PEL Pakistan

Marketing Plan for a New Product
1-EXECUTIVE SUMMARY
This project is based on the comprehensive study of the core subject of Strategic
Marketing Management. The project contains a detailed industry analysis as per the
teaching of course and detailed information about the present condition of Air
Conditioners Market in Pakistan.
The project contains a comprehensive Marketing Plan (for External Audience) of a

new product which is to be introduced as a pioneer product in the Pakistan’s market.
The product belongs to the family of Split Air Conditioners and is called Mobile Air
Conditioner. The selected name of the product is “MAC – Series” which contains two
different models. The product is launched under the family brand name of PEL. Pak
Elektron Limited (PEL) is the flag bearer of the Saigol Group of Companies and
is the pioneer manufacturer of electrical goods in Pakistan. It was established in 1956
in technical collaboration with M/s AEG of Germany. PEL currently has a market
share of 13% in the Split Air Conditioners market but has the strongest dealership
network all over Pakistan which can help in the success of new product. PEL has
recently exported 14,800 Split units to Afghanistan.
The unique product has some attractive features like changeable bodies, automatic
excretion of air freshener and above all portability.
The project discusses a complete marketing strategy with respect to five P’s and also
the three years income statements. Promotion of MAC – Series has a budget of
Rs.15.04 Million which is further distributed in the electronic, print, outdoor media
and direct marketing.
Please read the project for detailed information.
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2-DESCRIPTION OF THE COMPANY
Company Profile:
Pak Elektron Limited (PEL) is the flag bearer of the Saigol Group of Companies.
Pak Elektron Limited (PEL) is the pioneer manufacturer of electrical goods in
Pakistan. It was established in 1956 in technical collaboration with M/s AEG of
Germany. In October 1978, the company was bought by the Saigol Group of
Companies. Since its inception, the company has always been contributing towards
the advancement and development of the engineering sector in Pakistan by
introducing a range of quality home appliances and by producing hundreds of
engineers, skilled workers and technicians through its apprenticeship schemes and
training programs.
The company comprises of two divisions:
 Appliances Division.
 Power Division.
2.1-Appliances Division
PEL’s Appliances Division is the flag carrier of the Saigol Group. This Division of
PEL consists of home appliances manufacturing.
PEL window-type air conditioners were introduced in 1981 in technical

collaboration with General Corporation of Japan. Ever since their launch, PEL air
conditioners have a leading position in the market. PEL air conditioners cooling
performance has been tested and approved by Copeland and ITS USA and today PEL
holds approximately 45% of air conditioners market share.
PEL recently launched its Cool life Split air-conditioner which is a technologically
advanced model specially designed for Pakistan market. This masterpiece from PEL
provides maximum cooling even at very high temperatures while minimizing your
electricity consumption. Its salient features include:
 Low power consumption

 Low Voltage startup
 Hydrophilic Aluminum Fins
 3-bend heat exchanger
 Scientific Louver Rotation (SLR)
 Independent de-humidification function
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 Anti-bacterial and anti-dust filters
PEL Air Conditioners have been specially designed for countries, having climatic
conditions similar to Pakistan. The Air Conditioners have excellent cooling
capabilities at extreme temperatures at varying levels of humidity; high air dust and
uneven local power supply conditions.
2.2-Power Division
PEL Power Division manufactures energy meters, transformers, switchgears, Kiosks,
compact stations, shunt capacitor banks etc. All these electrical goods are assembled
under strict quality control and in accordance with international standards. PEL is one
of the major electrical equipment suppliers to Water and Power Development
Authority (WAPDA) and Karachi Electrical Supply Corporation (KESC), which are
the largest power companies in Pakistan.
Over the years, PEL electrical equipment has had been used in numerous power
projects of national importance within Pakistan. PEL has the privilege of getting its
equipment approved and certified from well-reputed international consultants such as:
 Preece, Cardew and Rider, England

 Harza Engineering Company, USA
 Snam Progeti, Italy
 Societe Dumezm, France
 Miner & Miner International Inc. USA
 Ensa, France
In spite of stiff competition from emerging local and multinational brands, PEL
Group's appliances and electrical equipments have remained in the spotlight due to
constant innovation. Strategic partnerships with Copeland, Danfoss, Samsung and
others have enabled the PEL Group to incorporate new technologies into existing
product ranges, thus giving the Pakistani market access to innovative, affordable and
quality products.
The products manufactured by PEL have always been of high standard and the name
'PEL' is synonymous with QUALITY all over Pakistan. Since its inception, the
company has been working for the advancement and development of engineering
know-how in Pakistan. The company has produced hundreds of engineers, skilled
workers and technicians through its apprenticeship schemes & training programs.
PEL has been continuously adding new products to its range. As a result, PEL has
registered a significant increase in its sales volume, during the last ten years.
PEL was 16th Company in Pakistan which got ISO 9002 Certification in 1997,
since then PEL Management is applying this International Standard Practices for
Effectively Managing Quality of Products and Services that Company Offers. The
International Standard Practices in PEL have been Upgraded as per the Revised ISO
9001 Standards and its Scope of Application is expanding ever since and Top
Management is Committed to make PEL a Total Quality Management (TQM)
Company.
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3-STRATEGIC PLAN AND FOCUS
This section covers three aspects of corporate strategy that influence the marketing
plan:
1. Mission/Vision.
2. Goals.
3. Core Competencies/sustainable competitive advantage.
3.1-Mission/Vision:
The mission and vision of Pak Elektron Limited (PEL) is to market lines of high
quality home appliances and power division products at affordable prices that satisfy
consumers in the fast growing electronic and power segment while providing
challenging career opportunities for employees.
3.2-Goals:
Non-Financial Goals:
 To add a new product to its range in every third year for increasing the sales
volume.
 To set an image as the best quality of local home appliances.
 To set an image as the best quality of local power division products.
Financial Goals:
 To obtain a real (inflation-adjusted) growth in earning per share of 10% per
year over time.
 To increase the market share of split unit to at least 20%-25% by the end of
2007.
3.3-Core Competencies/sustainable competitive advantage:

 Pak Elektron Limited (PEL) is the pioneer manufacturer of electrical goods in
Pakistan.
 PEL was 16th Company in Pakistan which got ISO 9002 Certification, ever
since and Top Management is Committed to make PEL a Total Quality
Management (TQM) Company.
 Huge distribution network all over Pakistan.
To translate these core competencies into a sustainable competitive advantage,

the company will work closely with key suppliers and distributors to build the
relationships and alliances necessary to satisfy the standards of customers.
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4-SITUATION ANALYSIS
4.1-General Environments:
4.1.1-General State of the economy:
On the back strong economic recovery of last year Pakistan’s economy is gathering
even greater momentum during the current fiscal year (2005-06).
 Privatization of Karachi Electric Supply Company (KESC) – the most

difficult and complex public sector utility.
 Growing interest of foreign investors in Pakistan as manifested by the
visits of over 200 foreign investors’ delegation in the last 2 years.
Above are some of the events of significant nature which have taken place on
domestic economic scene during the current fiscal year.
GDP is targeted to grow by 8% in 2005-06, powered by a strong growth in

manufacturing (10.2%) and continuing robust performance in services (15%) and
agriculture (5.0%-6%).
At the back of stronger than expected performance of agriculture and manufacturing

the GDP growth is likely to exceed the target and may end up at around 8.4% -
the highest growth in the last 15 years. Pakistan is number 2 in the race of GDP
growth after China.
The overall fiscal deficit that averaged nearly 7% of the GDP in the 1990s has decline
to 3.2% in 2005-06.
The per capita income of Pakistan has reached up to $847 (Recent Economic
Survey).
The literacy rate of Pakistan is estimated at 54% of both sexes.
4.1.2-Economic condition of the industry:
The industry is experiencing a phenomenal growth for last three to four years. Three
years back the total demand for split units was 180,000 Units/year which rapidly
increased to 280,000 Units/year in 2002-03, in 2004 demand reached 300,000 units
in 2005 the demand for split units was 336,000 units and in 2006 the demand is
approximately 350,000 units. The window type air conditioners are almost obsolete
and companies are planning to shut their facilities of window type air conditioners in
the coming year if the situation keeps same.
4.1.3-Condition of the company in industry:
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It is a very stable and an established company. They are in the market for almost 30
years and they are considered to be the pioneers in Window type Air Conditioners in
Pakistan. They span almost all of the major cities of the country. They have a number
of renowned products in their credit. Their key product is Refrigerator and they
are rated as number 2 Refrigerator Company in Pakistan. The company is dealing
in two sub-divisions of the appliances division.
1. Manufacturing items.
2. Trading items.
They are manufacturing Refrigerators locally and importing all other products from
abroad and distributing these items with their label on them. The factory is
producing 1200 refrigerators daily. Split unit is their trading item and they are
importing it from China. Their Split Unit sales are not that good.
4.2-Product Market:
4.2.1-Product Types, Varieties and Brands:
PEL is renowned for its refrigerators and they are rated as number 2 company, they
only manufacture refrigerators and the split unit is their trading item. They import it
and then distribute it all over Pakistan with their own label on it. They test launched
the Split Unit in 2002 and then again in 2003 but the results were not favorable
so they decided not to repeat the same in 2004. They have again launched the
Split Units in 2005 and it is Available in 0.75, 1.0, 1.5 and 2 ton energy efficient
models. PEL split models names are:
1. Silver Line
2. E-6
3. Cool Life (Energy Saver)
Description Models
Unit
Function PS95K PS125K PS185K PS245K
Cooling Capacity BTU/hr. 9500 12500 18500 24000
Power
Kilowatts 0.880 1.300 1.960 2.550
Consumption
Operating Current Amps 4.0 6.1 9.0 11.7
Sound Level
dB 37 39 43 45
Indoor
Sound Level
dB 48 48 55 58
Outdoor
Dehumidification
L/hr. 1.2 1.6 2.5 3.0
Capacity
Voltage Frequency V/Hz 220/50 220/50 220/50 220/50
Indoor WxHxD mm 800x285x185 800x285x185 1020x315x180 1080x330x230

