EXECUTIVE SUMMARY
Throughout the course of Principles of Marketing, the essence of marketing and its application has been emphasized. For an organization, not only it‟s immediate
and competitive, but also macro environment is important as it needs to survive and sustain itself whilst operating in these environments. Spice industry all over the world can be referred to as a subset of the food industry. Spices stand at prominent positions in Pakistani imports and exports.. The spice industry of Pakistan annually grows at a rate that is above 50%. Within this industry, 80% market share is with unbranded loose spices and the rest with branded packed spices. Shan Foods and National Foods both are the leaders in branded packed spice category each holding 40% share in 2010, while other prominent players include Chef‟s Pride, Ahmed Foods, Habib Foods and Zaiqa Foods. Shan Foods
was founded in 1981 in a single room as Shan Masala. Later, due to its popularity, it went on to become Shan Foods. It has presence in 60 countries today and deals in six broad categories of offerings. Shan Foods has capitalized on the changing market trends and consumer tastes and through product trials, it has made sure to churn out offerings that are best in line with consumer tastes. It maintains global presence primarily through exports and follows more than one growth strategy simultaneously. With fourteen departments and state of the art technology and customer focused marketing strategies and campaigns; Shan Foods has become synonymous with authentic traditional cuisine of good quality and taste.
1
MISSION AND VISION
COMPANY MISSION AND VISION
Shan Foods‟ mission explains its success, “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.” Shan Food‟s vision is “to be a dominant global player in food products and
socially responsible company that attains its quality standards so that Shan stands for tradition, trust and good taste.
ANALYSIS OF MISSION AND VISION Shan Foods through its mission and vision want to project their ambition to become a „global leader‟ in food products while maintaining „quality standards‟ so that its name becomes synonymous with these two phrases. It intends doing this by maintaining its focus on their customers and the applicable regulatory requirements of the markets it is operating in, be it local or international. Along with these core values, it intends preserving and upholding other values like purity, authenticity and consistency; which it credits for the phenomenal growth it has seen over the past decade. The company intends to grow on the back of cutting edge technology, with the proven best practice of CPI (Continuous Process Improvement), and it realizes that a major portion of its past success and the future drive towards its development and the achievement of its goals will be hinged on the motivation level, the training, and ultimately the efficiency of its human resource. 2
MISSION AND VISION
COMPANY MISSION AND VISION
Shan Foods‟ mission explains its success, “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.” Shan Food‟s vision is “to be a dominant global player in food products and
socially responsible company that attains its quality standards so that Shan stands for tradition, trust and good taste.
ANALYSIS OF MISSION AND VISION Shan Foods through its mission and vision want to project their ambition to become a „global leader‟ in food products while maintaining „quality standards‟ so that its name becomes synonymous with these two phrases. It intends doing this by maintaining its focus on their customers and the applicable regulatory requirements of the markets it is operating in, be it local or international. Along with these core values, it intends preserving and upholding other values like purity, authenticity and consistency; which it credits for the phenomenal growth it has seen over the past decade. The company intends to grow on the back of cutting edge technology, with the proven best practice of CPI (Continuous Process Improvement), and it realizes that a major portion of its past success and the future drive towards its development and the achievement of its goals will be hinged on the motivation level, the training, and ultimately the efficiency of its human resource. 2
INTRODUCTION TO SHAN FOODS
ORGANIZATIONAL HISTORY Shan Foods came into existence in 1981 when it began operations from a single room. Shan Masala as it was back then, launched full range of spices to cater to local public,
due to its popularity. Shan started exporting after a few years due to increased international popularity. But after sometime, the need to reposition the brand was felt. It needed to be repositioned as a food brand rather than a spice brand. Reimaging the organization became necessary for re-positioning of the brand; it was a job well done and led to continued success of Shan on national and international fronts. Now, Shan Foods is well known as a brand of easy to cook mixes for Pakistani food. The name of Shan Foods has become synonymous with highest quality and exquisite taste. It continues to carry on, the tradition of authentic cuisine to farthest parts of the world. There are six broad categories of varieties Shan deals in including recipe mixes, plain spices, dessert mixes, basmati rice, pickles and salts.
