GROUP MEMBERS
WALI UR REHMAN (FA18-MBAG-0037)
SHAH HILAL (FA18-MSMG-0009)
MUHAMMAD IQBAL (SP19-MSMG-0052)
PROGRAM
: MBAG & MSMG
SUBMITTED BY : MR. KASHIF FARHAT
:20/5/2019
DATE
: STRATEGIC MARKETING
SUBJECT
Acknowledgement
Mohammad Ali Jinnah University (MAJU)
Faculty of Management Science.
City campus, Shahrah-e-Faisal
Karachi, Pakistan .
This is the term report of Strategic Marketing course which was assigned to us by Teacher Mr. Kashif Farhat.
The objective of this report is to understand the marketing strategies learnt in the class are applicable in the real
business world. Since we choose Shan Food’s Limited (SF) as our selected FMCG Company in Pakistan and
therefore visited the Company and met with the Brand Manager Ms. Anam Nazneen who was kind enough to
spare her time and replied to our questions. Although we were unable to find answers to few questions which
were peculiar but were not answered because of confidentiality issues.
The report has been compiled with dedicated hard work, determination and devotion of past few weeks by the
whole team and have proved fruitful and achieving the desired results.
We pay special thanks to Ms. Anam Nazneen, Brand Manager, Shan food for her time from the busy schedule,
and our teacher, Mr. Kashir Farhat for instigating us to grill the answers of the questions that were provided to
us as Project Report and in consequence learn the Strategic Marketing techniques in the real business world.
Table of Contents
Introduction of Shan food company............................................................................................................................................ 1
Identify the distinctive capabilities.............................................................................................................................................. 2
Determine the boundaries of structure of the product-marke......................................................................................... 3
Form the product-market structure............................................................................................................................................3
Analyze competition........................................................................................................................................................................... 3
Identify the segments the company targets.............................................................................................................................. 4
Also identify the segments that company’s key competitors target............................................................................... 4
Identify company’s positioning strategy................................................................................................................................... 4
Identify the strategic relationships that company has entered such as:....................................................................... 5
Joint Ventures...................................................................................................................................................................................... 5
Strategic Alliances (with suppliers, competitors, intermediate customers)................................................................ 5
Give details of each strategic partnership with reasoning for the partnership.........................................................5
Discuss how company uses brand leveraging strategy for its current brand portfolio......................................... 6
Identify how many partners (e.g. retailers, distributors etc.) company has in its forward value chain......... 7
Draw the value chain structure of the company and present why company uses or multiple channels to
reach customers................................................................................................................................................................................... 7
Analyze the pricing situation of the market company operates in................................................................................. 8
Conclusion.............................................................................................................................................................................................. 9
Page 2
EXECUTIVE SUMMARY
Throughout the course of Strategic Marketing Management, the essence of strategy and its application has been
emphasized. For an organization, not only it’s immediate and competitive, but also macro environment is
important as it needs to survive and sustain itself whilst operating in these environments. Spice industry all over
the world can be referred to as a subset of the food industry. Spices stand at prominent positions in Pakistani
imports and exports. The spice industry of Pakistan annually grows at a rate that is above 50%. Within this
industry, 80% market share is with unbranded loose spices and the rest with branded packed spices.
Shan Foods and National Foods both are the leaders in branded packed spice category each holding 40% share
in 2006, while other prominent players include Chef’s Pride, Ahmed Foods, Habib Foods and Zaiqa Foods.Shan
Foods was founded in 1981 in a single room as Shan Masala. Later, due to its popularity, it went on to become
Shan Foods. It has presence in 60 countries today and deals in six broad categories of offerings. Shan Foods has
capitalized on the changing market trends and consumer tastes and through product trials, it has made sure to
churn out offerings that are best in line with consumer tastes. It maintains global presence primarily through
exports and follows more than one growth strategy simultaneously. With fourteen departments and state of the
art technology and customer focused marketing strategies and campaigns; Shan Foods has become synonymous
with authentic traditional cuisine of good quality and taste.
Page 3
Question#01
Introduction of Shan Food Industries
Shan Food Industries a pioneer in the food industry of Pakistan. It is a well renowned company not only in
Pakistan but outside Pakistan, across the boundaries Shan Food Industries is known for the quality and taste it
has been providing since its establishment.
