DEDICATION

We dedicate this project to our Parents, Teachers and to

each other as a tribute to our teamwork during the past five-
years in Bahria University.

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 ACKNOWLEDGEMENT
Praise and thanks to Allah, the lord of universe who is either of all
knowledge and wisdom to mankind. We bow our head in gratitude to
almighty Allah who blessed us with the capability to complete our
project, which was a challenge for us.

“We the group members would like to avail this opportunity to thank
our course instructor of New Product Development, Mr. Pasha for his
cooperation and support as a teacher.”

We feel pleasure in expressing heart felt gratitude to our families for

their encouragement affection, support, constant help and prayers at
all times without which it was not possible for us to achieve this target.

NELUM SHEHZADE
FAIZAN ALI ZIA
MARYAM CHOUDHARY

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 ABSTRACT:

Packaged milk industry is a fast growing industry in

Pakistan. Nestlé, presently is losing share at the hands of
competitors and is engaged in differentiation and value-
pricing strategies. Stiff competition from local players
and changing consumer preferences are the main hurdles in
Nestlé MilkPak’s efforts to regain its market leadership
position in the industry.

During our research we were able to access the lapse of

largest and pioneer tetra milk pack company; Nestlé MilkPak
Pakistan in this sector and opportunities that are ahead of
them.

We endeavor to identify the compatibility of the company's

basic marketing strategies to its resources, structure of
the company and ultimately the milk industry, and finally
about implementing their strategies and staying abreast
with everyday engorging competition. Through the analysis
we determined that there is a need for a change in the
dimensions and workings of Nestlé and how it can retain its
position in such a dynamic industry.

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 Table of Contents

Table of Contents.........................................4

CHAPTER 1: INTRODUCTION...................................8

BACKGROUND OF NESTLÉ AND MILK SEGMENT AND BROAD PROBLEM

AREA:.................................................................................................................................9
PROBLEM STATEMENT:...............................................................................................14
OBJECTIVES OF STUDY:..............................................................................................15
RESEARCH METHODOLOGY:.....................................................................................16
METHODS OF RESEARCH:...................................................................................16
TYPE OF STUDY:....................................................................................................16
POPULATION SAMPLE..........................................................................................18
INSTRUMENTS/SOURCES OF DATA COLLECTION:.......................................19
SCOPE & LIMITATIONS........................................................................................19
CHAPTER 2: LITERATURE REVIEW.............................22

CHAPTER 3: INDUSTRY ANALYSIS.............................30

MILK INDUSTRY IN PAKISTAN..................................................................................30

CHAPTER 4: ORGANIZATION ANALYSIS.........................33

NESTLÉ MILKPAK PAKISTAN:...................................................................................33

SWOT ANALYSIS...........................................................................................................34
PORTERS FIVE FORCES MODEL.................................................................................39
FIVE FORCES MODEL APPLICATION IN NESTLÉ...................................................40
THREAT OF NEW ENTRY.............................................................................................41
POWER OF BUYERS......................................................................................................42
POWER OF SUPPLIERS. ................................................................................................42
THREAT OF SUBSTITUTES..........................................................................................43
THE COMPETITIVE RIVALRY.....................................................................................43
PEST ANALYSIS.............................................................................................................44
POLITICAL FACTORS: ..................................................................................................45
ECONOMICAL FACTORS: ............................................................................................45
SOCIAL FACTORS:.........................................................................................................46
TECHNOLOGICAL FACTORS:.....................................................................................46
NESTLÉ’S MARKETING STRATEGIES FOR ITS MILK PRODUCT LINE..............46

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CONSUMER COMMUNICATION.................................................................................47
PRODUCT AVAILABILITY...........................................................................................47
BRANDING .....................................................................................................................47
DIFFERENTIATION STRATEGY..................................................................................48
POSITIONING STRATEGY............................................................................................48
MARKETING MIX...........................................................................................................48
MARKETING GROWTH STRATEGY...........................................................................51
CUSTOMERS’ ANALYSIS:............................................................................................52
Questionnaire analysis:......................................................................................................56
Comparison of Nestle MilkPak with other brands............................................................73
CHAPTER 5: IDENTIFICATION OF KEY AND CONCLUSIVE RESULTS. .75

CHAPTER 6: RECOMMENDATIONS...............................77

CHAPTER 7: ACTION PLAN...................................79

BIBLIOGRAPHY.............................................81

ANNEXURES................................................83

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List of Figures:
Figure 1: Product Concept................................33

Figure 2: Porters Five Forces Model......................40

Figure 3:Five forces model application in nestlé.........41

Figure 4: Product Life Cycle.............................49

Figure 5: Comparison of Prices and Packaging............50

Figure 6: Pie Chart of Gender ratio......................52

Figure 7: Age Distribution in Customer Survey

.........................................................53

Figure 8: Occupation Distribution in Customer Survey. . . . .54

Figure 9: Income Level Distribution in Customer Survey. . .55

Figure 10: Ratio of Open Milk to Packaged Milk...........56

Figure 11: Preference to Nestlé MilkPak..................57

Figure 12: Satisfaction with Nestlé MilkPak Quality. . . . . .58

Figure 13: Need for Improvement in Nestlé MilkPak........59

Figure 14: Taste of MilkPak as compared to other tetra pack

milk.....................................................60

Figure 15: Price of Nestlé MilkPak.......................61

Figure 16: Availability of Nestlé MilkPak................62

Figure 17: Choice of Other Milk Brands..................64

Figure 18: Recall of Nestlé Milk Advertisement...........65

Figure 19: Preference while purchasing tetra pack........66

Figure 20: Loyalty with the brand........................67

Figure 21: Recognition of Nestlé MilkPak brand...........68

Figure 22: Recognition of limited time packaging.........69

Figure 23: Perceived Traditional Advertisement Image. . . . .70

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Figure 24: Perceived Modern Advertisement Image..........71

Figure 25: Perceived Serious Advertisement Image.........71

Figure 26: Perceived Image that Brand fits to life style 72

List of Tables:

Table 1 : Comparison of Prices and Packaging.............50

Table 2: Gender Ratio....................................52

Table 3: Age Distribution in Customer Survey.............53

Table 4: Occupation Distribution in Customer Survey. . . . . .54

Table 5: Income Level Distribution in Customer Survey. . . .54

Table 6 : Ratio of Open Milk to Packaged Milk............56

Table 7: Preference to Nestlé MilkPak....................57

Table 8: Satisfaction with Nestlé MilkPak Quality........58

Table 9: Need for Improvement in Nestlé MilkPak..........59

Table 10: Taste of MilkPak compared to other tetra pack milk

.........................................................60

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Table 11: Price of Nestlé MilkPak........................61

Table 12: Availability of Nestlé MilkPak.................62

Table 13: Choice of Other Milk Brands...................63

Table 14: Recall of Nestlé Milk Advertisement ...........65

Table 15: Preference while purchasing tetra pack.........66

Table 16: Loyalty with the brand.........................67

Table 17: Recognition of Nestlé MilkPak Brand............68

Table 18: Recognition of limited time packaging..........69

Table 19; Perceived Advertising Image....................70

CHAPTER 1: INTRODUCTION

Packaged milk industry in Pakistan is a very fast growing

industry and through our research we’ll be able to access
the oversight of Nestlé in this sector and opportunities
that are ahead of them. Through the analysis we’ll

8
determine if there is a need for a change in the extents
and workings of Nestlé or in other words what is next for
them, how they are going to improve themselves further? How
are they going to retain their position in such a dynamic
industry? What are the strengths, threats, opportunities
and weaknesses for Nestlé in its Milk Line products? And we
will analyze the factors that will help them to regain
their lost market share and what other market segments they
can cater.

BACKGROUND OF NESTLÉ AND MILK SEGMENT AND BROAD

PROBLEM AREA:

Nestlé was founded by Henri Nestlé in 1866 in Switzerland.

Nestlé was derived from word nest in Swiss German which
also is shown in the logo of Nestlé. Henri Nestlé came up
with the idea of developing something for infants those
were not able to accept their mother’s milk or any other
substitute, therefore to fight this problem of infant
mortality he came up with a product that was a combination
of cow’s milk, wheat flour and sugar and he called it
Farine Lactee Nestlé which was the first product of Nestlé
being marketed in Europe (Gupta).
In 1974, Jules Monnerat purchased Nestlé and launched a
condensed milk product of its own. In 1905, Nestlé got
merged with Anglo-Swiss condensed milk. After Nestlé got
fully established in Europe and everyone in Europe seem to
know what Nestlé is that’s when Nestlé decided to expand
its boundaries out of Europe, and to set up the plants
around the globe and become a multinational (Gupta).
Nestlé’s decision to become multinational turned out to be
fruitful. Today Nestlé has its own operating plants and

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products in America, England, India, Brazil, Australia,
Pakistan, Hungary, France, Belgium, Italy, Spain and
various other countries around the globe. (Gupta), Nestlé
has become the world's leading food manufacturer and the
market leader around the globe in both coffee and mineral
water, and the wide range of products manufactured by
Nestlé includes ready to cook dishes and cooking aids, all
kinds of milk based products, cereals, instant coffee,
pharmaceuticals and ophthalmic goods, pet care products &
baby foods and what not. Nestlé specializes in the areas
like Baby Milk, Food, Mineral Water, and Pet Food.

