Project Abstract

We are assigned a project to introduce a new product in existing market. The product we have introduced is an everyday consuming product. Our product is Milk and the type of milk fall in the all purpose category. In the report we have mentioned that how the collection, purification and packing of milk is done along with its costing, market research (include market demand) and according to that market research, we have made our product available all over the market. We were facing losses in the start but now we are earning profits.

Milk
Our product is a homogeneous product which is consumed daily in the households. The demand of milk is very high in the market. Milk is a nutritive beverage obtained from various animals and consumed by humans. Most milk is obtained from dairy cows, although milk from goats, water buffalo, and reindeer is also used in various parts of the world. In the Pakistan, and in many industrialized countries, raw cow's milk is processed before it is consumed. During processing the fat content of the milk is adjusted, various vitamins are added, and potentially harmful bacteria are killed. In addition to being consumed as a beverage, milk is also used to make butter, cream, yogurt, cheese, and a variety of other products.

Our Product
The product which we have launched in the market is with the name Pure Milk. Its high nutritious milk containing calcium, iron and all the nutrition in it which is needed by the body of humanity. We launched our product in the end of last year on 16th of December 2010 and after a year we have maintained our good quality with price stability.

Market Research
Before launching our product we did a market research to have an idea about the demand of milk. We got the information that the demand of all purpose packed milk is 1.5 million liter per day. In our research we also got the information about the market structure of the product. It is a homogeneous product and we have very big competitors in the market who are selling all purpose milk. In which the market leader is Nestle Milk Pack which is the price maker in the market and all others like Olpers, Haleeb and NurPur are price taker. We are new in the market so we cant afford to do competition with Milk Pack, olpers and Haleeb. We have to take the customers of NurPur to sustain in the market. As well set our price according to it. Which is 76 Rs. Per liter pack.

Segments of Milk
There are three segments of milk which are in the market: All Purpose Segment (Haleeb, Olpers, Milk Pack) Tea Creamer Segment (Tea Max, Tarang) Dairy Drinking (Umang) We are covering the all purpose segment of milk.

Raw Materials
The raw material milk is taken by 3 major resources which are as follow: Taking raw milk from collection centre. Taking milk from the Farms. Having own milk farm. We are taking milk from our own farm named Omer Dairy Farm. By this we are able to manufacture our product in low cost and we are sure about our quality.

The Manufacturing Process

.Dairy cows are milked twice a day using mechanical vacuum milking machines. The raw milk flows through stainless steel or glass pipes to a refrigerated bulk milk tank. After collecting the milk from the cows it has transferred to the plant where the following procedures are applied on them.

Test of Milk
When the milk is collected from dairy forms there are certain test performs on the milk to check either the milk is of good quality, the milk is not contaminated with any thing. After that it is send for the further process.

Pasteurizing
The milk is piped into a pasteurizer to kill any bacteria. There are several methods used to pasteurize milk. The most common is called the high-temperature, short-time (HTST) process in which the milk is heated as it flows through the pasteurizer continuously. Whole milk, skim milk, and standardized milk must be heated to 161 F (72 C) for 15 seconds. Other milk products have different time and temperature requirements. The hot milk passes through a long pipe whose length and diameters are sized so that it takes the liquid exactly 15 seconds to pass from one end to the other. A temperature sensor at the end of the pipe diverts the milk back to the inlet for reprocessing if the temperature has fallen below the required standard.

Ultra Heat Treatment

Ultra Heat Treatment was introduced in Pakistan by Haleeb Foods Limited. Before Haleeb all the companies were using pasteurizing process. In UHT the milk is just pasteurized for a few seconds on 70oC and immediately cooled down and then the milk is transferred to another container and heated on 120oC to kill remaining bacterias which were not killed in the pasteurizing process.

Packaging
The milk is packed in tetra pack liter, half liter and quarter packs and transferred to the distributors.

Demand
The demand of PURE MILK in the beginning was very low, we faces losses because our price is high. So with the passage of time we decrease our price and then we gain some profit we offer 20% extra on per liter pack this technique also worked and our demand increasing gradually and now were earning Ab-normal profit. Our price of per liter pack is 78 Rs. The behavior of demand curve is as follow.
Price Quantity demanded per day (in thousands) 1 2 3 4 5

80 78 76 74 72

DEMAND
81 80 79 78 77 76 75 74 73 72 71 0 1 2 3 4 5 6

Supply
The supply of PURE MILK is also affected with the passage of time. As our prices change our supply equally changing with price. The behavior of supply curve is as follow:

Price

80 78 76 74 72

Quantity supplied per day(in thousands) 5 4 3 2 1

SUPPLY
81 80 79 78 77 76 75 74 73 72 71 0 1 2 3 4 5 6

Market structure
PURE MILK lie on the oligopoly market structure, the sellers of milk are many but the sellers of all purpose segment of milk are few i.e. Milkpak, Olpers, Haleeb, Pure milk and NurPur. So thats why it lies in oligopoly. Milkpak is leader of all these and it is price makers while others are price taker. The entry in U.H.T milk is limited allowed because a huge capital is required. The product is pseudo heterogeneous because when you compare it with other milk packs without packaging like Haleeb the taste of both are same. We have partial control on our pricing. The knowledge about our product is imperfect because everybody not knows how U.H.T milk made.

Costing
The costing of PURE MILK per liter pack is as follow:

Quantity Fixed (in cost thousand)

Variable Total Cost cost F.C+V.C

Average fixed cost F.C/Q 0 30 15 10 7.5 6 5 4.3 3.8 3.4 3

Average variable cost V.C/Q 0 40 35 30 32.5 38 43.34 47.8 51.8 56 59

Average total cost T.C/Q 0 70 50 40 40 44 48.34 52.2 55.6 59 62

Marginal cost T.C2-T.C1 Q2-Q1 40 30 20 50 60 70 75 80 85 90

0 1 2 3 4 5 6 7 8 9 10

30 30 30 30 30 30 30 30 30 30 30

0 40 70 90 130 190 260 335 415 500 590

30 70 100 120 160 220 290 365 445 530 620

Graphs
100 90 80 70 60 50 40 30 20 10 0 0 2 4 6 8 10 12 A.V.C A.T.C M.C

Revenues
Mathematically
Quantity (in thousand) 1 2 3 4 5 6 7 8 9 10 Price Total Average Marginal revenue revenue Revenue P.Q T.R/Q TR2-TR1 80 80 78 158 79 76 234 78 74 308 77 72 380 76 70 450 75 68 518 74 66 584 73 64 648 72 62 710 71 _

80 79 78 77 76 75 74 73 72 71

Graphically

AR=D
Our demand curve is unit elastic and our demand is equal to AR.
90 80 70 60 50 40 30 20 10 0 0 2 4 6 8 10 12 D AR

Total Revenue

TR
700 600 500 400 300 200 100 0 0 2 4 6 8 10 12 TR

MR
90 80 70 60 50 40 30 20 10 0 0 2 4 6 8 10 12 MR

Equilibrium
We are at break even point when our cost price which is 70 Rs. Is equal to our selling price we earn no profit and no loss, and our equilibrium is also at break even point.

100 90 80 70 60 50 40 30 20 10 0 0 2 4 6 8 10 12 MR M.C

Profit and Loss

At the starting of our business we faces loses and then we become in break even point and now with the Bless of Allah we earn Ab-normal profits.

100 90 80 70 60 50 40 30 20 10 0 0 2 4 6 8 10 12 M.C P MR A.V.C A.T.C