Today, Shan Foods has presence in 60 countries. The brand is exported to UK, USA, and Middle East and now to Far East regions as well Organizational Hierarchy
Shan Foods comprises 14 departments all together:
1)
Supply Chain
2)
Information Technology
3)
MIS
4)
Procurement
5)
Engineering & Services
6)
Production 3
7)
Communication
8)
Human Resource
9)
Export
10) Import 11) Quality Control 12) Research & Development 13) Sales 14) Marketing
Following is the organizational hierarchy of Shan Foods
In the below hierarchy: CEO: Chief Operating Officer GM: General Manager BM: Brand Manager
4
Managing Director
CEO
General Manager
Director GM (Production)
Director GM (Procurement)
&
Marketing
Sales
Exports
Sales Office Manager
Director GM
Regional Sales Manager
Director /GM
BM (plain spices, instant mixes)
Territory Sales Manager
Category Owners
Regional Sales Manager
Category Owners
Territory Sales Manager
Category Owners
Regional Sales Manager
Territory Sales Manager
Regional Sales Manager
Territory Sales Manager
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TARGET MARKET
Females aging from 18 to 45 years compose the main target market of Shan Foods. This is because of the reason that in our part of the world, women are mostly related to the food and cooking. Hence, Shan Foods develops products that are according the needs and wants of these women no matter if they are stay-at-home or working, single or married ones.
OBJECTIVES Business objectives Shan takes pride in its practices regarding client and customer interaction as derived from Islam. Their strong connection and respect for Islam drives the company‟s core values. Therefore they have agreed upon not to accept anything
but the best in raw material from the suppliers as Islam teaches to entertain our Islamic brothern similarly as we would treat ourselves. Driving from the same concept of Islam Shan Foods also provides quality to its utmost limits in the products that it offers. Its is the main reason for their how cost as Shan Foods has the latest technology which is one of its kind in south east Asia. The V-look technology and the coal grinding technology is only an example to their dedication to provide nothing but the best to their consumers. It‟s the world class quality that brings the blind trust of the consumers on Shan
products that it will not only be hygienically prepared but would be secure from any harmful ingredients that loose spices offer.
Value proposition of Shan Foods is to be receptive towards innovation and experimentation in food and in life, while remaining a brand that will provide the highest quality products to its customers and will never comprise on this idea.
Shan food considers all major food brands, packed and loose , retailer‟s brands, ready to cook or raw food as its potential competitor. The direct competition is with National Foods, Meehan‟s, Sheehan‟s, Ahmed‟s, Young‟s and the like. 6
Marketing objectives As the strong connection of the Shan Foods owners with Islam, the company does not believe in advertisement heavily on any advertisement medium. Since the product offerings are seasonal the company does advertise in Ramadan and come with its advertising campaigns. Shan advertisement does not show any celebrity or prominent figure to drive sales, rather it just compromises of show-reel showing hands with background music and rotating dishes. The company also conducts BTL activities and holds up demonstrations of cooking with its Spices and product offerings on different venues. All the marketing strategies are customer centric or customer oriented so that it can leverage on already well-developed consumer goodwill for the company.
Shan due to its consumer centric marketing strategies and with market intelligence has started targeting teenagers as they are the future decision makers in households. Shan is aiming to educate and persuade the teenage population with innovative campaigns and with demonstrations to provide them complete information on not only Shan Foods but also regarding the superior quality that if offers to them. This is a very strategic move as when the time will be right, Shan usage will increase many folds because these teenagers will then already be loyal to the Shan product offerings
With its proactive research and development department Shan is always on the move to newer and better opportunities that it can cash upon. Regardless of this it has not filled some basic gaps such as products for fisheries and the likewise cuisines
GROWTH RATE
The food industry in Pakistan is a developing industry and is witnessing growth. The main reason behind this is that buyers have started to shift from loose to 7
packed spices, thus changing the cooking and eating habits. The claimed growth rate of the entire industry is more than 50% annually. Shan Foods with a colossal annual growth of more than 50% was quick to respond to the driving forces and key success factors of the industry and today, it proudly is the most preferred spices company. It has become the industry giant holding almost 40% of the market share belonging to the branded spice dealers. It has over the period of time, managed to win the heart share of consumers that has translated into its brand loyalty and true friendship with consumers.
Company Products Products Range of Shan Foods
The products of Shan can be broadly categorized into 6 categories, with multiple sub-categories. The different product offerings of Shan Foods are:
•
•
Recipe Mix
-
Biryani Mixes
-
Stir Fried Foods
-
Curry Spice Mixes
-
Deep Fried Foods
-
Barbeque
-
Vegetarian Foods
-
Instant Foods
-
Breakfast
Plain Spices
-
Khushbudaar Lehsan
-
Zaiqedaar Adrak
-
Khatta Khatai
-
Qasuri Methi
-
Karara Zeera
-
Taiz Laal Mirch
-
Taaza Dhaniya 8
-
Zaafrani Garam Masala.