Nestlé’ is a publicly owned company, it has subsidiaries

spread all around the world. Its website lists addresses in
104 countries. Nestlé has large number of annual sales
which are worth $ 71 billion and it has almost 30000
employees around the globe. Nestlé has almost 8000 brands
in total around the world. Remarkably, there isn’t any
country where the products of Nestlé are not sold. Nestlé’s
products are perceived to be safe and high quality and this
is also symbolized from the logo of Nestlé which shows coat
of arms, the birds’ nest which refers to the brand name of
Nestlé. Nestlé places priority in developing high quality
and safe products for which it conducts extensive Research
& Development based innovation through which they build
strong brands (Gupta).
From the beginning, Nestlé was aware of the fact that the
food products have to be developed in a way that they link
closely with the eating and social habits of the local area
where they are introducing their products in. That is the
reason why Nestlé from the very start has always shown
respect for diverse cultures and traditions and developed

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products according to their needs. Nestlé strives to
integrate its products with the local cultures and taste it
also brings its own set of values to the local environment
as well and merge both of them and come out with something
unique. Therefore, Nestlé embraces cultural and social
diversity and does not discriminate on the basis of origin,
nationality, religion, race, gender or age. Moreover,
Nestlé believes that if their actions are helpful to the
local community only then they can achieve long term
profits for their company. Precisely, the environment is
changing very swiftly and in particular consumers are
looking for answers to their health concerns. Nestlé
applies the concept “Think globally acts locally” in a
real sense where ever it goes, as well as thinking out the
box idea and being unconventional in their product and
distribution with the help of strategic global marketing.
(M.Aslam).

INTRODUCTION TO NESTLÉ MILKPAK PAKISTAN:

Nestlé have been serving Pakistani consumers ever since

1988, that is when Nestlé based in Switzerland and a very
well established brand in the world acquired the share of
MilkPak in Pakistan following their strategy of acquiring
well established local firms. Nestlé acquired 40% share in
MilkPak initially. MilkPak was the first tetra pack milk
that was introduced in Pakistan in 1981 with green and
white packaging that is associated with Pakistani flag. It
promised natural and healthy milk from its name and
packaging. It further gained strength when it bought by
Nestlé which brought its core competencies with it and
helped MilkPak to expand. From the start MilkPak was very

11
well-received and the brand soon became synonymous with
high quality milk. MilkPak first face completion from
Haleeb in 1986 which launched its uniquely packaged blue
tetra packs in the market.

Nestlé Switzerland from the very beginning of acquiring

MilkPak started investment in cooling tanks. Between 1988
and 1992, 100 milk tanks were installed in Pakistan by
Nestlé. 1992 onwards, with full support from the Nestlé
headquarters in Switzerland, restructuring of the milk
collection operation and the provision of agricultural
technical assistance became top priorities for Nestlé
MilkPak. The investment paid off and within a decade,
Nestlé's purchase of fresh milk had quadrupled, and the
number of small farmers selling milk to Nestlé tripled in
number. In 2008 MilkPak hit the market share of 40% in the
dairy milk category. (About Us, 2009)

MILK COLLECTION

As it is clear by the brand name of MilkPak, raw material

of Nestlé MilkPak is milk. Over the last Twenty Eight years
of its operation, Nestlé’s major concern has been to
improve the value and volume of milk for UHT processing and
for other milk based products. The company over the time
has very successfully established its own milk collection
system and stretched out its operations over a very large
milk shed area in Punjab. MilkPak has experienced very
large growth in the volume over the time for its high
quality milk. Nestlé MilkPak has a very long shelf life
because of that and its milk taste better than its
competitors as been observed from the survey.

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Today, Nestlé MilkPak has the largest milk collection
network in Pakistan and its competitors cannot match it in
the size, efficiency of the plant and high productivity.
Nestlé collects milk from the huge network of village milk
centers and sub centers daily. As mentioned earlier Nestlé
from the very beginning invested in the chillers and these
chillers are installed at these centers where milk
temperature is reduced to 4 degree C to prevent it from any
kind of bacteria development during the long hauls to the
factories where it is processed. The milk is taken to the
factories by the large fleet of specifically build tankers.

Nestlé conducts and extensive education program for its

farmers and milk collection staff to maintain the high
quality in collection and milk loading and transportation
system. Nestlé MilkPak does not compromise on quality and
maintains high standards whether its milk collection,
transportation, processing or packaging and they pride
themselves in it.

Other brands of Nestlé in Pakistan:

• Nestlé Juices
• Nestlé Nesvita
• Nestlé Yogurt
• Bottled Water

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 • Chocolate KitKat
• Baby Food Brands
• Maggi noodles
• Nescafe

PROBLEM STATEMENT:

With the changing demographics and psychographics people

are becoming more conscious about their dietary habits
specially the hygienic aspect of the food quality. Milk
industry is still new and is growing industry at a good
pace in Pakistan and has a lot of scope for further
advancement.

Nestlé MilkPak in fact had been the market leader in

Pakistan in terms of a strong brand recognition and quality
but recently it has been experiencing high level of
competition from the local major players like Olpers,
Haleeb and Nurpur and in tea whiteners it is facing
competition from Tarang whereas dry milk like and its
various extensions are still protected from massive
competition. To stay as a market leader Nestlé has re-
evaluated its marketing plan over the time. (About Us,
2009).

Nestlé’s main focus is differentiation on the basis of

quality, purity, high mineral content and rich iron and
vitamin C quantities than the competitors and value-pricing
and they use these strategies very effectively. Rigid

14
competition from local players and shifting consumer
preferences are the major hurdles in Nestlé’s efforts to
recuperate its market leadership position in the industry.
Nestlé’s requirement to beat the competition is to
capitalize on its brand name and come up with unique and
multiple different strategies, they need to do that to
overcome competition and gain back their lost share to the
competitors.

We also aim to identify the integration of Nestlé’s basic

marketing strategies with its structure and resources and
finally how they use them over all in the milk industry. We
also strive to know the strengths and weaknesses of the
company and how effectively they have used the control
system. And finally what they have done till now about
staying ahead of their competitors.

OBJECTIVES OF STUDY:

The project objectives include:

 Analysis of present scenario of packaged milk industry
in Pakistan as a whole.
 Analyses of present marketing strategies implemented
by Nestlé, to promote its milk product line.
 Calculating the difference among the standards of the
local and foreign industry.

15
  Suggesting new extent of competition for the Pakistani
milk industry.
 Determine whether the change in the industry be in the
form of a new need, new form or new technology or the
general direction of Nestlé in this particular product
line.

RESEARCH METHODOLOGY:

This section will explain how the research was carried out
with research question, problem area, research technique,
gathering empirical data analysis of data and finally the
answer to the research question.

METHODS OF RESEARCH:

Two basic methods are used to collect and examine

experiential data. These are qualitative and quantitative.
Research methodology is chosen according to research
question, so that it should be help full to find out the
answer of research question (Maxwell, 1996).

TYPE OF STUDY:

Research Design is generally classified into two types of

research, exploratory research and conclusive research
(Malhotra, 2008). Exploratory research aims to present
insights into, and understanding of, the problems
confronting the research (Malhotra, 2008). The results and
insights out of exploratory research are then further used
in conclusive research, which can be further categorized
into descriptive and causal research (Malhotra, 2008).

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Literature review in this report consists of exploratory
research. In this part, secondary research method including
analysis of news articles, government reports, scholarly
articles, industry reports and press releases were used to
gain insight of the recent and new developments in the
dairy milk sector of Pakistan. First the situation of the
dairy milk sector was analyzed through a secondary research
method. Then analysis of marketing strategies and
advertisement of the tetra pack milk providers was
conducted.

We will start our research by conducting exploratory

research in which we’ll observe the behavior of packaged
milk industry and marketing strategies implemented by
Nestlé. We will also try to search the existing findings
related to our topic.

Then we will move onto descriptive research. This is a type

of research that mainly focuses on providing an exact
description of the variables in the problem model. Examples
include market-potential studies, attitude surveys, media
research, and price studies etc. Descriptive research
describes “What is”. It looks at the present scenario. This
is what is being done in the study too. Using descriptive
research contributes quite a lot to the research, such as:
 Descriptive research tells us about the
problem area and abnormal situations so that
corrective measures can be taken. This would help in
providing the recommendations at the end.
 Descriptive research makes possible the
prediction of the future on the basis of results on

17
 prevailing conditions, correlation and on the basis of
people toward a certain issue.
 Descriptive research gives an improved and
deeper understanding of a phenomenon on the basis of
an in-depth study of the phenomenon.
 Descriptive research is the premise of
Providing a basis for decision-making process.
 Descriptive research helps fashion many of
the tools with which we do research

In the end data has been analyzed to infer results and

based on which recommendations and action plan has been
suggested.

