Shan Foods
Transcript of Shan Foods
Business Plan for
Shan Foods
2
Pakistan is the world’s ninth largest market with an estimated 150 million consumers.
3
7000 spices and salt grinding units Tremendous growth in last decade Factors behind increased demand
-- changing lifestyle-- sub-continental style of cooking (good spices means good food)
Unbranded spice industry Unethical Practices in the unbranded spice
industry-- Causing different ailments-- Contamination in Spices-- Bribes
Driving Forces-- Prices-- Brand Loyalty-- Lifestyles and Attitudes-- Product Innovation
Key Success Factors-- technology, manufacturing, distribution, marketing skills and organizational capability.
Economies of Scale and Learning curve effects.
MAJOR INDUSTRY PLAYERSShan FoodsNational foods
Other playersChef’s PrideMehran FoodsAhmed FoodsHabib FoodsZaiqa FoodsKitchen Secrets
came into existence in 1981 started exporting after a few years Repositioned as food brand deals in r
--recipe mixes, plain spices, dessert mixes, basmati rice, pickles and salts
presence in 60 countries
Where All across Pakistan / abroad (for export) What Needs Nutritional and pleasure requirements. Tastes of food Whose Needs All segments of consumers. Added Value Recipe of different dishes Widely available almost everywhere. Adapting and implementing latest technologies to offer a variety of food products
while maintaining quality and safety standards at all times. Business we are not in Other than spices.
Shan’s Vision--To be a global leader in food products and socially responsible company that attains its quality standards so that Shan stands for tradition, trust and good taste.
“To continuously develop and produce quality products that meet the customers and markets demands, compatible with applicable regulatory requirements. To be a consumer oriented company with keen insigne of food products ensuring quality panty consistency and authentic taste to operate with state of the art technology to obtain optimum results and retain highest quality standard thrived efficient and motivation human resource and inculcate in them a sense of participation and proved for personal goals and development.”
Market Structure
Market Segment Shan Products
Recipe Mix Biryani Masala, karhai Gosht Masala etcPlain Mix Lal Mirchi, Haldi Powder, etcSalt Shan NamakInstitution All The Products of Shan Export All the Products of Shan
Market Segment 2006 2007 2008 2009
Recipe Mix 19% 29% 36% 42%
Plain Mix 22% 28% 33% 46%
Salt 3% 4% 5% 7%
Institution 19% 24% 28% 38%
Export 9% 10% 15% 25%
Market Segment 2010 2011 2012 2013
Recipe Mix 42% 44% 50% 56%
Plain Mix 48% 51% 53% 55%
Salt 8% 9% 11% 13%
Institution 39% 44% 49% 53%
Export 28% 33% 40% 50%
Market Segment 2006 2007 2008 2009
Branded 3 4.25 6 8
Unbranded 8 10 12 15
Segment Life Cycle
Market / Product Segment Intro Growth Maturity Decline
Recipe Mix
Plain Mix
Salt
Institution
Export
Shan’s Portfolio life Cycle
Market / Product Segment Intro Growth Maturity Decline
Recipe Mix
Plain Mix
Salt
Institution
Export
Outlets A B C D Total
Total Outlets 407 3020 30205 147344 180976
Shan Outlets 360 2765 23995 22880 50000
Outlet Coverage 89% 92% 80% 16% 28%
Outlets Contribution 0.22% 1.67% 16.70% 81.40%
2009 Market ReachRetail Volume Sales
Shan Foods 3.3 billion
Industry 8 billion
5
10
10
5
15
12
3
10
10
4
6
9
6
11
4
17
8
4
1
29
1
10
17
3
10
5
10
15
20
25
30
LEVEL OF IMPORTANCE
Most Unimportant
Unimportant
Important
Most Important
Factors considered important by customers
Customer analysis
21 1
2
18
5
1 1 1
02468
1012141618
Respondents
FIRST WORD Convenience
Taste
Shan ke tarhanhonay chayeExperiment withfoodShan
National
Food
Shan film actor
Dabay kaymasalay
17
12
1
4
11
11
321
2
4
6
9
5
212
0
5
10
15
20
25
30
Respondents
Shan National Taam Chef'spride
Personalspice mixes
Retailer'sbrand
PREFERENCE ORDER (SPECIAL SPICE MIX)
5
4
3
2
1
1 being for most preferred)
SUBSTITUTES
None, 3, 10%
National, 19, 63%
Personal Spice mix, 6, 20%
Chef's pride, 2, 7% None
NationalPersonal Spice mixChef's pride
5
9
6
10
6
14
8
2
7
10
5
8
1
8
6
15
4
10
10
6
7
15
3
5
19
10
1
0
5
10
15
20
25
30
Respondents
ACTION OF COMPETITORS
Most Unlikely
Unlikely
Likely
Most Likely
Strengths Shan food has a very strong heritage and legacy
behind it which has given it a strong goodwill in households.