Shan Food Industries is a Private Limited Company that was established in 1981 by Sikander Sultan. Since
1981, it has been providing products of exceptional quality and even after so many years it is mainly recognized
due to its spice, it has created so much brand loyalty within the market of Pakistan that whenever the word
spices are used people start referring towards Shan Food Industries. The story of Shan Food Industries not only
ends in Pakistan but you may even hear their name across the boundaries. People living outside Pakistan know
Shan Foods Industries due to their spices but in Pakistan the story is bit different. It is recognized not only due to
spices but also due to other offerings which it is has been offering.
Shan Food Industries main operation center in Pakistan is located over the area of 100,000 sq. ft. The
Machineries which are equipped in Shan Foods are imported from countries like United States and United
Kingdom, due to which they are fully equipped giving Shan Food Industries an advantage of State of Art
Technology. As Shan Food Industries main aim is to provide Food of highest quality they have set up different
laboratories which are used for testing and analyzing each product.
Shan Food Industries is currently operating in 60 countries outside Pakistan, major countries where Shan Foods
is recognized as a brand are, United Kingdom, United States, Middle East and Far East Regions. Shan Food
Industries is a brand that is exporting its products outside the country and it is helping Pakistan’s Economy.
Sikandar Sultan wanted to provide masalas in the Pakistani Market but as it was a unknown brand he was only
able to provide it to his close relatives, family friends and other known people. Later as some months passed
unknown people started contacting him for masalas and this was the point which pushed Sikandar Sultan and
Shan Food Industries towards proper operations. The servant quarter which was available at his residence was
used for the first time to produce masalas to fulfil needs of other customers, this time period is considered as the
time when proper production started. The Journey from single room to servant quarter almost took 1 year and
from servant quarter to a multinational company it almost took 25 years. Sikandar Sultan during this period
faced many difficulties but the taste which he was providing led him towards growth.Overall, the journey from a
single room has reached to 400+distributors within Pakistan and 80+ distributors across 60 countries.
Page 4
Question#02
Identify the distinctive capabilities of the company that provide it a competitive edge or advantage in the
market. List all those abilities and discuss them in detail.
Shan Foods always have aggressive strategy to sell as much as they can by setting price parity with the cost and keeping
market price in mind. High volume is always the key strategy. Shan Food has recently launch a product line of Oriental
Recipe. The new launch is a part of intensive strategy to compete with local and international Recipe Mix brand, including
those from Far East. The new Recipe Mix has following recipes
Chicken Chowmein
Manchurian
Chinese Chicken Vegetable
Chicken Sweet n Sour
Chop Suey
Fried Rice
Beef Chicken
Indonesian Satay
Filipino Steak
Malaysian Chicken
One can see the strategy implemented by Shan is Think Globally, Act Locally whereby Shan is capturing middle class who
can’t afford restaurant or prefer to eat home and Shan is directly competing with Knorr, a brand introduce by Unilever to
offer such international cuisine Recipe Mix. Besides, further Shan tends to place the brand internationally by getting all
international certification and winning award ‘Suprerior Taste Award’ by iTQi
List all those distinctive capabilities and discuss them in detail.
Cryogenic Grinding Technology
As pioneers in Pakistan’s packaged spice industry, Shan Food has incorporated Cryogenic Grinding Technology
that preserves the natural components and aroma of raw spices through the use of liquid nitrogen. This not only
ensures that all heat-sensitive oils are kept intact during the grinding process but also establishes hygienic
grinding practices that keeps the food free of bacteria.
V Lock Freshness
Shan Foods is the only organization in the domestic spice industry which uses food-grade nitrogen & aluminum
foil packaging to preserve freshness and quality also known as V-Lock Freshness. This process ensures air tight
packing of products to maintain high quality taste, appearance, aroma and texture.
Leadership drives the Company’s culture
Shan Foods (Pvt.) Limited CEO Muhammad Sikander Sultan, helped in paving the way to success by pioneering
in the spice business with presence in more than 63 countries across 5 continents. Shan Foods has been
governed by its core values drives by its leadership. Mr. Sikander shape the culture and define the character of
Shan Foods, forming the foundation on which its employees perform and make decisions. Long term thinking,
integrity, mutual respect, pragmatism, openness to diversity, passion for quality and delighting consumers in
accordance to the Islamic laws remain at the core of our company culture.”