POPULATION SAMPLE

Population for a study is a group of people from which a

researcher wants to observe the reaction and draw
conclusions from (Babbie, 2005). It is never possible to
study all the members of the population that interest
researcher, in every case, researcher selects a particular
sample among the population (Babbie, 2005). The Rawalpindi
& Islamabad metropolitan area is the third largest in
Pakistan, with a population of over 4.5 million inhabitants
(Frantzeskakis). For customers survey the population has
been restricted to the city of Rawalpindi & Islamabad.

The target population of our project is the Nestlé’s milk

consumers. The sample for customers has been restricted to
200 respondents. Sample was selected using Convenience
Sampling. It refers to the collection of information from

18
members of the population who are suitably available to
provide it (Malhotra, 2008).

Population sample among packaged milk companies is

restricted to the major milk packaged companies of Pakistan
i.e. Olpers, Haleeb, Nurpur, GoodMilk and their respective
sub brands.

INSTRUMENTS/SOURCES OF DATA COLLECTION:

There are two sources of data collection, first is Primary

data while other is Secondary data. Primary data is
conducted by a researcher for the sole purpose of
addressing the problem at hand, whereas secondary data are
data that have already been collected by others for purpose
other than problem at hand (Malhotra, 2008).

Secondary data is presented in this report in form of

literature review, industry analysis, and background
problem area. This data is collected from various sources
which include news articles, government reports, scholarly
articles, industry reports, press releases and different
websites etc.

In this research primary data is gathered through

questionnaires and interviews. The questionnaire designed
had some closed-ended and open-ended questions. Structured
interview was used only to gain data from Nestlé’s
officials, for the accurate industry analysis.

SCOPE & LIMITATIONS

The likely outcome of our project would provide the insight
about the milk division of Nestlé, this would give the

19
reader/ user a general idea about how the things are being
monitored by Nestlé and what are the procedures that are
involved in milk production/ processing etc. Along with
that, we would find out the opportunities and the areas for
further improvement for Nestlé, like what are the areas
which are left exposed or are with the competitors and what
measures can be taken to ensure MilkPak covers those areas.
It will help us to understand if there is a further need of
product improvement or adding a new product to the existing
milk line etc. The competitor analysis will help us to do
find our parities and differences and help us to find ways
to gain competitive advantages and how and when to reshape
or modify our strategies. SWOT and PEST of the organization
will be helpful in gaining the understanding. Along with
that consumer preferences and their need requirements are
observed.

Most of our entire project would give us and the reader /

user the understanding of different marketing, management,
business development, and other concepts that are being
taught to us during our program of MBA. Our project covers
all the 7 Ps of marketing, branding strategies and the like.

Limitations are that this study like any other is to be

conducted within a specified period of time provided to us.
Consumer preferences outside that time limit may change
over the time. Moreover the extent of study of consumers is
limited to Rawalpindi/Islamabad with a set sample size. In
reality the market size of the packaged milk comprises many
cities of Pakistan. It can be assumed that some the
sensitive data is closest to reality for example
advertising budgets and customer churn.

20
On the whole this research is subject to certain
limitations pertaining to time and resources.

21
 CHAPTER 2: LITERATURE REVIEW

Nestlé has a reputation to enter the growing markets before

any of the competitors reach those markets, and Nestlé
successfully builds a significant position in those
markets. Nestlé moves from niche levels to the upscale
level as the income level of the consumer increases.
Nestlé, where ever it reaches tries to localize its
products for according to the needs of local markets. It
also localizes its distribution and marketing strategy to
the requirements of the local market. Nestlé also never let
go of any opportunity to acquire any local firm whenever
they find it worth a good opportunity.

Nestlé’s organization structure is decentralized and the

operating decisions are made by to local units. There are
qualified managers that help in holding the organization
together in Nestlé.

To start up an industrial operation in the new and

undeveloped market requires a lot of attention and
precision in research; some factors affect the growth of
the newly developed sector in organization and turn it into
a loss.

Such factors are as follows

 The availability of raw material

 Cost factor

 Economic climate

 Consumer purchasing power

 Consumer tastes

22
Nestlé used procurement and project management on various
occasions to b able to cut major costs. But the
relationship of Nestlé suffered in a great deal because of
the gap between Nestlé’s global and local strategies.
Nestlé’s direction is very strategic in nature. There
system was called Globe which was directed by CEO. GLOBE
was supposed to standardize Nestlé’s activities around the
world. (Consumer Report, 2006).

From the analysis it is clear that Nestlé has taken

advantage from the economic factors as they have
collaborated with the local government of Pakistan to gain
access to the raw materials locally because of which they
don’t have to import the raw material from other countries.
By doing this Nestlé was able to cut down their costs and
increase production. (Consumer Report, 2006).

Nestlé has a history of having committed innovative product

technology centers all around the globe that carry out
extensive R & D. they also license-in their innovative
technology from external sources. Nestlé carries out this
process very carefully in a legal manner because the new
technology has critical effect on Nestlé’s products and
processes.

Nestlé has the following Business Principles in all

countries it operates in and it is very dedicated to these
principles, taking into account local legislation, cultural
and religious practices:

• Nestlé creates value for its consumers, shareholders,

employees, and business partners for a long term by

23
manufacturing and marketing its products in a unique way
and this value is persistent over time. (About Us, 2009).

• Nestlé is all about achieving the long term profits and

they do not compromise on it in any way. (About Us, 2009).

• Nestlé recognizes that its consumers place trust in the

name of it and its brands, therefore they carefully monitor
their behavior, beliefs and actions. (About Us, 2009).

Buffaloes are the main source of milk production in

Pakistan as they produce 70% of milk and rest of the 30%
comes from cattle. There are basically two generic types of
milk available in the Pakistani market:

• UHT milk

• Raw or unprocessed milk.

Raw and unprocessed milk own the major chunk of the market
which is 90% because of that quality measures are difficult
to impose. The milk is delivered by local milkman on their
bikes and they ride away after delivering therefore the
quality controls on them cannot be regulated. There are
also some retail outlets to provide open milk but they are
not in a very large number. (Development Policy Institute
Islamabad, 2008).

UHT milk has its own set of problems and quality issues.
Since UHT milk is made to b unaffected by many
adulterations and has longer shelf life, the main problem
with it is price which is slightly higher than the open
milk. ( Development Policy Institute Islamabad, 2008).

UHT milk market needs to be saturated in Pakistan. In

Pakistan the capacity of processing milk is much higher
than what is actually produced, the reason for it is that

24
urban consumer prefers using packaged milk but that is a
very limited market and the higher price of UHT milk
creates artificial ceiling for its distribution and usage
in other sectors of Pakistan. (Raja, 2008).

Brands like MilkPak which is owned by Nestlé and Haleeb

Milk owned by Haleeb Foods has been leading the dairy
market of the world’s fourth largest milk producing country
for nearly two decades very successfully. Engro Foods which
is basically a giant in fertilizers industry, in contrast,
had only been established for few years in Pakistan. Olpers
is the packaged milk brand owned by engro foods and no one
in a branding industry could imagine how Olpers was going
to distance itself from its parent company’s image. And
Olpers surprised every by its high turnover by the end of
2006, sales for Olper’s Milk had reached Rs.1 billion
(approximately US$ 15 million) and in 2008, the brand has a
market share of close to 22 percent at present which is
second only to Milk Pak (estimated at 40 percent).
(Oppapers).

In Pakistan the packaged milk category at first was

originated in 1981 by Milk Pak, they were the pioneers of
packaged milk in Pakistan. The idea was to collect the milk
from rural areas across Punjab, process the milk that was
collected from different milkmen, through UHT (Ultra-High
Temperature Processing) treatment, and to sell it to
consumers across Pakistan in uniquely colored triangular
and rectangular packs that were designed to protract the
milk’s quality for a longer period of time then usually a
milk can be stored. Therefore when this idea was applies
Milk Pak’s “Milk Packs” were very well-received by the

25
consumer and the MilkPak in a very little time gained
success and received as a quality milk. Haleeb was
MilkPak’s first real competitor, which came into market in
1986 and introduced blue colored packaged milk in the
market. Milk Pak’s stance further grew in standing when it
merged with Nestlé in Pakistan. By the figures of 2006, the
dairy milk category in Pakistan was growing at 20 percent
annually, and Milk Pak and Haleeb were well-received brands
that have distinctive colors and those brands brand
promises to keep providing high quality, natural and
healthy milk in future as well, also all the packaged milk
branda are getting benefitted because of the highly
innovated advertisement of packages and Tetrapak.
(Oppapers).

We know and studied during the course of our MBA program

that advertising can increase sales through a certain
procedure that the buyers mind goes through. One of the
most popular models that explain this is the AIDA model.
The acronym stands for ("AIDA” of marketing, 2009):

A – Attention/Awareness: attract attention of the customer

towards a particular product.

