HAMDARD INSTITUTE OF MANAGEMENT SCIENCES

CITY CAMPUS, KARACHI.

Marketing Management

Term Report

National Foods Limited

(A Growth Oriented Company)

Submitted to: Mr. Ejaz Wassey

Submitted by: Syed Asad Mehmmod

MEN-2200475
Abdul Rasheed
MEN-2200475
 Strategic Planning in National Foods Limited
(A Real Life Case)

1) Company Information … 1
a) Background … 1
b) Decade-wise History … 1
2) Organization Structure … 2
a) Functional Organization Chart … 2
b) Strategic Business Units … 2
3) Strategic Planning Process Followed … 4
a) Vision … 4
b) Mission … 4
c) Objectives … 4
d) SWOT Analysis … 5
1) External Environment (Opportunities and Threats) … 5
2) Internal Environment (Strength and Weakness) … 5
e) Strategies … 5
1) Geographical Market Expansion Strategy … 6
2) Market Penetration Strategy … 6
f) Implementation … 6
1) Geographical Market Expansion Strategy – Implementation 6
2) Market Penetration Strategy – Implementation … 7
g) Feedback and Monitoring Mechanism. … 8
4) Appendixes
Kitchen Food Division Product Portfolio … A
Family Food Division Product Portfolio … B
NFL Top Line performance Indicators
Sales Volume Comparison for the year 2005 & 2006 … C
Sales Growth Comparison for the year 2005 & 2006 … D
Gross Sales (Local & Export) Comparison for the year 2005 & 2006 … E
 1

1) Company Information
a) Background

National Foods began its journey in 1970 as a spice company, with revolutionary products that
popularized the concept of having clean, healthy food. National Foods’ initiatives were, to
make food that is hygienic, reduce time spent in the kitchen by women, foster health, and
contribute towards personal attractiveness, so that people who use NFL products would be able
to experience a more rewarding life style.

Until 1970, the spice industry although flourishing locally was not structured, and spices were
unbranded, loosely sold. It all started with the idea of introducing branded, packaged spices: a
revolution in the Pakistani food market. Red Chili, Turmeric and other spices were introduced
in a clean, attractively packed form to the consumers, and despite the predominance of loose
spices, people quickly converted to NFL products.

Even if the notion of only women doing the housework – have become outdated, in this age of
rapidly changing lifestyles, fuelled by the rampant development of technology; consumers are
compelled to alter their eating habits. National Foods responds to this challenge of developing
innovative foods products based on convenience and quick preparation in line with modern
lifestyles and yet retains traditional values through its diverse collection of food products.

b) Decade-wise History

First Decade: The company began its life in a rented warehouse in Dinar Chamber with initial
sales of only Rs: 16,487/= in its first year. NFL origins were humble but NFL vision and aims
were always high, witnessed by the purchase of a new spice mill and packaging plant in 1978
as a step towards being a progressive company.

Second Decade: In 1981, the company launched its Salt products with proved a lucrative
venture for the company. In 1986, the new factory complex was constructed, where most of
NFL manufacturing facilities still reside. In 1988, NFL became the certified vendor of
McCormick, USA, as part of their Supplier Certification Program. The certification was
awarded base on excellent production and quality credentials. In the same year, NFL becomes
a public listed company on the Stock Exchange.

Third Decade:In 1991, NFL diversified its products portfolio with the launch of the Pickle
range. In 1992, as an effort towards contribution for social welfare and responsibility, NFL
joined hands with UNICEF, in order to propagate the use of iodized salt, to fight diseases like
goiters. In 1997, NFL added to more categories to its product portfolio, i.e. Ketchups and Jams.
In 1998, NFL becomes an ISO Certified Company.

New Millennium: In 2000, mainstream products were launched in Australia to offer ethnic
food to non-Asian consumers. In 2004, the NFL was assigned a credit rating of A+ by JCR-
VIS. In 2006, new recipe brand by the name RONAQ launched across the country.
 2

2) Organization Structure
a) Functional Organization Chart

Board of Directors

Company Secretary

(Chief Executive)

General Manager Human Resources Sales & Marketing Managers

Business Unit Managers Manager Logistics

Finance Head Head of Research & Development

Manager Quality Control Manager Material Management

b) Strategic Business Unit

At NFL the two Strategic Business Units are define in terms of products. These SBU although
does covered three major characteristics of SBU i.e.

1- The planning process is separate from rest of the company.

2- Each SBU has its own set of competitors.
3- Each SBU has its own Management who is to some extant responsible for strategic
planning execution and monitors the factors effecting profit.

