MARKET POTENTIAL FOR LAUNCH OF OMORE ICE CREAM PARLOR IN KARACHI

METHODS IN BUSINESS RESEARCH

ENGRO FOODS LTD INSTITUTE OF BUSINESS MANAGEMENT

2010

6/23/2012

PRESENTED TO
MRS. SAADIYEH SAID FACULTY OF MARKETING INSTITUTE OF BUSINESS MANAGEMENT

PRESENTED BY
ANUM IMTIAZ KAZI AYESHA FARHAT HARIS AHMED MUHAMMAD MATEEN ANSARI TAHA BIN ADIL ID# 9260 ID# ID# ID# 9144 ID# m.a.mateen.ansari@gmail.com anumkazii@gmail.com

CONTENTS

ACKNOWLEDGEMENT ................................................................................................................................... 4 EXECUTIVE SUMMARY .................................................................................................................................. 5 ENGRO COMPANY PROFILE .......................................................................................................................... 6 ENGRO FOODS LIMITED ................................................................................................................................ 6 INTRODUCTION ............................................................................................................................................. 7 OMORE.......................................................................................................................................................... 7 KEY FIGURES OF OMORE........................................................................................................................... 7 MANAGEMENT PROBLEM STATEMENT ........................................................................................................ 8 APPROACH TO THE PROBLEM....................................................................................................................... 8 Literature Review: ..................................................................................................................................... 8 RESEARCH PROBLEM: ................................................................................................................................... 8 RESEARCH OBJECTIVES ................................................................................................................................. 8 HYPOTHESIS ................................................................................................................................................ 10 TARGET MARKET ......................................................................................................................................... 11 SAMPLE SIZE................................................................................................................................................ 11 WALLS ICE CREAM............................................................................................................................... 12 IGLOO ICE CREAM ............................................................................................... 12YUMMY ICE CREAM ............................................................................................................................................................ 12 RESEARCH DESIGN ...................................................................................................................................... 13 CONCLUSION............................................................................................................................................... 23 APPENDIX .................................................................................................................................................... 24 ARTICLE# 1 .............................................................................................................................................. 24 ICE CREAM INDUSTRY COMPETITION ................................................................................................. 24 BIBLIOGRAPHY ............................................................................................................................................ 26

ACKNOWLEDGEMENT
This report is on Market Potential For Omore Ice Cream Parlor in Karachi. It has been prepared as a part of our course requirement, Methods In Business Research. In this report, we elucidate the methods and objectives in conducting a Business Research.
Firstly we would thank Allah for giving us the opportunity and the resources to be able to do something productive with our lives. Without His blessings we would not have been able to come as far as we have.

Then, we would like to express our gratitude to our teacher of Methods In Business Research, Mrs. Saadiyeh Said for providing us with the opportunity to work on this report as a team and to let us practically perform all that we have studied during the semester. It has definitely been a learning experience for all of us.

We are very thankful to our teacher for her guidance and help which he has extended throughout the course of this report, moreover this course Methods Of Business Research was very informative and instructive for us. Mrs. Saadiyeh Said demonstrated the real managing existence, providing us with practical cases from daily routine life, as well as from the marketing world, and also incorporated a joke or two into her lectures, keeping the atmosphere light and friendly for the students. We would also like to pay our gratuitous regards to Mr. Farukh Saad, Manager at Gelato Affair who spare sometime for us so that we could conduct the interviews with him. It is true that his responses in the interview have been very helpful.