Outdoor WxHxD mm 830x500x310 830x500x310 800x685x300 860x900x330
Ideal room size Sq. ft. 90-120 120-150 150-225 225-300
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4.2.2-Sales Volume and Trend:
PEL is selling the Window Air Conditioners for years but they are new to Split Units.
They have test launched the product twice with minimal results and now they are
looking to sell about 30,000 units this year. Their overall sales are increasing which
can be seen as follows.
Audited financial statements and a review of the performance of the Company

for the year ended June 30, 2005. (Available on internet)
Operating Results:
The gross sales of Rs. 8.075 Billion, from Rs. 6.077 Billion in the last year, have
shown an increase of 33%. Profit after tax has also registered a corresponding increase
of 25%. A list of key financial results is given below:
Financial Results (Rs. in Million) 2005 2004
Gross Sales 8,075 6,077
Gross Profit 1,489 1,070
Operating Profit 893 659
Profit Before Tax 442 280
Profit After Tax 347 277
4.2.3. Growth Rate:
The industry is experiencing a phenomenal growth in last three to four years. Three
years back the total demand for split units was 180000 Units/year which rapidly
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increased to 280000 Units/year in 2002-03, in 2004 the demand reached to 300,000

units, in 2005 it was 336000 units and in 2006 it is estimated to reach 350,000 units.
4.2.4. Market Share:
Because they have launched it recently and there are a lot of competitors in the market
their market share for Split units is 13%. The market share of PEL refrigerator is
38% and the overall share of PEL in market is 18-19%.
Market Share of Window Type Air Conditioners:
The market share of companies when the air conditioner market was ruled by local
competitors producing only window type air conditioners:
MARKET SHARE
Others
18%
PEL
Others
PEL
82%
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Market Share of Split Air Conditioners:

The market share of the companies at present after the entrance of cheap Chinese split
units:
MARKET SHARE
PEL
Others 13%
19%
PEL
MITSUBISHI
WAVES
DAWLANCE
L.G.
L.G.
20% MITSUBISHI Others
34%
DAWLANCE
7%
WAVES
7%
4.3-Customer Market:
4.3.1-Demographic Factors:
When we talk about splits we have two social classes who are the potential customers.
1. Higher end.
2. Middle end.
The companies like LG and Mitsubishi are classified as higher end products and
they are more costly.
The companies like PEL, Haier, Dawlance and Waves etc are middle end brands.
These are low price products with low electricity consumption. They are for price
conscious people who belong to middle class of the society.
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4.3.2-Life style and Patterns:
Due to high electricity rates and high consumption of electricity, through Window
type Air Conditioners, the trend has now changed towards the Split Air Conditioners
as they are more efficient in electricity consumption. There is also another factor that
the prices of the land has increased dramatically and it is easier to install a Split Unit
in a small house rather than a Window type Air conditioners which requires a proper
place for outside unit at the exact point where the inner portion is installed.
4.3.3-Usage Patterns and Behaviors:
Air conditioning has now become an essential part of living. As it is becoming very
difficult to fight against the ever increasing heat in cities as well as in remote areas.
People tend to use Air conditioners more and more day by day during summer
seasons. In countries like Pakistan the Air Conditioning usage is maximum because of
an extended summer season of nearly 8 months a year. In Pakistan the Air conditions
are used by upper and middle class.
4.3.4-Preferences for Specific End Benefits:
PEL is providing 18000 BTU for 1.5 ton Air Conditioner in comparison with its
competitors who are mostly providing 16000 BTU for 1.5 ton.
In most parts of Sindh there is a major problem of rust and PEL is providing extra
copper coating on its outer units which prevent them from rusting.
4.4-Marketing Programs:
4.4.1-Advertising and promotional programs:
PEL is using two types of advertising programs i.e. Above the Line (ATL) and
Below the Line (BTL).
ATL includes:
 Print Media.
 News Papers.
 Media Vehicles.
 Electronics
BTL includes:
 Closed Circuit Television (CCTV).

 Radio.
 Magazines.
 Internet.
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 Point on Sales Material (POS) & Point of purchase (POP) - Buntings,

Wobblers etc.
On television PEL covered the Pakistan Vs India series and Pakistan Vs West
Indies during the matches PEL ads were running in almost every commercial brake
on Ten Sports, ARY digital and other channels. Now they are planning to cover
Pakistan Vs England series also and this is helping them in the promotion of their
products.
PEL spent Rs.45million in the advertisement of Refrigerator and Rs.20million in

advertisement of their split units.
4.4.2-Pricing Practices:
For PEL MAC – Series pricing practice is as follows:
Its PEL’s trading item so they are importing it from China in a complete packed form.
Its cost includes import duty, custom charges, carriage charges, warehouse charges
and dealer margins. The market selling price of PEL is
4.4.3-Relationships with Whole Sellers and Retailers:
They have a brand name which is worth for a lot of years; dealers wish to work with
such giants. Their market reputation is very good and people are very much satisfied
with the products. Company have strongest distribution network so the relationship
with dealers and all the Retailers and whole sellers are very good and cooperative.
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5-SWOT ANALYSIS
5.1-SWOT ANALYSIS OF PEL:
Strengths:
 Strong brand equity.

 Quality Product (ISO Certified).
 Large dealers’ network.
 Country wide availability.
Weaknesses:
 Lack of marketing orientation.

 Lack of executive sport for marketing department.
Opportunities:
 Range of products can be increased. Big area of home appliances like washing
machines, vacuum cleaners, toasters etc.
 Local assembling of the key products.
 Increase market share in growing market.
 Expansion of area because of brand equity.
Threats:
 Cheap Chinese brands.

 Dealers’ personal product.
 Bigger incentive by bigger players.
 Bigger advertising budgets of others.
 Easy entry and exit in the industry.
5.2-SWOT ANALYSIS OF PEL SPLIT UNITS:
Strengths:
 Brand equity.
 Quality product.
 Larger dealers’ network.
 Oldest group of companies at the back.
Weaknesses:
 Absent from the market in the past.
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 Weak customer pull.

 Unplanned availability.
Opportunities:
 Local assembling.
 Combination of push and pull strategy.
 Expansion in product range.
Threats:
 Cheap Chinese brands.

 Dealers’ personal product.
 Bigger incentive by bigger players.
 Bigger advertising budgets of others.
 Easy entry and exit in the industry.
5.3-SWOT ANALYSIS OF AIR CONDITIONERS INDUSTRY:
Strength, weaknesses, opportunities and threat analysis show the industry’s current
position and future prospects.
Strength
 Fully modernized industry.

 Having internationally compatible products.
 Capacity to manufacture and assemble 400,000 units annually.
 Potential to produce the complete range for central air conditioning system of
textile industry.
Weaknesses
 Under utilized capacity of manufacturing units.

 Shut down units into industry.
 High cost of production.
 Declining growth into the industry.
 Absence of Export in international market.
Opportunities
 Opportunity to penetrate into the Middle East and African markets.

 Can convert from window type air conditioner towards split units and centrally
air conditioning systems.
Threat
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 Imported air conditioner into local market (Cheap Chinese brands).

 Smuggled items in the market.
 New world trade order of open trade.
This analysis depicts that the industry has the potential to grow and can move towards
a booming industry. Ultimately it is beneficial for Pakistan’s economy.
6-PEST ANALYSIS
6.1-POLITICAL ENVIRONMENT:
 The political condition of Pakistan is highly uncertain and unstable but from
few years we have seen some consistency in Government policies which
encourage the foreign investors to invest in Pakistan.
 There is no check on importers by the Government. Any dealer can import

anything and can sell it with his own label on it. There is no quality check and
brand authenticity. An example is the FAST home appliances.
 There are very few incentives for the manufacturers in Pakistan by the
Government as compare to the up coming giants like China. The cost of
manufacturing is very high because of the electricity rates and other overheads
so most of the time the manufacturers prefer to outsource
 The said demand is met through imports from china, there is 15% subsidy
given to the exporters in china.
 For example, the government should reduce even abolish import duty on raw
materials. This would make Pakistan made HVACR (heating, ventilation, air
conditioning and refrigeration) products much more ‘purchasable’ than today.
 Demand of split air conditioner emerged mainly because almost all the
government departments were replacing window type air conditioner with split
units.
6.2-ECONOMIC ENVIRONMENT:
 There is a great boom in construction sector nowadays and more houses and
other buildings are being constructed then ever before so there is a great
demand for home appliances and above all are the split units.
 GDP is targeted to grow by 8% in 2005-06, powered by a strong growth in

manufacturing (10.2%) and continuing robust performance in services
(15%) and agriculture (5.0%-6%).
 At the back of stronger than expected performance of agriculture and

manufacturing the GDP growth is likely to exceed the target and may end
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up at around 8.4% - the highest growth in the last 15 years. Pakistan is

number 2 in the race of GDP growth after China.
 The overall fiscal deficit that averaged nearly 7% of the GDP in the 1990s has
decline to 3.2% in 2005-06.
 The per capita income of Pakistan has reached up to $763.
 The literacy rate of Pakistan is estimated at 54% of both sexes.
 Cost of production and imported raw material are very high.
 Growing interest of foreign investors in Pakistan as manifested by the visits of