I - Interest: customer’s interest is then increased by

focusing on and demonstrating advantages and benefits of
the product.

D - Desire: influence customers that they want and desire

the product or service and that it will gratify their needs.

A - Action: guide customers towards taking action and/or

purchasing.

26
The usefulness of promotion through advertising mainly the
TVCs basically relies on the attention or memory retention
of its audience. To see the effectiveness of advertising
and the risk of the loss of any new information that comes
to the consumer Daniel Schacter (2001) has pointed out
seven ways. These seven ways are transience, absent-
mindedness, blocking, misattribution, suggestibility, bias
and persistence. Flaws in memory can have marked influence
on the process of successful processing of advertising.
(Griffiths, 1997). Even if a positive intention is formed
as a result of exposure to an advert, if a memory
malfunction interferes with that target, the advertising
will not be effective (Griffiths, 1997).

In response to this Larry Percy (2004) has identified

various ways while designing and applying advertising
campaign to avoid these seven risks associated with
human/audience memory. These include (Larry Percy, 2004):

 Advertisers should integrate the message with the

perception of the brand very carefully (transience)
 Advertisers should make those points more easy to
understand in which the target audience is interested
(transience)
 Advertisers should apply personal references,
particularly to positive memories (bias)
 Advertisers should involve current positive brand
attitudes are of long standing (bias)
 Advertisers should make sure the correct emotions are
tied to the brands image (blocking, persistence)

27
 Advertisers should use unique cues not likely to be
associated with other long term memories (absent-
mindedness)
 Advertisers should create a distinctive brand benefit
claim link (misattribution)
 Advertisers should institute links in memory to
appropriate need category (absentmindedness)
 Advertisers should make sure those links are well
integrated with noticeable associations to the category
need (blocking)
 Advertisers should ensure a consistent 'look and feel'
over time to encourage familiarity (absent-mindedness)
 Advertisers should use strong visual images to create or
reinforce positive memories associated with the brand
(suggestibility)
 Advertisers should exploit reminders of past problems
that could be evaded or solved by the brand
(persistence).

To evaluate the impact of advertising on the success,

growth in sales and switching behavior on any brand a
research was conducted by AC-Nielsen, and as a result it
was assumed that without the adequate support of
advertising the brand can shrink brand loyalty, brand
equity, and premium pricing (Johnny Panagiotidis, 15th May
2005). Even if there is no ATL advertising is available and
only BTL advertising is there, even in that case sales
growth has been observed, but in that scenario consumers
are more prone to switch the brand (Johnny Panagiotidis,
15th May 2005).

28
The involvement of the authors of this project will pertain
to an in-depth analysis of the current situation of
Pakistan’s existing packaged milk providers and capacity of
Nestlé milk products to advance and stay abreast. Once an
overview is achieved it will be compared to the
international standards in order to verify if some
performance gaps or variances exist. The project is
followed by recommendations that will explain how Nestlé
can gain its lost market share.

29
 CHAPTER 3: INDUSTRY ANALYSIS

MILK INDUSTRY IN PAKISTAN

In Pakistan the packaged milk category at first was

originated in 1981 by Milk Pak, they were the pioneers of
packaged milk in Pakistan. The idea was to collect the milk
from rural areas across Punjab, process the milk that was
collected from different milkmen, through UHT (Ultra-High
Temperature Processing) treatment, and to sell it to
consumers across Pakistan in uniquely colored triangular
and rectangular packs that were designed to protract the
milk’s quality for a longer period of time then usually a
milk can be stored. Therefore when this idea was applies
Milk Pak’s “Milk Packs” were very well-received by the
consumer and the MilkPak in a very little time gained
success and received as a quality milk. Haleeb was
MilkPak’s first real competitor, which came into market in
1986 and introduced blue colored packaged milk in the
market. Milk Pak’s stance further grew in standing when it
merged with Nestlé in Pakistan. By the figures of 2006, the
dairy milk category in Pakistan was growing at 20 percent
annually, and Milk Pak and Haleeb were well-received brands
that have distinctive colors and those brands brand
promises to keep providing high quality, natural and
healthy milk in future as well.

In the recent times, it seems that everywhere we look,

there is either a billboard, a TVC or a radio jingle
promoting a brand of packaged milk, regardless of the
brand, whether it’s Haleeb, Nurpur, Pakola, Nirala,
MilkPak, Goodmilk or Olper’s there is always some kind of

30
advertisements going on. But this isn’t surprising for a
country like Pakistan which is according to recent
statistics, the fourth largest milk producing country in
the whole world which is 32 billion liters per year from 50
million animals, with urban consumption at nearly seven
billion liters per annum.

However, even though the rankings are high, packaged milk

according to the recent estimates, has only twenty percent
penetration in the total market. That is the reason why
processed milk companies (PLMCs) have been aggressively
advertising and marketing their brands in attempt to
increase the penetration in the market. Even though current
economic turnaround has contributed to the growth in the
PLM sector, but still the penetration in the market is
fairly less.

The reason for the growth in PLM sector because people are
becoming more and more aware of the health and hygiene
factor. This factor and increasing dissatisfaction with
open milk are the reasons for growth in this sector.
However, many challenges still have to be overcome by the
PLMCs to increase the penetration in the market.

Milk even amongst the most urbanized consumer is perceived

fresh, healthy and preservative free and straight from the
cow, if it is provided to them by doodhwala ( milkman )
early in the morning. Therefore this perception has to be
overcome, if increased penetration of packaged milk is to
occur at a significant rate in the market.
Another problem faced by packaged milk industry to make
people switch from loose milk to packaged milk is price.

31
Brands like Milk Pak which is owned by Nestlé and Haleeb
Milk owned by Haleeb Foods has been leading the dairy
market of the world’s fourth largest milk producing country
for nearly two decades very successfully. Engro Foods which
is basically a giant in fertilizers industry, in contrast,
had only been established for few years in Pakistan. Olpers
is the packaged milk brand owned by engro foods and no one
in a branding industry could imagine how Olpers was going
to distance itself from its parent company’s image. And
Olpers surprised every by its high turnover by the end of
2006, sales for Olper’s Milk had reached Rs.1 billion
(approximately US$ 15 million) and in 2008, the brand has a
market share of close to 22 percent at present which is
second only to Milk Pak (estimated at 40 percent).

Though there are still a lot of hurdles like consumer

perceptions and price differentials between open and
packaged milk and they needed to overcome, the processed
milk market is set to grow. There is a still a very large
market size that needs to be converted, which is a huge
opportunity for PLMCs. If the economy remains stable for
the next five years, penetration in the market will
increase at an astonishing rate. (Dairy Industry in
Pakistan, 2007).

32
 CHAPTER 4: ORGANIZATION ANALYSIS

NESTLÉ MILKPAK PAKISTAN:

Today, Nestlé MilkPak produces its products in over 81

countries and achieves 98% of its turnover outside Europe.
Nestlé MilkPak is the world’s largest milk company. It has
an annual revenue of 70 billion Swiss francs, 522 new
factories in 81 countries, 200 operating companies, 1 basic
research outer and 20 technological development groups, has
more than 231,000 employees and more than 8000 products
around the globe. There are three main administrative
companies that co-ordinate the activities of more than 200
operating companies around the globe. (About Us: Nestlé,
2009).

Figure 1: Product Concept

Nestlé is perceived as the best quality product all over

the globe and the same idea is reflected and replicated in
the introduction and launch of Nestlé MilkPak. It became

33
reputable brand very soon in Pakistan and many other milk
producers later chased the same pattern to initiate their
milk brands in the same market which has now become
rigorously competitive.

MilkPak has been nominated as the best brand on the

attribute of sustaining quality. Familiarity with the brand
has been rated as the second most sought after features and
specify the superior quality of marketing and promotional
communications which are more aimed at consumers’ awareness
for consumption of packaged milk. Availability of the
Nestlé MilkPak has been rated as third in the sequence and
definitely indicates potential for further improvement.
Affordability has been graded as last by consumer voting
indicating consumers’ sensitivity to frequent upward
pricing of essential commodities. In an economy like today
affordability is a very important factor that affects the
spending on packaged milk.

SWOT ANALYSIS

A SWOT Analysis is carried out by the company so that it is

able to position itself to take advantage of particular
opportunities in the environment and to avoid or minimize
environmental threats. In doing so, the organization
attempts to emphasize its strengths and moderate the impact
of weaknesses and improving them.

SWOT Analysis of Nestlé MilkPak done by a research group

(AC Neilson) is as follows:

34
INTERNAL ANALYSIS

STRENGTHS
• A socially responsible Company.
• Nestlé MilkPak Limited’s products enjoy strong brand
image and market pull.
• Innovative and constantly growing product line. Nestlé
MilkPak launched 17 new products, including variants
of existing products in recent past.
• Sales force is the major resource strength in terms of
physical possessions of the company.
• Marketing strategies employed by the company are
innovative and draw in customers.
• Financial, marketing and sales strategies are devised
by gauging the customer demands.
• Periodic research is carried out to judge market
trends.
• It is a large scale multinational organization, with
copious funds and has the competence of acquiring
weaker firms by throwing them out of competition
• Growing Sales and profits.
• Major shareholder in the food industry of Pakistan.
• Aggressive Marketing.
• Efficient Distribution networks throughout the country.