“By the grace of Almighty Allah, our Islamic culture and value remain our single most important competitive
advantage”.
Page 5
Question#03
(a) Determine the boundaries of structure of the product-market?
(b) Form the product-market structure?
(c) Analyze competition?
(d) Estimate current market size and forecast future market size?
Boundaries of structure of the product-market
The boundaries of structure of Shan Food Market is increasing day by day. Initially in early 1980s it was
confined to only Karachi but within the span for 4 years i.e. by 1985 the product was available in all major cities
of Pakistan. Geographically the products of Shan Food is now available in all five continents of the worlds and
all big cities where Indian / desi origin people are living, the products of Shan Foods is available. The company
has endeavor to reach other nations with the different taste bard to try and enjoy the spices of Shan Foods that
includes Arab, Middle East, Africa and Europe / USA.
The product of Shan Foods in not limited to spices but they have not entered into cooked food and soups /
noodles. Further the combination of spices for different nations have be altered / modified to match their taste
bards and traditions. The name of Shan Foods has become synonymous with highest quality and exquisite taste.
It continues to carry on, the tradition of authentic cuisine to farthest parts of the world. There are six broad
categories of varieties Shan deals in including recipe mixes, plain spices, dessert mixes, basmati rice, pickles
and salts.
Today, Shan Foods has presence in 60 countries. The brand is exported to UK, USA, and Middle East and now
to Far East regions as well
Page 6
a) Form the product-market structure
Generic product
Product types
Variant - A
Variant - B
Brand
Page 7
b)
Analyze competition
Domestically in Pakistan, Shan Foods is facing competition to other brands mainly from National Foods, Mehran,
Chef’s Pride, Ahmed Foods, Habib Foods and Zaiqa Foods etc. According to the above graph product category
more competitive specially for Shan and National food same product offering with the same price.
Page 8
c) Estimate current market size and forecast future market size
Spices Industry of Pakistan worth of PKR 24 Billion Annual Business, according to the statistics provided by
SMEDA .Branded/Packed Spices (Market Share 40%, Business Volume PKR 8 Billion). This industry can be
further divided into two categories, with respect to the sources being known/ unknown. Unbranded/Loose Spices
(Market Share 60%, Business Volume PKR 10-15 Billion).
The Unbranded Industry wins a fairly larger volume of sales than the Branded spices manufacturers, but this
Unbranded Spices Industry is showing decreasing trends due to the rapid changes in consumer behavior, may be
due to the globalization. Market Share Spices Industry Branded vs. Unbranded. This can be considered as an
opportunity for the branded spices producer to increase their market shares. Unbranded players operate in the
market through independent, self-owned businesses and they don’t run their products under any label in
particular. Consumption increasing from 7700 tons to more than 8200 tons. There is also increasing trends in
northern and central regions of the country were Shan market share has increased by 2%.percent.
Spice market would perform in next 4 years in each of the segment and also helps us in pointing the most
attractive sector. This is very important exercising and helps people in identifying the segments they should look
for and really aim on.as the food industry is having a tremendous growth there is possibility that new players
will come and existing players will also intensify their efforts to meet the demands.
• The spice consumption is dependent on food consumption and we know that people consume about 50% of
their income on food so his sector will have a good opportunity.
• Exports segment specially have a great potential and its size can be increased by having more efforts to export
spices and meet the international demand
Page 9
Question#04
a) Identify the segments the company targets?
b)
Identify the segments that company’s key competitors target?
c)
Identify company’s positioning strategy?
a) Segments the company targets. Females aging from 18 to 45 years compose the main target market of Shan
Foods. This is because of the reason that in their part of the world, women are mostly related to the food and
cooking. Hence, Shan Foods develops products that are according the needs and wants of these women no
matter if they are stay-at-home or working, single or married ones.