Shan foods enjoys an approximately 50% market share in the recipes mixes category.
Shan foods is a leading exporter of food items from Pakistan providing it an opportunity to tap the large global market which helps it to expand at a rapid pace.
Shan has a wide range of products and SKU’s available consolidating its presence in various niches and keeping its customers loyal to the brand.
Weaknesses Shan is not present in Jams and marmalades,
Ketchups categories like National foods thereby loosing an opportunity market. Many loyal Shan customers purchase National products in these categories which is causing loss of potential sales.
Shan has a low market share outside Karachi in the Punjab market where National enjoys market leadership. This is due to weak distribution of Shan products in Punjab market which is causing loss of potential sales.
Opportunities Shan can vertically integrate to produce its own
raw materials which will not only reduce costs but will also provide it more control over the quality of input.
Shan currently has a very low advertising spend in the FMCG industry. It can deploy brand activations and other innovative campaigns to switch customers from the loose/ unbranded segment to Shan products.
Shan can also horizontally expand its scope like national foods and enter the other related food categories where it can tap its loyal customers with minimal extra efforts.
Threats The biggest threat to Shan is the high inflation
in Pakistan coupled by a global recession which is putting pressure on the profits and sales.
The prevalence of counterfeit products is also threat to Shan causing loss in goodwill and potential sales.
The emergence of newer brand with deep pockets can also damage Shan’s market share due to heavy advertisement while keeping the product quality close to that of Shan.
QUALITY & PRICE ShanNational
Non Price Attributes affecting Customer Choice
WEIGHTAGE%
Product-Related %
1. Quality 25 22 222. Packaging 10 10 103. Variety 18 16 145. Brand Name 15 14 12
Service- Related %
1. Recipe 20 18 152. Availability 12 8 10
Market Segment Size Growth Products
Existing
Profitability Objectives New Product plan
Recipe Mix
Rs.25 billion
industry
40%Biryani
masala,
BBQ,
Qorma
Masala etc
10-15% 1.Include
more varieties
in portfolio
2.Capture
Market share
from branded
and un
branded
industry
Fish recipe
Italian recipe
Chinese recipe
Continental
Recipe
Plain Mix
Tez lal Mirch,
Kaali Mirch,
etc
Increase
usage small
towns and
suburbs
All varieties in
Sachet packing
Salt
Shan Namak Increase
awareness
among people
Institution
ALL Products Intensify
personal
selling efforts
Export All Products New markets
What How Who When
1.Include more varieties in
portfolio
2.Capture 30% Market share
from branded and un
branded industry
Adding new variants in
recipe mix
By Increasing selling efforts
and proper management of
trade channel
Production Department
Sales department
By end of 2010
By 2012
Increase usage in small
towns and suburbs by 10%
By increasing awareness
By effectively managing
trade members
Marketing Manager
Sales Department
By end of 2010
Increase awareness among
people
By targeting health conscious
people and making people
aware from hazardous effect
of loose salt
Marketing Department By 2011
Intensify personal selling
efforts
Selling efforts will be
intensified to build a good
client base with institutions
Sales Department By 2010
New markets Taping new markets /
increasing share in existing
countries
Sales Department
(international)
By 2012
Pricing
Product Competitor Bench Mark Price Positioning
Recipe Mix
Ranges from Rs.30 to 40 Pricing charged by competitors
depends upon SKUs and it uses
Parity Pricing
Pricing charged by Shan
depends upon SKUs and it uses
Parity PricingPlain
Depends on SKUs
Like 50 grams red chili powder
is available at a price of Rs.20
and150 grams at Rs.115
Salt
Iodized salt is priced at Rs.17
(800 grams) and plain salt at
Rs.15 (800 grams)
What How Who When
As the pricing policy depends upon the raw material and Shan uses Parity pricing so marketing department just have to look for how much is it costing them and hen accordingly they set the prices keeping in view the prices of competitors.