• Quality Products.

• Environment Friendly.

• Skilled labor.

• Educated staff.

35
 • Large number of offerings.

• Arrangement of events.

• Brand name

• Easy to approach outlets.

• Physical evidence Strong Brand image

• Quality product

• Solid Financial position

• Strong supply chain network

• Qualified work force

• Commitment to High Quality Products

• Focus on research and development, estimations of UHT

Milk Production and Consumption up to 2008– 09

• Year Annual Production

(million liters) Annual Consumption
(million liters)
2008-09 => 648.43 353.71
2009-10 => 753.89 372.05

WEAKNESSES:

• Selective investment due to uncertain economic and

political conditions.
• Feasibility of new products needs to be analyzed, e.g.
Nestea was launched some years back but it failed
because no customer demand for it existed.
• Relatively a new company in comparison to its rivals

36
 e.g. Lever Brothers.
• Low levels of inventory maintained can be dangerous.
• No credit sales.
• Low sales margins due to highly value added products.
• They cannot launch many of its expensive international
brands due to the lower income groups.
• Physically impossibility to have target market.

• There is weak marketing of MilkPak as there is no

advertisement of MilkPak on official website.

• Lack of awareness among the target market.

• It Dependency on others (govt. & sponsors) for the

arrangement of events. The target market of Nestlé
MilkPak is upper middle and high class because lower
middle and poor class cannot afford to buy UHT milk
due to its premium price.

• It is a main weakness of MilkPak that there are

different companies of milk but the name of Nestlé
MilkPak is always stand in the last because of low
advertising and marketing.

EXTERNAL ANALYSIS

OPPORTUNITIES:

• Pakistan is the seventh largest producer of milk in

the world with annual output of over 22 billion liters.
• There are substantial growth opportunities considering
the average capitulate of Pakistani animals at only
1,100 liters/annum as compared to 6,000 liters/annum

37
 for animals in Europe and USA. There are nearly 20
million milk producing animals in the country, mostly
in Punjab (80%).
• The overall milk market in Pakistan is 20 billion
liters, out of which processed milk contributes only 3
million liters. Nestlé MilkPak along with other
processed milk businesses makes a payment of only 2%
to this large market.
• Nestlé MilkPak has stretched out its product range by
entering the cold dairy market recently by launching
Nestlé plain yogurt and now fruit yogurt is also added
to it.
• To expand the cold dairy products range, Nestlé fruit
yogurt is the latest addition to this group.
• The cold dairy market offers many opportunities for
the company which can capitalize these products by
banking on its superior quality milk.
• The coffee brand also offers many opportunities for
the company to expand by tuning the taste of the
masses towards coffee.
• Credit policy can be implemented to increase sales.

THREATS
• Price fluctuations due to rupee devaluation as raw
material are imported.
• The uncertainty of economic conditions poses a great
threat as the major funds invested in the country come
from outside Pakistan.
• The present economic crisis in the world, led to the
withdrawal of foreign management from the company and
the investment has come to a halt.
38
 • Competition with Nestlé’s owns smuggled brands.
• Effect of Seasonality’s upon sales.
• Imported raw material, in some of the company’s
products.
• Major player may enter target market
• Legal and ethical issues.
• Market segment growth could attract new entrants.

PORTERS FIVE FORCES MODEL

The Porter’s Five Forces Analysis helps the marketer to

contrast a spirited competitive environment. It has
similarities with other tools for environmental audit, such
as PEST analysis, but tends to focus on the single, stand
alone, business or SBU (Strategic Business Unit) rather
than a single product or range of products. (Porter's Five
Forces Model).

39
 Figure 2: Porters Five Forces Model

Five forces analysis looks at five key areas namely the

threat of entry, the power of buyers, the power of
suppliers, the threat of substitutes, and competitive
rivalry.

FIVE FORCES MODEL APPLICATION IN NESTLÉ.

In our project of Nestlé milk product line the application
of Porters five forces model is as follows.

40
 Figure 3:Five forces model application in nestlé

THREAT OF NEW ENTRY.

In the scenario of packaged milk industry of Pakistan,
there is a lot of potential as the consumers are switching
their preferences from conventional Gawala milk to the
packaged milk. The new entrants that have some resources or
experience are entering into milk industry. As the data
from last 5- 10 years show that the only two dominant
brands of packaged milk available were the Nestlé MilkPak,
and Haleeb Milk by Haleeb foods (formely Chaudhary daries
limited). But in the last decade new brands came like
Nirala Milk from the owners of Nirala Sweets , Nurpur milk
from Noon group of companies, Halla milk which has
currently closed its operations. And in the recent last few
years two new brands came that have significantly captured
a large market share that are Good Milk from Shakar ganj
group, and Olpers by Engro foods.
Now what Olpers and Good milk has done is that they hired
the management from Haleeb and Nestlé at high wages and at

41
their expertise they captured the market, these companies
have high budgets so they done intense and out of the box
marketing and made their name in market. As earlier, there
were only two players in milk industry; Nestlé and Haleeb
so the government does not have strict policy , new brands
came in to make healthy competition which has ultimately
given benefit to the consumer. And as the industry is
growing so new entrants have potential in the market. The
differentiation these companies are doing is by their
marketing and distribution only like if a company for
example Olpers have strong distribution in Chakwal it will
capture the market in that area and vice versa.

POWER OF BUYERS.
The power of buyers is high when there are only few firms
in the industry providing their services. In the milk
industry the buyers have more choices now with the entry of
new brands like Oplers and Good milk. Like previously the
buyers have only two choices either Haleeb or Nestlé. But
now the situation has changed, buyers have many choices if
any brand doesn’t performs good in terms of quality,
convenience or pricing they switch to other brand. For
example a restaurant that buys milk from Haleeb doesn’t get
favorable terms of credit from company can now switch to
any of other brands like Nestlé, Olpers , Good milk. There
is a cut throat competition and each of them is striving
for its market share.

POWER OF SUPPLIERS.
Now with more brands the switching cost is also low as
buyers have increased choices.

42
The power of suppliers is stronger than powers of buyers.
The dairy farms that had been supplying milk to packaged
milk brands have more choices now as they can sell their
milk to any of prevalent packaged milk brands who offer
more prices and favorable terms of payments etc.

Other thing is that the switching costs of buyers is high

and also matters like it will cost high when switching from
one supplier to another requires more complex procedures.
Like if Nestlé buy milk from one buyer and switch to other
it had to re make its policies and negotiation terms and
conditions , along with that it also had to make other
changes etc.

THREAT OF SUBSTITUTES.
The substitutes options to the packaged milk are very less
yet very strong in the market, the substitutes are the
conventional open milk, and the dry powdered milk. One
important thing is that milk is the generic product so to
make its substitutes is a difficult thing. So threat of
substitute is low.

THE COMPETITIVE RIVALRY.

This is very high in this industry, there are many cases
when one brand has bought or hired the sales force of other
company, there are many promotions and marketing campaigns
going on to capture the market share. The only way to
compete is on the basis of marketing as the prices are
almost same. The different brands have done their
positioning differently as:

Nestlé. Purity is everything.

43
Haleeb. The thickest milk.
Olpers. A complete milk.
Good milk. Healthy life.

PEST ANALYSIS
In analyzing the macro-environment, it is significant to
discover the factors that might in turn affect a number of
imperative variables that are likely to influence the
organization’s supply and demand levels and its costs
(Kotter and Schlesinger, 1991; Johnson and Scholes, 1993).
A number of checklists have been developed as ways of
sorting the vast number of possible issues that might
affect an industry. A PEST analysis is one of them that is
merely a framework that categorizes environmental
influences as political, economic, social and technological
forces. The analysis examines the impact of each of these
factors (and their interplay with each other) on the
business. The results can then be used to take gain of
opportunities and to make contingency plans for threats
when preparing business and strategic plans.
Kotler (1998) claims that PEST analysis is a useful
strategic tool for understanding market growth or decline,
business position, potential and direction for operations.
PEST also ensures that company’s performance is aligned
positively with the powerful forces of change that are
affecting business environment (Porter, 1985).PEST is
useful when a company decides to enter its business
operations into new markets and new countries. PEST
analysis of Nestlé MilkPak Pakistan has following points:

44
 POLITICAL FACTORS:

The rules of government of Pakistan do affect the company

and its brand. The company policies are affected and its
budget is also affected .Nestlé paid 15% sales tax and 18%
excise duty when they directly imported chiller from the
other country but mostly they purchase chillers inside the
country. Increased prices of electricity and petrol cause
transportation and other cost heavily which results in the
increased prices of processed milk.
On the other hand, these days Government provides chillers
to the Nestlé MilkPak at interest free installment through
UNDP and PDDP projects. This process reduces the pressure
on milk industry and increase the productivity.