Shan Foods has already established it brand name outside the country but there are certain Asian segments
which they haven’t reached yet, for example; Asian community living in Germany are not able to access Shan
Foods Spices and Ready to Cook recipes. This is the story of one Asian community belonging to a country but
in reality there are many other unexploited Asian segments where there is immense need.
b) Identify the segments that company’s key competitors target.
National Foods is the main competitor of Shan in terms of market share nationally when we talk about packaged
spices, therefore the company keeps a close eye on the competitor so that they do not get driven out of the
market. Like Shan, National foods also have different kinds of spices that are available in packaged form. As the
product is one that is used on daily basis therefore, more than the offerings that the companies tend to offer it’s
the buying preference that actually determines the success of the two companies. In terms of pricing both the
products are approximately same but National holds an edge when we talk about the efficient delivery (i.e.
better availability of the product) as well as caters to large market share. Another factor that contributes to
National’s success over Shan is the fact that Punjab is the most populous province of the country and the people
there are fond of eating. Now since it is the largest market with mild preference for spice, it makes it easier for
National to have its success story in that part of the country.
Major players of packed spices in the industry are:
• Shan Foods
• National foods
Others players in the industry are:
• Chef’s Pride
• Mehran Foods
• Ahmed Foods
• Habib Foods
It sometimes becomes difficult for firms to compete and this is one of the main reasons due to which many firms
leave the industry. A noteworthy player Galaxy Masala was there in the market in the last decade but has closed
down its operations now. The vital reasons due to which a firm might leave the industry are low Pageconsumer10
response to the company’s offerings due to dissatisfaction, high brand loyalty already towards other
brand/player, not shifting to other brands, and monetary and trade concerns. Despite these possible reasons,
there are number of players who have survived the stiff competition and come out successful.
Shan Foods and National Foods both as occupying first position as far as market share is concerned. However,
since their complete financial figures could not be accessed at this preliminary stage of report, it is difficult to
determine which player currently holds more share when it comes to operating in both Pakistan and international
markets.
Chef’s Pride as holding 15% market share and occupying the second position in branded packs in Pakistan. It
has however been observed that this player is not available in majority leading stores across Karachi, which
forms quite a substantial market for all branded and unbranded spice dealers.
c) Identify company’s positioning strategy?
Shan Foods position statement is “To the confident and convenience seeking woman of today, our wide range of
Shan spice mixes offer premium quality products, made with the finest ingredients like no other.” It is just for
the fact that the consumers should be provided with solution of having a tasty meal in no time with homemade
mixes of recipes and spice.
The whole marketing mix of Shan Food is designed in a way to set high quality and standards in the mind,
customers are convinced that what they get is more then what they pay. The new endeavor should be to set an
image in the minds of the customers about the importance of “Being Pakistani and Buying Pakistani” and that
our brands can outshine internationals ones.
Page 11
Question#05
Identify the strategic relationships that company has entered such as:
Joint Ventures
Strategic Alliances (with suppliers, competitors, intermediate customers)
Give details of each strategic partnership with reasoning for the partnership.
The Company has strategic relations with regard to long term strategic alliance with its suppliers and distributors
but due to confidentially of the same, the required peculiar information was not provided to us by the concerned
representative of the Company.
Question#06
Discuss how company uses brand leveraging strategy for its current brand portfolio.
It has been more than 25 glorious years that Shan Food Industries was established in Pakistan, with its portfolio
increasing by the day. It believes in research & development and therefore, it is only after testing that new
products are introduced in the market, ensuring success. A company that started from spices only, kept
extending its portfolio range with pickle and salt added to the list. Finally, a wide range of desserts also became
the part of the portfolio.