over 200 foreign investors’ delegation in the last 2 years.
 According to the per capita income, Pakistan is included in the middle income
group and the high rates of electricity at commercial and residential areas are
point of huge concern for people. This is one big reason that people are
shifting at a great speed from window type air conditioners to split units. A
window type air conditioner (1.5 ton) consumes 11 Amperes/Approximately 3
units of electricity per hour and a split unit consumes 8.5
Amperes/Approximately 2 units of electricity per hour.
6.3-SOCIAL ENVIRONMENT:
 Nowadays people are becoming more and more price conscious. That is why
window type air conditioner is almost obsolete because of high cost of
electricity bills and splits are becoming popular because of low electricity
bills.
 Consumers also prefer split units because “they are considered energy
savers”. But the traders are fleecing consumers by selling to them low
capacity splits as high capacity units. There are many chances that you get a
0.75 ton split if you go to the market to buy a one ton unit without your
knowing it, so the consumers have to pay the same amount of power bill at the
end of the day and live with less cooling.”
 In countries like Pakistan the Air Conditioning usage is maximum because of

an extended summer season of nearly 8 months a year. In Pakistan the Air
conditions are used by upper and middle class.
 The companies are becoming socially responsible these days as they have
introduced Anti-bacterial and anti-dust filters.
 Our society has started considering split units as a status symbol and feels
disgraced if split units are not installed in every room of their houses .A
sizable number of people prefers to buy air-conditioners on cash basis, there
are many who want to procure A/Cs through banks and leasing companies on
consumer financing packages. Besides, many dealers have initiated their own
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schemes of selling air-conditioners and other domestic appliances on easy

installment basis.
 Several hundred workers employed by three window air-conditioner

manufacturers of the country may lose their jobs because of an increased
influx of the low-cost Chinese split units that have almost wiped out the
demand for the former.
6.4-TECHNOLOGICAL EVIRONMENT:
 With the introduction of split units, this new technology has made air
conditioning more affordable and easy to install & maintain.
 Efficiency of an air conditioner depends on the outer part. If the outer part is
bigger then the air conditioner will be more efficient in sense of cooling.
Window type air conditioners have smaller outer part as compare to the split
units; therefore they are less efficient as compare to the split units.
 Another reason for being less efficient is that window type air conditioners
have the cooling unit and heat discharging unit at the same place so sometimes
hot air tends to cause the cool air loose its potential to work properly. Split on
the other hand has two separate parts and the cooling unit is in no contact with
the heat discharging unit which tends to improve the efficiency of a split unit.
 Another technical aspect is that rotary compressors are used in split units
which are soundless and do not heats up in extreme temperatures as compare
to the window air conditioners.
 Because of being more efficient in cooling the compressor of split unit drips at
proper time and the set temperature is achieved at lesser time as compared to
window type air conditioner. This is one of the reasons that split unit consumes
approximately 2 units of electricity per hour and a window air conditioner
consumes approximately 3 units of electricity per hour.
 This is due to innovation in technology that now there is need to make a small
whole anywhere you want to install a split as compare to a window type air
conditioner which needs a big hole and a proper place to be installed.
 In international market, non-CFC (Chloro-floro Carbons) are shifting in air
conditioning industry and all large companies are trying to use non-CFC
gasses. CFC gases are harmful for the ozone air. From 2005; no CFC gases
item will be bought or sold into the international market, this is a deadline for
Pakistan and to remain into international market it’s necessary to adopt new
technology of non-CFC gases.
 Another point with respect to technology is that in window type air
conditioners uses more electricity at the time of being switched on as compare
to split units.
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 Split contains following latest technology as compare to the window type air
conditioners:
1. Hydrophilic Aluminum Fins.
2. 3-bend heat exchanger.
3. Scientific Louver Rotation (SLR).
4. Independent de-humidification function.
5. Anti-bacterial and anti-dust filters.
6. Low power consumption.
7. Low Voltage startup.
7-PORTER ANALYSIS
Threat of
Substitutes
Bargaining
Current Competitors Bargaining
power of
within the Industry power of Buyers
Supplier
Threat of
New Entrants
7.1-Bargaining power of Suppliers:
 Bargaining Power of supplier is low because of availability of no. of Chinese

brands in the market and the buyers can shift at any time from one brand to
another brand.
 Main suppliers of Raw Materials and sub-\components are Japan, U.S.A, Italy,
Korea, Singapore and Thailand.
 Main suppliers of whole Split unit are China, Japan and Korea.
 In near future the Chinese Government is expected to remove subsidies given
to their air conditioner industry, due to which prices may rise and only the
suppliers who would have achieved the economies of scale will remain and
ultimately result in increased bargaining power of suppliers.
 The bargaining power of suppliers may rise if Chinese producers adopt the
forward integration strategy by establishing their plants in Pakistan.
7.2-Bargaining power of Buyers:
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The bargaining power of buyers is high, because:
 They have many options available regarding the purchase of various brands.
 There is a variety of different split units available with different prices in the
market- people are becoming more and more price conscious with respect to
split units because they are aware of the fact that all splits are Chinese made
and almost of same quality.
 The buyers are very choosy among various brands because of;
1.Very low switching cost.
2.The air conditioners available at various prices; ranging from low price
A/Cs to high price A/Cs depending on the brand.
3.The facilities or value added features offered by the different sellers.

4.The user friendly interface.
5.The prestige a buyer feels regarding the purchase and use of a particular
brand.
7.3-Threat of Substitutes:
The major substitutes for the industry are:

 Room air coolers
 Fans
Room air coolers:
Room air coolers are further of two types:
Branded: Non-Branded:
1- National. 1- Hand assembled room air coolers.

2- Super Asia.
3- Atlas.
 Room air coolers are available at a very low price starting from Rs.2,000 and
goes up to Rs.5,000.
 The room air coolers are effective for a particular period of two moths
approximately but they increase the level of humidity a lot in the monsoon
season and this factor is the main reason for excessive usage of air
conditioners in that season.
 On the other hand some coolers have terrible noise and some sensitive people
do not prefer them.
 Room air coolers are very dangerous for electric appliances like P.C etc
because they raise the level of humidity which results in rusting the appliances
and reduce their life.
 Although they are cost effective but still they are not perfect replacement for
an air conditioner especially in this part of the world where the climate is
changing rapidly and the hot summer season is extending with ever passing
year.
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Fans:
 Ceiling fans
 Pedestal fans
 Bracket fans
Major Companies
 G.F.C Fans
 Younas Fans
 Royal Fans
 Parwaz Fans
 Pak Fan
 Climax Fans
Features
 Economical to use
 Remote control feature
 Affordable
 Warranted
Although the features are very attractive but still they are not the perfect substitute for
an air conditioner when the excessive heat season starts in Pakistan.
 From above analysis it is very clear that the air conditioner industry of
Pakistan is facing almost a negligible threat of substitute.
7.4-Threat of New Entrants:
 The element of the new entrants is either a threat or an opportunity for

industry. Opportunity in the sense that entrant can increase the market growth
of the industry and by promoting that industry may raise the level of
awareness of consumer and attract more and more customers. Threat is in a
sense when increase in number of competitors reduces the SOM of the
existing firms in the industry.
 In order to restrict new entrants from entering in the industry, Entry Barriers
are created and sometimes they emerge themselves.
Barriers to entry
 High cost of production is one of the main barrier of entering the air
conditioner industry
 The huge advertisement cost.
 The far away Break Even point as it will take time to set an image in the eyes
of consumers and sell them their product.
 Establishing dealership network.
- 19 -
 High costs of raw materials and other inputs (costly electricity and custom
duties on imports of the said units or raw material).
7.5-Current Competitors Jockeying within the Industry:
There is intense competition within the industry to capture the market in terms of
SOM. Major Key players in the industry and their SOM are given below:
1. Mitsubishi.… 34%
2. L.G. ……….. 20%
3. PEL…………13%
4. Waves……… 7%
5. Dawlance…...7%
The remaining 19% lies with other brands.
 Mitsubishi is Japanese made brand with the latest technology and L.G. is a
Korean brand with latest technology. The rest of the companies use Chinese
brand and technology.
 The companies like LG and Mitsubishi are classified as higher end products
and they are more costly.
 The companies like PEL, Dawlance and Waves are middle end brands.
These are low price products with low electricity consumption. They are for
price conscious people who belong to middle class of the society.
- 20 -
8-COMPETITORS ANALYSIS
The competitor analysis is of following key players in air conditioning industry.
8.1-L.G:
History:
LG Electronics, Inc. was established in 1958 as the pioneer in the Korean consumer
electronics market. The company is a global force in electronics, information and
communications products with 2004 annual sales of US $38 billion (consolidated).
With more than 66,000 employees working in 76 subsidiaries in 39 countries around
the world,
LG Electronics is comprised of four main business companies including Mobile
Communications, Digital Appliance, Digital Display, and Digital Media. L.G is
considered to be one of the biggest giants in the industry. They are offering a wide
range of products including Air Conditioner, Refrigerator, Microwave Oven, Washing
Machine, Vacuum Cleaner, Compressor for Air Conditioner, Compressor for
Refrigerator, television and many more.
Vision:
Global Top 3 By 2010

LG Electronics pursues its 21st century vision of becoming a true global digital leader
who can make its customers worldwide happy through its innovative digital products
and services.
LG Electronics sets its mid-term and long-term vision anew to rank among the top 3
electronics, information, and telecommunication firms in the world by 2010.
- 21 -
As such, we embrace the philosophy of "Great Company, Great People," whereby

only great people can create a great company, and pursue two growth strategies
involving "fast innovation" and "fast growth." Likewise, we seek to secure three core
capabilities: product leadership, market leadership, and people-centered leadership.
Growth Strategy:
Fast Growth
Fast growth is the result of strategies designed to expand the market size and earnings
quickly, in the process improving the growth rate in terms of monetary value rather
than quantity.
Fast Innovation
Fast innovation involves setting extremely high innovation goals and securing a
competitive edge, aiming for a target of 30% more than what our competitors can do.
Fast innovation also means 30% more sales and improvement in our market share,
new product development and unveiling these 30% faster, technology development
and establishment of corporate value three years ahead of competitors.
Core Capabilities:
Product Leadership
Refers to the ability to develop creative, premium products through specialized new
technologies.
Market Leadership
Refers to the ability to achieve the "LG brand is No. 1" goal backed by its formidable
market presence worldwide.
People Leadership
Refers to talented people who perform excellently by internalizing and practicing
innovations.
Corporate Culture:
Though a company implements perfect management strategies and boasts of
outstanding and talented people, it should have an appropriate corporate culture to
unleash the power of these capabilities.
No Excuses : We foster a corporate culture whereby we suggest an alternative before

saying "no" and aggressively work towards fulfilling our goal.
'We' not ‘I’: We pursue a corporate culture whereby we embrace a strong teamwork.
Fun Workplace: We create a workplace where individuals' creativity and freedom are
respected and working is made fun.
- 22 -
8.2-Dawlance:
 Dawlance is the Leader in household appliances in Pakistan. It’s the largest

company engaged in appliances business. It is rated no.1 in refrigerators and
has the market share of 40%.
 Dawlance has 23 service centers in Pakistan. Sales network has reached 850
dealers nationwide.
The Vision:
"We are committed. Above everything else, Dawlance places its top priority on the
satisfaction of human beings the satisfaction of its customers, partners and employees.
All our policies and approach towards work revolve around our corporate belief."
Corporate Belief:
 Individual must be respected.

