Introduction The Noon Group Marketing Essay

Introduction The Noon Group Marketing Essay Noon Group of Companies is being managed by the Noon family. The group has qualified and experienced professionals. The Noon Group of Pakistan strives to improve its profitability and safeguard its stakeholders interest while maintaining highest quality standards and serving the community. The Noon Group of Companies has various business ventures and Noon Pakistan Limited is one such profitable venture of the Group. Apart from Noon Pakistan Limited a brief description of the other business ventures are as follows:- 1.Noon Sugar Mills Limited This venture was incorporated in 1964 and manufactures white sugar. Initial crushing capacity was 1500 MT of sugarcane which has been increased to 4000 MT over the passage of time. In 1986 an alcohol distillery was setup to manufacture industrial alcohol. The total number of people employed is 683 and currently efforts are underway to increase the crushing capacity to 8000 MT/day. (Nurpur Foods-About Noon Group) 2.Pioneer Cement Limited Pioneer Cement Limited was incorporated in 1985 with a total investment of Rs.2660 million and production capacity of 630000 tons per annum. The plant is situated in Chenki, Khushab. The project was financed by a consortium of foreign lenders led by the Asian Development Bank. Efforts are underway for another line having a capacity of 6000 MT/day. (Nurpur Foods-About Noon Group) 3.Noon International Private Limited Noon International (Pvt) Limited is a trading company which was established in 1972. The company employs 43 people including a team of 15 professional sales engineers. This firm represents various international companies of repute in Pakistan and markets their equipment in the fields of textile, power generation, sugar, fertilizer, chemical, steel, cement, food and milling. (Nurpur Foods-About Noon Group) 4.Textile Technics Private Limited Incorporated in 2004 with a total investment of Rs 100 million, Textile Technics is a joint venture between M/S Blue Reed of Spain and Noon International Private Limited. The project has a production capacity of 22000 meters of reed per annum. (Nurpur Foods-About Noon Group) 5.Textile Services Textile Services was established in 1994 and provides services to over 200 customers of Sulzer Textile Projectile Weaving Machines. The company employs 32 people and provides training, technical service and spare parts for clients. (Nurpur Foods-About Noon Group) NOON PAKISTAN LIMITED Incorporated in 1966 with a total investment of 553 million, Noon Pakistan Limited produces various products namely Butter, Cheese, UHT milk, HCLF, Pasteurized milk, Flavored milk, Juices, Water, Desi ghee, Honey and Jam. Installed capacity of the plant is 72000 Liters/2 shifts and there are 700 employees. Noon Pakistan Limited has been marketing its products under the brand name of Nurpur. The plant is located in Bhalwal, Sargodha while the head office is situated in Lahore. (Nurpur Foods-About Noon Group) The company has not only built a strong reputation over the past years but has also been able to offer a strong product portfolio to its consumers. Noon Pakistan Limited believes in optimum utilization of resources in order to secure the interests of major stakeholders and fulfilling its obligation as a responsible corporate citizen by serving the community. The company also utilizes rigorous quality control procedures at all stages to ensure supply of quality products to consumers. This has allowed the firm to increase its turnover from Rs 311.7 million in 2004 to Rs 2436.41 million in 2011. (Nurpur Foods-Company Profile) The year 2011 was a challenging year for Noon Pakistan Limited. Energy Crisis, security situation coupled with devastating floods had exerted significant pressure on the economy and cost of living. Higher inflationary trends continued impacting their key products particularly related to fresh milk when shortages led to a cost increase of 16% compared to last year. Additionally, higher growth of their products led to severe filling capacity constraints and the market demand could not be met fully. Despite all these challenges, the management made serious efforts to achieve performance objectives by effective product mix, controlling fixed costs and locating new cheaper sources of raw material. Economic trends, prolonged gas and electricity outages, severe competition in selling brands and procurement of raw milk are not expected to ease out during the coming months. Due to reduced buying power, trend in the market is changing fast as consumers are looking for cheaper products in small packages. Therefore the management at Noon Pakistan Limited has made plans to reassess the market requirements and also further improve their production efficiency. (Noon