-
Teekhi Kaali Mirch
-
Khaalis Haldee
•
Dessert Mixes
•
Basmati Rice
•
Pickles
•
Salts
Even after having more than just spices in the portfolio, Shan is considered the Recipe Mix expert. Within Biryani alone it has nine different variants, two spicy and seven milder ones. And it is the first one to come up with „Taaza Dhaniya‟ in
the Plain spice category. Every single offering of Shan has its own identity. Product Offerings within Spice Mix Category
The Spice mix division at Shan Food Industries happens to be the oldest product category of the company. The category has a total of 67 different products, which are broadly divided into 11 categories, some of these categories are •
Authentic Curries
•
Traditional Stir Fries
•
Tasty Instant Food
•
Tempting Vegetables
•
Delectable Biryani
•
Sumptuous BBQ
•
Lavish Fried Food
•
Yummy Chat
Looking at the product portfolio of Shan Foods, it is seen that Shan Foods has given is consumers an offering for every occasion and every type of taste. Be it traditional cuisine mixes like Biryani or an offering in the Dessert category; Shan has an offering to complement all the good things in life associated with food. Out of all its categories, the Spice Mix category is the oldest and is still used synonymous with the name Shan i.e. Shan Foods is still referred to as Shan Masala by many. This shows how strong the spice association is with Shan Foods. Other categories like Basmati Rice, Dessert 9
Mixes, Pickles and Salts were introduced later. It is seen that Shan itself promotes its Spice Mix category most with minimal or no marketing expenditure on the rest of its categories. Shan advertises its traditional recipe mixes and spices the most, because it wants to remain top of the mind and top of the heart brand. Shan Foods is believed to be the leader in the Spice Mix category and it takes utmost effort to ensure that the leadership crown is not worn by anyone else but only Shan Foods. Following is what some offerings from Shan‟s product portfolio look like:
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Micro enviorment Supplier
Suppliers can seriously affect the shan foods marketing. They provide the resoures needed by the shan food company to produce its goods.Marketing manager policies are affected by them. Public
Public is a group that has a actual interest in the company. Shan food company identify the public that affect its strategies. These are fellows. o o o o o
Financial publics Government public Media public General public Internal public
Customer
Consumer markets consist of individuals and households that buy the products for personal use. Their taste for the product can be changed at any time, in result, the company enviorment is distrubed. Market intermediaries
Any disput with market intermediaries can cause of decrease in sales. Companies whole environment is affected due to them. Technology
Shan food uses the latest technology to produced its product. In 2012 shan import the machienary for packing the products. This machine can pack upto 30,000 packet.
Strategic and Marketing Analysis Market Segmentation:
The market segmentation can be explained by defining demographic, geographic, and behavioral factors that are most important for Shan Foods. Demographic Factors
The basic demographics that Shan caters to are the women of today belonging to age group of 18 years and above with socio-economic class of middle lower of above. Her martial status can be married or single, cooking for the household or 11
just trying out new things
Geographic Factors Shan food has not segmented itself on the basis of geographical segmentation. Their distribution ranges from valleys of Quetta to the Khyber Pass and to the seas of Karachi. It has more than 500 distributors in its supply arsenal. However some recipes are more famous in particular areas of the country than others because of sub-culture preferences. For e.g. the white Nihari, Sindhi Biryani, & Qorma mix are in huge dem and in Karachi and the demand in Lahore consists mainly of Pulao, Murgh Choley & BBQ mix.
Behavioral Factors:
Being born Pakistani, loving food is in our blood. Spicy and delicious food is a main part of our lives. Be it the celebrations of Eid or marriage ceremony of a beloved, it‟s the food that give colors to the events and that bring the relatives for a quality
time Another behavioral factor is related to the double income phenomenon that is growing everyday. Both the man and the woman of the house are earning to support the family and they require ease and convenience when it comes to cooking factor.
