Marketing Strategy of Nishat

Marketing means a market research process in which attitudes, needs and competitors’ products are assessed and it also continues through, promotion, customer services, advertising, packaging sales and distribution. Here I am going to write about nishat mills Pakistan. The company background, products or services offering, financial reports, the market audit, market plan and corporate objectives, gap analysis, segmentation, positioning, tactical strategy, marketing budget and evaluation and control mechanism.

Company overview:

Nishat group of industries in one of the most important group in Pakistan with the asset of more than 300 billion rupees. This is the fifth largest group in Pakistan. This group has a strong command in four sectors named as banking, cement and textile industries and management. The chairman of the group main Muhammad Mansha one of the richest Pakistani and in 2007 had been awarded with the highest civil award by Pervaiz Musharraf. Nishat Mills Limited is a public company operating in Pakistan and is listed on all three Pakistani stock exchanges. This company is engaged in textile manufacturing including weaving bleaching, spinning, combing, stitching, dyeing, printing and buying, and selling of textiles. The company is providing high quality products to all its customers not only within the Pakistan but outside as well.

• Mission statement:

Mission statement of this particular company is to provide the quality products to all its valuable customers and depending upon its high quality products to discover new markets and to expand sales of the company through good governance and energetic management. The basic purpose is to achieve lower prices of quality products so that company’s growth and prosperity can be enhanced.

• Vision statement:

The vision statement describes that company wants to become the leader in the specific industry by making over itself into a processed cloth, modern and dynamic yarn and finished product manufacturing company with latest technology, highly professionals and fully equipped to play a meaningful role on sustain able basis in the economy of Pakistan.

Target marketing:

Target marketing needs a market plan to hit the market. Target marketing is in between market segmentation and market positioning. It can be explained better in the four following points.

1) The market targeting means who will buy your product/service.

2) The need your product means why and how the people will use your product or service.

3) What are your products or services have in particular.

4) Improvement of the product or service.

So the nishat mill is targeting the market of industry by geographic, demographic, psychographic and behavioural.

 

Marketing audit:

The marketing audit is considered an important problem solving tool in marketing management, is defined as “a comprehensive, systematic, independent and periodic examination of a company’s- or business unit’s – marketing environment, objectives, strategies, and activities with a view to determining problem areas and opportunities

And recommending a plan of action to improve the company’s marketing performance (Kotler et al., 1977; Brownlie, 1993).” Market audit tells us what market strategy is. So it is very essential in all the companies because it corrects the wrong efforts. The marketing audit relates to the profit, productivity and cost effectiveness the market audit consists of different function like price, advertising, products distribution sales forces and customer services. Marketing audit is done internally and externally and consists of some micro and macro forces as well. So nishat mills do it in the same sequences.

Pest Analysis:

Macro environmental forces may disturb or affect any company in the world. These forces called pest stands for political, environmental, social and technological.

• (P)olitical factors:

Due to the unsustainable political and legal factors of Pakistan the current situation is not satisfactory for this industrial giant. Changing in the government after every 2 or 3 years is a big issue and after that every government implements its own trade policies which are great problems. Government should apply sustainable policies for the beneficial of the exporters as well as the investors.

• (E)conomic situations:

The global economic recession also put the negative impression on the economy of Pakistan and disturbed it badly. Prices of the commodities have gone up and which minimise the people purchasing power. The economic condition of Pakistan is not good as well. Inflation rate is increasing rapidly and the high cost of production not attracting the foreign investors and thus reduce the profit margin of the investors and the stakeholders as well.

• (S)ocial change:

Rapidly increasing inflation rate has disturbed the lifestyle of the people and hence has affected the growing demand of the nishat textile mills (NTM) products. So this is another important factor which is disturbing the nishat mills products because people life style has changed a little bit.

• (T)echnological situation:

As the advanced technology is being used by every company in the world. It just disturbed a small portion of the industry but the NTM has very good equipments imported from different countries. So position from technological point of view is satisfactory as compared to the others.

Analysing the pest

Political and legal factor:

Factor

Impact on industry

implications

political

High

It is a great threat for the industry

Legal

medium

It need to be stop from becoming high risk

Economical situation:

Factor

Impact on industry

Implications

Economical

High

Economical situations would have to change as soon possible

Social situation:

factor

Impact on industry

Implications

social

low

This is a satisfactory and is not a big threat

Technological factors:

Factor

Impact on industry

Implications

technology

low

The industry has latest technology

Conclusion:

These macro forces are great threats so that the government of Pakistan should take some necessary steps for the betterment of the industry. Pest analyses are of great importance for every industry so they should be given the first priority and the most important thing in this regard is the political stability so that the investors’ confidence can be promoted.

