NURA MILK POWDER

Market Research Report

Prepared for
Omaar International Company, Somaliland

Prepared by
Nur Yusuf Abdilahi
BBA Accounting, Executive MBA Candidate

February 11, 2017

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 Contents

Transmittal Letter
Key Terms

1. Introduction 1
1.1 Objectives
2. Methodology 2
2.1 Sample Design and Size
2.2 Data Collection and Analysis
3. Limitations 3
4. Results 5-8
5. Discussion and Conclusion 9 -10
6. Recommendations 11
Tables
Table 01: the four highest turnover milk powder according to respondents 10
Table 02: Number of Cartoons per order 11
Table 03: 2,500g milk powder tin prices 12

Figures
Figure 01: Competitor Mapping 14
Figure 02: Five forces Analysis 15

Appendix
A -Questionnaire A 17
B - Questionnaire B 19
C - Market share Ranking Calculation 21

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Mohamed Ali Muhumed
General Manager
Omaar International Company,
Hargeisa, head Office

11th February, 2017

Subject: Market Research Report Submission

Dear Mohamed Ali,

I am herewith submitting the market research report for Nura milk powder
product as you requested.

This study may not be conclusive and at the same time gives you market
picture that Ominco could see useful. The sample in this study also might not
be true representative of Hargeisa retailers and as the data gathered from
retailers solely concerned with those locate in 26 June and Ga’anLibah district.

Therefore, I believe, this market research would be substantial for Ominco,

Somaliland and suggest further research that covers Somaliland markets.

I am available for further clarifications

Best Regards,
Nur Yusuf Abdilahi

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Key Terms

Buyer Market a market situation where supply exceeds demand.

Seller’s Market a situation when there are few goods for sale than
the people wants to buy so the sellers can charge
higher prices.

Target pricing strategy Cost oriented pricing approach in which companies

tries to determine the price that would give it a
specified target rate of return on its total cost at an
estimated standard volume.

Mark Up pricing strategy cost oriented pricing approach that sellers charge
certain percentage above the original cost of the
merchandise.

Ali Matan Mosque area is a wide area included Waaheen market where food
retail stores locate and the retailers surrounding the
mosque to the Mosque Jama.
Idaa’ada Area Is the area near Ministry of information to
EssaDheere building.

Here Awr area the area between from the Xeroawr Juncture up to
Koodbuur police station district

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1. INTRODUCTION
The shortage of rain and prolonged drought existing in the recent years
in Somaliland increases the demand for milk powder in order to fill the gap
between supply and demand of animal milk. Further, Umi, Tulip, Majan and
Admiral Brands are newly entered products in the industry.

The economic situation and the consumption need for milk powder
interestingly created stiff competition between importers. Particularly, all
competitors are trying hard to supply cheap products and chosen penetration
strategy to capture market share.

The persistent inflation of Somaliland economy and temporary ban of

Saudi Arabia livestock export create uncertainty in the market. And this
condition may decrease purchasing power of consumers in different
commodities in the market.

Though important, the milk powder will be among the commodities that
affects such economic difficulties. And at this, competition on pricing will be the
likely scenario that every businessman bears in his mind. And this study
endeavors to understand the pattern of competition and competitors in the milk
powder industry.

1.1 Objectives
This study aims to:
 Determine competition pattern and the competitors of milk powder
industry in Hargeisa.
 Assess market size of milk powder and the market share for Nura Milk
powder.

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2 METHODOLOGY
2.1 Sample Design and Size
This research is employed an exploratory research study in Hargeisa for
Nura powder milk brand that consisted primary data gathering. The researcher
needed to consider the tight schedule provided and his limited resource to get
information about the target market.

For that reason, the sampling design used to conduct is simple random
sampling method, where every respondent has an equal chance to fill the
questionnaire. The target population for this study is 20 respondents, whilst
coefficient variance and marginal error are 95% & 5% respectively.

N= N = 20 = 19 Respondents
1+N (ME) 2 1+20(0.05)2

In this regard, the sample size will be 19 respondents, where the

researcher categorized as 10 for consumers and 9 for retail stores in order to
reach research objectives.

2.2 Data Collection and Analysis

Questionnaires were used to collect data, in which one for consumers
and the other for retail stores. In practical terms, data is gathered through
telephone and distribution of questionnaires, both filled by the respected
respondents.
In collecting data from consumers, the researcher has given equal
opportunity for the following Telesom mobile subscribers: 447, 448, 440,
410,411,412 and 416 initials. Each initial is given 5 calls for the first round, and
the second round was 3 calls and 2 calls until it reaches 10 respondents.

