HICO Ice CreamConsumer Behavior Project

Jahanzeb AamirSaad Ali KhanNoor FatimaSidra BaigHera Qasim

Submitted to:Tania Hassan2nd November.2014Lahore School of Economics

Table of Contents

Product4Price4Placement4Positioning4Weak positioning5Weak Marketing6Limited capacity6Limited Distribution Network7Limited Exciting Flavors7Methodology8Analysis8Consumer Survey Research Findings8Retailer Interview Research Findings14Product16Price16Place16Target Market:16Promotion16Bant Lo Khushiyan Campaign16Sales Promotion17Personnel Selling17Direct Marketing17Cheeni Free Campaign18Public Relation and Publicity18Interactive/Web Marketing18Viral Campaigns18Appendix19

Hico Ice-CreamHico ice-cream was the first ice cream company in Pakistan although it is an established brand but its positioning in the minds of consumers is very weak. It is manufactured by Pakistan Fruit Juice Co. (Pvt.) Ltd., which was established in 1952, brand Hico has been well established since 1958. It has a fully automatic ice cream manufacturing facility, and has a production capacity capable of producing more than 4.5 million liters of dairy ice cream a year. Hico Ice Cream is one of the few brands in Pakistan which manufacture 100% pure dairy ice cream. This makes for a healthier alternative. Hico Ice Cream produces a variety of flavors including chocolate, vanilla, mango, strawberry, pineapple, apple, and orange. It is also responsible for the production of several other more premium flavors, such as Tutee fruity. Perhaps its most respected flavors is praline. Companys strong but small distribution and marketing network guarantees consumer satisfaction and brand loyalty. Though Hico Ice Cream has a small sales network, Hico's ice cream flawless quality challenges big names like Walls or Omore which have a stronger sales network and more publicity. Once someone tastes the quality of Hico ice cream, he/she becomes a loyal fan.Many consumers take Hico ice-creams as a second choice and mostly will not even make a repeat purchase. Hico has a strong institutional buyer base. Strength of Hico lies in the strong family take away packs segment. Its buckets and other family packs are a prime choice among many families of Pakistan. We have identified that marketing is critical to its success in consumer sector and future profitability. The basic market needs are high quality, innovative tastes and easy availability. For that, a proper marketing plan, execution and control would be required.Current PositioningMany ice cream brands of Pakistan which have failed have not always been innovative companies that possessed the ability to adapt quickly though changing trends and consumers tastes. Although many competitors like Walls have been able to adapt even to the changes of the World Wars and Great Depression. Walls has re-positioned its line of ice cream products from its traditional persona to something cool and trendy. However, Hico has failed to that as well. ProductThe strength of Hico ice cream is that it is one of the only brands in Pakistan to manufacture dairy ice cream. Despite all the issues the company is facing and its lagging behind of competition, Hico is considered the favorite brand of ice cream in its hometown, Lahore. Hico has only two products in the market both of them are medium time consumables but can also be stored for long durations if shut air tight. They are its ice cream and ice-lollies. The main focus of the brand is on its ice cream which is available in a very wide variety of unique and tantalizing flavors. These include Chocolate, Chocolate fudge, Chocolate Chip, Coffee, Cookies and cream, Mango, Pistachio, Praline, Strawberry, Tutti Frutti, Vanilla and Kulfa. The Ice lollies are in Apple,Orange and Pine apple flavors. Hicos main focus however is on high quality standard, with their pure milk dairy ice-cream which they try tomaintain throughout Pakistan. All of their ice creams havean appealing and wide variety of packaging but that definitely lags behind the competitive packaging and other techniques of competitors. They offer Small Packs, Sticks, Cones and 0.1 liter cups.PriceBeing, a national company it charges low prices than its major competitors. They also charge a sales tax along with the retail price. However, ethically they should be aying these taxes out of their own profits and not through customers' pockets. PlacementThe supply for Hico is low as compared to its demand caused by its nature of being pure. This is due to the budget getting short for expenses. Furthermore, it has a share of 10% from the total market segment of ice cream users. The question of target market is a key to market success as they can provide new horizons and on the other hand a wrong selection can play mayhem with a companys resources and profitability position. Earlier there was not even any clearly defined target market by the management of Hico Company and no segmentation was done either. However, they have somewhat established a marketing department now and segmented their target market on geographic, demographic and behavioral basis. PositioningHico does not do proper formal advertising through TV, internet, radio etc; the most common mediums of communicating with mass audiences targeted by Hico. However, it does print