Micro external environment:

Micro external environment enables an organisation to have a good knowledge of the forces which can cause problems for the organisation from outside the organisation.

Porter forces model:

“Five forces model is helpful to analysis an industry’s competitive environment. In all industries, the rules and nature of competition are alive in a five forces framework (FFF): 1. the bargaining power of suppliers, 2. Threat of new entrants, 3. the bargaining power of buyers, 4 the threat of substitute and 5. The rivalry among the existing competitors” (Porter, 1985, 1990). The Porter’s 5 Forces model is a very simple but the powerful tool which helps to understand the business situation. This model enables an organisation to understand both current competitive situation and the position which you are looking for.

• supplier’s bargaining power:

Supplier bargaining power is affecting the nishat mills profit. Because of inflation the prices have gone up and the raw material as well. So this powerful bargaining hitting the profit badly of NTM.

• New entrance threat:

This is a threat which every organisation faces. Keeping them save from this threat they use a scale of economies so that the cost can be reduced and product differentiation can be maintained.

• Buyers bargaining power:

Bargaining power of the buyer is helping to reduce the profit ratio of the NTM because they want discount in the products and insist for the more which is helping to minimise the margin ratio.

• Substitute’s threat:

Substitute products are available in the market and creating the problems for the nishat textile mills. So such kind of threats are available both at national and international market.

• Rivalry between existing competitors:

This is strong threat to the company’s profit ratio and market goodwill. Both nationally and internationally the competitors are very strong and beating to each other in everything. So this is the strongest threat for the NTM and they will have to consider it as a first priority threat for the survival. The below table shows the porters five forces analysis.

Five forces analysis

force

Profit threat

Supplier bargaining power

Strong

Buyer bargaining threat

Weak

Threat of new entrance

Weak

Substitute threat

Medium

Rivalry between existing competitors

Strong

• Internal marketing audit environment:

Marketing internal audit consists of some factors which can be helpful to make aware of the organisation about the different aspects. The internal market audit consists of the following.

• Marketing segmentation:

Market segmentation is explained as “the subdivision of a market into discrete subsets of customers”. [Kotler, 1976, p. 144]. Market segmentation consists of the following points. It is helpful to have a good idea of the need of potential customers of the company. If it is done properly and in a good way, would be beneficial to assure the highest return for your sales or marketing Expenditures. It depends on the following points

1) Customers:

Customers of the NTM are from around the world. The industrial giant of Pakistan emphasis the buyers need, purchasing power, cultural customs and target the people of all age’s sector vice because it is engaged in different sectors.

segmentation

Status

profile

Psychographic

Social criteria

Married, single etc

behaviour

position

Loyalty

Rate of usage the products

Common users

Highly trusted brands

Depends on the product which sector of NTM it is from

2) Products:

NTM produces great brands and therefore has a good reputation in the different countries. It is working in the sector of spinning, waving, and home textiles and under these units a large number of products are prepared with different designs as well. NTM is engaged in the business of textile manufacturing and using weaving, spinning, printing, bleaching, dyeing , combing, stitching, buying, selling, cloth, yarn and fabrics made from raw cotton, synthetic fibre and cloth, linen and to generate, distribute and supply electricity.

3) Competitors:

The major competitors of the NTM are Chenab textile and crescent textile mills. NTM competes with its competitors in terms of innovation, price and promotions.

The higher managers innovate the employees of NTM by listening them and have started to give them benefits and hence get the desired results. NTM has good strategy of innovation over the competitors

Price is the very important factor and NTM trying to reduce the cost and prices will go down automatically. This price strategy helps NTM to become the industry leader in Pakistan.

The employees are being promoted on their performance level within a fix period while the competitor’s employee need more time to be promoted.

4) Brand:

All the products of the NTM are traded under the name of nishat group of textile in all over the world. The NTM is very famous for its brands both nationally and internationally.

• Core competence:

NTM’s core competence is price. The prices of everything have gone up rapidly due to the credit crunch which affected all the aspects of the industry as well. The NTM has been utilizing advanced technology to reduce the prices and to secure itself a leading position in the textile industry.

Competences and capabilities (5m’s):

The internal market environment consists of money, men, machinery, minutes and materials. The description is as follows.

