develop and appoint
high performing and high potential people to key positions.Communicate
with all constituents openly, honestly, interactively, and on a timely basis.

WEAKNESSES
Lack of Diversification
The major weakness of the HOM is that it deals with only one kind
product, which is edible oil so it cannot diversify from its present business to
some other business.

Less Production Capacity

Another weakness of HOM is that they are not be able to fulfill the
demand of the customers, the reason being that they don’t have more
capacity for production.

THREATS.
The Threat of Indirect Competition.
There is a threat and a chance for the Indirect competition that may grow
in future. For example that the companies already producing items can
come in Ghee business.

Dalda Ghee & Sundrop Oil.

The main competitors are Dalda & Sundrop. There is main Threat is from
this side. Due to Price factor and Quality standared these company are
giving high task to Habib Oil Mills.

Unable to Meet Demand:-

Due to Overdemand the company is not in position to meet the consumer
demand properly. That is a main weakness for the company.

Target Market of HOM

HOM focuses on all types of market that is why they offer different
packages for different markets. The company has introduced recently a new
product in the market named Handi (oil). The reason for introducing this
product is cater the needs of the lower income group.

Basis for segmentation

The bases of segmentation for HOM are:

Geographic Segmentation
HOM divides the country in to two major regions i.e. north and south.
North region includes two provinces Punjab and N.W.F.P and south region
includes Sindh and Balochistan. With the help of the segmentation they
came to know the demand of the oil and ghee. They have more demand of
Ghee in the northern region and oil in southern region.

Income Groups
The other basis of segmentation is income groups, for example they have
introduced pet bottle for high-income group as well as Handi (oil) for low-
income group. They have also introduced different sizes of the products from
one-liter pouch to ten liters tin pack. This product range carries the needs of
all income groups.

Market Strategies
As far as the market strategies are concerned HOM uses two types of
strategies, such as Push and Pull Strategies. HOM uses the combination of
these two strategies. Push strategy is concerned with the short-term period
and it is usually less expensive and in this strategy the company emphasizes
on customer, while the Pull Strategy is used for long term period and in this
strategy company emphasizes on trade rather than customer.

Market Share
As HOM is the market leader in the oil industry, its market share is 42%.
The market share for other companies is: Dalda 39%, Soya Supreme 12%,
Tullo 10% and for others 7%.

DEVELOPING MARKET OBJECTIVES AND GOALS

Objectives of Habib Oil Mills

The basic objectives of HOM is profitability, market share and to fulfill the
needs of their customers. Although they have achieved the desired market
share and profits but they are making efforts to fulfill the demands of the
customers.

Differentiation of company’s offering from others.There are some points to

differentiate HOM from its competitors, which are discussed below:

ISO 9002
HOM is the only one with an ISO 9002 certificate in the oil industry in
Pakistan.

Wide Range of Edible Oil Products

HOM offers a wide range of edible oil products more than any other oil
producing company. The variety of edible oil offered by HOM is: Habib
Cooking Oil, Habib Banaspati, Habib Soybean Cooking Oil, Habib Corn
Oil and Habib Canola Oil.

Pioneer In Pet Bottle and Pouch Pack

HOM is the first company to introduce oil products in pouch packs in and
pet bottles.

Own Warehouses
Another differentiation of HOM from its competitors is that it has its own
warehouses in all over the country. The warehouses are located in Karachi,
Hyderabad, Sukkur, Multan, Lahore, Gujranwala, Islamabad, Faisalabad
and Quetta.

Company’s Stage In Life Cycle

At the present time HOM is at the stage of Maturity. The reason is that the
company’s sale is at its peak and the company is getting high profits and the
other major reason is that the number of competitors is stable. The company
was in the stage of growth in 1986, when it entered in the market. At that
time there were growing number of competitors in the market.
Boston Consulting Group Model.
According to the BCG model the company falls in cash cows, because
company is characterized by low growth and high market share and the
business is generating large cash surpluses.