 The customer must be given the best possible products and services.
 Excellence and superior performance must be pursued.
Corporate Responsibilities:
 Advancing the standard of living in Pakistan by manufacturing reliable and

affordable electrical products.
 Implementation of first class production engineering.
 Development of our employee not only for the firm's benefit but to contribute
to each employee personal growth.
 Major contributor in restoring Pakistani status and prestige.
 To reinforce value like harmony, solidarity, discipline and dedication.
- 23 -
Business:
Manufacturing and marketing of domestic appliances
Market Position:
 Leader in household appliances in Pakistan

 Largest company engaged in appliances business
Customers:
Up to Middle Upper Class of Pakistan
History:
 Established 1980
 Refrigerator Production 1981
 Deep Freezer Production 1988
 Deep Freezer Manufacturing Unit 1992
 Launched RAC and No-Frost Ref. 1992
 Launched WM and MWO 1995
 Production of No-Frost Refrigerator 1996
 Production of Aero-Design Series 1996
 Production of Up-Right Freezer 1997
 ISO 9001 Certification 1999
 Production of Washing Machine 2000
 ISO 14000 Certification 2001
 USL Shops 2001
 Electric city # 1 2001
 Signature series USL Shops 2002
- 24 -
8.3-Waves (Cool Industries Pvt. Limited):
History:
Cool Industries (Pvt.) Ltd. established in 1973, is a leading manufacturer of Home

Appliances, including Deep Freezers, Refrigerators, Air conditioners, Vacuum
cleaners, Food processors, Washing machines and other wide range of appliances
waiting to launch in a market very soon.
Position in Market:
Our brand name Waves is undisputed leader in the market, both in residential and
commercial sector in Pakistan. Waves is also exporting its products to Middle East
and Central Asian States including Afghanistan.
Our company is known for its commitment to the latest technological advancements
in design & manufacture. Owing to the engineering experience and skills available,
the identification and adaptation of new techniques, materials and know-how, our
production processes and products requires a minimal lead-time. This flexibility in our
production has given us distinguished edge over our competitors in the market. We
have brought into the market a 100% indigenously designed and manufactured split
air conditioning system with different innovations and choices, which has attracted a
large customer base.
- 25 -
The company is fully committed to protecting the environment and has been awarded
a substantial grant by the World Bank to phase out ODS (Ozone Depleting
Substances) its production processes. This is an ongoing activity and is being given all
the importance it deserves for a timely and successful competition.
Waves have introduced complete new range of Digital micro wave ovens equipped
with CRS technology, Fashion Color electric Iron, easy & quick toaster, fine & fast
blender, twin Tub turbo contract Jet washing machine with Dryer. Its specific design
and jet flow system provides extra ordinary cleanliness by using minimum quantity of
washing powder.
Waves split AC:
Are energy savers and provide strong cooling because of its T4 compressor. Waves
have announced ‘One year free Replacement Warranty of complete unit with in one
year’ for its split AC. It is undoubtedly height of confidence and such an offer is for
the first time for any of the air conditioning company in Pakistan.
Another sizzling entry is the latest technology curved sliding Glass Door Freezers
whose tapered shape provides extra visibility to the products.
Though WTO regime is in the offing and national companies all over the world are
feeling threat from multinationals. Waves Home Appliances claim affinity with the
Homeland more than any of foreign company as it provides easy and efficient after
sale services and parts availability throughout Pakistan.
Waves Split Type Air Conditioners are perfect for those that do not have central air
conditioning, and do not want to settle for the noise and inefficiency of window units.
Waves Split systems offer higher efficiency and reduced noise without a large hole in
the wall or an open window. By separating the compressor and condenser coil from
the fan and evaporator coil, the noisiest component is away from the room. The indoor
unit will usually have remote control capabilities and a timer to cycle the system only
when needed.
WAVES Air Conditioners are built to the highest international standards, ensuring
maximum efficiency, performance and reliability.
After sale services:
Who We Are?
 To provide customer a prompt, quality and reliable services at their doorstep

Waves has a largest after sales service network through out the country. By
having seventeen (17) own service centers in all major cities and one hundred
and fifty-seven franchised workshops.
 To take care of customer appliances all service centers have latest tools,
equipments and machineries.
- 26 -
 After sales service team consist of Engineers and highly qualified staff with
great professional approach due to this reason customer feels confident, once
their appliance are being maintained.
 Waves after sales service is the only service who provide the facility to
customers by meeting complaints same day on just one phone call.
 Waves after sale service also provide the facility to customer of lifting their
units from residence to service center and delivering within 48 hours.
 Waves after sales service give services warranty with replacement of one year
of Indoor and Outdoor of Split Air-conditioner.
 We take care of our customers by remaining in contact with them so that they
should not face any type of problem.
What We Do?
 We care our customer.

 We do repair all kind of Refrigerator (Direct cool, No frost etc.).
 We do repair all kind of freezers (Deep Freezer, Vertical freezers, Triplets etc.).
 We do repair all kind of Air-conditioner (Wall mounted Split AC, Window AC,
 Floor standing, Ceiling hanging, Gas fired chillers etc.).
 We do repair all home appliances and kitchen appliances.
How We Do?
 We have the best team of Air-conditioning repairing of Pakistan.

 We have the best team of Air-conditioning repairing of Pakistan.
 We give the prompt response to our customer and met the complaints on same
day exclusively.
 We have the mobile service centers in all big cities.
 We have the best and biggest network of services in country with having
seventeen own service centers and 154 contract workshops in each town.
Customer Care
We go after our every customer within the warranty period and after the warranty
period, we get the feedback from our end users by call them, by visiting them, by off
season free checkup scheme. We take the feedback of customer very seriously.
Capabilities
 Repairing of Refrigerator, DF & A/C. Repairing of Washing Machine,

Microwave oven.
 Repairing of Internal leak units all kinds.
 Sturdily analyzing the manufacturing faults. Compressor replacement, gas
charging, repairing of PCB kits.
 Unit cleaning.
- 27 -
Our Team
We have highly qualified Engineers and technical staff always ready to give you
prompt services through all over the country with Proudly having Pakistan largest
Service network. Seventeen service centers in all major cities and 154 franchise
Workshops.
We have also having the biggest network of Split Air-conditioner installation and after
sales, and a very well qualified staff at our factory for Designing and improvements.
Cool Advertising:
Cool Industries (Pvt.) Ltd. has its own dedicated marketing and professional teams
capable of analyzing the market trends, envisioning the opportunities, meeting the
assigned challenges, develop efficient policies and strategies as well as effective
promotional plans. Owing to the training provided, the marketing professionals are
fully competent to meet targets and capture new markets by adopting ongoing market
evaluation techniques.
Advertising & publicity:
Media always plays a master role in the promotion of products, keeping this in mind,
Cool Industries (Pvt.) Ltd. has its own Advertisement and Publicity department, where
all the advertisements are designed and developed by highly professional and creative
minds. Every advertisement is designed and released after the careful analysis of the
targeted market and audience. These Advertisements and Publicities are then
monitored and analyzed by the team of senior members to fill any gray areas and to
bring further betterment if any.
After sales service:
Products of Waves are fully supported by the strong network of After Sales services.
With branches all over Pakistan, highly qualified engineers and technicians, with all
the equipment ensure that our after sales support is second to none.
Quality:
Cool Industries is heading towards quality documentation and other groundwork is

being done to achieve this milestone.
Quality systems department:
The Company achieved ISO 9001: Certificate by June 2000.
After sales department:
Resolves 100% customer complaints within 48 hours.
Sales department:
- 28 -
 Maintains 75% ~ 80% share of Deep Freezer sold in the market.