ECONOMICAL FACTORS:

Pakistan is blessed with good potential for dairy

development, buffalo being the principal source of milk.
But due to problems such as poor nutrition, mismanagement,
failure to control disease, unavailability of veterinary
and poor animal husbandry, only 5% milk is used for
processing. Nestlé MilkPak is playing an important role in
the economic growth of Pakistan. They earn a lot of profit
and also trust its profit in social welfare by making
schools or helping with funds during earthquake in Azad
Kashmir. Nestlé Pakistan also helps educating the farmers
how to get maximum quantity of milk from the animals by
providing them sufficient food. They also provide job
opportunities to the people of rural areas by giving them
animal on interest free installments.

45
Now a days, our economy is on recession due to this the
prices of processing milk has been increased day by day.

SOCIAL FACTORS:
People in Pakistan mostly prefer fresh and open milk & rely
less on processed milk because they understand processing
milk companies add chemicals and preservatives in milk
during process. But Nestlé MilkPak try to change this trend
through heavy advertisement and awareness programs.
Processing milk is mostly used in large cities or towns.
Companies try to win large number of customers by providing
them quality and value.

TECHNOLOGICAL FACTORS:
Nestlé uses latest technology and high quality machinery in
the production of milk or other products, it also fulfill
the customer’s requirement. For example, Nestlé recently
opened Asia’s largest factory in Kabirwala. Nestlé MilkPak
now uses machinery that produced 1800 to 2000 tones milk
daily.

NESTLÉ’S MARKETING STRATEGIES FOR ITS MILK PRODUCT

LINE
The corporate strategy of Nestlé Pakistan is growth. The
operational strategies of Nestlé in Pakistan are as follows:
o Consumer communication
o Product availability and development
o Quality strategy
o Branding strategy
o Differentiation strategy

46
 o Positioning strategy
o Marketing Mix Strategy

CONSUMER COMMUNICATION
The taste of the customer and awareness is brought among
people about healthy and delightful eating with the help of
electronic media, advertisements boards, banners,
advertising on newspapers, pamphlets, brochures, handouts
and by the stall activity of marketing department. Customer
feedback is also very important for Nestlé MilkPak and to
cater this it has setup a special call centre. Good to know
is the tag line Nestlé use for customer communication and
satisfaction.

PRODUCT AVAILABILITY
From time to time activities such as area storming,
determining new places or areas are being done. Thus,
making the distribution of MilkPak everywhere.

BRANDING

Nestlé is a strong brand so while catering to Pakistani

market of Milk it has developed a broad branding strategy.
The packaging of the MilkPak is in green and white color in
lieu of the colors of flag of Pakistan thus following
Glocalization. It is because of this branding that Nestlé
MilkPak is a major producer of packaged milk and very

47
successful in high brand recognition and brand recall and
product quality in Pakistani market.

DIFFERENTIATION STRATEGY

Nestlé has differentiate itself in terms of nutrients in

MilkPak e.g. “Addition of IRON and Vitamin “A & C” and
purity “Khalis hi sab kuch hay”.

POSITIONING STRATEGY

Nestlé MilkPak has adopted the functional positioning

strategy like:

“Khaalis He Sab Kuch Hai”

“Wohi Qudarti Maza”

“Jaan Banaoo”

MARKETING MIX

Product:

• Quality Product

Nestlé MilkPak has the largest market share

due to its consistent quality.

48
 　 • Product Packaging

Nestlé MilkPak is available in different product

consumption range and stylish packaging.

• Product Lifecycle

Nestlé MilkPak has been in the market for more

than two decades and it is at continual growth
stage.

Figure 4: Product Life Cycle

Initial growth Continuous growth

Decline Maturity

Price:

• Competitive Pricing

MilkPak has a large share in the market. The

price of MilkPak is competitive with other brands
in market.　

49
 Table 1 : Comparison of Prices and Packaging

Figure 5: Comparison of Prices and Packaging

Placement:

• Distribution Channels:

50
 MilkPak is not sold directly to consumers. A
complete distribution process is followed. It
uses indirect channels for distribution like:

Manufacturer

Distributor

Wholesaler

Retailer

Consumer

Promotion:

• Spotlighting on health conscious people in

their advertisement.

Promotion Mix

• Advertisement

• Public relations

MARKETING GROWTH STRATEGY

Nestlé is pursing growth strategy. They have invested $ 70

billion at Kabirwala Plant and they are planning to invest
$ 381 billion in the milk business in coming years.

51
 CUSTOMERS’ ANALYSIS:

To meticulously considering the response Nestlé MilkPak

customers were from Rawalpindi and Islamabad, belonging to
varying demographics i.e. different age groups, occupation
and income levels were surveyed. This survey was in form of
questionnaire, a sample of which is attached in Appendix.

At start, let’s look at how the total population of survey

is distributed in terms of gender, age, occupation and
income level; we have taken gender and income level as the
major criteria for our sample selection. Following tables
and charts show the distribution of respondents over these
categories:

GENDER: Overall 54% of our respondents were female, and

rest 46% were males.

Table 2: Gender Ratio

Gender
Male Female
93 107

Figure 6: Pie Chart of Gender ratio

52
AGE: While being totally neutral in selection of sample, it
is seen that most of the MilkPak users are between 26-35yrs
age group. This is because they belong to the current
generation, who has an eye over every thing, conscious
about health and are working class and has lack of time.
below 15 years is just 2% of the total population sample,
but in future it seems to be really attractive age group
for MilkPak customers because children are the best
influencers for selling.

Table 3: Age Distribution in Customer Survey

Age Group
Category Below 15 15 to 25 26 to 35 36 to 45 Above 45
No. Of Respondents 4 40 88 42 26

Figure 7: Age Distribution in Customer Survey

OCCUPATION: In terms of occupation the sample was

distributed in three categories namely, low income,
employed/having own business and retired / housewives /
financially dependent family members. While being unbiased
in selection of sample, it is witnessed that the last two
categories consume packaged milk more.

53
 Table 4: Occupation Distribution in Customer Survey

Occupation
Retired /housewife /financially
Low income Employed / have my own business
dependent family member
33 102 65

Figure 8: Occupation Distribution in Customer Survey

Retired/HW

Employed/OB

Low Income

0 50 100 150 200

INCOME LEVEL: This category is divided into five divisions

from below Rs.10,000 to above Rs.75,000, keeping in mind
the social income groups prevailing in Rawalpindi and
Islamabad. The respondent’s income levels indicate that
MilkPak users belong to every income group.

Hidden Trend: It is seen that the above Rs 50,000 income

level people tend to show their preferences for Packaged
Milk more because of various reasons e.g. shopping in malls
and convenience, availability of packaged milk its long
life.

Table 5: Income Level Distribution in Customer Survey

Income Level (in Rs.)

Below 10,000 10,000 to 25,000 25,000 to 50,000 50,000 to 75,000 Above 75,000
4 12 34 72 78

54
 Figure 9: Income Level Distribution in Customer Survey

2% 6%

Below 10k
17%
39% 10-25k
25-50k
50-75k
above 75k

36%

Now in the second phase of our analysis, lets dissect the

responses on main questions and try to figure out the
hidden and/or clearly visible, registered trends.

55
 Questionnaire analysis:

1. What is your preference: open milk or tetra pack?

Table 6 : Ratio of Open Milk to Packaged Milk

Ratio of Open Milk to Packaged Milk

Options Open Milk Tetra Pack Both
Responses 48 96 56

Figure 10: Ratio of Open Milk to Packaged Milk

24%
28%

OPEN MILK

TETRA PACK
MILK
COMBINATION
OF BOTH

48%

Out of the sample size of 200 respondents from Rawalpindi

and Islamabad showed a mixed trend. Total Fifty one percent
of the consumers in market use either open milk or open
milk and packaged milk simultaneously. Packaged milk has

56
penetrated deeply in market especially in cities and the
48% of the people prefer tetra pack milk in comparison to
28% people who are stick to conventional open milk only in
all sorts of circumstances and don’t like packaged milk at
all. High Price perceptions also prevails in this 28% of
sample. Whereas the 24% people use packaged milk as
substitute of open milk n this shows the growth potential
in market.

2. If you buy packaged milk then would you prefer Nestlé

MilkPak?

Table 7: Preference to Nestlé MilkPak

Preference to Nestlé MilkPak

Options Yes No Up to some extent
Responses 120 46 34

Figure 11: Preference to Nestlé MilkPak

17%

YES

NO

23%
60% UP TO SOME
EXTENT

57
Here in this case when the respondents were asked about
their preference of the Nestlé MilkPak over other tetra
packs 60% of them responded in favor of MilkPak, 23% of the
respondents choose other tetra pack milks and 17% were
neutral and according to them they purchase whatever brand
is available. This analysis shows the higher preference of
MilkPak over other brands.