The purchase behavior changes according to the seasons. If on one occasion Fruit chart masala is in demand because of Holy Ramadan, BBQ mixes could be in demand on Eids or in summers when families invite friends over on BBQ parties. The Haleem & BBQ mix are in greater demand during the winter season while Chana Chat mix is purchased more often in summers
SWOT ANALYSIS SHAN FOODS 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 12
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 13
RATING AGAINST CUSTOMER BUYING CRITERIA The table below suggests what is the weight age customer gives to each of the non priced attributes and how is Shan and National performing against them
Shan
QUALITY & PRICE Non Price Attributes affecting Customer Choice
National
WEIGHTAGE %
Product-Related
%
1. Quality
25
22
22
2. Packaging
10
10
10
3. Variety
18
16
14
5. Brand Name
15
14
12
Service- Related
%
1. Recipe
20
18
15
2. Availability
12
8
10
Positioning Shan Foods position statement is “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.” It is just for the fact that the consumers should be provided with solution of having a tasty meal in no time with home made mixes of recipes and spices
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Positioning Map
Shan foods National foods 40% Chef’s
pride 15% Other 5%
Brand
Other players in the industry are:
Mehran Foods
Ahmed Foods
Habib Foods
Zaiqa Foods
Kitchen Secrets
PRICING POLICIES, PROMOTIONAL AND DISTRIBUTION PLANS
Shan Foods is present in 6 broad food categories which are as follows:
Recipe Mix
Plain Spices
Dessert Mixes
Basmati Rice 15
Pickles
Salts
Though there are many competitors in the Spice Food business, but the main competitor or rival of Shan Foods is National Foods. Shan has a strong market share in the Recipe mixes category from which it derives most of its revenue. Shan is most famous for its Biryani Masala for which today it has nine different variants.
Pricing Policy
The pricing of all Shan offerings varies and depends on each Stock Keeping Unit (SKU). However, the price ranges for five (out of six) categories of Shan product offerings are as follows:
Recipe Mix :
The Recipe mixes range from Rs.20 to 45 Plain Spices :
Pricing of Plain spices varies SKU wise. For example, 50 grams red chilli powder is available at a price of Rs.40 and150 grams at Rs.120 Dessert Mixes:
Desserts are all priced at Rs.40 Pickles
Pickle pricing is Rs.170 for 1000 grams, pricing varies also. Salts Iodized salt is priced at Rs.25 (800 grams) and plain salt at Rs.22 (800 grams)
It is seen that on a general note, Shan Foods‟ offerings are based on parity pricing and are
similar to those of its rival National Foods. According to sources, this similar pricing is not due to any price war that exists between both companies but is because the raw materials of both are similar in nature for many offerings. If the cost of raw materials increases, both have to increase their prices and again their prices show similar trend after increase.
Promotion
The estimated marketing budget for Shan is Rs.100 million for all their ATL and BTL 16
activities in the year 2012. The company does most of its marketing on seasonal basis especially before and during Ramadan and near Eid. The breakdown for the budgeting is 80% for ATL activities and 20% for BTL activities. In the recent times Shan has put more emphasis on its export and only comes up with new marketing campaign for new products.
Shan does not advertise as a ritual and can be termed as quite conservative when it comes to using mass media fro promoting itself. It does not believe in advertising rigorously. The advertising is done seasonally only; however it does conduct certain promotional campaigns and activities. Almost all of Shan‟s promotions are addressed towards women. The advertisements of Shan‟s offerings focus entirely in the females of the family. The marketing strategy is very customer oriented i.e. Shan emphasizes on marketing its products keeping in mind its customers thus having a customer centric view. Such a marketing strategy allows it to leverage on the goodwill already in the market.
It has started to reach out to a wider audience keeping in mind the changing lifestyle to nuclear families and convenience seekers. Shan has recently realized that a potential part of the population i.e. the teenagers are the ones that will become tomorrow‟s decision
makers. Thus, it aims at informing, reminding and persuading teenagers through innovative campaigns with proper information regarding the superior quality of Shan products. This way, Shan will be their most preferred choice when they become the decision makers in the kitchen. More recently, the major marketing or promotional expenditure done by Shan Foods is on making deals with television channels for their commercial air time. One of their most recent deals was with Geo news and Geo entertainment in which they committed Rs. 12 million for one month of heavy advertisement in both prime and non prime time advertisement. Few of the BTL activities that the company does and plans on continuing is branding of shows in which the contestants can directly interact with the host of the cook. Along with that it also does mall activities which is direct marketing to educate the potential consumers.