 Increased the sale of refrigerators by 40% ~ 45%.
 Launch our new products split Air Conditioners, Washing Machines,
 Microwave Ovens and other domestic appliances with aggressive advertising
support.
Production department:
It aims to Reduce Wastage by 2% in Production Sections.
Company quality policy:
We believe in timely provision of cost effective & quality products to achieve

complete satisfaction of our valued customers while maintaining our efforts for
constant improvement of our quality and services through research and development
as per customer need.
We are committed to improve our skills in all areas to achieve excel by providing the
best working environment and training for the development of our Human Resources.
Quality in product:
Product quality and reliability are the hallmark of all WAVES products manufactured
and marketed by Cool Industries (Pvt.) Limited. The company has earned the
reputation of a professional enterprise engaged in the manufacture of quality products
by understanding specific customer needs and obtaining their satisfaction.
Quality in people:
The whole management, staff and workers are fully committed to achieve the best
quality, both in appliances and After Sale services under the guidance of CE, Mr.
Javed Butt. Our engineering and supervision staff includes highly qualified engineers
and polytechnic operators ensuring quality in the manufacturing of the appliances at
all levels and all the sales staff is vastly qualified and trained to perform special tasks.
Quality in service and commitment to our customers:
Keeping in mind our over-riding commitment to our valued customers, we pay special
attention to the quality of after sales support to dealers, and service to the valued
customers. A comprehensive network of over 500 authorized WAVES dealers and
service centers are fully geared up to meet all customers’ needs.
Cool Customers:
While a vast network of authorized dealers is spread all over Pakistan. Our major
institutional customers are:
 Pepsi Cola International (Pvt.) Ltd.

 Canteen Stores Department, (CSD) Pakistan Army, Rawalpindi.
 Coca-Cola (Export) Pakistan.
- 29 -
 Be Be Jan Protein Farms Ltd.

 Pakistan Fruit Juice Co. (Pvt.) Ltd.
 Hico Ice Cream.
 Departmental Stores.
8.4-Mitsubishi Electric:
History:
Mitsubishi Electric entered the air conditioning and refrigeration business in 1932,
more than 65 years ago. Their very first product met the need for an efficient and hi-fi
device to create a comfortable and cool home environment. With this end in view,
they developed the new Mr. Slim Series of air-conditioners.
What we offer?
Advanced technology and the latest in convenience features allow you to maintain air
quality and temperature at optimum levels. Best of all, the compact and lightweight
design of their units not only helps to make installation easier but also lets them blend
in beautifully to any interior. It's the world's most widely used air-conditioner. Annual
sales of Mitsubishi room air conditioners are estimated to be approximately 25 million
units. The world benefits from their lasting commitment to innovation, quality
manufacturing and customer service.
Balanced Corporate Management:
The Mitsubishi Electric Group promotes a philosophy of maintaining a "balanced

corporate management" structure, comprising three particular areas of focus: growth
potential, profitability and efficiency, and soundness. This has lead to the
- 30 -
establishment of a robust managerial basis for ensuring sustainable growth, allowing

the further improvement of corporate value.
We are advancing restructuring, which includes business reinforcement and

streamlining, focusing on the concentration of operations, reinforcement of production
systems in Japan and overseas, as well as partnerships with other companies. In
addition, to strengthen the management structure, we are promoting continuous efforts
to strengthen marketing capabilities, improve productivity and quality, bolster
development capabilities, invigorate intellectual property activities, improve material
procurement, reinforce the financial structure, and apply growth strategies, presented
as follows.
Management Policy:
Fundamental CSR Policy:
Looking to contribute to society as a whole since its founding, the Mitsubishi Electric
Group’s approach to Corporate Social Responsibility (CSR) is based on its Corporate
Philosophy and the Seven Guiding Principles of the Group. The Essence of
Management, a doctrine created when Mitsubishi Electric was established in 1921,
stated the corporate objectives of contributing to the prosperity of society, improving
quality, and pursuing customer satisfaction. Carrying on this founding spirit, our
current philosophy and policies, followed by every one of our employees, is embodied
- 31 -
in the Corporate Philosophy, in which we aim to contribute to a vibrant and abundant

society through the continuous improvement of our technologies, services, and ability
to innovate. They are also found in the Seven Guiding Principles of trust, quality,
technology, citizenship, compliance, environment, and growth, to fulfill our
responsibilities as a member of society.
Growth Strategies
The Mitsubishi Electric Group is advancing the VI Strategy and the AD Strategy as
concrete measures to realize sustainable growth. The VI Strategy is a means to ensure
growth potential by making strong businesses stronger. The Mitsubishi Electric Group
aims to use its strengths in elevators and escalators, industrial automation equipment,
automotive products, satellites, air conditioners, and other fields to further strengthen
the strategies of all its individual businesses. While reinforcing cross-sectional
corporate support for development, manufacturing technologies, and materials
procurement, we intend to efficiently apply our key technologies and expertise as we
increase synergistic effects to further strengthen our operations.
The AD Strategy aims to bolster the solutions business by centering on strong

businesses. We are making every effort to provide one-stop solutions that fulfill
customer needs in environmental/energy-saving solutions, total security solutions, and
v sual information solutions by combining all of our technologies, experience, and
knowledge gained through developing, manufacturing, and selling competitive
products and services.
The Mitsubishi Electric Group is concentrating its efforts on business expansion from
a global perspective in an aim to foster and strengthen operations that will prosper on
the world stage. We aim to further bolster our business structure through greater
global integration and by tying together our worldwide management infrastructure.
Specifically, we will foster manufacturing collaboration between mother factories and
local plants, as well as implement ideas coming from a variety of perspectives,
including those from marketing, research and development, and financial support.
In this way, the Mitsubishi Electric Group is combining its technologies and expertise
to cooperatively promote its growth strategies and attain greater performance in the
future.
- 32 -
Challenges Related to Climate Change:
The Mitsubishi Electric Group is advancing specific action plans, such as the
installation of ultra energy-efficient equipment and cogeneration systems, to meet its
goal for a 25% reduction, from fiscal 1991 levels, in carbon equivalent energy
consumption per net sales (i.e., a fundamental sales unit) by fiscal 2011. Among these
initiatives, our unique Energy Loss Minimum (EM) activities use the Eco-Monitor
and other equipment that support energy savings to find and eliminate energy loss by
closely measuring the energy consumption of facilities and production lines in units
down to the second to evaluate electricity usage in manufacturing processes at plants
and in buildings. In addition, to reduce the environmental impact of logistics systems,
we are promoting ecological logistics activities through the construction of a
transportation system that uses the 12-foot dimensions of international containers with
flat racks between China and Japan. Mitsubishi Electric Group’s Carbon Dioxide
Reduction Plan
- 33 -
9-KEY PRODUCTS OF PEL IN THE MARKET
9.1-Refrigerator:
The key product of PEL in the market is ‘Refrigerator’. PEL is assembling

refrigerators locally and it is rated as a very high quality product. They have 38%
share of the whole market of refrigerators which is 2nd highest. They are producing
nearly 1200 units of refrigerators per day.
PEL has launched its Crystal Classic Series - a new range of Refrigerators with great
storage capacity and impressive outlook. PEL as always has introduced more efficient
and technologically advanced product that promises to take care of your refrigeration
needs and guarantees freshness of food when you rely on us.
PEL Crystal Classic is a step ahead towards the achievement of our goal of satisfying
customers today and in time to come
- 34 -
Other products include:
9.2-Deep Freezers:
Single Door Deep Freezers are available in three sizes with capacities from 175
liters to 370 liters.
Twin Freezer is a unique product, with one compartment working as a refrigerator and
the other as a freezer.
The product is available in two sizes i.e. 370 & 410 liters. The high quality of PEL
Deep Freezers was recognized equally well by the customers and multinational
companies. Lever Brothers Pakistan Limited asked PEL to manufacture a special
freezer for them when they launched their world famous "Walls" ice cream in
Pakistan. Today PEL is the preferred source of freezers for the major multinational ice
cream companies in Pakistan.
9.3-Window Type Air Conditioners:
- 35 -
PEL is considered to be the pioneers in Window Type Air Conditioners. They are
energy efficient and good quality product. They are available with 5 years
compressor warranty.
9.4-Microwave Oven:
PEL the trustful company name in home appliances all over the country, now
introduced all new models of "PEL Power Wave" Microwave Ovens. Now PEL
customers can have four models of PEL Power Wave in which they can enjoy the
grilling feature as well. PEL Microwave Ovens are available in different sizes, inner
cavities (steel & painted) and features.
9.5-PEL Television (Newly Launched):
PEL introduced Color Television under the brand name of "PEL DIGITAL LIFE".
PEL has introduced four models (flat & semi flat).
Now PEL customers can enjoy a Multi System, Multi Sound, DVD Input, AV In/Out,
Clock, Timer and Auto Degauss Technology all in PEL Digital Life Color Television.
PEL provides strong back up of customer services all over Pakistan with 5 years
picture tube and 1 year parts warranty.
- 36 -
9.6-PEL Cool Life Split Air Conditioners:
PEL recently launched its Cool life Split Air Conditioner which is a technologically
advanced model specially designed for Pakistan market. This masterpiece from PEL
provides maximum cooling even at very high temperatures while minimizing your
electricity consumption. Its salient features include:
• Low power consumption.

• Low Voltage startup.
• Hydrophilic Aluminum Fins.
• 3-bend heat exchanger.
• Scientific Louver Rotation (SLR).
• Independent de-humidification function.
• Anti-bacterial and anti-dust filters.
PEL Air Conditioners have been specially designed for countries, having climatic
conditions similar to Pakistan. The Air Conditioners have excellent cooling
capabilities at extreme temperatures at varying levels of humidity; high air dust and
uneven local power supply conditions.
- 37 -
10-STRENGTHS AND WEAKNESSES OF THE COMPANY

(REGARDING SPLIT UNITS) WITH RESPECT TO 5 P’S
10.1-Product:
Strengths:
 PEL is an ISO certified company therefore their products are quality products.
 Brand equity.
 Oldest group of companies at the back.
 Low electricity consumption.
 Latest design.
 Rust proof external unit.
Weaknesses:
 Newly launched product.

 Weak customer pull.
10.2-Placement:
Strengths:
 Large dealer network.