Pakistan Limited, 2011) VISION The vision statement of Noon Pakistan Limited is as follows:- Our vision at Nurpur is to be a transformative force in our community and world at large and to serve as a model of a sustainable business alternative that nurtures social and economic well being in an environmentally sensitive manner. (Nurpur Foods-Our vision) MISSION The mission statement of Noon Pakistan Limited is as follows:- Nurpur is committed to supplying the consumer and customer with the finest, high quality products and to be a leading industry in healthy and nutritious products. Nurpur supports these goals with a corporate philosophy of adhering to the highest ethical conduct in all its business dealings, treatment of its employees, and social and environmental policies. (Nurpur Foods-Our mission) CORE VALUES At Noon Pakistan Limited, consumers are at the forefront of everything they do. The core values of the company are as follows:- 1. Ideas are constantly challenged to develop next generation solutions. 2. Business is conducted openly and fairly while competing fiercely at the same time. 3. Team work is encouraged with individual flair for the best results. 4. Tough goals are set and challenged and beaten. 5. Preservation of the environment is valued and organic agriculture is sustained. 6. Mutually supportive relationships are valued among members of local and global communities. (Nurpur Foods-Core values) AWARDS AND CERTIFICATIONS Noon Pakistan Limited has won many prestigious awards and certifications which are as follows:- 1. First dairy company in Pakistan to be certified under ISO 22000:2005. 2. Brand of the year award (2006-07) in the category of Butter. 3. Brand of the year award (2007-08) in category of Butter, Cheese and flavored milk. 4. Brand of the year award (2008-09) in the category of Butter. (Nurpur Foods-Company Profile) PRODUCTION OVER THE PAST THREE YEARS PRODUCTION UNITS 2011 2010 2009 UHT Milk/Tea whitener Ltrs 30,940,079 20,385,290 16,246,333 UHT Flavored milk Ltrs 4,668,071 4,075,407 2,498,299 UHT Cream Ltrs 71,381 461,722 345,580 Butter Kgs 986,335 1,011,925 862,622 Milk powder Kgs 927,943 1,160,508 930,894 Cheese Kgs 203,146 206,508 194,020 Ghee Kgs 34,371 52,190 31,331 Pasteurized Milk Ltrs 4,911,778 2,663,294 1,806,733 Loose cream Ltrs 3,490 Jams and honey Kgs 34,032 42,812 23,735 Juices Ltrs 4,421,399 10,341,160 10,402,443 (Noon Pakistan Limited, 2011) THE PURCHASE DEPARTMENT OF NOON PAKISTAN LIMITED In order to get insights about the operations of the Purchase Department, two interviews were held with the Purchase Manager of Noon Pakistan Limited. The purchase manager of Noon Pakistan Limited is Mr.Malik Ashraf who has been with the firm since its establishment. The operations of the department and interview findings are described as follows:- The purchase department is responsible for purchasing all materials required by the head office and plant other then milk which is purchased at the milk collection centre in Bhalwal. Materials which are purchased by the department range from ordinary items like office and plant stationary to complex materials like Flavors, Spare parts for plant equipment and transportation vehicles, Chemicals, Fuel and everything related to the manufacturing process, Logistics and day to day operations. Demand for requisition comes from the factory and approval has to be given by the Managing Director. The purchase department currently has 4-5 employees. The purchase department stays in coordination with the plant and suppliers through phone and email and as such no software is currently being used by the department. The department uses a manual system of keeping records and storing files. The purchase department always keeps 3 copies of requisitions and delievery challans. One copy is sent to the pl ant, one copy is maintained with the purchase department and one copy is kept by the Purchase Manager. The major suppliers of Noon Pakistan Limited are SMC, Sitara Chemicals , Jeson Foods and Danisco. Everyone is involved in the purchase process including the General Manager, Purchase Manager and people from the plant. Payments to suppliers are made either on cash or credit through the head office. Credit terms depend on contacts and relations with suppliers and can range from 15 days up to a month. (Ashraf) According to Mr. Malik, Noon Pakistan Limited believes in maintaining healthy relations with Suppliers and this is one of the key strengths of the department. The primary reason given for this was that Juices and Milk factories in Pakistan have no second option since suppliers are limited and few. They have to purchase materials from the specified suppliers and bargaining power of suppliers is high in this regard. However if relations are good with suppliers not only do suppliers