• Money:

The NTM is one of the successful textile mills in Pakistan with the market capitalilization of 10705609170. (Pkr rupee)

• Machinery:

NTM is using the latest machinery with latest technology. “Since 1997-98 textile machinery has been imported when a bumper cotton crop was harvested and the Textile Industry reaped massive profits due to lower input cost. More than 9 billion (pkr rupee) have been invested in the last five years for the import of spinning machinery. Nishat imports machinery from all the developed countries.” (Jamil bhatti, 2006)

• Men:

It has hired the skilled labour which contributes a lot in success. The higher authority has been taken from the all over the world.

• Material:

For the high quality production high quality material is used. As the various functions are performed like spinning, weaving, stitching, dyeing, sourcing, bleaching and printing and other as well. So high quality of production factors are used.

• Minutes:

As the latest machinery is used, it helps to produce the products on time and customers are facilitating as well.

Swot analysis:

The SWOT analyses are of great importance and helps in decision-making for all sorts of situations in business and organizations. The swot analysis for nishat mills limited is as follows. (Kotler et al…2005) “SWOT is a practice which helps to analyse the internal and external environments of an organisation through the classification and judgement of its Strengths, Weaknesses, Opportunities, and Threats. SWOT analysis shows an image of the results of an internal and external audit which draws attention, from a strategic point of view, to the organisations critical strengths, weaknesses, the opportunities and threats facing the organisation.”

• (S)trengths:

1) ISO 9001-2000:

Nishat textile has the certification of ISO 9001-2000 which means its quality standards are its major strengths and hence it also fulfils the requirement of international standard and has a great importance in the industry internationally as well.

2) OKTEX 100:

Nishat also has the certification of oktex100 with itself which insures that it doesn’t use any harmful chemicals.

3) Computerized machinery:

This textile giant is using the latest technology for the production of the highly quality products which also enhances the production capacity of employees.

4) Skilled management:

The highly skilled management from all over the country has been hired by Nishat and especially the foreign graduate people in their management contributing a lot in the success of the NTM.

5) Financial position:

The owner of the NTM is one of the richest people in Pakistan and has the adequate financial resources which mean the back of the NTM is very strong.

6) MIS:

NTM is fully equipped with the management information system through which the employees and various departments are connected with each other and share the data with the top management. So it is a very appreciable system.

7) Power generation plant:

The electricity power is a very immense issue in Pakistan so NTM has its own power generation plants and producing the power not for itself only but also selling it to the WAPDA.

• (W)eaknesses:

1) High production cost:

The resources are not being use properly and due to the economic crisis the rates are going up rapidly and hence cost of production is increasing as well.

2) Bureaucratic organisation:

Another weakness is the bureaucratic environment within the organisation. The upper management takes all decision ignoring the employee’s suggestions.

3) International market:

NTM has week international market because of china that is very well known in the cost reduction and creating a big problem in the industry for the NTM internationally and the market share price has gone down as well.

4) Employee benefits and rewards:

Nishat is not providing any kind of benefits or rewards even the medical allowance and transport facilities are not given to their employees and this put the productivity down and therefore there is the lack of motivation in the NTM.

• (O)pportunities:

1) Product expansion:

The very important opportunity for the nishat mill is that it should expand its products in the form of knitwear. As NTM has plants, good market position and strong financial back so it should avail this opportunity by dealing in knitwear.

2) Low cost production:

The NTM should use the resources in a good way so that the production can be reduced to a great extent and can maximum the profit ration.

3) International market:

NTM should take the benefits of global recession and has a chance to increase its market share price internationally.

• (T)hreats:

1) Political instability:

This is the threat which cannot be ignored due to the current circumstances of Pakistan and the export of the products may affect in account of this.

2): Government policies:

As the political instability is in Pakistan and every new government imposes its own rules and regulations and especially the sudden increment in the taxes is not affordable for the NTM.

3) Buyer needs changing:

The NTM has a great threat from international market because of its satisfactory design and competitors providing the latest ones which can put the NTM reputation down.

4) Global instability:

The global instability is still in operation for this industry. Any unusual incident can happen as 9/11 was happened so still that kind of threats are able to disturb the company performance.

Trade reports:

According to a trade report the profit of the NTM after tax deduction in the nine months period ended March 31, 2010 has raised to Rs 1,810.674 million as compared to Rs 1,100.421 million in the related period ended March 31, 2009, showing an increase of 64.54 %. It shows the good reputation of the company but still has problems of high prices which need to be solved.