Strategic Tools
Game Theory Concept of HOM
According to the Game Theory Concept HOM always have a check on its
major competitor Dalda regarding its promotional and pricing strategies for
example, when for the month of ramzan HOM reduced its prices by Rs.10,
Dalda also responded and reduced its prices by Rs.15.
Marketing Strategies
Total Market Strategy
To serve the market HOM follows Total Market Strategy and serves an
entire spectrum of the market by selling different sizes of the product to
different segments. The proof is that the company has five oil products in the
market and every product has minimum three sizes.

Early Entry Strategy

HOM was the early entrants in the edible oil market. It entered in the
market in1975; the other early entrants were GCP and Kohinoor. The first
company to enter in this market was Dalda, which is to complete its 50
years of serving the market. Due to the first to enter in the market Dalda
enjoyed high profits with a production of 150,000 tons and due to the
entrance of other companies the production is now reduced to only 60,000
tons.

Strong Commitment
HOM is doing its business in a good manner and it has a very strong
commitment with the market and its other business operations. If the
company looses its commitment than it will also loose its market share that
is why HOM gives trade discounts to its dealers and focuses on every step of
the competitors.

Market Dilution Strategy

The company sometimes uses the pruning strategy when it is not getting the
desired results from its products. In the past the company had used this
strategy many times, once it was used for Nayab Banspati, which was not
very successful product that is why it was eliminated in the market. The
other products that were eliminated are American corn oil and Habib Punch
pack.

Product Strategies
Positioning Strategies
Multiple Brands
Company has one product in the market, which is related to edible oil, but in
this segment company has multiple brands, which covers the complete
market of edible oil.

Design strategies
Standardized products
Company has standardized products but these products are available in
different sizes for the convenience of its customers, such as 1 liter, 2.5liters,
5 liters, and 10 liters.

New product strategies

Product improvement strategies
Company also follows this strategy and introduces improvement with the
passage of time, such as different flavors, new grate taste and vitamin A, E
& D.

Product imitation strategy

Company some times follow other companies and does not take initiative,
such as HOM introduced corn oil after introducing this product by other
companies.

Value marketing strategy

Quality strategy
Company’s basic philosophy is to provide quality products to its customers
and the evidence is the ISO 9002 certification.

Customer service strategy

Company never ignores its customer and always gives importance and value
to them. Company has its own in house research department, which gathers
information related to the customer’s preferences and sometimes the
company also hires the services of other research firms such as, Aftab
Associates. HOM also provides door-to-door service occasionally and use
to give free samples.

Establishing the product’s price strategy

Company always tries to maintain its product’s prices but sometimes gives
discounts in response to the different moves of its competitors and also to
attract more customers. Most of the times company makes changes in terms
of discounts and does not change its tag prices. In other words we can say
that the company has a flexible pricing strategy.

Product-Line Pricing Strategy

HOM focuses on its customers while setting the prices of its product line.
When company introduced its pouch pack in the market it followed the
market penetration strategy and set low prices according to its target
markets. On the other hand when the company introduced the Soya Bean Oil
in pet bottles it followed market skimming strategy and set high price with
high promotion according to the targeted customers.

Distribution Strategy
Single Channel Strategy
For distribution purposes HOM uses single channel strategy. The process of
distribution consists of different steps, such as factory to warehouse,
warehouse to distributors, distributors to retailers, and finally the product
reaches to the final consumer through retailers. So we can say the products
of the HOM reach to its ultimate customers through single channel
(retailer). At the present time there are nine distributors in Lahore, which
covers 5000 shops.

Distribution Rights
As such there is no formal procedure for giving the distribution rights. What
HOM require is a good reputation and strong financial position. HOM asks
for an advance payment for the ordered goods from the distributors.

Promotion strategies
Way of promotion
HOM actively participate in all the promotional activities. The annual cost
of the promotion is Rs.50 million, right about it also arranges different
cookery competeion in different women colleges for promotion purposes.
HOM also arranges sports week in different women colleges.