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 In addition, the retail stores were selected on the basis of area sampling
method. The sample size of retailers in this study is 9 respondents. This study
selected respondents on snow balling method, and that the researcher
approaches every retailer in the three areas that most retailers locate in
Hargeisa. These areas are Idaa’ada (Idaacada), Hero Awr (XeroAwr ) and Ali
Matan Mosque area and unequally distributed each area as 3:2:4 respectively.

It was collected for 89% of the total surveys designed that is equivalent
to 17 respondents. Two (2) respondents were not answered and returned back
blank questionnaires.

In analyzing data, it employs data presentation in percentages and

descriptive statistical analysis. The statistical analysis used is measure of
central tendency in order to map out the prices and how the competitors
dispersed from it.

3 LIMITATIONS

Let alone the deficiencies of statistical sample methods, this study also
may not be free from biases according to the timeframe, budget and secrecy
tradition that may cause false information poured into the questionnaires.
Accordingly, the questions in the study do not relate to discounts and other
promotions offered by suppliers due to the sensitivity of the respondents.

In addition, the sample of consumers may not be true representative of

fathers and mothers living in Hargeisa. And the actual consumer respondents
were concentrated on Goljano, Hawaadle, Abaaye, Jigjigayar, and Daloodho,
sheikh Nur; Gantaalaha and Xidigta villages.

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 Furthermore, the retail stores were only locates in two areas and it
proofed difficult to obtain data from Koodbuur district retailers. Specifically, the
respondents were from Ga’anLibah and 26 June districts.
With this regard, the study may have some biases and that could be its
limitations.

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4 RESULTS
Consumer Characteristics
The consumers were 60% and 40% of mothers and fathers respectively
living in Hargeisa. The age of respondents is two ranges, 15 – 35 and 36 – 55
that stands as 40% and 60% respectively. 40% were Koodbuur residents, while
30% is from 26June, and 20% from Ga’anLibah and the remaining 10%
represents MahamoudHaybe district.
In particular, the villages where respondents inhabit ranges from
Jigjigayar, Gantaalaha, Goljano, Daloodho to Abaaye sheikh Nur and Xidigta
villages.
Consumer Behavior
80% of consumers buy powder milk for children and for tea, and other
consumptions, while 20% of the sample used only for children. Moreover, the
respondents unanimously (100%) agreed that coast; Anchor and Nido are for
children’s drinking need, while Nura, Hilwa, Nahda, Amis, Zamzam, Mumtaz
Admiral, Majan, Dano and Tulip powder milk brands are for tea and other
consumptions.

20% of the respondents buy primarily Amis, while 50% use to buy Nura
and the remaining 30% is for Zamzam. Interestingly, the data showed that
respondents’ second choice is Nura with 30% while the nearest brands as
second choice are Amis, Nahda and Zamzam with 20% each respectively,
while Hilwa is 10%.

Data also reveals that 60% of the sample is price sensitive, while other
40% of the sample considers both price and taste of the product. Moreover,
100% of the respondents preferred to shift from their first choice of powder milk
if the price increases by $3.

Product Awareness

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 100% of the respondents have heard the Nura milk powder brand. In
addition to that, 60% of them got information from retailers, whilst advertisement
and neighbor were 20% each respectively. 60% from the sample knew that
Nura milk powder is a brand of Omaar international company, while 40% didn’t.
Of the 70% from the sample told that the product is good in taste and the
remaining didn’t know exactly.
Retail Store Sales
Zamzam also hits as the highest turnover for two retailers, while the third
and fourth highest turnover for another two retailers. Hilwa stands all time low
according to inventory turnover, while Nahda listed in two retailers as their third
and fourth highest turnover.
At same time, Amis represented as the second highest inventory
turnover for four retailers and third for the fifth retailer. Nura brand becomes as
the highest stock turnover for one retailer and the third for the second retailer.

Table 01: the four highest turnover milk powder according to respondents
Product RS-001 RS-002 RS-003 RS-004 RS-005 RS-006 RS-007
Anchor X X XXX X XX
Nido XXXX XX X
Coast XXXX XXX
Zamzam XXX XXXX X X
Nura XXX X
Hilwa XXXX XXXX XXXX
Amis XX XX XX XXX XX
Nahda XXXX XXX
ArlaDan XX
o
Mumtaz XXX
Legend: X = highest turnover XX = Second highest turnover XXX= Third highest
turnover XXXX= Fourth highest turnover
- Own Construct -

Furthermore, the below table 02 depicts the quantities that each

respondents order per one time. In addition, it also represents the four most
frequently sold brands by the retailers in cartoons.