 Sales offices all over Pakistan.
PEL Head Office
- 38 -
Mr. Yousaf H. Ishaque : 14-Km, Ferozepur Road, Lahore

General Manager Marketing Mobile: 0300-4004382
(Appliances Division) Tel: 5812015 Fax: 5810156
Mr. Tariq Irani : 14-Km, Ferozepur Road, Lahore

Sr. Manager Distribution & Credit Mobile: 0300-4004383
Control Tel: 5822849
(Appliances Division)
Other Regions
NWFP:
 Peshawar
PUNJAB:
 Lahore
 Rawalpindi
 Gujranwala
 Sargodha
 Faisalabad
 Sahiwal
 Multan
 Bahawalpur
SIND:
 Sukkur
 Hyderabad
 Karachi
- 39 -
Weaknesses:
 PEL is not an international brand.
10.3-Promotion:
Strengths:
ATL:
 Print Media.
 News Papers.
 Media Vehicles.
 Electronics
BTL:
 Closed Circuit Television (CCTV).

 Radio.
 Magazines.
 Internet.
 Point on Sales Material (POS) & Point of purchase (POP) - Buntings,

Wobblers etc.
Weaknesses:
 Low marketing budget as compare to other competitors like L.G.

 Lack of executive support for marketing department.
10.4-Price:
Strengths:
 Available on installment through Soneri Bank.
Weaknesses:
 Comparatively high price.
10.5-Positioning:
Strengths:
 Brand equity.
 Middle class is the target market. (Most of the population comprises of middle
class).
 Positioned as reliable and durable. (AAJ BHI KAL BHI).
- 40 -
Weaknesses:
 Not positioned for high class.
11-PERCEPTUAL MAP OF KEY PLAYERS WITH RESPECT TO

SPLIT UNITS
Following is the perceptual map of the key players of the air conditioning industry
with respect to split units. Variable taken are Reliability and Price.
High Reliability
Mitsubishi
L.G.
PEL
Dawlance
Waves
Low Price High Price
Low Reliability
- 41 -
12-TREDS OF THE INDUSTRY
 Consumers prefer split units as compare to window type air conditioner;

therefore industry is changing its technology at a very quick pace.
 The advancement of technology is making splits more value added.
 Major share of market lies with the imported brands like Mitsubishi and L.G.
 The growth rate of demand of split units is increasing with every passing year
because in countries like Pakistan the Air Conditioning usage is maximum due
to an extended summer season of nearly 8 months a year. In Pakistan the Air
conditions are used by upper and middle class.
 Companies who are using Chinese brands, which are very much alike in
technology and other aspects, tend to compete on low price strategy.
 The companies are becoming socially responsible these days as they have
introduced Anti-bacterial and anti-dust filters.
 Companies are giving more incentives to the consumers to make their brands
more and more popular.
- 42 -
13-FUTURE OUTLOOK OF THE COMPANY
 The company wants to be No.1 in the coming five years.

 Moreover it was a sales oriented company previously and now it is going
towards the Marketing concept.
 In addition to that, company wants to set plants for local assembling of the key
products, which are becoming popular day by day in the market, such as Split
Unit.
 The company may target another segment of lower income by producing
cheaper split units. Their current target market is upper class and middle class.
 Because of WTO this world will become a global market and only those firms
will survive who will offer compatible price with good quality standard
products. China also has signed WTO. There is need to set our industries on
reasonable prices which is not possible without mutual consent of all
companies.
 In future Chinese government has a plan to remove 15% subsidies from their
air conditioner industry so local producers of our country can take advantage
of that because naturally prices of Chinese splits will rise a little bit.
 Because of WTO Pakistan can export their local brands to fulfill the increasing
demand of air conditioners in the globe especially Middle East.
 The companies who lack innovations in split units like Dawlance and waves
(only 7 % SOM of each company) will automatically be left out far behind and
will be forced to close their Split Business unit.
- 43 -
14-CONSUMER RESEARCH
PEL continuously conduct direct research programs to see the consumer behavior
towards the products that they are offering. They have recently conducted two Focus
groups. They used projective techniques to question the participants of the focus
group. Some of the questions they asked and their answer are given as follows:
 To see where their Split AC stands they asked the participants to recall the
names of three companies with respect to split AC’s and the result was:
1. Waves.
2. Dawlance.
3. Haier.
 They asked the participants to associate the name of the company with the
product and the result was:
1. PEL ………… AC.

2. Waves …….... Deep Freezers.
3. Dawlance….... Refrigerator.
They are also planning to conduct a research on PRE and POST campaign
analysis.
Findings from the focus group held by gathering 8 people from different fields of
community:
1. Most of the participants believe that AC is a basic need in summer, especially
for the hostel students.
- 44 -
2. The window AC consumes more electricity than the split.

3. The demand of split is rising in spite of the fact that it is expensive.
4. The people want AC at low price.
5. People think that most of the AC’s are Chinese assembled, so mostly they are
similar.
6. Air conditioners are very necessary for the patients and small children.
7. AC is a very necessary thing but the problem is nobody can afford AC in every
single room of his house or office, because of the following reasons:
 Expensive.
 Cannot get/ receive enough electricity to run all AC’s simultaneously.
 Not all the places have sufficient facilities to install an air conditioner.
In order to cater the requirements and needs of the people we have following
suggestions to improve an AC or if we have to launch a new AC it should have
following features.
Ac should be at an affordable price.

Ac should consume less electricity.
It should be easy to move from one place to another i.e. mobile AC easy to install.
15-MARKET-PRODUCT FOCUS
This section describes the three year marketing and product objectives for PEL and
the target markets, points of difference & positioning of the new product.
15.1-Marketing and Product Objectives:
Mobile Air Conditioner’s marketing intent is to take full advantage of its family brand
potential while building a base from which other revenue sources can be mined.
Current Markets:
Current markets will be grown by the introduction of a new brand under the label of
family brand. In addition to the retail outlet sales will be increased by the addition of
the new product.
New Markets:
By the end of the year three PEL’s new product will be distributed in all the major
cities of Pakistan to grab a big chunk of share in the unique new market.
New Products:
The new Mobile Air Conditioner’s presence will lead to further innovations in the
product line which will be accomplished through the potential of the new technology.
Air Conditioners Industry:

The introduction of a totally new idea will increase the size of pie of profit in the Air
Conditioners Industry and will open the gate way to enter the new era of latest
technology which will be of great help to compete with the international market.
- 45 -
15.2-Target Markets:
The target markets of Mobile Air Conditioner will include the middle class, upper
middle class and the elite class. If you want to further classify these target groups then
families, business community and hostilities will be the primary users.
15.3-Points of Difference:
The “points of difference” – characteristics that makes the Mobile Air Conditioners
unique relative to competitors ordinary split units – fall into following important
areas:
Capacity:
Mobile Air Conditioners will be having standard BTU’s in launched capacities. For
e.g. 18,000 BTU for a 1.5 ton split and not like competitors who are providing 16,000
BTU for a 1.5 ton split.
Unique Model:
It will be a unique model of split as Mobile Air Conditioners are not yet launched in
the Pakistani market.
Changeable Bodies with Cartoon Characters Available:

No other split had yet offered changeable bodies with cartoon characters to attract
kids.
15.4-Positioning:
In the past split air conditioners, in reality, had either been durable or economical and
not both but this unique split will be positioned as a high quality and economical
product.
- 46 -
16-MARKETING PROGRAM
16.1-Target Market:
The target markets of Mobile Air Conditioner will include the middle class, upper
middle class and the elite class. If you want to further classify these target groups then
families, business community and hostilities will be the primary users.
16.2-Marketing Mix:
16.2.1-Product:
The name of the new Split Series will
be “MAC Series”. There shall be two
models initially:
1. MAC-1
2. MAC-1.5
MAC-1:
It will be of 1 ton exactly, i.e. 12,000
BTU.
MAC-1.5:
It will be of 1.5 ton exactly, i.e. 18,000
BTU.
Product should be available in different

colors. Casing of the main unit should
- 47 -
be changeable and should be available in the market. Product pack should include
stylish remote control, user manual and a good quality assembling kit with a small
stuff toy in the introduction period of three months to attract children. Special casings
should be there for children room having some cartoon characters on it like bugs
bunny. Transparent bodies with a very dim light should be available. Automatic
excretion of air freshener will also be a unique feature. Alarming signal should be
there when the filter needs to cleaned. Clock alarm and timer will be some of the other
features. Product should be smarter, slimmer and stylish in look. Product should be
available in different capacities.
Mobile Air Conditioners

These are the easiest route to true air conditioning in the office or home. They can be
installed easily, connecting into a 13amp socket and are ready to use immediately.
Mobile air conditioning units work by taking heat from a room and expelling it to the
outside. Air inside the room is chilled and re-circulated. For larger rooms or rooms
that have bigger heat loads, split systems are normally required. They are easily
recognized by the separate (condenser) box that needs to be placed outside the room.
16.2.2-Price:
Prices would be as follows:

MAC-1: Rs.17,000
MAC-1.5: Rs.23,000
The main focus should be on quality. The quality and unique features will
automatically justify the price.
16.2.3-Placement (Distribution):
Company is doing well with the placement and no improvement is required in this
regard. But the product will be pilot tested in one city in the introductory first year.
The city selected for the first year is Lahore. In the second year MAC will be
launched in three other major cities i.e. Karachi, Islamabad/Rawalpindi and
Multan. In the third year MAC will be launched nationwide.
16.2.4-Promotion:
The product, in the introductory stage requires high budget allocation for promotion.
The budget for MAC promotion should be 15 million. (PEL spend 50 million on
promotion in one year out of which 30.04 million is for Air Conditioners, PEL should
convert half of the amount i.e. 15.02 million on the advertisement of MAC series).
 Advertising:
80% of total promotion budget (Rs.12,016,000) should be allocated to
advertisement.
Electronic Media:
- 48 -
50% of advertisement budget (Rs.6,008,000) should be allocated to

electronic media should. Cricket series and other important programs of
different channels should be covered.
Rs.
Geo T.V 1,479,000 (17 days package)
PTV 1,280,000 (10 days packages)
Sun Multimedia cable network 1,080,000 (6 months package)
NBC cable network 1,080,000 (6 months package)
World Call cable network 1,080,000 (6 months package)
Total 5,999,000
NOTE:
Advertisement expenses of Lahore city are attached ahead.
Outdoor Media:
13.5% of the total advertisement budget (Rs.1,622,160) should be
allocated to the outdoor.
Rs.
Liberty Round About 600,000
Kalma Chowk 225,000
Season Chowk 225,000
Scheme More 185,000
Lower Mall (G.C college) 180,000
Minar-e-Pakistan (Yadgar) 165,000
Total 1,580,000
NOTE:
Print Media:
36.5% of the total advertisement budget (Rs.4,385,840 should be allocated
to the print media.
Rs.
Daily Jung - Half Page (Front):
2992000
748,000 * 4
Daily Din – (20 *3 – front page):
351,000
117,000 * 3
Daily News - (20 * 3 – front page):
128,700 * 4 514,800
Daily Dawn – (18 * 6 – front page):