The SBUs of NFL are not fully decentralized, in fact they are only involve in planning and
implementation of Manufacturing, Marketing and Sales Promotion activities of their portfolio
of products, at NFL they consider the SBUs as a divisions, in fact each SBU has its own
Business Unit Manager and Sales and Marketing Manager, both enjoying same level in
organization hierarchy. Business Unit Managers are responsible to look after production
facility management and relating affairs where as Sales and Marketing Managers have the
responsibility to manage marketing activities of respective SBU.

The other functions like Human Resources, Finance, R&D, Logistic, Material Management
and Quality Control are managed in centralized way.
 3

The two Strategic Business Units are:

1. Kitchen Foods Division

2. Family Foods Division

Introduction of each SBU is as under:

1- Kitchen Foods Division

Kitchen Foods Division (KFD) in NFL led by Mr. Zaheer Ahmed (Sales and
Marketing Manager – KFD) is involve in NFL Salt, Spices, ingredients, ready to
curry pastes etc, Sales and Marketing activities. For complete range of product
portfolio of KFD please sea (Annexure “A”)

KFD, has combination of products line, according to BSC tool some of which are
really Stars, some are straightforward questions marks.

Stars: Salt Products

Questions Marks: Recipe Masala and Spices & Ingredients Products

KFD brands have to face toughest competition, in Receipt Masala and Spices and
Ingredients Market with the Market leading Brand SHAAN. KFD’s some brands
are still in growth stage like Raj and Rivaj Masalas Products. NFL has the plan to
make huge investment in market/product development of recipe masala paste
products in order to gain significant share in market pie.

NFL Management has very different expectations of growth rate and return level
from KFD then FFD, because KFD’s most products are in growing stages, where as
FFD almost all products are in their maturity stage. As well as the growth potential
of both SBUs portfolio of products are much different from each other.

Despite the fact that some brands of NFL facing toughest competition, there is only
build, hold and harvest strategies in minds of Management. They have planned to
invest heavily, in convenience-packaged food segment; which is mostly focused on
the product line of KFD, in order to claim a significant market share by the year
2020.

2- Family Foods Division

Family Foods Division (FFD) in NFL led by Mr. S. Ahmed Iqbal (Sales and
Marketing Manager – FFD) is involve in NFL Ketchup, Pickles, Jam and Jelly’s,
Chinese, Snacks and Custer Sales and Marketing activities. For complete range of
product portfolio of FFD please sea (Annexure “B”)

FFD, is responsible to look after the portfolio of mostly star products of NFL,
according to BSC tool these products are real Stars in their respective market i.e.
Snacks (Chat Masala etc), Ketchup and Pickle products. Being a leader in these
markets NFL striving hard to push competition further away from the competitors,
 4

NFL has planned to put huge investment in market penetration through product
improvement.

Some of FFD portfolio products are question marks for NFL, i.e Jam and Jelly
products in that market NFL has to face MITCHELLS. To revamp its share NFL
has investing brand image improvement through Sales Promotion activities and
advertisement.

3) Strategic Process
a) Vision
In the year 2005, NFL has revised its vision and given a clear and brief theme to its peoples for
coming 15 years.

“To be a Rs: 50 Billion Food company by the year 2020 in the convenience food segment by
launching products and services in the domestic and international markets to enhance
lifestyle and create value for consumers through management excellence at all levels”

That mission statement also propagates and promotes as ‘Vision 20/20’ by the NFL
management. NFL vision 20/20 will act as guiding light until the year 2020.

b) Mission

• To deliver consistent quality to consumer using pure ingredients, authentic recipes

and the best available technology.
• Dedicated to continues improvement thought active alliance with international
companies by expanding technological and product horizons.
• To main close and direct contact with consumer through consumer insights and
dedicated services.
• To provide external and internal customer service by excelling in functional
management.
• To promote professionalism at all levels through education, training and
development of human resources.
• To deliver a fair return to valued investors and shareholders, annually, in line with
industry names and economic conditions.

c) Objectives

It has been 36 years since NFL was formed. Today it is well established corporate entity, in
fact a household name. NFL objectives are still very clear towards growth. NFL products
are sold not only in domestic markets but also in far-flung corners of the globe. Despite
these successes, NFL has not reached the end of its growth path. There are still many
horizons to conquer, and NFL will continue its progress, continuously offering quality to
consumers.
NFL strongly believes that success means acting with ‘the highest standards of corporate
behavior towards our employees, consumers and the societies and world in which we life’.
 5

The company’s focal point remains on customer’s needs through product development in
line with the changing market trends.

d) SWOT Analysis

External Environment Analysis

Opportunities:
o Strong local and international brand recognition.
o Availability strong vertical integration (Suppliers, Distributors etc).
o Positive macro economical outlook of country.
o Increase consumers inclined towards quality and branded products.
Threats:
o Inflationary pressure on the cost of agro based raw materials.
o Economic complications caused by high oil price.
o Growing global and regional competition.
o Trade and fiscal consequences of 10/8 earth quack.