3. Are you satisfied with quality of MilkPak?

Table 8: Satisfaction with Nestlé MilkPak Quality

Satisfaction with Nestlé MilkPak Quality

Options Yes No
Responses 182 18

Figure 12: Satisfaction with Nestlé MilkPak Quality

9%

YES
NO

91%

58
The response to this question is related with the response
of the question that if respondents prefer MilkPak over
other tetra pack brands. One reason of the high percentage
of preference could be its taste, as out of the sample of
200 respondents, 91% of them replied that they like the
taste of it better than any other brands and only 9%
replied that they prefer the taste of other milk brands
which shows the better taste is one of the reason of
MilkPak being the market leader.

4. Would you like to have improvement in MilkPak?

Table 9: Need for Improvement in Nestlé MilkPak

Need for Improvement in Nestlé MilkPak

Options Yes No
Responses 182 18

Figure 13: Need for Improvement in Nestlé MilkPak

9%

YES
NO

91%

59
The response to this question is similar to the last one
the reason being that it was about the taste of MilkPak.
The people that prefer the taste of Nestlé MilkPak does not
want it to be changed and the people that does not prefer
its present taste thinks it should be changed. Therefore
91% of the respondents do not want the taste to change and
9% of the respondents want it to change.

5. Rate the taste of MilkPak as compared to other tetra

pack milk?

Table 10: Taste of MilkPak compared to other tetra pack milk

Taste of MilkPak compared to other tetra pack milk

options Very bad Bad moderate good Very good
responses 0 0 46 92 62

Figure 14: Taste of MilkPak as compared to other tetra pack milk

0%
23%
31%
very bad
Bad
Moderate
Good
Very Good

46%

60
According to the responses to this question as much as 31%
of the respondents think that the taste off Nestlé MilkPak
is very good as compared to any other tetra pack milk. 46%
of the respondents think it’s good and 23 % think its
moderate as compared to other tetra pack milks. None of the
respondents think that the taste of MilkPak is worst or not
as good as any other tetra pack milk.

6. Is the price of Milk Pak rational?

Table 11: Price of Nestlé MilkPak

Price of Nestlé MilkPak

Options Yes No
Responses 172 28

Figure 15: Price of Nestlé MilkPak

14%

YES
NO

86%

61
A huge population of our sample as 86% responded that the
price of Nestlé MilkPak is competitive and justified in
comparison to other tetra milk packs. 14% felt that the
MilkPak is over-priced. The thinking might be in comparison
to the price of open milk.

7. Is MilkPak readily available to you?

Table 12: Availability of Nestlé MilkPak

Availability of Nestlé MilkPak

Options Yes No
Responses 172 28

Figure 16: Availability of Nestlé MilkPak

14%

YES
NO

86%

62
86% of our sample size of population is contended with the
availability of the Nestlé MilkPak and its intensive
distribution. It is available every where in cities, super
markets, grocery shops and in kiosks also. The convenient
availability of the Nestlé MilkPak is backed by the strong
and efficient supply chain management system of Nestlé
Pakistan. However there are many areas where milk Pack is
not available and 14% people reported that they could not
have the access to Nestlé MilkPak.

8. Which brand of tetra pack you will buy in case of

unavailability of MilkPak?

Table 13: Choice of Other Milk Brands

Choice of Other Milk Brands

Options Olpers Haleeb Good milk Any other
Responses 82 62 28 28

63
 Figure 17: Choice of Other Milk Brands

14%

41% OLPER'S
14%
HALEEB
GOOD MILK
ANY OTHER

31%

When the sample of 200 respondents were asked the question

that which other tetra pack they would prefer if MilkPak is
not available to them, 41% of the respondents replied that
they would go for Olpers if they don’t find MilkPak, 31%
prefer Haleeb in case they can’t find MilkPak, 14% replied
in the favor of good milk and 14% of the population replied
other brands. This shows that Olpers is a very close
competitor of MilkPak and even if people can’t find MilkPak
majority would go with Olpers and Haleeb.

9. Do you recall the ad of Nestlé when you see Nestlé

milk at the store?

64
 Table 14: Recall of Nestlé Milk Advertisement

Recall of Nestlé Milk Advertisement

Options Yes No
Responses 110 90

Figure 18: Recall of Nestlé Milk Advertisement

The recall of Nestlé MilkPak advertisement is not very

high and encouraging.55% of the sample population could
recall advertisement in contrast to 45% who did not. The
reason being that Nestlé’s strategy about advertisement
is not very intensive. Nestlé believes on providing good
quality products and knowing customers better and
communication with the customers than merely
advertisement on TVCS.

10. What you prefer while buying packaged milk?

65
 Table 15: Preference while purchasing tetra pack

Preference while purchasing tetra pack

options Purity/quality price Convenience availability
responses 82 76 24 18

Figure 19: Preference while purchasing tetra pack

41% of the people emphasized on purity and quality of the

milk while choosing different brands. Price of the brand is
also a major reason of switching to different milk brands.
38% of the people in our sample were price conscious.
Convenience of packaged milk and availability were minor
issues in regard to quality as milk is a food item.

11. If Nestlé milk isn’t available at shop/ out of stock

you ask the shopkeeper about its reason or switch to
other available brand of milk?

66
 Table 16: Loyalty with the brand

Loyalty with the brand

Options Other brand Ask reasons
Responses 142 58

Figure 20: Loyalty with the brand

In the previous question we have seen that quality is

foremost important to people while buying edible products
such as milk. But as milk is very generic product and there
aren’t many substitutes available so people as 71%
responded that due to the non availability of Nestlé in
market they will go for other brands for some time though
in spite of their strong loyalty with Nestlé Milk.

12. Can you remember and recognize the colors of Nestlé

MilkPak (white & green) at billboard?

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 Table 17: Recognition of Nestlé MilkPak Brand

Recognition of Nestlé MilkPak through colors

Options Yes No Don’t know
Responses 178 18 4

Figure 21: Recognition of Nestlé MilkPak brand

Nestlé is a very quality perceived and trusted strong

brand. In Pakistan MilkPak has green and white colors
representing colors of the land.89% of respondents claim
that they can recognize Nestlé MilkPak.

13. Nestlé has been changing its packing with the events
like Independence day pack with Pak flag and Ramadan
packs, have you seen such packs on the shelves of shops
as it is for a limited time offer with high turnover of
milk.?

68
 Table 18: Recognition of limited time packaging

Recognition of limited time packaging

Options Yes No
Responses 126 74

Figure 22: Recognition of limited time packaging

Nestlé’s sales promotion strategy is intensive during the

special events like Ramdan, Jashan Azadi and the Eids.
Special packaging is introduced to emphasis the
relationship Nestlé shares with its consumers. Nestlé is
quite successful in this regard as 63% of the population
sample responded that they can recall and recognize the
special packaging and colors of the brands.

14. How you perceive brand image from the Television

advertising for each company?

69
 Table 19; Perceived Advertising Image

Perceived Advertising Image

Nestlé Olpers Goodmilk Haleeb Nurpur
Traditional 82 54 36 45 26
Modern 49 81 12 24 24
Serious Image 85 60 31 52 38
Fits my Life
36 84 34 29 22
Style
Quality
72 75 48 36 11
service
Economical
70 82 31 17 74
Service
Trustworthy 69 82 32 35 8
Wide Range of
76 69 14 34 30
products
Innovative 29 108 54 9 29

Figure 23: Perceived Traditional Advertisement Image

11% Nestle

19% 33% Olpers

GoodMilk

Haleeb

Nurpur
15%
22%

70
 Figure 24: Perceived Modern Advertisement Image

Figure 25: Perceived Serious Advertisement Image

14%
Nestle
31% Olpers
20% GoodMilk
Haleeb
Nurpur
12% 23%

71
 Figure 26: Perceived Image that Brand fits to life style

11% 18%

14% Nestle
Olpers
GoodMilk
Haleeb
17%
40% Nurpur

This is one of the most comprehensive questions of this

questionnaire in terms of the perceived advertising image
of the key players of tetra pack milk industry of Pakistan.
In this question all the respondents were asked to mark the
key players of this industry i.e. Nestlé, Olpers, Haleeb,
Goodmilk, Nurpur. with reference to 8 characteristics i.e.
traditional, modern, serious image, fits my life style,
quality service, economical service, trustworthy, wide
range of products and innovative. Above table shows the
ranking of each company in percentages with respect to the
above stated 12 characteristics.

The above table shows the power of advertisement used by

Olpers. As it has the highest ranking among other players
in the industry and Nestlé is right behind it. Olpers is
leading in many given aspects like modern, trustworthy and
innovative etc and Nestlé is right behind it whereas other
three brands are way behind them in all the aspects.