Distribution
At Shan Foods, special care is placed upon meeting market and customer demands 17
in a fitting and timely manner. It is therefore, ensured by the Supply Chain team that goods or shipments reach their destinations well in time to match market trends and customer demands. Shan makes sure that its authentic brands are distributed by efficient and top of the line distributors. Shan has a separate Sales department focusing on International Modern Trade (IMT) and Local Modern Trade (LMT). This department maintains direct relationships with variety of shops to meet their customized requirements. This practice helps Shan to keep a close and direct relation with high sales outlets which is pivotal for its greater profits and market share. Sales teams are totally monitored by Territory Sales Manager (TSM) and Regional Sales Manager (RSM). Shan Foods helps by extending all possible marketing support to its distributors in to create awareness of its quality products in the international market in mutual sustainable business interest. Company‟s TSMs and RSMs work on the basis of
area wise policy for distribution, be it local distribution or export. Products are distributed on the basis of geographic segmentation. For instance, in posh areas no display of the sachet packs will be seen in the stores whereas in underprivileged areas only sachets are supplied. In Pakistan alone Shan has 500 distributors; from Karachi to Skardu. The sales force of Shan supplies its products to these distributors and some direct distribution is also done mainly in Karachi market. The distribution channels of Shan Foods include:
Retail
Wholesale
Hyper Markets (e.g.Macro)
International Chains (e.g. Wal-Mart, Carrefour, Lulu Hypermarkets, Panda, Safeer, Mall of the Emirate,, Reliance India)
Shan is the largest exporter of premium quality packaged spices, spice mixes, food mixes, rice mixes to USA, Canada, UK, Germany, Holland, Malaysia, Middle east, South Asia, Japan, Singapore, Australia, and many other countries of the world.
It also exports its products to the Far East, Bhutan, Japan, Malaysia, Singapore, Thailand etc. In totality, it has its presence in almost 60 countries worldwide. It is the first Pakistani 18
brand that has been officially launched in India and Shan foods plans to extend its availability in other lucrative markets around the world. The Above The Line (ATL) activities of Shan foods include advertisements on television, radio and print (magazines and newspapers). Following are some of its famous ATL campaigns
Expert
Ramadan ad
Radio ads with tara ra ra ra music
Backgrounds music with rotating dishes
Khanon mein shaan Shan Zindagi Asaan
5 mins Qorma
Following is an ad of when Shan Foods launched its pouch pack for Achaar (pickle):
Some of the Below The Line (BTL) activities done by Shan Foods as part of its promotion are as follows:
19
College Activities
Cooking Demonstration Programs
Activities/ Programs involving localities (E.g. programs for Memon community in areas of Bahadurabad and Sindhi Muslim Society – Memoni Biryani Masala)
Product and new product strategies and pipeline Growth Strategy
Pakistan‟s food industry is growing rapidly and is on the growth stage of its life cycle.
The prime reason for that is that consumer are becoming brand conscious these days and are switching from unbranded looses spices to packed branded spices which in turn indicates that cooking and eating habits are also changing. The growth rate of whole industry currently is more than 50% annually, which is phenomenal opportunity for company like Shan to capitalize by filling that gap.
Shan was vigilant and responded well enough to the market conditions. Today Shan‟s growth rate is more than 50% and it is industry giant having about 40% of
the share of branded spices industry. Shan has remained successful in achieving a soft corner in people‟s hearts which has resulte d into a strong brand loyalty.
It‟s very difficult to compete in spice industry with top -down or centralized organizational
structure
because
of
the
fact
that
different
departments‟
performances are inter-dependent. Shan realized this and it now has decentralized structure. Every worker is welcomed to participate in decision making and can come up with new ideas and thoughts to improve the product or the production process. This helps the strategist in understanding that what is attitude of an average employee about the company and that feedback aids in forming better and improved strategies. By involving employees in decision making process gives employees a sense of ownership and they feel right at home where they have a 20
say. Product Strategy
Shan in an entrepreneurial venture and it is following market development strategies, product development strategies and penetration strategies as it is expanding its product line to new customer base in various locations, setting up product lines such as spices, pickles, etc and sustaining its global position mainly through exports. Shan has great prefers vegetable. Similarly in Pakistan Shan has wide range of meat mixes as people are meat lovers and highly prefer meat diet. Shan is currently present in over 60 countries and is performing to maximum of its potential to become the global leader. Therefore, based on conceptual understanding form the Strategic Marketing Management course, it can be called a „transnational‟.
Shan Foods has the competitive edge of technology and innovation. Company develops new methods and techniques to test its new products and generate trials in the market to measure the market response before they formally launch any product. So we can say that research is an integral part of the company and the new product is brought in keeping in view the customer preferences and needs.
The spices mixes at Shan‟s production plant are created with the exquisite and genuine
flavors having the cultural and traditional touch. Shan believes in the best as it never compromises on standards of finest quality and engraves the old age recipes into modern packaging keeping the freshness intact.