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Table 02: Number of Cartoons per order
Number of Cartoons per order
In Cartoons
RS –
Products RS – 001 RS - 002 RS - 003 004 RS - 005 RS - 006 RS - 007
Anchor 30 30 20 10 30
Nido 10 5 10
Coast 5 10
Zamzam 20 15 50 50
Nura 10 40 50 10 15 30 15
Hilwa 20 10 15
Amis 15 50 30 10 50
Nahda 20 25
ArlaDano 50
Mumtaz 30
- Own Construct –
As shown in the table 02, the respondent one 1 orders monthly 10
cartoons, while respondent four2 orders one time for a quantity of 10 cartoons of
Nura brand due to few demands from their customers. In addition, retailer five3
also orders two (2) times in three months with 15 cartoons in each order.
Further, retailers of six4 and seven5 order Nura brand one time in three months
for a quantity of 30 and 15 cartoons respectively.

Also data revealed that 71% of the respondents order milk powder
products monthly in credit, while 29% order in two months. The data also shows
that 100% of the sample is not paying cash at the time of contract and pays
back before the next order is effecting, and enjoys free delivery. Below is
presented statistical results from the retail stores prices. The prices mentioned
in the table 2 represents big milk powder tins and that each Cartoon consists of
6 (six) tins of milk powder.

1
RS - 001
2
RS - 004
3
RS - 005
4
RS - 006
5
RS - 007

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 Table 03: milk powder tin2,500g prices

Prices of each 2,500g milk powder tin from the retailers

Retail Store Identification Number Statistical Operations
RS – RS - RS - RS - RS – RS – RS –
Products 001 002 003 004 005 006 007 Market Mean Mode Medium
Anchor 18 18 18 18 18 18 18.0 18 18
Nido 18 18 18 18 18 18 18.5 18.1 18 18
Coast 18 18 17.5 18 18 18 17.5 17.9 18 18
Zamzam 11 10 10 10 10 10 10.2 10 10
Nura 11 11 11 11 11 11 11 11.0 11 11
Hilwa 11.5 13 13 12 12 13 11 12.2 13 12
Amis 11 11 11 11 11 11 11.0 11 11
Nahda 11 11 11 11 11 11.0 11 11
ArlaDano 11 11 12 10.5 11 11.1 11 12
Mumtaz 11.5 11 11 12 11 11 9.6 11 11.5
Majan 11 10 11 11.5 10.9 11 10.5
Tulip 11 14 14 12 12.8 14 14
Two
Cows 11 10 10 10.5 10 10.3 10 10
Admiral 11.5 11.5 11.5 11.5 11.5 11.5
Tayo 10 10.0 10 10

- Own Construct -

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The above table shows that Nura, Amis,NahdaandArlaDano mean prices are
$11, while Mumtaz, Majan , Two cows , Zamzam is less than 11 dollars
respectively.
In addition, Nura, Majan, Amis , Nahda , Dano , and Mumtaz have 11
dollars mode, whilst Zamzam, Two Cows and Tayo milk powders depicted as
10 dollars as their mode. From that perspective, data informs the pattern of
competition and the competitors in the industry.

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5 DISCUSSION AND CONCLUSION
5.1 Discussion
According to the data obtained from the research, the competition within
the industry of milk powder is extremely high, and the brands are competing on
cost leadership strategy. As the mode price of Nura brand is $11, there exist
handful brands shown their modes as $10. While other brands are the same as
Nura including, Nahda and Amis etc.

To clearly see the industry, the below” figure01” shows the industry
players in an extended manner and potentially animal milk would have
negative impact on market size of milk powder in the rainy seasons expected,
especially for those brands used for tea and other consumptions.

Figure 01: Competitor Mapping

- Own Construct –

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 In addition, the five forces analysis derived from the research data elaborates
the industry’s vulnerability and less margin of profitability in the industry players
since consumers are price sensitive.

Figure: 02 Five forces Analysis

Threat of Entry
Strong

Rivals Supplier bargaining power

Buyer bargaining power
Strong Weak
Strong

Threat of Substitute
Strong

Adopted From Michael E. Porter

As the figure 02 shows, the threat of entry is strong due to the open
market philosophy enshrined in the Somaliland constitution, and that poses
threat to incumbents. Moreover, buyer bargaining power also is strong
according to the more options (substitutes) available and no switching cost to
consumers. And the supplier bargaining power also is weak and meant that
potential entrants could get easily funds from Islamic banks, and the
commodities from other European suppliers.

5.2 Conclusion
Research data revealed that the competition is based on cost leadership
strategy and that could lead fewer profit margins in the industry. In summary,
the research concludes that:

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  Nura rival competitors are those brands that used for tea and other
consumptions including, Amis, Mumtaz, Zamzam,Tulip,Hilwa, Majan,
Nahda, Admiral etc.
 Nura milk powder brand is ranked as 4thaccording to the broader
competitors as Anchor records 1st and Nura brand ranks as 3rd while
Amis and Zamzam rank as 1st and 2nd respectively according to the
rival competitors.
 Without considering that orders are monthly, bimonthly or more, the
current market size according to the data estimated as 760 Cartoons
of milk powder in which each comprises 6 tins per 2,500g per single
order.