some ads on some magazines and sometimes, uses local cable channels for advertising.The key strength of Hico ice-creams is its heritage. According to companies management institutional buyers and general consumers use to queue outside the factory and get there ice-cream. Even today Hico has very good reputation among the bulk quantity or B2B buyers. Freddies caf and Pearl Continental are also in the list of its buyers enjoying high customer loyalty among these consumers. Hico can well use this in its ads to cash its competitive advantage.Another of key strengths is Hicos family take away packs and its product with unique flavors like Paraline and Oreo cookies. Not only that they are unique flavors, Hico also takes advantage of using co-branding strategy with a very well know brand Oreo. Also, its Ice-creams are made of milk and butter purely unlike Walls and other competitors making it the only pure dairy ice cream.The primary weakness of Hico ice-creams is its not so strong marketing, no proper positioning, low brand equity and multinational rivals. Walls ice-cream, for example, uses its international experience and R&D to come with very high quality products and popular tastes. Hico has a very week distribution network being out of stock even at major retail stores. There trolleys are also not as much present as walls trolleys are. It also has unattractive packaging as compared to competitors.Also, it does not offer as many flavors as Walls and others have come up with. It still has an image of a fun loving brand that focuses on high quality, purity of ice cream and is serving a niche being economical at the same time. But that affordability comes into practice more in its family packs, some consumers just simply view it as a low quality product mainly because of its low marketing activities. This issue needs to be catered on a serious note. SWOTHICO stands for happy ice cream company. This is the national company whose products are of multinational level. There are big competitors of HICO in the market which include Walls, Yummy, Omore etc. Therefore HICO is facing both direct and generic competition in the market. SWOT analysis becomes a key to success.Strengths: The brand of HICO ice cream was established in Pakistan at Lahore in 1958. It is 100% pure dairy ice cream, which has superior food value. One of the other strength of the HICOs product is their unique flavors they offered to the consumers, which include praline and Oreo cookies. First choice in family takes away packs, because they offer 2, 5 and 10 liter packs which are not offered by any other company. So people can greatly prefer this ice cream for special occasions like weeding, family get together etc. They have strong institutional buyer base. They have a co-branding strategy with Oreo.Weaknesses: The primary weakness of HICO ice cream is their weak marketing, distribution and limited resources. They do not advertise in a right manner which is one of the main reasons that their sales are declining and becoming a fail product in the market. Because advertising is one of the major tool in order to attract customers. They have a weak positioning in the consumers mind, this is again due to less advertising or marketing. They have a very limited availability in major cities of Pakistan, HICO primarily service only Lahore market. HICO have low brand equity. Their major competitor is multi- national company like Walls, which has widespread distribution, R& D, international experience and marketing system. They are offering very limited varieties of products to the customer as compared to their competitors. They have small distribution and also have a small sales network. One of the major weaknesses of HICO ice cream is their unattractive packaging. Opportunities: There is a large untapped market to grow its business all over Pakistan. They have high sales figures in summer because Pakistan is situated in area where there is summer most of the time, so people living here in Pakistan love and enjoy ice cream in summers. Recent researches carried out by the major competitor Walls proved that ice cream have no concern with throat aches in winter. People also consume ice cream in winter also and the sales figures are increasing in winters. Their seasonal sales are converted all over the year which leads to higher consumption of their products.Threats: One of the major threats is the new flavors and products introduce by its competitor Walls. One of the biggest names in ice cream is Walls which not only distribute their products internationally but also has a great control on the local market. Threats of new entrants in the market. Legal and ethical issues Economic recession Political instability of Pakistan and involvement in the war against terrorism

Issues with the brandWeak positioningThe core issue we see in the brand is Hicos weak positioning in consumers minds. Although Hico stands for Happy Ice Cream Company but people do not associate Hico with happiness. We came to know about the product positioning by asking the users how they perceive Hico ice cream. General perception prevailing in the market about the Hico ice cream is that it is a low quality product. This, in part, is because of the unattractive packaging of the product.