cooperate but may also be lenient in terms of credit. In this regard price does not play a major issue but a greater issue is that of availability of materials from suppliers. Mr. Malik also stated that in case of materials needed from local suppliers, the purchase department is given no time and purchase has to be made immediately. However when imported materials are required from foreign suppliers, the Purchase department is informed in advance as shipping takes time. Mr. Malik also stated that there is no fixed pattern of purchases made throughout the year and it all depends on plant and market requirements. The quality of materials purchased is checked at the plant and if there are defects the merchandise is returned to the supplier. Mr. Malik also stated that there is no HR department as such and the performance of the purchase department is monitored from the plant and the Managing Director. (Ashraf) When the Purchase Department gets a requisition from the plant, the respective supplier is contacted and a van or truck of the firm goes to the supplier along with delievery Challan. The goods are then transported to the plant. One issue which is being faced by the purchase department is lack of coordination with the plant. Mr.Malik pointed out an instance in which the plant actually required Diesel but in the requisition form mentioned Furnace Oil. He mentioned some employees in the plant try to trap the purchase department to lower its performance but due to his vast experience of working with the firm and keeping a personal record of purchases, he immediately gets to know about such issues. Mr.Malik described having more informal relations with local suppliers but with foreign suppliers a formal relation is kept. This is the primary difference in dealing between local and foreign suppliers. He also mentioned that Government Policies and Regulatory Environment do have an impact on prices because if the government increases prices, suppliers also have to increase their price. (Ashraf) A typical deliver challan and requisition form is given on the following page. Original documents have also been attached in the Annexure. DELIVERY CHALLAN Noon Pakistan Limited 1st Floor, Mustafa Centre, 45 F, Main Market, Gulberg Lahore Pakistan No._______ Date:_________ To, Manager, Noon Pakistan Limited, Bhalwal The following goods have been dispatched to you by Truck No_____________ SR# Description Qty. Amount Supplier Remarks Kindly Sign and Return Duplicate ____________________ _________________ Malik Mohammed Ashraf Bhalwal Store (Noon Pakistan Limited) NOON PAKISTAN LIMITED, BHALWAL DEMAND OF STORE TO BE PURCHASED DEMAND NO______ DATE____________ SR# Item Code Nominclature Specification Name A/U Qty Required Stock in Hand Last Purchase Date Rate/Unit Amount Remarks ____________ _______________ Store Manager General Manager (Noon Pakistan Limited) THE MARKETING DEPARTMENT OF NOON PAKISTAN LIMITED In order to study the operations of the Marketing Department, two interviews were conducted with Mr.Rizwan Khan who is the Marketing Manager at Noon Pakistan Limited and has been with the firm for the past 5 years. The questions asked during the interviews have been attached in the annexure. Details of the Marketing Department are as follows:- Marketing research activities are outsourced. The Marketing Department purchases monthly reports by different marketing research agencies like AC Nielson and Tetra Pak. In this way the marketing department stays in touch with the latest trends and competitor activities. The Marketing department comprises of one marketing manager and a brand manager. The Marketing Manager reports to the General Manager of Marketing and Sales while activities of the brand manager are monitored by the marketing manager. The brand manager is responsible for dealing with various agencies as all marketing research data and ATL as well as BTL activities are outsourced. Some of the agencies with which the marketing department works are SABB Marketing, Time and Space, Orient, HRK Communications, Aura Communications, TOPAZ Communications and ADZ Communications. These agencies prepare designs of print ads and commercials. The brand manager discusses the various designs with the Marketing Manager and after makin g necessary amendments and recommendations gives the approval to Marketing agencies. (Khan) The Marketing Department does its planning in the beginning of the year in coordination with the Sales Department. A monthly, yearly and 5 year plan is made. The Marketing Department is consulted in all strategic decisions made at the corporate level. There is no fixed method for determining the budget allocated to the Marketing Department and it all depends on various factors like last years profitability and market performance of various brands available