6 RECOMMENDATIONS

According to the data and in conjunction with the research conclusion,

this study is recommending below suggestions to Omaar International
Company, Somaliland to expand market share of Nura brand in the future.
 Set and Offer quantity discounts to retail stores to speed up sales.
 Reposition Nura brand by adding family photo on the tin (father,
Mother and child)
 Reconsider costing approach and evaluate whether target pricing is
workable method to compete in the market since it is buyer’s market.

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Appendix
Appendix – A Questionnaire A – for Consumers
PART ONE - RESPONDENT CHARACTERISTICS

1. Please let us know your status within your family

Father Mother
2. Kindly identify your age group
15 – 35 36 – 55 56 – 75
3. Which district you reside in?
26 June Koodbuur Ahmed Dhagah
Ga’anLibah MahamoudHaybe MahamedMooge
4. Please tell us your village
………………………………….

PART TWO - CONSUMER BEHAVIOR

1. Do you consume milk powder?

Yes No

2. Which purpose you use to buy powder milk?

For Children for Tea and other consumptions both
3. Please categorize according to you perception as (X) for those milk brands
used for children and as ( ) for those used for tea and other consumptions.
Amis Anchor Nura Nido

Nahda Mumtaz Admiral Hilwa

Zamzam Majan Coast Tulip

Two Cows ArlaDano

4. Which milk powder brand you always buy for tea and other consumptions from
retail stores?
Nahda Nura Mumtaz Hilwa
Zamzam Amis Majan Tulip ArlaDano

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 5. Please identify your second choice of milk powder for tea and other
consumptions?
Nahda Nura Mumtaz Hilwa
Zamzam Amis Majan Tulip

6. Why you preferred to buy your first milk powder brand of your choice?
Price Taste Taste & Price

7. What will you do if the price of your first choice increases by $3 (three dollars)?
Switch to second choice Remain to buy first choice

PART THREE – CONSUMER AWARENESS ABOUT NURA MILK POWDER

1. Have you ever heard Nura Milk Powder brand?

Yes No
2. What source you got from?
Advert Neighbor Retailer
3. Which company imports Nura milk powder brand?
Mawel Indho-deero Qaalib Enterprise Omaar don’t
know
4. What is your perception about the quality of Nura Milk
Fair Good very good don’t know

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Appendix – B Questionnaire B - For Retailer Stores

1. Please identify the milk powder brands available for sale at your store ( 2,500g
milk powder tins)
Milk Powder Brand Price
Anchor
Amis
Nido
Nura
Mumtaz
Admiral
Hilwa
Zamzam
Majan
Coast
ArlaDano
Tulip
Two Cows
Nahda

2. Kindly outline the most four frequently sold 2,500g milk powder (tins) brands at
your store?
……………………………………………………………………………………………
……………………………………………………………………………………………
……………………………………………………………………………………………
……………………………………………………………………………………………
…………………………………………………………………………………………..
3. According to your four most frequently sold brands, how many cartoons you
order at one time from your whole seller?
……………………………………………………………………………………………
……………………………………………………………………………………………

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 ……………………………………………………………………………………………
……………………………………………………………………………………………
…………………………………………………………………………………………..

4. Of the most four frequently sold brands, please list in an ascending manner
according to their higher turnover?
……………………………………………………………………………………………
……………………………………………………………………………………………
……………………………………………………………………………………………
……………………………………………………………………………………………
……………………………………………………………………………………………
5. Do you get free delivery from your suppliers?
Yes No
6. Do your suppliers ask cash down payment at the time milk powder sale
effecting?
Yes No
7. If question (6 is YES), what percentage you pay in cash down payment?
10% 15% 20% 25% 50%
100%
8. If question (6 is NO), how many days you settle the credit of milk powder
purchase?
1 – 30 31- 60 61- 90

9. In three months, how many times of Nura milk powder brand you order from
your supplier?
1 time 2 times 3 times
10. How many cartoons you order per one time from Nura milk powder supplier?
………………………………………….

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 Appendix C – Market share Ranking Calculation

Calculated per one order quantity according to the four highest turnover for each respondent
RS - RS - RS - RS - RS - RS - RS -
Products 001 002 003 004 005 006 007 Total Rank %
Anchor 30 30 20 50 30 160 21.05%
Nido 10 5 10 25 3.29%
Coast 5 10 15 1.97%
Zamzam 20 15 50 50 135 17.76%
Nura 10 40 50 100 13.16%
Hilwa 20 10 15 45 5.92%
Amis 15 50 30 10 50 155 20.39%
Nahda 20 25 45 5.92%
ArlaDano 50 50 6.58%
Mumtaz 30 30 3.95%
Total Quantity 760 100%
- Own Construct -

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