EXECUTIVE SUMMARY

ENGRO COMPANY PROFILE

Engro Corporation Limited is one of Pakistans largest conglomerates with businesses ranging from fertilizers to power generation. In the interest of better managing and overseeing businesses of subsidiaries and affiliates that are currently part of Engros capital investments, Engro Chemical Pakistan Limited converted into a holding company structure. As part of this process, two major changes occurred with effect from January 1, 2010; Engro Chemical was renamed as Engro Corporation Limited and it demerged and transferred its fertilizer business into a separate wholly owned subsidiary, Engro Fertilizers Limited. Currently Engro Corporations portfolio consists of seven businesses which include chemical fertilizers, PVC resin, a bulk liquid chemical terminal, industrial automation, foods, power generation and commodity trade. Besides providing the long term vision for the company and overseeing performance of the subsidiaries and affiliates, Engro Corporation Limited is also responsible for allocation of capital, management of talent, leadership development, HR guiding policies, leadership role in public relations and CSR activities, control structures, legal and IT support. From its inception as Esso Pakistan Fertilizer Limited in 1965 to Engro Corporation Limited in 2010, Engro has come a long way and will continue working towards its vision of becoming a premier Pakistani company with a global reach.

ENGRO FOODS LIMITED

Engro Foods Limited was officially launched as a fully owned subsidiary of Engro in 2004. Using dairy as a stepping stone to enter into the food business, the Company has established state-ofthe-art processing units in Sukkur and Sahiwal, along with an ice cream production facility in Sahiwal. Top quality brands like Olpers, Olwell, Tarang, Omore and Owsum have been successfully launched under the helm of Companys dairy products. To support these brands and their highest standards of quality, Engro Foods has invested heavily in milk processing and milk collection infrastructure. After the success of our dairy products, to which our customers testify, Engro Foods now plans to venture beyond the dairy sector. In this pursuit, grain and fruit markets have been analysed in great detail. Engro Foods vision is Elevating Consumer Delight Worldwide and the Company aims to generate a significant portion of its revenue from foreign operations.
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INTRODUCTION
Engro Foods Limited was launched in May 2004. It has two manufacturing sites, one in Sukkur and the other in Sahiwal. Ice cream factory is located at Sahiwal and the ice cream factorys average operating capacity is 50,000 liters per day. Yummy 36 was the first brand to set the trend of ice cream parlor in Pakistan in the late 80s. There was wide gap before others jumped in this retail business. However, in February 2001 Hot Spot opened its first official branch in D.H.A which was an innovative idea and turned out to be a success. Being an organization that is constantly looking for and capitalizing on opportunities, Engro requires us to determine the scope for a potential opportunity for Omore in Karachi - the launch of Omore ice-cream parlor. Being an organization that is constantly looking for and capitalizing on opportunities, Engro requires us to determine the scope for a potential opportunity for Omore in Karachi - the launch of Omore ice-cream parlor.

OMORE
Omor was launched in March and formally launched on April 6, 2009. The ice cream was launched in eight cities and towns. The brand started with 24 different formats and flavors, 3 of which never introduced before. Lack of cold storage facilities and proximity of factory were reason for slow start.

KEY FIGURES OF OMORE

Engro has had its gross profit increase from 6917 million rupees in 2008 to 6931 million rupees in 2009 In just a few weeks, Omor made sales of Rs 10 million on volumes of 76,000 liters. Ice Cream now has 39 SKUs launched and boasts sales of over 6 million liters. Ice cream turnover in 2009 was Rs.751 million. Market share is 11%

MANAGEMENT PROBLEM STATEMENT

Does an opportunity for Omore ice-cream parlor exist in Karachi?

APPROACH TO THE PROBLEM

Literature Review:
According to Sarah Barrette (2004), the preferences of consumers vary according to age and gender. Consumer research has shown that preferences of consumers for Ice cream vary according to age and gender (Sarah Barrette 2004). It is cited that Children eat more types of ice cream products and also consume more during a 30-day period. Their consumption varies as they enter their teenage years. The most important research in this arena comes from Report Linker which has covered all the key data on the Ice cream in Pakistan. It provides with a value volume segmentation and market share data and highlights such points as the reasons to purchase Ice cream, quantitative trends affecting the Ice cream markets, consumers consumption and expenditure patterns and five year forecasting for the market. Another research can be cited from Data monitor which provides data and research about a number of topics including take home Ice cream. It also shows quantitative data on the consumption patterns of take home Ice cream.