Different products of Shan Foods have different portfolio roles. Shan Plain Spices and Pickle play the role of
strategic brands because these two are expected to have high future levels of profits and sales. Plain Spices can
also be referred as Silver bullets because ‘Tez Lal Mirch’, ‘Teekhi Kali Mirch’ and ‘Khushbudar Lehsan’ are
themselves separate brands and also add benefit to the umbrella of Shan Foods. The Garlic Pickle prepared in
olive oil is the first of its kind and because of its uniqueness, mostly it is short in market and so the company
representative classified it as a linchpin brand. Lastly, since its Recipe Mixes have a large market share and a lot
of brand loyalty has been established for them over the decades, these are cash cows for Shan Foods. Products
Range of Shan Foods The products of Shan can be broadly categorized into 6 categories, with multiple
subcategories. The different product offerings of Shan Foods are:
• Recipe Mix
- Biryani Mixes
- Stir Fried Foods
- Curry Spice Mixes
- Deep Fried Foods
- Barbeque
- Vegetarian Foods
- Instant Foods
Page 12
• Plain Spices
- Khushbudaar Lehsan
- Zaiqedaar Adrak
- Khatta Khatai
- Qasuri Methi
- KararBiryani
- Taiz Laal Mirch
- Taaza Dhaniya
- Zaafrani Garam Masala.
- Teekhi Kaali Mirch
- Khaalis Haldee
• Dessert Mixes
• Basmati Rice
• Pickles
• Salts
Even after having more than just spices in the portfolio, Shan is considered the Recipe Mix expert. Within
Biryani alone it has nine different variants, two spicy and seven milder ones. And it is the first one to come up
with ‘Taaza Dhaniya’ in the Plain spice category. Every single offering of Shan has its own identity.
Product Offerings within Spice Mix Category
The Spice mix division at Shan Food Industries happens to be the oldest product category of the company. The
category has a total of 67 different products, which are broadly divided into 11 categories, some of these
categories are:
• Authentic Curries
• Traditional Stir Fries
• Tasty Instant Food
• Tempting Vegetables
• Delectable Biryani etc.
Looking at the product portfolio of Shan Foods, it is seen that Shan Foods has given is consumers an offering
for every occasion and every type of taste. Be it traditional cuisine mixes like Biryani or an offering in the
Dessert category; Shan has an offering to complement all the good things in life associated with food. Out of all
its categories, Foods Spice Mix category is the oldest and is still used synonymous with the name Shan i.e. Shan
Foods is still referred to as Shan Masala by many. This shows how strong the spice association is with Shan
Foods.
Page 13
Other categories like Basmati Rice, Dessert Mixes, Pickles and Salts were introduced later. It is seen that Shan
itself promotes its Spice Mix category most with minimal or no marketing expenditure on the rest of its
categories. Shan advertises its traditional recipe mixes and spices the most, because it wants to remain top of the
mind and top of the heart brand. Shan Foods is believed to be the leader in the Spice Mix category and it takes
utmost effort to ensure that the leadership crown is not worn by anyone else but only Shan Foods.
Question#07
a) Draw the value chain structure of the company and present why company uses or multiple channels
to reach customers. ?
b) Identify how many partners (e.g. retailers, distributors etc.) company has in its forward value chain.?
Consumer product
Page 14
a) Explain Shan food channels to reach customers
Shan Foods reaches out to its customers through two channels i.e. through distributors and direct sales to
Retailers. Although specific information about the distributors were not provided regarding local distribution
channel and international distribution. Although it was informed that major big Retail Stores are directly
supplied products from Shan factories that includes Imtiaz Stores, Metro and others.
b) Identify how many partners (e.g. retailers, distributors etc.) company has in its forward value chain.
Shan Foods meets the market and customer demands in a fitting and timely manner. It is therefore, ensured by
the Supply Chain team that goods or shipments reach their destinations well in time to match market trends and
customer demands. Shan makes sure that its authentic brands are distributed by efficient and top of the line
distributors.
Shan has a separate Sales department focusing on International Modern Trade (IMT) and Local Modern Trade
(LMT). This department maintains direct relationships with variety of shops to meet their customized
requirements. This practice helps Shan to keep a close and direct relation with high sales outlets which is pivotal
for its greater profits and market share. Sales teams are totally monitored by Territory Sales Manager (TSM) and
Regional Sales Manager (RSM). Shan Foods helps by extending all possible marketing support to its distributors
in to create awareness of its quality products in the international market in mutual sustainable business interest.
Company’s TSMs and RSMs work on the Conclusion area wise policy for distribution, be it local distribution or
export. Products are distributed on the basis of geographic segmentation. For instance, in posh areas no display
of the sachet packs will be seen in the stores whereas in underprivileged areas only sachets are supplied. In
Pakistan alone Shan has 500 distributors; from Karachi to Skardu. The sales force of Shan supplies its products
to these distributors and some direct distribution is also done mainly in Karachi market.