Internal Environment Analysis

Strengths:
o Availability of effective and efficient distribution network.
o Availability of services of professional, organized and high value
individuals.
o Availability of state of the art food processing, material management
technology.
Weakness:
o High employees’ turnover.
o Huge amount of money trapped in trade debt (Receivable turnover
days for the year 2005-06 are 17.56).
o High Inventory turnover ratio suggests company has to hold stock of
inventory excessively (i.e. 103.50 days)
o Potential credit and liquidity risk, signifies with very low current and
quick ratios for the year 2005-06 (1 : 1.16) and (1:0.43) respectively.

c) Strategies

In the quest to grow, NFL has emphasizing on backward, forward, and horizontal
integration. NFL has formulated its strategies according to its share in particular product
segment, in some segment NFL enjoying the status of leaders, where NFL pursing to retain
its status, and in some segments NFL has to play the rule of challenger i.e. Spices, Jam and
Jelly segments. Nevertheless, strategically NFL focus is to target the convenience packaged
food segment in order to claim a significant market share by the year 2020, that make the
fact evidently clear that NFL focusing on intensive growth strategy backed by their reliable
knowledge of opportunities for improving its existing business.
 6

The two core strategies of NFL to achieve its ‘Vision 20/20’ are as follows.

1. Geographical Expansion Strategy

2. Market Penetration Strategy

1. Geographical Expansion Strategy

Besides strengthening the existing markets, NFL striveing to develop new but
emerging markets to grow business at a faster pace. NFL Product are distributed in
over 35 countries around the globe, with a well-diversified and experienced
portfolio of distributors. NFL is making inroads into new markets. It shows the
NFL focus on forward integration and incentive growth.

2. Market Penetration Strategy

While trying to expand total market size, the dominant firm like NFL continuously
defends its current business. The most constructive response of competitor’s
offence is continuous innovation. NFL led the industry in developing new products
and consumer services, distribution effectiveness and cost cutting measures. It
keeps increasing its competitive strength and value to consumers.

The local and existing markets are to be supported with continuous product
improvement and innovation, Effective Sales Promotion and Investing in
Technological and infrastructural development so that the appropriate category
growth is achieved. Last year NFL added more than 20 products to its portfolio.
The new continental recipes include Vegetarian, BBQ, Curry, Fish and Briyani
ranges.

There is an immense untapped potential in terms of coverage, product offering,

packaging and meal solutions, which NFL are striving to cover.

d) Implementation

1. Geographical Expansion Strategy- Implementation

Accordingly NFL is in the process of getting listed with almost all the leading players of
this sector. NFL has a very clear vision for global market development. In the first stage
NFL has successfully appointed strong distribution partners in the Gulf region; Dubai,
Kuwait and Saudi Arabia.

Exhibitions have proved to be most effective and economical tool for this very purpose.
NFL successfully participated in the following global exhibition in the year 2005-06.

ANUGHA 2005 Germany,

AAHAR 2006, India.
IFE 2005, India.
FHC 2006, China.
IITF 2006, India.

7

2. Market Penetration Strategy – Implementation .

A crucial step linked with this strategy was the launch of RONAQ. The purpose was to
cater to a special segment of consumers who prefer to dine out and seek the distinct
‘restaurant’ taste. Initially NFL introduced six new variants and after witnessing their
phenomenal success, NFL’s R&D team developed three more irresistible additions that
were launched recently.

The future of recipe category holds many surprises and investment opportunities. NFL has
faith in its brands portfolio to be the leading contributors to NFLs’ 20/20 Vision.

NFL has planned to revamp its ketchup category with the launch of an innovative upside-
down squeezable bottle with sub brand name ‘squeezy’ and a major re-launch of its entire
range. NFL proudly asserts that it is the first amongst all Pakistani companies to come up
with an upside-down squeezable bottle in the Ketchup category.

The composition of marketing spending has objectively been changed with increased
emphasis on brand building and customer demand pull strategy. Accordingly, NFL’s total
marketing and promotional spending increased from Rs: 133.2 million in 2004-05 to Rs:
179.3 million in 2005-06.

In Pakistan, the number of modern trade outlets, also called key accounts, are increasing in
number and have a great influence on consumer lifestyle. In 2005-06, NFL started focusing
on these self-service super stores by establishing dedicated field force, giving special POS,
and launching store specific consumer promotion.

The Eid-ul-Azha campaign on sachets has greatly facilitated the growth in household
penetration, as it has been widely accepted by the consumers.