RESEARCH PROBLEM:
To find out if an opportunity exists for Omore ice-cream parlor in Karachi or not

RESEARCH OBJECTIVES
To determine the scope of ice-cream parlors in Karachi and to find out if an opportunity for Omore ice-cream parlor exists, based on its brand awareness and perception.

To determine the target market for Omore ice-cream parlor, and to obtain data regarding their preferred product range, price, location, and name of the parlor.

HYPOTHESIS
H0: : People with high income group would not prefer going to Omore ice cream parlor. H1: People with high income group would prefer going to Omore ice cream parlor TEST STATISTICS Chi-Square Tests
Asymp. Sig. (2Value Pearson Chi-Square Likelihood Ratio Linear-by-Linear Association N of Valid Cases 31.203
a

Df 18 18 1

sided) .027 .004 .207

38.230 1.591 135

Decision Since the P-value associated with Chi-square (31.203) is very large i.e. >0.005 therefore we do not reject H0 and we can conclude that people with high income group would not significantly prefer going to Omore ice cream parlor. H1: Consumers will be willing to try the parlor due to the success of previous products of Engro and high perceived quality H0: Consumers will not be willing to try the parlor due to the success of previous products of Engro and high perceived quality Test statistics

Decision Since the P-value associated with Chi-square (37.404) is very small i.e. 0.003 therefore we reject H0 and we can conclude that Consumers will be willing to try the parlor due to the success of previous products of Engro and high

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 H1: Consumers who often visit ice cream parlor would prefer the idea of launching Omore ice cream parlor in Karachi . H0: Consumers who often visit ice cream parlor would not prefer the idea of launching Omore ice cream parlor in Karachi . Test statistics

Decision Since the P-value associated with Chi-square (52.401) is very small i.e. less then 0.005 therefore we do reject H0 and we can conclude that Consumers who often visit ice cream parlor would prefer the idea of launching Omore ice cream parlor in Karachi .

TARGET MARKET
The target market consists of individuals, both male and female, belonging to 20-35 years age group.

SAMPLE SIZE
1) Experience surveys - 3 surveys will be conducted with experienced and knowledgeable individuals in the field. 2) Focus groups- 2 focus group sessions will be held. Each group will consist of 8 individuals. 3) Survey- A sample of 135 respondents will be selected from the target population.

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ICE CREAM INDUSTRY IN PAKISTAN

WALLS ICE CREAM In 1995 Unilever started manufacturing of ice cream in Pakistan with brand Name Walls. Unilever became the largest ice-cream manufacturers in Pakistan through an amalgamation with Polka in May 1999.It has HACCP and Total Quality Management certification. It is situated in Bhai Pheru .Its production capacity is 30 million liters per annum. IGLOO ICE CREAM

Pakistan Dairy Products, Igloo Ice Cream, is the pioneer ice cream manufacturer in Pakistan & operating since 1974. As a nation wide premium ice cream manufacturer. The Company operates from Karachi; however its distribution network covers a vast area of Sindh and Balochistan. Out of a largely consumed range of scrumptious products, the Supreme Ice Cream range is a market winner with its multitude of exceptional and unmatched flavors such as Strawberry Cheesecake, Cookies N Cream, and lots more mouth watering flavors. Igloo is providing ice cream to its valuable consumers through three different channels, which are tricycles, retail outlets & igloo parlors. These channels ensure efficient delivery & maximum fun & satisfaction to consumers.
YUMMY ICE CREAM It prepares pure dairy ice cream from milk fat. Its production capacity is 10 million litres per annum. t is situated in Koat Lkhpat, Lahore.

The growing ice cream industry

A population of 161mn with 44% aged below 14 years is the key to the growth of the food industry in Pakistan. The country has a market size of ~70mn liters or PRs8bn of branded ice cream while combined with the unbranded sector the size should be double that amount. Unilever, the only nation-wide seller, dominates the branded ice cream segment with ~60% market share. It has recently doubled its capacity to 77mn liters, out of which 39mn liters were produced in 2008. Unilever ice creams have witnessed 15% volumetric growth and 23% CAGR in revenues over the past five years (2003-08). Pakistan has a per capita ice cream consumption of 0.4 liters pa compared with 22liters in EU countries. This coupled with the possibility of consumers of unbranded ice creams shifting to branded ones implies upside potential for demand growth. The success of ice cream business depends on (1) a strong cold storage network and (2) aggressive consumer marketing.