Weak MarketingConsumers are not aware that Hico uses pure and natural ingredients in ice cream recipes. Most people just buy Hico ice cream in family size because of its economical price. Due to limited resources, Hico has only carried out niche marketing which involves advertising at limited stores such as Makro and Metro.Consumers are not aware of any sort of message from the Hico brand. Since there is lack of advertising by the company, some individuals have neither good nor bad points to talk about. Nobody knows that HICO exists since 1952 and was the first ice-cream company that came into Pakistan.

Limited capacityHico also has capacity constraints due to which it cannot reach many untapped markets. Walls production capacity is 30 million liters per annum as compared to Hicos which is only 3-4 million liters per annum. Due to high demand in summers, Hico also runs out of stock because of limited supply. Originally, Hico ice cream was available in Lahore only. Later it was distributed in other cities of Pakistan, i.e. Rawalpindi, Karachi, Faisalabad among others. Hicos main distribution center is situated in Gulberg, Lahore. The other two are located in Islamabad and Karachi.

Limited Distribution NetworkHico has a small distribution network as compared to its competitors. Hico ice cream is not readily available in all grocery stores. Limited Exciting FlavorsHico does not offer a variety of exciting flavors as compared to its major competitors like Walls. Walls is known for offering a wide variety of products including Feast, Cornetto, Magnum, Jet Sport and Choc Bar. Hico also has many flavors like chocolate, vanilla, mango and strawberry but it is mostly respected for its Praline flavor.

Methodology

This project is based on both secondary and primary data; secondary data was collected from Hicos website. For primary data again both qualitative and quantitative approaches were used. We conducted 6 retailer interviews and 64 questionnaires were filled by the respondents from our target market. Also we asked consumers about dessert category and their perception about Hico particularly, this helped us in analyzing the situation properly, and we were able to get consumer insights. For consumer questionnaire refer to Appendix 1.1, and for retailer interview questions refer to Appendix 1.2. For details of each retail store interview refer to transcription attached in Appendix 1.3, 1.4, 1.5, 1.6, 1.7, 1.8).AnalysisConsumer Survey Research Findings

Findings indicated that respondents are clearly more inclined towards having ice-creams than all the other confectioneries. Out of 64 respondents 27% preferred ice-cream, 25% preferred traditional desserts like kheer, firni , 23% chose urban desserts like custards, fudge etc, 20% chose cakes, 5% ticked sweets (mithai) and 0% ticked others, refer to figure 1.

Fig 1

Fig 2Lahore being very hot in summers makes people desire ice cream even more. The options included Everyday, Once a week, Special Events and Never. 44% said that they consumed ice cream once a week. Around 42% said that they liked having ice cream only on special events like Eid, Weddings, birthdays etc, 8% of the respondents said that they have it every day while the rest 6% said that they never have it, refer to figure 2.

Fig 3 The results are indicative of Walls having a larger market share than the rest of the products despite arriving late in the market than some. Also, Hico is the second brand that strikes consumers mind most after Walls despite being the first ice cream company established in 1952 which is way before Walls entry into Pakistan market. The question pertained to ice cream brand awareness. When respondents were asked as to what brand came to their mind when the word ice cream was taken around 50% said Walls, 14% ticked Hico, 11% said Gourmet, 9% said Omore, 8% said Yummy while the remaining chose Others, refer to figure 3.

Fig 4In this question the respondents were asked as to which brand of ice cream out of Walls, Omore, Hico, Gourmet, Yummy and others they liked the most. Similar to the response to previous question 53% ticked Walls, 17% said Omore, 14% said Hico, 5% said Gourmet, 5% said Yummy while the rest 6% ticked others. Hico was the third preference when it came to ice cream brand preference, while Walls and Omore are clear winners in this regard, refer to figure 4.