518,400
129,600 * 4
Total 4,376,200
- 49 -
NOTE:
 Direct Marketing:
Stalls in different exhibitions etc, 20% of total budget (Rs.3,004,000)
should be allocated to direct marketing. Dealers should be given special incentives
and margin for dealer should be an impressive one because dealer can
make the customer’s mind to buy any Split Air Conditioner.
16.2.5-Positioning:
Positioning of the product is low electricity consumption, high cooling and unique
movable split air conditioner. High cooling aspect and portability will be more
prominent. One of the reasons behind it is during our research work we went to
different shop keepers and ask them which Split Air Conditioner has the lowest
electricity consumption and every body said they all are same in electricity
consumption.
 Positioning Sentences:
Simply the coolest one.
- 50 -
17-FINANCIAL DATA AND PROJECTIONS
17.1-RAW MATERIAL AND PARTS
Main raw materials for air conditioner are:
 Compressor
 Capacitor
 Over loaded relays
 Thermostats
 Copper tubing
 Magnetic gas kits
 Aluminum sheets
 Electrical controls and switches
17.2-COST OF PRODUCTION
Cost of production varies from unit to unit. Average figures provided by the industry
for split units are:
Rs. Rs. Rs.

Selling Price 20,000
Direct Cost
Materials 14,000
Labor & Factory Overhead 1,975 15,975 (15,975)
Gross Profit 4,025

Indirect Cost
Admin & Selling Cost
- 51 -
Admin expenses 375

Selling Cost Fixed 1,200
Selling Cost Variable 450 2,025 (2,025)
Operating Profit 2,000

Financial Charges Varies from
unit to unit
17.3-AVERAGE COST DIFFERENCE OF ORDINARY SPLIT AND MOBILE

SPLIT FOR THE CONSUMER
17.3.1-For Households:
Rs. Rs.
Average Selling Average Selling
Price of Ordinary 18,174 Price of Mobile 20,000
Split Unit Split Unit
Average Fixation Average Fixation
Charges plus iron Charges plus iron
2,200 0
stand for external stand for external
unit and pipe unit and pipe
Total 20,374 20,000
So the benefit for the end user will be of Rs.374
17.3.2-For Business Sector:
Rs. Rs.
Average Selling Average Selling
Price of Ordinary 18,174 Price of Mobile 20,000
Split Unit Split Unit
Average Fixation Average Fixation
Charges plus iron Charges plus iron
3,500 0
stand for external stand for external
unit and pipe unit and pipe
Total 21,674 20,000
So the benefit for the end user will be of Rs.1,674
- 52 -
17.4-MAJOR SUPPLIERS
Major suppliers of raw material and sub-components/components are Japan, U.S.A,

Italy, South Korea, Singapore and Thailand.
17.5-EXPORT POTENTIAL OF SPLIT TYPE AIR-CONDITIONERS
The air conditioning world market is expanding rapidly and the existing demand is
estimated at around U.S $ 60B, ranging from split units to packaged units and central
air-conditioning systems. The market size of split in the world is given in the table:
Region Million Units

U.S.A 10.6
China 9.5
Japan 6.1
Europe 3.5
Middle East 3.0
Africa 1.0
Central Asia 0.5
Other Asian 4.5
Australia 1.5
South America 1.5
Total 41.7
17.6-RETAIL PRICES OF DIFFERENT SPLIT UNITS AVAILABLE IN

MARKET
Brand Name Prices of 1 Ton Prices of 1.5 Ton

(Rs.) (Rs.)
Sabro 15,000 19,000
Haier 15,500 22,500
Daiken 17,500 23,000
Orient 14,500 23,500
Mitsubishi 25,900 36,900
- 53 -
Dawlance 15,900 21,500

L.G. 20,100 30,000
Super Asia 15,000 22,000
Fast 16,500 24,000
Kenwood 16,500 25,900
PEL 15,900 22,000
Waves 16,000 23,000
Samsung 25,000 33,400
Thompson 14,500 22,500
Gree 16,000 22,500
17.7-PROJECTED INCOME STATEMENT FOR THE YEAR ONE
It is assumed that 150 units, out of 160 units imported, of both capacities will be sold
in the first year.
Pak Elektron Limited (PEL) – For MAC Series Only

Income Statement
For the Year Ending December 31, 2006
Rs. Rs.
Sales (W-1) 3,000,000
Cost of Goods Sold (W-2) (2,196,250)
Gross Profit 803,750
Operating Expenses
Selling and Admin (W-3) 324,000
General Expenses (W-4) 40,000 (364,000)
Financial Charges (0)
Profit Before Taxation 439,750
Provision for Taxation (75,000)
Profit After Taxation 364,750
- 54 -
17.8-WORKING FOR YEAR ONE
W-1:
Rs.20,000 * 150 units = Rs.3,000,000 (Refer 17.2 Heading)
W-2:
Cost of Goods Sold:
Rs. Rs.
Raw Material: Rs.14,000 *
160 units (Refer 17.2 2,240,000
Heading)
Direct Labor & FOH:
Rs.1,975 * 160 units 316,000
(Refer 17.2 Heading)
Manufacturing Cost 2,556,000
Add: Opening work in
0
process
Cost of Goods to be
2,556,000
Manufactured
Less: Closing work in
(200,000)
process
Cost of Goods
2,356,000
Manufactured
Add: Opening inventory 0
Cost of Goods to be Sold 2,356,000
Less: Closing inventory (1,4000 + 1,975) * 10 (159,750)
Cost of Goods Sold 2,196,250
W-3:
Rs.2,025 * 160 = Rs.324,000 (Refer 17.2 Heading)
- 55 -
W-4:
General Expenses:
Rs. Rs.
Fax 2,000
Telephone 5,000
Electricity 6,000
Stationary 1,000
Printing 2,000
Legal Charges 20,000
Postage 2,000
Entertainment 2,000 40,000
17.9-PROJECTED INCOME STATEMENT FOR THE YEAR TWO
It is assumed that 250 units, out of 260 units held, of both capacities will be sold in the
second year.

Income Statement
Rs. Rs.
Sales (W-1) 5,000,000
Gross Profit 1,106,250
Operating Expenses
- 56 -
17.10-WORKING FOR YEAR TWO
W-1:
W-2:
Cost of Goods Sold:
Rs. Rs.
250 units (Refer 17.2 3,500,000
Heading)
Direct Labor & FOH:
Rs.1,975 * 250 units 493,750
200,000
process
Cost of Goods to be
4,193,750
Manufactured
(300,000)
process
Cost of Goods
3,893,750
Manufactured
Add: Opening inventory 159,750
W-3:
- 57 -
W-4:
General Expenses:
Rs. Rs.
Fax 2,000
Telephone 5,000
Electricity 6,000
Stationary 1,000
Printing 2,000
Postage 2,000
17.11-PROJECTED INCOME STATEMENT FOR THE YEAR THREE
It is assumed that 450 units, out of 470 units held, of both capacities will be sold in the
third year.

Income Statement
Rs. Rs.
Sales (W-1) 9,000,000
Gross Profit 1,811,250
Operating Expenses
- 58 -
17.12-WORKING FOR YEAR THREE:
W-1:
W-2:
Cost of Goods Sold:
Rs. Rs.
460 units (Refer 17.2 6,440,000
Heading)
Direct Labor & FOH:
Rs.1,975 * 460 units 908,500
300,000
process
Cost of Goods to be
7,648,500
Manufactured
(300,000)
process
Cost of Goods
7,348,500
Manufactured
Add: Opening inventory 159,750
W-3:
W-4:
- 59 -
General Expenses:
Rs. Rs.
Fax 2,000
Telephone 5,000
Electricity 6,000
Stationary 1,000
Printing 2,000
Postage 2,000
17.13-BREAK EVEN UNITS:
Rs.
Sales: 20000 * 200 4,000,000
Variable Cost: 16800 * 200 3,360,000
Contribution Margin 640,000
Fixed Cost 640,000
Net income 0
(Break Even Point)
Note: (Refer 17.2 Heading)
Break Even Units = Fixed Cost/price per unit – variable cost per unit
= 640,000/20,000 – 16,800
= 640,000/3,200
= 200 units.
Therefore Break Even is possible in the second year after the product is
launched.
- 60 -
18-BIBLIOGRAPHY
 Research Report on air conditioning industry published by Lahore Chamber of