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RESEARCH DESIGN
Primary data was gathered using the 3 instruments mentioned below: i) Experience surveys:

Experienced individuals in the field were surveyed. Comprised of managers, in selected icecream parlors in Karachi, who provided us with valuable data that aided in decision making. Interviews were more like a conversation; we asked the managers a few important questions in person, and jot down the responses on paper. Some sample questions that were asked are: How much potential exists in the market? What are the average sales per month? What is the profile of consumers who visit the most? What is the product that is most frequently bought? Managers of Gelato Affair at Clifton, Walls Ice cream parlor at Hotel Metropole, Abdullah Haroon Rd. and Yum Yum Ice cream parlor in North Nazimabad were interviewed. Judgment Sampling method was used, concluding to: High potential for ice cream parlors Average sales per month counts to Rs. 400,000 ii) Focus groups:

Two Focus group sessions were held, 1. Between 20-26 yrs of age, students of Institute of Business Management and University of Karachi 2. Between 27-35 yrs of age, random working people. Moderator was one person chosen from our group. Participants were given a chance to engage in a free discussion about the research topic. Sample questions include: Where do you prefer going for a dessert? Ice-cream? Why? How often do you go? Are you aware of Omore? Would you like to try it? Why? What comes to your mind when you think of the word Omore? Would you be willing to try Omore ice-cream parlor? Why?
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We conclude that: Gelato Affair was more preferred Enthusiastic and, in the offing to try Omore Highly supported the idea for introducing Omore Ice Cream Parlor

iii)

Surveys: Conducted by distributing 200 questionnaires to the respondents. Closed ended questions were asked- ensuring quick response from the participants.

Divided Karachi into the following areas: Gulshan-e-Iqbal Defence and Clifton North Nazimabad Saddar Including vicinities of PECHS and Bahadurabad 40 questionnaires were assigned to each area. Sample questions include: Q1 What is your monthly household income?
Cumulative Frequency Valid Rs.10000-Rs.25000 Rs.26000-Rs.40000 Rs.41000-Rs.70000 Rs.71000 and above Total 14 25 40 56 135 Percent 10.4 18.5 29.6 41.5 100.0 Valid Percent 10.4 18.5 29.6 41.5 100.0 Percent 10.4 28.9 58.5 100.0

After analyzing the results of the monthly household income we came to know that out of 135 representatives 14 belonged to the monthly income range from Rs 10,000 to Rs 25000, while 25 belonged to the income group of Rs. 26000 to Rs.40000 40 belonged to the income group of Rs. 41000 to Rs.70000 And, 56 respondents had monthly income Rs. 71000 and above.

Q2 How often do you have ice cream?

Gender Cross tabulation

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Count Gender Male How often do you have icecream? Very often Often Not very often Total 18 41 21 80 Female 8 22 25 55 Total 26 63 46 135

Out of the 80 male respondents most of them (41) have ice cream often while 18 of them have it very often and 21 do not eat ice cream that very often. Out of the 55 female respondents 25 do not eat it that often while 22 have it often and 8 of them eat ice cream very often. From this we analyzed that the male respondents have greater trend of eating ice cream as compared to females perhaps due to the availability issues faced by women in Pakistan.

What is your monthly household income? How often do you have icecream?
Crosstabulation Count How often do you have icecream? Very often What is your monthly household income? Rs.10000-Rs.25000 Rs.26000-Rs.40000 Rs.41000-Rs.70000 Rs.71000 and above Total 2 2 5 17 26 Often 2 13 28 20 63 Not very often 10 10 7 19 46 Total 14 25 40 56 135

The above results reflect that the people having income bracket eat ice cream more often than people having low income group perhaps due to the budget feasibility, number of family members depending on the income etc.