The raw material is an initial and important part of whole product strategy. Shan strongly holds the belief that excellent quality is majorly dependent on the first-class quality raw material processed with the help of state of the art technology. For this very reason the purchase department at Shan Foods thoroughly selects the best quality spices from fields, local bazaars and international markets. Raw material is also procured from number of countries such as black pepper is imported from India, Africa, Thailand and various other countries. Shan Foods pays special attention in obtaining raw material as different spices are imported from the places where those spices are grown best.
Possible Future Prospects:
Shan is currently in spice mixes and pickles but it can find niche market such as diet 21
conscious people and bring in the spices for that market. Shan also can diversify its product offerings and can enter into jam and ketchup market as national is already playing in that category.
Brand Development Management Control
Control is one of the managerial functions like planning, organizing, staffing and directing. Everything managers do in following-through on decisions taken to achieve defined goals within an established timetable, is considered management control. It is important because it helps to check the errors and to take the corrective action so that deviation from standards are minimized and stated goals of the organization are achieved in the desired manner. This constitutes three main activities:
·
Setting standards
·
Measuring actual performance
·
Taking corrective measures
An earlier view of control saw this concept in action only after errors were detected, but in the modern view of management, control is a foreseeing action. “Management control can be defined as a systematic effort by business management to compare performance to predetermined standards, plans, or objectives in order to determine whether performance is in line with these standards and presumably in order to take any remedial action required to see that human and other corporate resources are being used in the most effective and efficient way possible in achieving corporate objectives” – Wikipedia. SETTING STANDARDS
Management control takes place at a number of levels within an organization namely: strategic, operational and tactical levels. In effect, control variables at one level cascade to the next level below and translate in nature and focus accordingly. For example, these controls may predominantly be financial in nature at the strategic level but translate to departmental activities at the operational level, and hence encompass both financial and non-financial information. Further down to the tactical level, they translate into productivity both for the groups and the individual. Therefore, the focus of this exercise in 22
any organization is on finance, performance appraisal and benchmarking. Marketing activities are inherently more volatile due to the constantly changing business environment which is driven by the needs and wants of the market. Therefore, for marketing performance to be measured correctly, the appropriate criterion for marketing activity needs to be determined, namely: annual plan, profitability, efficiency and strategy. For Shan Foods, the criteria to measure marketing success should be evaluated from the following factors: ·
Measurement of awareness (of the product range)
·
Feedback on customer satisfaction
·
Market share data – both in terms of levels of sales, and repeat business
Annual plan
Measures the extent of marketing success over a period of time. Shan Foods should be on analyzing: ·
Sales
·
Market share
·
Expenses
·
Customer perception
Budgeting
The process of developing any kind of strategy and its budgeting are intertwined. Budgeting process translates marketing strategy into financial terms, and is the single most common control mechanism. It serves not only to quantify plans but also to coordinate activities, highlight areas of critical importance and assign individual responsibilities. Difficulty, time, negotiation, and paperwork: all figure into the budgeting process. Simply put, it is a tool for resource allocation and acquiring the approval for all such allocations. Shan Foods‟ managers preparing a budget should look int o: Budgeting guidelines – policy and procedure relating to budget formulation. Includes
assumptions, methods, and presentational requirements. Cost behavior – understanding the cost drivers within an area of responsibility and how 23
those costs are allocated. Timescale – specific time and manageability considerations set for budgetary periods,
example financial year or a rolling budget, with forecasts over regular intervals. Objectives – specific aims and goals and how they will be assessed.
Though budget types can be historic, zero-based or activity related, it is recommended that Shan Foods pursue activity related budgeting for their marketing pursuits since such a budget would have calculation rules such as percentage of sales, or average industry spending, and these precursors are used to determine the available funds for marketing. Profitability
Creates a systematic basis for allocating cost and defining profit both in terms of products or marketing activities. Ultimately it should help Shan Food ‟s decision making in terms of: ·
Expansion
·
Reduction or elimination of product offerings
·
Resource allocation through various distribution channels.
Efficiency control
Gains optimum value from the marketing assets. Shan Food managers should look for value for money by analyzing the impact of promotional activities and setting controls on: ·
Sales
·
Advertising
·
Directing marketing
Monitoring marketing performance
When deciding on how to monitor marketing performance, reasonable standards need to be allowed. Shan Foods‟ emphasis should be on monthly monitoring (or weekly in case of critical situations). The question in mind should be, ·
What is the time period that allows the most realistic and accurate picture of our marketing performance?
·
Which KPIs need to be at the center of attention at the moment?
·
Is there a need to create new KPIs?