The distribution channels of Shan Foods include:
• Retail
• Wholesale
• Hyper Markets
(e.g.Macro)
• International Chains
Shan is the largest exporter of premium quality packaged spices, spice mixes, food mixes,rice mixes to USA,
Canada, UK, Germany, Holland, Malaysia, Middle east, South Asia, Japan, Singapore, Australia, and many
other countries of the world.
It also exports its products to the Far East, Bhutan, Japan, Malaysia, Singapore, Thailand etc. In totality, it has
its presence in almost 60 countries worldwide. It is the first Pakistani brand that has been officially launched in
India and Shan foods plans to extend its availability in other lucrative markets around the world.
Page 15
Question#08
Analyze the pricing situation of the market company operates in.
The pricing of all Shan offerings varies and depends on each Stock Keeping Unit (SKU). However, the
price ranges for five (out of six) categories of Shan product offerings are as follows:
• Recipe Mix:
The Recipe mixes range from Rs.30 to 40
• Plain Spices:
Pricing of Plain spices varies SKU wise. For example, 50 grams red chilli powder
is available at a price of Rs.20 and150 grams at Rs.115
• Dessert Mixes:
Desserts are all priced at Rs.35
• Pickles:
Pickle pricing is Rs.170 for 1000 grams, pricing varies as per SKU
• Salts:
Iodized salt is priced at Rs.17 (800 grams) and plain salt at Rs.15 (800 grams) It is seen that on a general note,
Shan Foods’ offerings are based on parity pricing and are similar to those of its rival National Foods.
According to sources, this similar pricing is not due to any price war that exists between both companies but is
because the raw materials of both are similar in nature for many offerings. If the cost of raw materials Increases,
both have to increase their prices and again their prices show similar trend after increase.
Page 16
Question#09
Conclusion
All the hard efforts that go behind the creation of Shan Foods products have helped them being acknowledged
internationally for their superior taste & quality. This "Superior Taste Award" from International Taste &
Quality Institute, Brussels is one of the many awards that Shan Foods has been receiving over the years for these
persistent efforts. To celebrate this success a formal press conference was held recently. The founder and
Chairman of Shan Foods Mr. Sikandar Sultan, who personally received the awards in Belgium said at the
occasion, "At Shan Foods it is our foremost belief that consumer-focus in all areas of business helps us create
consistent quality and authentic taste to win the consumers' hearts. Shan is the only company from Pakistan to
win the iTQi awards in 2018. We are proud for earning a good image for Pakistan during this critical Geopolitical phase" Shan Foods is committed to excellence in quality and taste of food. It strives to help Pakistan
reach new heights of success, achieve perfection in all areas concerned and to enrich and make your food
experience JUST PERFECT!!!
Further Shan Foods is seriously thinking about an IPO since at least January 2014, when it participated in
Pakistan IPO Summit. At the zenith of the KSE-100 index in late May last year, when it touched a record high
of 52,876 points, 17 entities had applied for a listing according to the daily quotation sheet of the exchange,
informed resources. Before panic struck the Pakistan Stock Exchange in May 2017, and therefore many
companies had been preparing for a listing but backed out due to fear of under-subscriptions. We believe that
Shan Foods will go for it [IPO] by 2020.
Shan Foods is in the process of launching a few new products, including wheat flour, told an insider. Shan
Foods’ management estimates that the share of the informal market as a proportion of the total market has gone
down by 10 percentage points in the last three years.
Recommendations
Apart from everything one of the growing sectors in food industry is of frozen foods, though a news field for
Shan foods but with the current performance in spices and the quality it maintains, Shan has strong chances of
making its marks in the frozen food category as well which is currently led by K&N. Shan Foods existing
distribution and production facilities can help in this initiative. Though the new generations are realizing the
benefits of open spices to packaged branded ones, but there still need to be developed effective marketing
strategies after understanding the trends in how people are using spices and for what reasons are they using them.
Convenience, environmental concerns, increasing acceptance of food as having therapeutic value are some of
dimensions organizations need to study and develop new uses for their spices.
Page 17