NFL being a leading spice and food company organized various sales promotion activities.
NFLs’ aim is to provide the highest possible quality of products to its consumer to help
them in their quest for a healthy and productive life.

Nutrition Month (March-April): NFL as a leading spices and food co., not only cares for
its consumers health through its products but also strives to promote a healthy life style for
consumers. The month of March is celebrated as Nutrition Month Worldwide. NFL
conducted various seminars on “Nutrition through Life Cycle” all over the country.

Exhibitions: NFL has participated in various exhibitions through out the country, and
offered and promoted the core essence of its product line.

Funkids Club: NFL is maintaining renowned Funkid Club, through its website and
activities by engaging the younger lot in exciting, nutritious and health based activities.

College Programs: NFL conducts cooking demonstrations throughout the country at

various educational institutions that includes school, colleges, and universities. Not only
 demonstrations but also competitions are conducted where participants are awarded and
given prizes for their efforts and talent.

8

Recipe Contest in Food Magazines: NFL regularly conducts recipe contest in food
magazines where the winners are awarded with great prizes.

Cooking Classes: Continuing with teaching women to cook delicious meals for their
families, NFL conducted cooking classes at different locations including technical training
centers, schools, colleges, hotels, clubs and other places.

The composition of marketing spending has objectively been changed with increased
emphasis on brand building and consumer demand pull strategy. Accordingly, company’s
total marketing and promotional spending increased from Rs: 133.20 millions in 2004-05 to
Rs: 179.3 million in 2005-06, an increase of 34.6%. On the contrary, the trade offers and
rebates came down from 92.7 million in 2004-05 to 67.2 million in the year 2005-06.

In the year 2005-06, the total capital expenditure, including investments in Port Qasim
Project is the highest recorded in the history of the company. Theses investments are part
of the long-term infrastructure development plan require supporting company’s future
growth. Port Qasim project is designed to bring innovation in processing food products and
material movement with state of the art technology.

The 1st Phase of the PQ Project is now operational and is going through a series of trial
productions at the moment. On completion of the PQ project NFP expect not only to
achieve saving in production cost but also to reduce extra operational cost incurred due to
the existing set up of operations being handled at multiple locations.

NFL has also invested in automation of production processes, they also developing a
mechanism to ensure that their vision and values are cascaded down to every individual of
the organization. They have planned to create and organization culture that truly sizzles and
is uniquely National Foods.

e) Feedback and Monitoring Mechanism.

Although, in the year 2005-06 has not been able to touch turnover landmark of Rs: 2.5
billion (Annexure “E”), but in the year NFL registered a satisfactory volume growth of
around 13.10% from 34622 Metric Tones in 2004-05 to 37135 Metric Tones 2005-06
(Annexure “C”), whereas a highest ever growth of around 19% is gained in term of value.
Please sea (Annexure “D”).

That good feedback has mainly possible through restructuring the company’s product mix
portfolio and optimization of operations across the board. This has been possible through
operational efficiencies, which have been achieved by investing in various R&D projects
and technological improvement. NFL cost saving programs are delivering well and have
been successful in containing the impact of increasing input cost.

NFL management recognizes that in order to continue and to achieve visionary target of 50
billion turnovers in the year 2020, they need a disciplined and focused approach. An
approach that focuses on results as well as mindset they are instilling those systems and
executing those strategies that will make success an on-going process.

9

NFL, R&D peoples are involved in the process of tracking result and monitor new
developments. They are continuously formulating and revising tactical and some time
strategic plans according to the situations of volatile global market, that are driven by the
technology, and keep changing in amazing and unpredictable way.

NFL has facing distributional problems in Middle East and Gulf region, NFL has adopted a
flexible approach and reevaluated the whole process in order to have effective and efficient
strategic partners. NFL successfully able to finalize certain agreements in the region and
hopefully the related benefits will be accounted for in the years to come.

On the other hand, for domestic market they have adopted fairly stable strategies due to its
calm nature; on the other hand they are continuously trying to restore competitiveness and
promoting industry base approach by refocusing and simplifying the organization. NFL
divisions (SBUs) are keep changing their tactical strategies according to potential
geographical areas by strengthening and motivating the sales force, wherever needed. The
other steps taken by the NFL in response of local market changes are product price
rationalization, focused growth in high margin products, discontinuance of low margin
products and SKUs and rationalization in distribution cost.

From the point of Human Resources, NFL is developing a mechanism to ensure that their
vision and values are cascaded down to every individual of organization. Having tackled
the soft side of business, they have set very clear goals and KPIs (Key Performance
Indicators) for their team. They will integrate into a Balance Scorecard which will measure
NFL key business drivers and generate a tremendous focus towards being a results-driven
organization.

……oOoOo(((THE END)))oOoOo……