Fig 5The results indicate that pricing is not at all that relevant in determining the consumers ice cream brand preference. However, taste is the most dominant factor in determining consumers ice cream brand preference. In this question respondents were asked the reasons for choosing the brand they mentioned in the previous question. 31% ticked taste citing it as a reason for choosing the brand that they did in previous question, 23% said that they chose the brand because the brand had a variety of flavors, 19% ticked quality, 14% chose availability, 8% chose pricing, 3% ticked pricing while the remaining 2% chose other reasons, refer to figure 5.

Fig 6The outcome shows that most respondents like consuming ice cream in a wafer cone while the least number of respondents ticked ice lollies. The respondents were asked the way they liked consuming ice cream. 31% ticked wafercones, 24% said stick/bars, 20% said family pack, 20% chose cup and the rest 5% chose ice lollies, refer to figure 6.

Fig 7According to the results, ice cream is most likely to be consumed during casual hangouts and least likely to be consumed during parties. 74% ticked Casual Hangouts, 13% said weddings, 7% said Get together, while the remaining 6% said parties, refer to figure 7.

Fig 8This indicates that mostly Hico is associated with cheapness. The respondents were asked what word came to their mind when Hicos name was taken. 31% said cheap, 25% said cold, 19% said happiness, 13% ticked others and 12% said fun, refer to figure 8.

Fig 9The results are indicative of a problem with Hicos strategy. Not having a promotional or marketing strategy can jeopardize a products sale and put its future at stake. This question was asked to find out if the respondents can recall any promotional activity or campaign associated with Hico. The result was a clear No (97%), refer to figure 9.

Fig 10The result shows that Hico need to up their ante in terms of promotional and marketing activities as they clearly have none of the two. This question was asked to determine if the respondents can recall any tagline or logo associated with Hico. 87% said no, while 13% said yes, refer to figure 10. . Fig 11The results clearly show that small retail stores are where majority of the consumers like buying ice cream from. Therefore, Hico should come up with a strategy that places more emphasis on retail stores as it is the only place they can find a large volume of customers. This question was aimed at determining as to where the consumers liked buying ice cream from. 39% chose small retail stores, 27% ticked corner shop, 20% said hypermarket, 6% said ice cream kiosks, 5% chose cycle cart and 3% chose others, refer to figure 11.

Fig 12The unavailability of Hico ice cream can have serious consequences for the company so it is recommended that it ensures availability to every consumer. This question was aimed at determining the places where consumers find Hico ice cream. 42% said departmental stores, 35% said it was unavailable, 20% said shops and 3% ticked others, refer to figure 12. Retailer Interview Research FindingsAfter conducting interviews from different retailers, we found out that small shops mostly does not keep Hico Ice Creams as they say that the major demand of customer is for Walls or Omore, so due to less storage capacity they prefer keeping Walls and Omore only. One of the small shop retailer also told us that nobody from Hico company have contacted them even once.

Some of the medium sized retailers who used to keep Hico in past but now they dont, said that they had faced a lot of problems with Hico such as late supplies, no follow up after delivery and poor communication with distributors. In case if ice creams are de-shaped /melted or expired Walls and Omore replaces their stock as soon as they hear any complain free of cost whereas on the other hand Hico distributors do not entertain such claims and retailer has to bear the loss of damaged stock. Hicos freezers are also old and not as good in performance especially in summers as compared to the freezers of their competitors. Large sized retailers usually keep Walls, Omore and Hico. They told us that majority of the sales are of Walls but Omore sales have also increased over the period of time and may be at some point in time Omore will beat Walls in terms of sales but Hico sales are on continuous decline over the past few years especially after the launch of Omore. When we asked retailers that which brand of Ice Cream gives you the most margin, we found out that there is no major difference in margins. It is the amount of total sales which matters eventually at the end of the day due to which they find keeping Omore and Walls in their stores more profitable.