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Q3 Which ice cream do u prefer?

Cumulative Frequency Valid Packaged Fresh Both Total 29 54 52 135 Percent 21.5 40.0 38.5 100.0 Valid Percent 21.5 40.0 38.5 100.0 Percent 21.5 61.5 100.0

The above results analyzed reflect the fact that people (40%) usually prefer eating fresh ice cream i.e, from parlors. Very few people (21.5%) go for the packaged ice creams maybe due to the price feasibility or availability of ice cream parlors at their residence.

Q4 How often do you visit ice cream parlors?

Cumulative Frequency Valid More than once a week Once a week Once a month Total Missing Total Did not respond 19 53 59 131 4 135 Percent 14.1 39.3 43.7 97.0 3.0 100.0 Valid Percent 14.5 40.5 45.0 100.0 Percent 14.5 55.0 100.0

Most of the respondents (43.7%) visit ice cream parlors once a month while 39.3% of the people visit ice cream parlors once a week and very few (only 14.1%) visit parlors more than once a week perhaps due to the availability of ice cream parlors at their residence or having strong financial background. Out of the total of 135 surveys conducted 3% people did not respond to our question perhaps due to informal attitude or some personal confidentiality issues.

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Q5 Which ice cream parlors do u prefer?

Cumulative Frequency Valid Gelato Affair Move n Pick Mini Melts Dip shop Others Total Missing Total Did not respond 21 46 20 23 24 134 1 135 Percent 15.6 34.1 14.8 17.0 17.8 99.3 .7 100.0 Valid Percent 15.7 34.3 14.9 17.2 17.9 100.0 Percent 15.7 50.0 64.9 82.1 100.0

When our respondents were asked which parlors they visit most then Move n Pick came out to be on the top of our list covering 34.1% (frequency=46/135) followed with Dip shop covering 17%, Gelato Affair 15.6%. These results are influenced due to the availability of the parlors at the respondents respective areas. 17.8% of the respondents prefer going to other ice cream parlors in the city while 0.7% of the respondents did not respond perhaps being unaware about the ice cream parlors.

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Q6

55% said yes 28% said no 23% said Dont know

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Q7 What are your perceptions about Engro?

1-Excellent 2-Very good 3-Good 4-Average 5-Not too bad 6-Poor 7-Very poor 19

Most of our respondents feel good about Engros already available products in the market and are satisfied with the quality and features of the products they offer to their customers. More than half of the respondents felt that Engros product fell in the average priced category. There were very few people who told us that they arent satisfied because the product doesnt fulfill their desired features or feel that products are overly priced.

Q8

70% said yes 30% said No

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70% of our target population is aware of the Omore ice cream brand offered by Engro and only 30% werent aware of the ice cream product. The reason they told us for not being aware was the unavailability of the ice cream in metropolitan.

Q9 what do you think of the idea of launching Omore parlor in Karachi?

1-Excellent 2-Very good 21

3-Good 4-Nice 5-Dont care 6-Poor 7-Very poor Our respondents gave very positive reaction for launching the Omore ice cream parlors at Karachi because they are satisfied with the other family products in the market and want to try this ice cream too. There were very few people who did not agreed to the idea of launchin this product at Karachi. Q10

Male are 60% Female are 40% 22

Q11 Which age groups do you belong to?

Cumulative Frequency Valid 20-23 24-27 28-31 32-35 Total 48 53 22 12 135 Percent 35.6 39.3 16.3 8.9 100.0 Valid Percent 35.6 39.3 16.3 8.9 100.0 Percent 35.6 74.8 91.1 100.0

Most of our respondents belonged to the age group of 24 years to 27 years while the rest stood between the ages ranging from 20 years to 23 years and 32 years to 35 years.