Commerce and Industry.
 Marketing 6th Edition by Berkowitz Kerin Hartley Ruderlius.
 www.pel.com.pk
 www.waves.net.pk
 www.global.mitsubishielectric.com
 www.lge.com
 www.dawlance.com.pk
 www.pakstat.gov.pk
 www.finance.gov.pk
 www.yahoo.com
 www.msn.com
 www.ask.com
- 61 -
STRATEGIC MARKETING
MANAGEMENT
(MK-585)
Final Project
Marketing Plan of a New Product
“MAC – Series”
The Only Mobile Air Conditioner in Pakistan
Resource Person:
Mr.Mobin-Ul-Haque
Submitted By:
Wasil Hameed
I.D # 043532-024
Rabia Tahir
I.D # 043532-065
Mohammad Shoaib Bashir

I.D # 043532-054
- 62 -
Owais Sohail
I.D # 043432-023
Submission Date:
June 5, 2006
UNIVERSITY OF MANAGEMENT AND TECHNOLOGY
- 63 -
ACKNOWLEDGEMENT
First of all we are thankful to ALLAH Almighty who has created us, gave us the
power to understand and the power to gain knowledge. Without HIS kind guidance
we would have not been able to complete any task given to us.
Secondly we would like thank our resource person Mr.Mobin-Ul-Haque who guided
us in the lay out of our project.
We would also like to thank Mr.Ibad Jamal (Senior Brand Manager PEL),
Mr.Umer Saud (Brand Manager PEL) and Mr.Khizar Zafar (Sales Person
Patyala Ground PEL Sales Office) who were always there to guide us, to give us the
required information and to encourage us in every possible way. They went out of the
way to help us and thus deserve a special thanks and credit. May ALLAH help them
and be kind on them.
Lastly we are thankful to all others who helped us directly or indirectly in completing
our project.
- 64 -
TABLE OF CONTENTS
Title Page No.
1-Executive Summary……………………………………………………. 1
2-Description of the Company…………………………………………… 2
2.1-Appliances Division…………………………………………… 2
2.2-Power Division………………………………………………… 3
3-Strategic Plan and Focus………………………………………………. 4
3.1-Mission/Vision………………………………………………… 4
3.2-Goals……………………………………………………………4
3.3-Core Competencies/Sustainable Competitive Advantage……... 4
4-Situation Analysis………………………………………………………. 5
4.1-General Environment…………………………………………...5
4.1.1-General State of Economy……………………………5
4.1.2-Economic Condition of the Industry………………… 5
4.1.3-Condition of the Company in Industry………………. 5
4.2-Product Market………………………………………………… 6
4.2.1-Product Type, Varieties and Brands…………………. 6
4.2.2-Sales Volume and Trend……………………………... 7
4.2.3-Growth Rate…………………………………………..7
4.2.4-Market Share…………………………………………. 8
4.3-Customer Market………………………………………………. 9
4.3.1-Demographic Factors…………………………………9
4.3.2-Life Styles and Patterns……………………………… 10
4.3.3-Usage Patterns and Behaviors……………………….. 10
4.3.4-Preferences for Specific End Benefits……………….. 10
4.4-Marketing Programs………………………………………….... 10
4.4.1-Advertising and Promotional Programs……………... 10
- 65 -
4.4.2-Pricing Practices……………………………………... 11
4.4.3-Relationships with Whole Sellers and Retailers…….. 11
5-SWOT Analysis…………………………………………………………. 12
5.1-SWOT Analysis of PEL……………………………………….. 12
5.2-SWOT Analysis of PEL Split units……………………………. 12
5.3-SWOT Analysis of Air Conditioners Industry………………… 13
6-PEST Analysis………………………………………………………….. 14
6.1-Political Environment………………………………………….. 14
6.2-Economic Environment………………………………………... 14
6.3-Social Environment……………………………………………. 15
6.4-Technological Environment…………………………………… 16
7-Porter Analysis…………………………………………………………. 17
7.1-Bargaining Power of Suppliers…………………………………17
7.2-Bargaining Power of Buyers……………………………………17
7.3-Threats of Substitutes………………………………………….. 18
7.4-Threat of New Entrants…………………………………………19
7.5-Current Competitors Jockeying within the Industry……………19
TABLE OF CONTENTS
Title Page No.
8-Competitors Analysis………………………………………………….. 21
8.1-L.G…………………………………………………………….. 21
8.2-Dawlance………………………………………………………. 23
8.3-Waves (Cool Industry Pvt. Limited)……………………………25
8.4-Mitsubishi Electric……………………………………………...30
9-Key Products of PEL in the Market…………………………………... 34
9.1-Refrigerator……………………………………………………..34
9.2-Deep Freezers………………………………………………….. 35
9.3-Window Type Air Conditioners…..…………………………… 35
9.4-Microwave Oven………………………………………………. 36
9.5-PEL Television………………………………………………… 36
9.6-PEL Cool Life Split Air Conditioners…………………………. 37
10-Strengths and Weaknesses of the Company W.R.T Five P’s………. 38
10.1-Product………………………………………………………...38
10.2-Placement……………………………………………………... 38
10.3-Promotion…………………………………………………….. 39
10.4-Price…………………………………………………………... 40
10.5-Positioning……………………………………………………. 40
11-Perceptual Map of Key Players W.R.T Split Units…………………. 41
12-Trends of the Industry………………………………………………... 42
13-Future Outlook of the Company……………………………………... 43
14-Consumer Research……………………………………………………44
15-Market Product Focus…………………………………………………45
15.1-Marketing and Product Objectives…………………………… 45
15.2-Target Markets……………………………………………….. 45
- 66 -
15.3-Points of Difference………………………………………….. 45
15.4-Positioning……………………………………………………. 46
16-Marketing Program……………………………………………………47
16.1-Target Market………………………………………………… 47
16.2-Marketing Mix……………………………………………….. 47
16.2.1-Product………………………………………………47
16.2.2-Price………………………………………………… 48
16.2.3-Placement (Distribution)……………………………. 48
16.2.4-Promotion…………………………………………... 48
16.2.5-Positioning………………………………………….. 49
17-Financial Data and Projections………………………………………. 51
17.1-Raw Material and Parts………………………………………..51
17.2-Cost of Production……………………………………………. 51
17.3-Average Cost Difference of Ordinary Split and Mobile Split... 52
17.3.1-For Households……………………………………...52
17.3.2-For Business Sector………………………………… 52
17.4-Major Suppliers………………………………………………. 52
TABLE OF CONTENTS
Title Page No.
17.5-Export Potential of Split Air Conditioners…………………… 53

17.6-Retail Prices of Different Split Units Available in Market…... 53
17.7-Projected Income Statement for the Year One……………….. 54
17.8-Working for Year One………………………………………... 55
17.9- Projected Income Statement for the Year Two……………… 56
17.10-Working for Year Two……………………………………….57
17.11-Projected Income Statement for the Year Three……………. 58
17.12-Working for year Three……………………………………... 59
17.13-Break Even Units…………………………………………….60
18-Bibliography……………………………………………………………61
- 67 -

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Marketing Plan for a New Product

The project contains a comprehensive Marketing Plan (for External Audience) of a

Please read the project for detailed information.

2-DESCRIPTION OF THE COMPANY

The company comprises of two divisions:

PEL window-type air conditioners were introduced in 1981 in technical

 Low power consumption

 Anti-bacterial and anti-dust filters

 Preece, Cardew and Rider, England

3-STRATEGIC PLAN AND FOCUS

3.3-Core Competencies/sustainable competitive advantage:

To translate these core competencies into a sustainable competitive advantage,

4.1.1-General State of the economy:

 Privatization of Karachi Electric Supply Company (KESC) – the most

GDP is targeted to grow by 8% in 2005-06, powered by a strong growth in

At the back of stronger than expected performance of agriculture and manufacturing

The literacy rate of Pakistan is estimated at 54% of both sexes.

4.1.2-Economic condition of the industry:

4.1.3-Condition of the company in industry:

4.2.1-Product Types, Varieties and Brands:

Operating Current Amps 4.0 6.1 9.0 11.7

Voltage Frequency V/Hz 220/50 220/50 220/50 220/50

Indoor WxHxD mm 800x285x185 800x285x185 1020x315x180 1080x330x230

4.2.2-Sales Volume and Trend:

Audited financial statements and a review of the performance of the Company

Financial Results (Rs. in Million) 2005 2004

Gross Sales 8,075 6,077

Gross Profit 1,489 1,070

Operating Profit 893 659

Profit Before Tax 442 280

Profit After Tax 347 277

4.2.3. Growth Rate:

increased to 280000 Units/year in 2002-03, in 2004 the demand reached to 300,000

4.2.4. Market Share:

Market Share of Window Type Air Conditioners:

Market Share of Split Air Conditioners:

4.3.2-Life style and Patterns:

4.3.3-Usage Patterns and Behaviors:

4.3.4-Preferences for Specific End Benefits:

4.4.1-Advertising and promotional programs:

 Closed Circuit Television (CCTV).

 Point on Sales Material (POS) & Point of purchase (POP) - Buntings,

PEL spent Rs.45million in the advertisement of Refrigerator and Rs.20million in

For PEL MAC – Series pricing practice is as follows:

4.4.3-Relationships with Whole Sellers and Retailers:

5.1-SWOT ANALYSIS OF PEL:

 Strong brand equity.

 Lack of marketing orientation.

 Cheap Chinese brands.

5.2-SWOT ANALYSIS OF PEL SPLIT UNITS:

 Absent from the market in the past.

 Weak customer pull.

 Cheap Chinese brands.

5.3-SWOT ANALYSIS OF AIR CONDITIONERS INDUSTRY:

 Fully modernized industry.

 Under utilized capacity of manufacturing units.

 Opportunity to penetrate into the Middle East and African markets.

 Imported air conditioner into local market (Cheap Chinese brands).

 There is no check on importers by the Government. Any dealer can import

 GDP is targeted to grow by 8% in 2005-06, powered by a strong growth in

 At the back of stronger than expected performance of agriculture and

up at around 8.4% - the highest growth in the last 15 years. Pakistan is

 The per capita income of Pakistan has reached up to $763.