72
 Comparison of Nestle MilkPak with other brands

Attributes/Brands Nestle Olpers Haleeb GoodMilk Open

Milk
Brand Image Pure Strong Thick Drinking Pure
Milk
Brand Positioning Purity is All Thickest Drink Fresh
everything Purpose Milk Good Milk and Pure
milk everyday
Brand Recall Strong Strong Strong None ---
Consistent Quality Always Always Always Always Depends
Price Rs. 58 Rs. 57 Rs. 57 Rs. 57 50-60/kg
Distribution(cities) Intensive Intensive Intensive Less Intensive
Distribution(rural) Intensive Intensive Less Less Intensive
Advertisement Less Intensive Medium Medium None
Frequency
Promotion Tvcs, Tvcs,radio, Tvcs, Tvcs, None
News Billboards, Home to News
Shows Home
Advertisement Emotional, Emotional, Emotional, Emotional None

73
Appeals
Taste Natural Good Creamy Sweet Natural
Convenience Yes Yes Yes Yes No
Market Research Nestle Market Timely Timely None
Research Research
laboratories Unit
Target Market Middle, Middle, Middle, Middle, Everyone
upper upper upper upper
middle, middle, middle, middle,
health health
conscious conscious
people people
Packaging 0.25L,0.5L 0.25L,0.5L 0.25L,0.5L 1.0L Depends
1.0L 1.0L, 1.5L 1.0L
Brand History 1981 2006 1986 2007 Always
Financials Backed by Backed by Now Less Backed by ---
Nestle Engro Stable Shakarganj
Foods Foods
Product Purity, Rich All Good for Drinking ---
Differentiations Iron, purpose tea and Milk
Vitamin C desserts
Sub Brands Nesvita,Nido Olwell Dairy --- ---
Queen
Marketing To be To be To be To attain ---
Objectives market market market 20% share
leader leader leader
Market Share of 40% 25% 35% other brands ----
packaged milk
industry
Total Market 8% 5% 7% 80%
share (40%of (25% of (35% of 20%)
20%) 20%)

74
 CHAPTER 5: IDENTIFICATION OF KEY AND CONCLUSIVE
RESULTS

Thoroughly considering the theoretical process of how

Nestlé impacts consumer behavior, analyzing closely each
Strategy of Nestlé taking up for its milk product line and
examining the data collected through customer survey to
have a handle on the customers’ respective perspectives,
and alignment of strategies with Nestlé MilkPak’s marketing
following results were deduced:

Nestlé MilkPak is quite able-bodied in the market. It has a

good image among the consumers. It is legendary for its
quality and being the pioneer of safe and good quality
milk. It is selling well. The marketing of it is also being
done quite well. Even though Nestlé’s overall performance
is quite well in the market but there is always a room for
improvement as the market is always very dynamic and so the
management of Nestlé has to align the strategies according
to the changing demands of the market.

Nestlé MilkPak’s management must also be careful and

abreast of Olper’s as it has managed to provide stiff
competition to MilkPak and Haleeb in a very short span of
time.

Brand awareness and brand recognition are present and

Nestlé MilkPak can capitalize on it in all ways. Marketing
is aligned with the strategies of Nestlé MilkPak.

75
All brands acknowledge that the intention behind their huge
marketing investments specifically in terms of TVCs is to
attract new customers, retain existing customers and make
competitors customers switch to their Brand. Customer churn
is acknowledged by all the brands to be a common problem
threatening each of them and TVCs is being used as a major
tool/medium to overcome this problem.

76
 CHAPTER 6: RECOMMENDATIONS

Nestlé MilkPak is a success story in Pakistani market. It

has maximum market share. There is not a lot to recommend
to a brand name as strong as Nestlé. Few of the
recommendations that we found out during surveys and
research are as follows:

o As we have analyzed Nestlé MilkPak has 360 degrees

promotions and involves in various ATL and BTL
activities. The ATL activities comprising of broadcast
media are not very aggressive. Nestlé MilkPak has made
only few TVCs and special occasion advertisement is
missing specially when other brands like Olpers and
Haleeb Link themselves with local occasions
aggressively.
o Nestlé need to improve its strategies related to
advertisement because the market is very dynamic and
vibrant and interactive advertisements attract new
customers and retain the old ones
o Branding and packaging is a reflection of the
production and the marketing process. A package that
is perceived as attractive by the people will
undoubtedly have a favorable impact on the buyer.
Although firms already pay a lot of attention to
branding and packaging and use it to their benefit,
there might still be room for innovation and research
in this field especially since, in our time marketing
is very important. Due to excess availability of

77
 different and innovative things, good marketing is
required in order to get what any user wants.

o Nestlé should engage in more guerilla marketing

techniques to attract more customers and retain the
existing customers.
o Nestlé must have to promote its Everyday; liquid tea
whitener brand.
o Nestlés only flavored milk brand is Milo, it had to
come up with new flavored milk brands as demand for
such milk is rising in new generation, there are
already brands available by Olpers , and Shakarganj
group etc.
o Further marketing campaigns on TVCs should be adopted
by Nestlé to compete with Olpers, what we have
observed is that the intense marketing of Olpers had
made it a strong brand in a short span of time.
o Nestlé MilkPak should have to make its distribution
channel strong, in order to get maximum shelve space
at stores, so people would have no choices for other
brands. What we have observed that in a shop if Nestlé
milk is not available people buy other brands like
Olpers and Haleeb.
o The producing firm should differentiate between the
needs, desires and perceptions of the various consumer
groups, which can be separated into groups on the
basis of age, gender, personality, income and many
other demographic variables. Thus, the firm can focus
on the target market that is relevant for its product,
and make the brand and package suitably. Different
other sub brands and flavored milk segment can be
targeted as it is an untapped market till now.

78
 CHAPTER 7: ACTION PLAN

To implement the recommendations made to produce effective

results following is the plan of action:

o Nestlé MilkPak need to make few of new TVCs and

special occasion advertisements as they are missing
especially when other brands like Olpers and Haleeb
Link themselves with local occasions aggressively.

o Nestlé can to do activity in schools for young

children about the Nestlé milks telling them about its
Nido brand and the importance of calcium to the growth
and nutrition of these children.

o Another important area for Nestlé is that its brand

Nido’s subdivision like nido 1 +, and nido 3, this
market is untapped, Nestlé can reposition itself in
these sub brands as medicated toddlers Milks and do
activity to tell mothers the importance of such milk.
As it has good market potential.

o Nestlé can do marketing activities like what Olpers

had done in Ramadan, it distributed the Roh-Azfza
flavored milk and dates as Aftari, it was a good
marketing activity at the same time corporate social
responsibility. These smaller yet powerful guerilla
maketing techniques are also aligned with Nestlé
MilkPak’s strategy.

79
o The market of tea whitener is already developed by
Tarang and Tea Max, Nestlé can capture the market
using its strong brand name and marketing as the tea
whitener market is already developed at the expense
of Tarang and Tea Max. The events of valentine day,
Mothers day etc. approaches, Nestlé’s brand Everyday
has strong association with the love and
relationships, Nestlé can capitalize on this event to
capture the market for its Everyday brand.

80
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milkpack.aspx

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82
ANNEXURES

83
Questionnaire:

1. What is your preference: open milk or tetra pack?

A: Open Milk
B: Tetra Pack
C: Both

2. If you buy packaged milk then would you prefer Nestlé

MilkPak?
A:Yes
B:No
C:Up to Extent

3. Are you satisfied with MilkPak quality?

A:Yes
B: NO

4. Would you like to have improvement in MilkPak?

A:Yes
B: NO

5. Rate the taste of MilkPak as compared to other tetra

pack milk?

A: Very Bad
B: Bad

84
C: Moderate
D: Good
E: Very Good

6. Is the price of Milk Pak rational?

A: Yes
B: NO

7. Is MilkPak is readily available to you?

A: Yes
B: No

8. Which brand of milk you will buy if MilkPak is

unavailable?

A: Olpers
B: Haleeb
C: GoodMIlk
D: Other

9. Do you recall the ad of Nestlé when you see Nestlé

milk at the store?

A: Yes
B: No

85
 10. What you prefer while buying packaged milk?

A: Purity, Quality
B: Price
C: Convenience
D: Availability

11. If Nestlé milk isn’t available at shop/ out of stock

you ask the shopkeeper about its reason or switch to
other available brand of milk?

A: Yes
B: No

12. Do you have strong recognition of Nestlé milk, like

you remember the colors (white & green) at billboard
that’s not visible to you clearly you recognize its
Nestlé?

A:Yes
B:No
C:Don’t Know

13. Nestlé has been changing its packing with the events
like Independence day pack with Pak flag and Ramadan
packs, have you seen such packs on the shelves of

86
 shops as it is for a limited time offer with high
turnover of milk.?

A: Yes
B: No

14. How you perceive brand image from the Television

advertising for each company?

Perceived Advertising Image

Nestlé Olpers Goodmilk Haleeb Nurpur
Traditional
Modern
Serious Image
Fits my Life
Style
Quality
service
Economical
Service
Trustworthy
Wide Range of
products
Innovative

Rate from 1 to 5.

5 being highest and 1 being lowest

87