Improving marketing program and their effectiveness
In order to establish a better marketing control system, the biggest obstacle at Shan 24
Foods may be the oft- repeated element of resistance. Being a „seth‟ company, there might be a lack of constructive and positive attitude at the top management. The basic objective of any top management should be to make its sales and marketing people more effective. Practicality and clarity should be addressed when implementing changes. This could be done through a series of thought provoking questions: ·
What specific actions should be taken?
·
When should the actions be taken?
·
By whom should the actions be taken?
·
What could be realistic starting and completion dates?
·
Who shoulders the responsibility of implementing these corrective actions?
Strategic control
Reviews marketing strategy and its subsequent implementation, in terms of the direction towards strategic organization goals. This exercise comprehensively examines marketing activities and assesses their effectiveness and makes recommendations to improve marketing performance. It is usually conducted in the form of a:
MEASURING ACTUAL PERFORMANCE
R a t i o s :
A simple and effective technique to measure performance is in terms of ratios. However these should not be used in isolation but should rather be considered in relation to trends and comparison with planned or standard ratios. Additionally, it is important to acknowledge that though these ratios are a quick and effective way to establish performance, they are mere indicators and hardly identify the source of a pending problem. It is also important to define the standards and be consistent with their use when using ratios, for example, profit before or after tax is to be considered Many businesses operate with lower acceptable ratio; however a ratio that is too high shows that the organization is not making optimum use of its financial resources by holding too much cash. Shan Foods can use these ratios to analyze the level of asset involvement in its marketing efforts. 25
Variance analysis:
Used along with budgetary control, Shan Foods would be able to examine the variation between the actual and planned results and this applicable to a range of marketing activities. The comparison would be made against budget forecasts, and the reasons for prevailing differences would be easily identified and examined within the areas of concern and their component parts. More specifically, variance analysis could be applied to sales price and sales volume and the values of variance can point to either of the two reasons. The management of Shan Foods can thus examine why revenue targets fell short of the intended volume or intended price. This technique can further be used to analyze other factors such as profit, cost and market size.
Performance appraisal:
In this form of management control, the focus is on achieving better results from groups or individuals. Such a framework is based on planned objectives, levels of achievement and competence. Management is required to have good people skills and its attitude to be constructive in nature. This would involve them using three specific managerial skills
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Reviewing performance – though a normal management activity, Shan Foods should emphasize the use of objective criteria to be used as the basis of such reviews. Far too often our industry and business environments use personal preferences and pre-conceived notions about employees to write performance reviews. The result is a deteriorating workforce which lacks motivation and hence a required level of commitment towards company vision, mission and objectives.
The review criteria should be communicated and all work and personal development plans should be considered in tandem with the communicated criteria. ·
Giving feedback – related to performance in terms of actual results and observed behavior. It is again important to mention here that Shan Foods does not just focus on the negatives when giving feedback, since such practices are common in the Pakistani business environment. It is pertinent to be specific yet descriptive when 26
referring to actions, behaviors and judging overall results. More importantly, suggestions should focus on key aspects of improvements that managers would like to see in their workforce. ·
Counseling – in order to overcome the observed weaknesses and build on the noted strengths, performance appraisals should firstly be positive in nature, and Shan Foods‟ management should be ready to counsel staff so as to build a
workforce that is not only equipped and geared towards achievement but also motivated and committed enough to go attain the company goals.
THE NEED FOR TAKING CORRECTIVE MEASURES:
If a planned marketing activity is not meeting its intended objectives, it calls for corrective actions. Since there is a wide range of possible outcomes, it is obviously prudent to have the corrective actions which are addressing the areas where the problem exists. Following are a few broad categories where problems may exist, and the corrective actions that may be taken to address them.
Unsuitable marketing objectives and strategy
Usually the starting point for any organizational activity, it is quite possible to have incorrect objectives which are the real problem. Not reading the organization environment correctly may lead to this, and this ends in having objectives that are too ambitious or unrealistic. Conversely, it is also possible that the resources an organization holds are insufficient to meet the stated objectives. For example a sudden reduction in income which was not expected may shrink funding, and it would become difficult to sustain a planned marketing activity under the new financial constraints. Unsuitable marketing tactics
This is where the marketing mix may not be having the required impact on target market audience. The pricing levels may have been set too high which hindered participation, or the message being sent out in an advertising campaign may have been incorrectly perceived. Similarly it is also possible that the wrong audience may have been targeted at the outset, or that the target audience did not have easy access to tickets. Another reason could be that the sponsors were not impressed by the levels of corporate hospitality. 27
Insufficient marketing budget
This is something that should be done at the beginning of a planned activity. The resource availability should be verified and more importantly budgeted, so that hindrances from cash constraints can be avoided later. The success of marketing tactics depend on this, and if not handled earlier, the impact of marketing campaign will not be felt because of the later need to cut corners. Last but not the least, it is very important to do a gap analysis prior to taking corrective actions. The discrepancies between planned and actual results must be pinpointed before any such corrective actions can be implemented.