CONCLUSION

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APPENDIX
ARTICLE# 1
ICE CREAM INDUSTRY COMPETITION Ice cream manufacturers face competition from a host of sweet contenders. The bulk of revenue generated in the ice cream industry comes from impulse sales to consumers looking for an instant fix of sweetness. Makers of cones, sticks and cups of ice cream have to battle with other similarly priced food and beverage items that also offer an immediate sugar rush. In such, they are competing for a share in the amount of money people are willing to spend for fun fun money. It is estimated that this year Pakistanis will spend more than Rs200 billion as fun money. The market for impulse food and drink items such as carbonated beverages, confectionery items, packed snacks and chocolates is expected to grow by 10 per cent annually. Producers of ice cream, however, have anticipated a much higher growth and assert that by next year the market for their products could grow by a whopping 25 per cent. This does not mean that there are no hurdles to the predicted expansion of the ice cream industry. Ice cream sales have not been able to match the sales of traditional items on days when people typically consume high amounts of sugar. For example, kulfi and mithai almost always trump ice cream sales on special occasions like Eid. Meanwhile, at the other end of the competition spectrum Pepsi and Coke spend many times more on advertising than even the largest ice cream brand in the country, Walls. What then does Unilever, manufacturer of Walls ice cream, think about the launch of Engro Foods brand of ice cream, Omore? It is the biggest blessing for existing ice cream manufacturers! claimed Khayyam Rajpoot, the Brand Director for Walls. Comfortable at the top Customers willing to part with fun money have a wide array of options to choose from. They constantly need to be convinced and reminded to buy ice cream. So far Walls has been the only brand that spends a significant amount on advertisements on TV, in magazines and other mass media, explained Khayyam. When they (Omore) launch nationally, there will be more ads for ice creams and that would translate into more overall demand, he concludes. Khayyams optimism is not completely unfounded. Total sales of branded ice cream stand between 70 and 80 million litres and even according to competitor estimates more than 60 per cent of that volume is bagged by Walls. Walls is synonymous with ice cream, Khayyam said, citing that when an ice cream cart or trike pulled into a neighbourhood and played the brands familiar jingle, everyone knew the ice cream man had arrived.

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Clowning around Preparing for the entry of a potentially threatening competitor is exactly what other companies in the market are busy doing. Fareed Tharani, Brand Manager for Igloo, said he was doing homework on the potential impact on sales from Omores national launch. He predicted that there could be more competition on dealer side, if they come on trade, they may come with trikes initially. So far Igloo has not faced competition from the new brand as the company only operated in Sindh and Balochistan, while Omore had been launched only in Punjab. But the cost of inputs is increasing and more competition means that Igloo would be unable to increase prices to accommodate cost pressures, admitted Tharani. Besides a rush for market intelligence, Igloo management has also introduced unique products hoping to boost sales. Recently, they launched Gumbo an ice cream stick shaped like a clowns face with a bubble gum for a nose. Street talk Omore will need a lot more than trikes and tricks to win over buyers in a market where competitors like Walls and Igloo are well entrenched. Walls has managed to develop a strong working relationship with retailers since it started operations in 1997. Moin Khan, owner of a small shop in Gulshan a middle-income neighbourhood of Karachi, clarified: I only have enough space in my store for one freezer, so I got it from Walls. They sell way more than other brands. Still, Omore had already made big waves among potential consumers with their marketing campaign. Wali Khan, a superstore owner from Defence, shared that people were eagerly waiting for the launch of Omore in Karachi. Their ads have great recall. People keep asking if the ice cream was available. https://officialpakinfo.wordpress.com/2010/07/07/competition-in-ice-cream-world-of-pakistan-wallsigloo-or-omore/

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BIBLIOGRAPHY
WEBSITES www.engro.com www.oppappers.com

ARTICLES http://findarticles.com/p/articles/mi_hb092/is_n1_v27/ai_n28667076/ https://officialpakinfo.wordpress.com/2010/07/07/competition-in-ice-cream-world-of-pakistan-wallsigloo-or-omore/ http://www.highbeam.com/doc/1G1-20457473.html

BOOKS METHODS IN BUSINESS RESEARCH BY UMA SEKARAN RESEARCH METHODS OF BUSINESS BY ZIKMUND

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