Marketing plan

“The marketing plan is an internal part of business that sets out the business goals and objectives and the strategies and actions as well that will need to be implemented in the way of achieving them.” Cathal Muckian, Director, Bank of Ireland Business Banking

• Market objectives:

Market objectives are about the products and market only. Which relates to the market share of the products and how it can be increased and how to attract the customer towards the products or services? Market objectives have a great relation with the market share.

• Market share:

Market share price of the nishat textile mills is 45.59(PKR rupee). The market share price rose to PKR 3.30 per share loss was PKR 0.23 in the same period one period before.

• Company’s objectives:

Short term (1 year)

Long term(2-3 year)

Increase the market share price

Expansion of business successfully

To keep the competitors behind by reducing the costs

Increase the sales by targeting the young’s

Gap analysis:

Gap analysis shows the reduction in the market share price and the sales of the company.

http://www.artdavisgroup.com/Images/isogap.jpg

This gap analysis explains that what is current situation or market share price of the products and how to increase the share price and what kind of action we need to take. Share price is now 43 which were 65 last year now it is challenge for the NTM to just not reach at 67 but also need to improve it by the objectives which it has chosen to improve itself stated above.

Strategies of NTM:

“Try to minimise the cost of production and the purchase of latest machinery.

To improve the quality and production is the main focus area.

Nishat has to establish its name in new markets be creating specialized fabrics designs by providing excellent customers service and quality as well.

In some areas of the industry old methods have to remove by the latest ones.

To make arrangements to increase the quota system.”

Jamil bhatti (2006)

Target marketing:

The target marketing comes after the market segmentation which I have explained above and here we select specific group of people or analyse the market of the products or services. After the identification of segmentation the managers make decision of taking the opportunities considering the prime target and secondary target but the target marketing of NTM wants to hit the weaving sector which contributed a lot in the revenues of NTM. So this is the specific sector of NTM where it wants better results and high quality products are essential.

Positioning strategy:

After selecting the target market, the next stage is to decide how company wants to hit the chosen segmentation. Ntm has decided to hit the cotton industry in all over the world by reducing the cost because china, India has the lower rates than the NTM. So the low rates and better quality is the demand of customer and company.

Competitive strategy:

It has two types. The brief description is as follows.

• Attacking strategy:

At the moment NTM is not in attacking position because it has problems both nationally and internationally. Because of the high cost of production, heavy government taxes, political instability are main factors.

• Defensive strategy:

NTM’s defensive strategy is to block the attack of the competitors because of the above problems it has been adopting the defensive strategy.

Marketing mix:

Marketing mix is unified by the 4p’s.

• Price:

The NTM for the survival will have to reduce the prices and they are trying to do this because they have the higher prices as compared to the competitors and this is because of high cost of production.

• Product:

The managers of the NTM trying to take the decision about products quality, design, functionality and warranty as well.

• Place:

It’s about the NTM transportation, order processing, warehouse and logistics as well. At a national and international level NTM trying to reduce the expenses and this would be helpful to increase the margin profit.

• People:

Customers are everything so NTM trying to focus more on the customer based policies so that the customer’s confidence can be won.

Tactics:

Tactics means a short time plan used immediately to increase the sales or market share. NTM tactics in difficult time is to improve the overall system with a quick survey and information. The contact is made with other dealers and their interest is kept in view. NTM sends articles to its clients that it has solved its problems very easily. The rewards are given to the valuable clients to improve the sales and stake holders are taken into confidence.

Market budget:

Ntm has fixed a certain amount of money for the development of marketing mix. At Ntm, the higher management has installed complete system of information for all its places, people, product and prices providing relevant information accurately to ensure thoroughness in decision-making and managing company s resources. Some of the sectors contributed a lot in the profit such as weaving but this segment in the future will go down because of the high prices and it would affect the profit, products, place and people because the company will have to prepare for this coming threat and therefore has announced a total package of 1010.236 (pkr) for next year. The required amount for the development of marketing mix has been included in this specific amount.

Implementation plan:

Strategic implementation is a way to put the strategic plan into an action-based road map that helps the companies to reach their organizational goals. A business plan is done when the internal analysis are made such as strategic marketing, management structure, personnel and finance. It plays an important role if it is run properly. NTM has decided to implement a plan against the increasing prices of the cotton and weaving. The NTM basically implements a plan by taking the action, check the action steps twice and then implement a plan.

“The process of implementing your plan can be divided into three components:

Taking action:

If you work actively then you can achieve the goals and can get success.

Review the steps:

At this point all the steps are rechecked and go through all of them.

C) Preparing for the next step:

Then be prepared to implement your plans and check them regularly for their proper working.” Deborah Brown-Volkman