TAKING CORRECTIVE MEASURES
A corrective action is a change implemented to address the weakness identified in a management system. Normally corrective actions are instigated in response to: ·
Customer complaints
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Abnormal levels of internal non-conformity
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Non-conformities identified during an internal audit
Business organizations do not have unlimited resources at their disposal. Management control can therefore lead Shan Foods to a more effective and efficient use of its resources, helping it to channel their efforts towards marketing initiatives and their achievement. This in turn will help them achieve their financial objectives in a controlled manner. Shan Foods‟ marketing efforts should not only help management decision
making, but also give support and direction to the day-to-day marketing active ties, since it is the customer needs and the satisfaction of those needs that at the end of the day become the judgment criteria for those efforts. Having a structured and rational approach to conducting marketing initiatives may well be appreciated more within Shan Foods than taking a piecemeal approach, as it would demonstrate action towards specific organizational objectives and their marketing solutions.
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Some recommended corrective actions for Shan Foods: ·
Obtain regular feedback from customers
Continuously increasing customer demands and the constantly competitive work environment calls for organization Wide learning as a continuous process rather than mere quality control. Shan Foods should view its organization as an integrative system responsible for customer service and satisfaction. Taking regular feedbacks would therefore help transform any unsatisfied customers into satisfied ones. Dedicated call centers
It is important to have synchronization between company objectives, customer service standards and customer satisfaction levels. Running and maintaining a dedicated call center (or outsourcing this function to a reputable company), which gathers current customer perceptions continuously will help compare and align Shan‟s business service standards with its objectives an d the customer attitudes. Monitoring marketing performance
The question to who should be responsible for monitoring has three possible alternatives: top management, marketing management, or the combination of the two. It is recommended that Shan Foods goes for the combination alternative as this approach allows direct marketing management to take immediate and timely corrective actions, and concurrently allows top management to have the necessary visibility but only from a control perspective. Since Shan Foods is known to be a „seth‟ company, this combination approach would suit its operations better than the
other two alternatives. o Regular marketing audits conducting periodic, comprehensive, systematic and independent investigation of Shan Foods‟ marketing activities, with the goal of identifying possible opportunities
as well as potential challenges will help the organization think pro-actively and evaluate the success of the corrective actions. Marketing audit is one way of helping organizations do the things they want to do, but moreover do it right the first time.. Shan Foods does conduct yearly audits, but we feel that increasing the frequency will improve the marketing function. These audits need to be carefully planned and conducted so as to ensure that the time and resource expenditures are kept to a minimum. 29
· Extending use of ERP system Organizations these days make extensive use of MIS to help them achieve increased profitability through optimizing their resources. Shan Foods‟ has been aware to this, and their business savvy is portrayed by the fact that it has been utilizing a customized ERP system to achieve these very goals. They have running modules in: o Inventory management – material resource planning o Production planning o Sales o Accounts o HR
The use of these modules however is still in the nascent stage and needs to grow into areas where management control can be brought about effectively. Shan Foods needs to further explore their current ERP system to employ some of the famous techniques such as kaizen or activity based costing.
From the perspective of marketing management it can also employs various organizational controls through this ERP system such as
o Sales forecasting o Sales force and reseller incentive programs o Sales force management system o Customer relationship management
Marketing dashboard
A tool used to simplify marketing reporting and analysis. It continuously tracks marketing metrics, related information and trends and presents everything on a one page report. It will help Shan Foods by 30
o Staying a step ahead and focused o Providing a better insight into marketing related problems o Communicating information to everyone involved o Saving management valuable time o Measuring marketing effectiveness o Making smart decisions o 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. profit and margins from new products / customers market share
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Recommendations
Apart from everything one of the growing sectors in food industry is of frozen foods, though a news field for Shan foods but with the current performance in spices and the quality it maintains, Shan has strong chances of making its marks in the frozen food category as well which is currently led by K&N. Shan Foods existing distribution and production facilities can help in this initiative.
Though the new generations are realizing the benefits of open spices to packaged branded ones, but there still need to be developed effective marketing strategies after understanding the trends in how people are using spices and for what reasons are they using them. Convenience, environmental concerns, increasing acceptance of food as having therapeutic value are some of dimensions organizations need to study and develop new uses for their spices.
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