Channel Market This Company
This Year
2010 This Year
2010
Distributor / Retail
60% 60%65% 60%
Distributor/ Wholesaler
20% 15%15% 10%
Institutional Sales
12% 15%5% 10%
Export 8% 10%15% 20%
What How Who When
Distributor / Retail
By effectively managing
distribution network and
giving trade incentives
Marketing and Sales
Department
By start of 2010
Distributor/ Wholesaler
Cutting some proportion
of wholesaler and
diverting that proportion
to other channels
Marketing and sales
DepartmentBy 2010
Institutional Sales
By making more efforts
in building good clients
to generate more
institutional sales
Marketing and sales
Department
2010
Export
Taping new markets &
increasing sales in
existing countries
Marketing and sales
Department
2010
Rs.100 million for all their ATL and BTL activities in the year 2009
80% for ATL activities and 20% for BTL activities
Most of its marketing on seasonal basis The advertisements of Shan’s offerings
focus entirely on the females Rs. 12 million for one month advertisement
on GEO
Target Market--Females aging from 18-45
Objectives Business Objectives-- Integrity and best Quality-- Latest Technology ( v-look)-- Innovation-- Competition Marketing Objectives-- Ethical Advertising-- Focus on BTL-- Variety-- Focus on Research-- Focus on teenagers Growth -- 50% per annum growth-- 40% market share in branded spice
THE WORLD OF SHAN FOODS1) Supply Chain2) Information Technology3) MIS4) Procurement5) Engineering & Services6) Production 7) Communication8) Human Resource9) Export10) Import11) Quality Control12) Research & Development13) Sales14) Marketing
Quality control since 1981 Quality assurance system since 2000 Food safety management system since of
2007 Total quality management target if 2010 Third party lab certification target of 2012 ISO 22000, the ISO version of HACCP
(Hazard Analysis And Critical Control Point)
Demographic Factors:-- Females 18+-- Middle lower class and above
Geographic Factors:-- 500+ distributors all over pakistan-- Regional preferences of different brands
Behavioral factors-- True Pakistani taste-- Catering to changing lifestyles-- Purchase pattern varies according to seasons
To the confident and convenience seeking woman of today, our wide range of Shan spice mixes offer premium quality products, made with the finest ingredients like no other
Portfolio Roles-- strategic brands
Plain Spices and Pickle
-- Silver bullets Plain spices (Tez Lal Mirch etc b/c separate
brands)
-- linchpin brand The Garlic Pickle
-- cash cows Recipe Mixes
Products introduced only after testing Portfolio comprises 6 broad categories like
recipe mixes, plain spices, dessert mixes, basmati rice, pickles and salts.
Offering for Every occasion and every type of taste
Top of the mind and top if the heart brand for Recipe mixes spice Mix category
Pricing generally depends on SKUs and is parity pricing.
Recipe Mix: The Recipe mixes range from Rs.30 to 40 Plain Spices: Pricing of Plain spices varies SKU wise. For example, 50
grams red chilli powder is available at a price of Rs.20 and150 grams at Rs.115
Dessert Mixes: Desserts are all priced at Rs.35 Pickles: Pickle pricing is Rs.170 for 1000 grams, pricing varies as
per SKU Salts: Iodized salt is priced at Rs.17 (800 grams) and plain salt
at Rs.15 (800 grams)
Presence in 60 countries Focus on International Modern trade and
Local Modern Trade Sales teams monitored by TSMs and RSMs Area wise policy of distribution 500 + distributors in pakistan alone Focusing on retail, wholesale, hypermarkets
and international chains.
modern factory covering an estimated area of 100,000 sq. feet, equipped with lates in house lab facilities
estimated investment of Rs.100 crores almost 1000 employees working diligently Recipient of many national and
international awards More than 50% growth rate with sales of Rs.
2 Billion
Product Strategy-- Market Development Strategy
Product Line to new customers-- Product Development Strategy
Product Lines (Spices, Pickles, etc)Vegetable mixes for country like
IndiaMeat Mixes for Pakistan
-- Penetration StrategiesCater the Untapped marketsGenuine flavors in spice mixesNiches like Diet conscious people
Obtain regular feedback from customers◦ Integrated focus on customer service and
satisfaction◦ Taking regular feedbacks to transform
unsatisfied customers Dedicated call centers
◦ gathers current customer perceptions continuously
◦ will help compare and align Shan’s business service standards with
its objectives The customer attitudes
Monitoring marketing performance◦ By both top management & marketing
management◦ allows direct marketing management to
Take immediate and timely corrective actions, Concurrently allows top management to have the
necessary visibility but only from a control perspective.
Regular marketing audits of Shan Foods’ marketing activities The goal of identifying possible opportunities as well
as potential challenges Help the organization think pro-actively Evaluate the success of the corrective actions.
Extending use of ERP system◦ utilizing a customized ERP system.◦ They have running modules in:
Inventory management Material resource planning Production planning Sales Accounts HR
Marketing dashboard – A tool used to simplify marketing reporting and analysis. ◦ It continuously tracks
marketing metrics related information Trends
presents everything on a one page report ◦ will help Shan Foods by
Staying a step ahead and focused Providing a better insight into marketing related
problems Communicating information to everyone involved Saving management valuable time Measuring marketing effectiveness Making smart decisions Continuously tracking marketing activities and metrics
like◦ sales per customer, product, region, industry, etc◦ sales from new products / customers
Profit and margins per customer, product, region, industry, etc.