in the market. In 2012, three new brands by the name of Yogo Yogo, Dairy Rozana and Jalwa have been launched. (Khan) The Marketing Strategy of Noon Pakistan Limited is Differentiation strategy. However the strategy to be adopted for each brand depends on the market performance and competitor activities. Since UHT milk is difficult to differentiate, the current strategy being adopted is to position it as a milk which is enriched with vitamins needed for healthy growth and development. The target market of UHT milk is Housewives and working females as well as males. Different SKUs are being used to target different Socio Economic Classes like the 1000ml pack is targeted for SEC-A while the 200ml and 250ml packs are targeted towards low income households. The main competitor brands of Nurpur Milk are Olpers, Milk Pak, Good Milk and Haleeb. The marketing department does not go for an offensive strategy because Nestle and Engro are huge giants with bundle of resources. Noon Pakistan Limited can be classified as an Analyzer. Another reason for not adopting an offensive strategy is that volumes are low. I mportance is not given to gain shelf space because there production volumes are so low that everything sells out due to high demand of UHT milk. Recently a new brand by the name of Dairy Rozana has been launched as a flanker brand to compete with the brand Dairy Omung of Engro. (Khan) The main weakness of the Marketing Department is that very little attention is being paid towards building brand equity. The department is focusing on increasing sales which is a short term approach rather than focusing on building their brands. The details about how the Marketing Department is managing the marketing mix of Nurpur milk is described in a later section. ORGANIZATIONAL STRUCTURE OF THE MARKETING DEPARTMENT (Noon Pakistan Limited) The Brand Manager is responsible for dealing with various Marketing Agencies and reports to the Marketing Manager. The Marketing Manager reports to the General Manager of Sales and Marketing. (Khan) THE SALES DEPARTMENT OF NOON PAKISTAN LIMITED In order to study the operations of the Sales Department, two interviews were conducted with Mr.Nauman Butt who is the Sales Analyst at Noon Pakistan Limited and has been with the firm for a year. The questions asked in the interview have been attached in the annexure. The organizational structure of the Sales Department comprises of the General Manager of Sales and Marketing, National Sales Manager, Regional Sales Manager, Area Sales Manager, Field Managers and Sales Officers. The job description of the Field Manager and Sales Officer is the same but position of Field Manager is superior because those Sales Officers whose performance is consistently outstanding are made Field Managers. Territories have been assigned according to location and comprises of Central Zone, Southern Punjab zone and Northern zone which includes RWL/AJK, Hazara belt and Pakhtoon.K belt. Distribution is limited in Quetta and Multan because of heavy freight expenses. The process of forecasting yearly sales is that last years closing sales are doubled and the amount is set as the Sales Target for the next year. Sales Quotas are assigned to Salesmen depending on the Area and potential. Other factors which are taken into account while assigning quotas are the seasonality issue because milk production and demand fluctuates throughout the year. There are more than 280 distributors all over the country and each Sales Officer has to monitor and look after 3-4 distributors. The Sales department also relies on individual projections from the Sales Team when deciding upon monthly and quarterly targets. If a salesman is unable to achieve his target in the specified time, he has to achieve both, the remaining target as well as the target allocated in the next period. If targets are continuously not being achieved the Salesman is fired. The salesmen who achieve targets are awarded with bonuses and cash rewards. In order to motivate the sales team, a sales competition is held and winner of Sales Man of the Year is rewarded. Besides having a Sales competition, vacation trips are also planned to motivate the Sales Team. If targets set in the year 2012 are met, the entire Sales Team will go on a vacation to Dubai on the companys expenses. Noon Pakistan Limited has als o started exporting its products to countries like England, Kenya and Afghanistan. The documentation process to export products involves the Performa Invoice, E-Form Attestation, Commercial Invoice, Packing List, Certificate of Origin and Analysis Report. (Butt) ORGANIZATIONAL STRUCTURE OF SALES DEPARTMENT Pakhtoon.K Belt SO Rawalpindi Field Manager Inst.S.Executive Sales Coordinator Southern Punjab Zone GM Sales/Mkt SO SO FM ASM RWL/AJK Hazara belt RWL/AJK belt