According to retailers, Hico is usually preferred when customers are looking for Family packs/tubs. Otherwise for Ice Cream sticks which are priced between Rs 15 to Rs 30, customers prefer buying Omore, however for ice creams which are priced between Rs 30 to Rs 70 customers usually prefer Walls. One of the retailers also told us that Cornetto, feast and magnum are most famous ice creams among customers. Customers usually come pre-decided for specifically these mentioned ice creams otherwise they decide on the spot by looking at the poster/card on the freezer or by opening the freezer door. We observed that Omore and Walls have also introduced the freezers with glass doors because in summers retailers used to face problem in maintaining freezer temperature as some customers opens it and takes time while deciding but HICOs freezers are still conventional without glass doors. The customers who prefers HICO are usually aged 40 & above. There is hardly any kid/youngster seen in stores who demands HICO. Hicos family packs are famous among customers and praline and tutti fruiti are the most selling flavors of HICO. According to retailers, the reason of HICO not doing so well in market is mainly because of their poor marketing. They believe there is nothing wrong their Ice Creams, the only difference between Walls/Omore and HICO is mainly that HICO does not spend much on advertising their brand and products as others do. Omore has recently come up with very innovative LED lights on the outer surface of their freezer which flashes and attracts customers towards Omore. So retailers believe that something innovative should be done from HICO in order to grab more market share and compete in the market.

New StrategyOur analysis clearly showed that Hico does not have any advertising; therefore we have done rebranding of Hico keeping in view the product MixProposed Marketing Mix

The Marketing Mix of HICO doesnt need to be changed except for Promotion and Place as they are the major weakness at the moment for HICO. (Explained in SWOT Analysis)ProductIn addition to our existing product, we will introduce Share Cup. This product will have two cups attached to each other and one the consumer will buy the product he/she can share the ice cream with his friend. We will promote this product by Bant Lo Khushiyan Campaign which will be discussed in promotions part.Other than our regular ice creams we will try to capitalize our already existing ice cream for diabetic people and will promote it by Cheeni Free Campaign which will be explained in promotion part.

PriceWe will keep the same prices which are being offered in the market at the moment except for our new Share Cup (will be explained in promotion) for which we will charge Rs. 50.PlaceHICO will be available in all leading stores as well as small shops. Previously it was only available in some leading stores. HICO will provide its retailers with refrigerators to maintain the temperature required to maintain the quality of the Ice Cream and provide quality product to the end consumer.Target Market: Teenagers, Youngsters and families: Regular Ice CreamsDiabetic and Health conscious people: Cheeni Free Ice creamPromotionBant Lo Khushiyan Campaign

This Campaign is designed for our new product Share Cup . The concept of share cup is that, whenever some will buy this product he can share it with is loved one or a friend. HICO being the happy ice-cream will be shared among friends and it will imply sharing happiness which is backed by our tagline Bant Lo KhushiyanOur Campaign will take aid of TVC which will show people sharing happiness.

Sales PromotionWhen it comes to sales promotion, they are of two types: consumer promotion and trade promotion. As for HICO, when we talk about consumer promotion, the tools that we are using include price deals. In price deals we are using the concept of banded packs I.e. customers will get 20% more ice cream in the bucket for the same amount of money. This offer is valid for one month only starting from January 2014, stated as the New Year Offer. This means that the bucket of 1 Liter is now going to be 1.2 Liter for the same amount charged to customers.

Personnel Selling Personal selling is face to face selling where the seller attempts to persuade a buyer to make purchase. We plan to appoint our special sales people at important big retail outlets of Lahore like Al-Fatah, HKB, Pot Pourri and Hyperstar where they would have small freezers with our specially made to order small cups of ice creams of different flavors. We would give them as samples to let people know about the very delicious taste of our product. Our major aim here is to convince them that its 100% pure dairy ice cream and that its creamier, tastier and richer than any other competitor. Direct MarketingFor this sort of marketing, we have decided to focus majorly on out of home direct marketing. Out of home direct marketing refers to a wide array of media designed to reach the consumer outside the home, including transit, bus shelters, bus benches, aerials, airports, in-flight, in-store, movies, college campus/high schools, hotels, shopping malls, sport facilities, stadiums, taxis that contain a call-to-action for the customer to respond. We have planned to sponsor the T-20 cricket matches that are going to be held in Lahore in the upcoming year. Also, HICO is going to get its ad printed on Daewoo, a transport facility that moves all over Pakistan. This is because we want to make HICOs name popular, although our major target market is Lahore, we still want people to know that HICO is a brand that exists since 1952 and is thus a pioneer in the ice cream industry.Cheeni Free CampaignThis Campaign is designed for our ice cream for diabetic and health people, we have named it as Cheeni free campaign and our brand ambassador will be Wasim Akram, as he is diabetic. His popularity will help us to capitalize our share in sugar free ice cream.For this we will make a print Ad .Public Relation and PublicityFor strengthening itself in relationship markets HICO is not only going for customer satisfaction but also stressing upon building strong public relations. For example, under the umbrella of its