RSM Multan SO SO SO SO SO SO Faisalabad SO Sargodha FM Gujrat FM SO ASM P.milk FM I.SIndh FM Karachi Inst.SO FM ASM Sales Analyst North Zone South Region Head Office NSM Central Zone (Noon Pakistan Limited) PRODUCT PORTFOLIO AND PRICE LIST Product Packing Unit/Ctn Retailer Margin Trade Price Consumer Price 1.UHT MILK Ctns Units Ctns Units 1000ml 12 6.09% 1018 84.83 1080 90 200ml 24 4.35% 391 16.29 408 17 250ml 27 5.97% 586 21.7 621 23 2.CHAI MIX Ctns Units Ctns Units 250ml 27 6.38% 533 19.74 567 21 200ml 24 5.97% 385 16.04 408 17 3.BUTTER KGs Units KGs Units 200gm 30 8.00% 463 92.6 500 100 100gm 60 12.70% 488 48.8 550 55 50gm 120 13.20% 530 26.5 600 30 20gm 300 13.20% 530 10.6 600 12 10gm 600 13.20% 530 5.3 600 6 1KG white 20 11.80% 8500 425 9500 475 4.CHEESE Ctns Units Ctns Units 200gm cottage 42 9.10% 6930 165 7560 180 200gm slice 36 16.10% 5580 155 6480 180 225gm chedder 40 14.90% 5920 148 6800 170 225gm spicy 40 14.90% 5920 148 6800 170 225gm mozarella 40 14.60% 6980 174.5 8000 200 450gm chedder 20 13.40% 6880 344 7800 390 450gm mozarella 20 13.60% 8800 440 10000 500 1.8Kg mozarella 4 13.10% 5128 1282 5800 1450 1Kg slice 8 13.60% 5072 634 5760 720 1Kg slice (KFC) 8 13.60% 5072 634 5760 720 2Kg Chedder 4 12.10% 3924 981 4400 1100 5.CREAM P/Tray Units P/Tray Units 250ml 27 4.20% 1200 44.44 1250 46.3 6.PASTEURIZED MILK P/Tray Litres P/Tray Liters 1000ml 10 11.70% 600 60 670 67 500ml 20 13.30% 600 30 680 34 7.FLAVORED MILK Ctns Units Ctns Units 250ml 12 13.30% 233 19.42 264 22 200ml 12 12.10% 214 17.83 240 20 8.PURE JUICES Ctns Units Ctns Units Apple 1000ml 12 6.10% 792 66 840 70 Guava 1000ml 12 6.10% 792 66 840 70 Orange 1000ml 12 7.10% 840 70 900 75 Pineapple 1000ml 12 6.10% 792 66 840 70 Mango 1000ml 12 6.10% 792 66 840 70 Apple 200ml 24 11.80% 322 13.42 360 15 Orange 200ml 24 11.80% 322 13.42 360 15 Mango 200ml 24 15.40% 312 13 360 15 9.YOGO YOGO Ctns Units Ctns Units 200ml 12 8.70% 276 23 300 25 10.DESI GHEE Ctns Units Ctns Units 1Kg 6 7.50% 2232 372 2400 400 11.JAMS 1.5Kg Units 1.5Kg Units Strawberry 15gm 600 14.30% 385 3.85 440 4.4 Apple 15gm 600 14.30% 385 3.85 440 4.4 Marmalad 15gm 600 14.30% 385 3.85 440 4.4 Honey 15gm 600 14.30% 385 3.85 440 4.4 12.DAIRY ROZANA 1.5Kg Units 1.5Kg Units 1000ml 12 6.12% 735 61.25 780 65 250ml 27 6.11% 458 16.96 486 18 13.JALWA Ctns Units Ctns Units 250ml 27 6.21% 483 17.89 513 19 200ml 24 5.88% 340 14.17 360 15 (Noon Pakistan Limited) MARKETING MIX OF NURPUR UHT MILK Nurpur UHT milk has been positioned as a milk which is enriched with vitamins needed for healthy growth and development. The milk is packed in Tetra Aseptic Packaging which allows long lasting storage and shelf space. Currently three SKUs are available in the market which are 200ml, 250ml and 1000ml. (Khan) Initially the pricing policy adopted for Nurpur milk was market penetration pricing, which means prices were low compared to competing brands. Recently the pricing policy has been changed and now the pricing policy is competitive pricing policy as shown below:- Product Packing Unit/Ctn Retailer Margin Trade Price Consumer Price 1.UHT MILK Ctns Units Ctns Units 1000ml 12 6.09% 1018 84.83 1080 90 200ml 24 4.35% 391 16.29 408 17 250ml 27 5.97% 586 21.7 621 23 (Khan) (Noon Pakistan Limited) Due to low volumes produced the company has adopted the policy of selective distribution. The company offers various discounts to retailers to push their products into the market. The indirect distribution channel being used is shown below:- (Khan) Due to limited marketing budgets, the marketing department has to promote most of the products through Below The Line(BTL) activities. Outdoor advertising, hoardings, flyers, Trader Schemes, Taste and trial promotion activities, posters, streamers, buntings and wobblers are mostly used. Even though some commercials have been aired on television, lack of budgets restricts the marketing department from making use of Above The Line advertising effectively. (Khan) SWOT ANALYSIS STRENGTHS Market leadership in selected product categories Strong and Experienced Sales Team Strong Supplier relationship Brand Loyal Customers Strict adherence to Quality Standards First dairy company in Pakistan to be certified under ISO 22000:2005 WEAKNESSES Weak coordination among departments No emphasis on building brand equity No formal HR Department Centralized Decision Making No policy of recruiting fresh blood Selective Distribution OPPORTUNITIES Exporting products to foreign countries Increased demand for dairy products due to urbanization and increasing population Ensuring availability in untapped markets Launching innovative products for health conscious consumers Going for backward integration THREATS Reliance on few suppliers Rising prices of sugar Rising prices of oil increasing transportation expenses Energy and Power Crises