name as a pioneer in the ice cream industry, HICO will play its part in charity activities e.g. we plan to give Shaukat Khanam a charity of certain amount after every 6 months. It would also try to get involved in national and religious events. For instance events like Eids and Valentines Day. This particularly includes our plan of putting small roof paper hangings with the brands name on it in different grocery stores .HICO will use such occasions to not only promote its sales but also to build strong public relationships through sponsoring events on this day. Moreover, HICO plans to start organizing colorful Fun Carnivals too, which would totally be a family affair. This is going to be done in OASIS, a new Golf and Aqua Resort located in Lahore outskirts. HICO will try to gain maximum of such opportunities. Interactive/Web MarketingWe will make a new website named www.hicoicecream.com.pk Obviously the use of internet is increasingly important these days. Everyone tends to use this facility and people surf the net in their leisure time too. People will get to know about different flavors available, different size packs available. Viral CampaignsWe will make banner ad these are small ads on other web pages on which people can click to move to the advertised web site. The design of internet advertising is constantly changing as the industry advances. Here are some common formats: skyscrapers, pop- ups and pops behind, minisites and superstitials . The format we will be using for the advertising is the skyscrapers. These are extra long, skinny ads running down the right or left side of a web site. We planned to advertise by guerilla marketing as this is unconventional marketing communication activities that are intended to get buzz on a limited budget. The idea is to use creative ways to reach people as we will do guerilla marketing by make HICO clowns who can advertise HICO in Hyperstar, liberty etc.

Appendix

Print Ad. Cheni Kum

We are working on a project, as students of Lahore School of Economics. We are really thankful to you for participating in this survey. The information provided will be kept confidential and it will hardly take few minutes. Please answer the questions below by placing a tick () in the box before your answer:1. Which of the following sweet dishes do you prefer the most?CakesTraditional desserts (kheer, ras malai etc)Urban desserts (Custards, fudge etc.)Ice creamSweets (Mithai) Others______________________1. How often do you consume ice cream?EverydayOnce a weekSpecial eventsNever1. What brand comes to your mind when you think of ice cream?WallsOmoreGourmetHicoYummyOthers_____________________1. Which brand of ice cream do you prefer the most?WallsOmoreGourmetHicoYummyOthers_____________________1. What are the reasons for choosing the brand you mentioned above?QualityFlavorsTasteAvailabilityPricingBrand name Others____________________

1. In what way do you like consuming ice-cream ?CupWafer conesStick/BarIce lolliesFamily pack1. On what occasions do you eat ice cream?WeddingsPartiesGet together Casual hangouts1. What comes to your mind when you hear the word Hico Ice cream?HappinessCheapFun ColdOthers___________________1. Do you remember any ad or promotional campaign of Hico Ice-cream?Yes No1. Can you recall Hicos tagline or logo?Yes No 1. Where do you frequently buy ice cream from?Small retail shopsHypermarket Cycle cart Corner shopIce cream stands/kiosksOthers__________________1. Where do you find Hico ice cream?Departmental stores All shopsUnavailableOthers___________________1. Your favorite ice cream flavor is:___________________________

1. What do you think is the strength of Hico ice cream?

1. What do you think is the weakness of Hico ice cream?______________________________________________________________________________

1. Your Gender:MaleFemale

1. Your Age:10-2021-3031-40Above 411. Your monthly family income:Below Rs.50, 000Rs. 51,000- Rs. 99,999Rs. 100,000-Rs. 149,000Rs. 150,000 & above

Thank you for your cooperation

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