Group # 4

MBA-1

SectionC

Lecturer:
Imran Ijaz

MILK PACK- THE KARACHI DILEMMA

Of

WAC

Marketing
Management

This case study is about

the problems faced by
the marketing manager
of Milkpak Pvt Ltd. The
case study listed the
problems face by the
company regarding drop
in sales in Karachi,
Different strategies used
to cope up with them,
competitors and now
similar product and
1
affects their launch had

in Karachi.
Group # 4

MBA-1

SectionC

Group # 4

MBA-1

SectionC

WAC
Written

Case
Study

Analysis
Content Cycle

Suggestion
&
Recommendati
on

Introduction
To MilkPak
Case Study

Identification
of Problems

Analysis

Justifications

Group # 4

MBA-1

SectionC

WAC
Of
MILKPAK-THE KARCHI DILEMMA

Introduction to MilkPak Case Study

This case study is about the problems faced by the marketing manager
of Milkpak private ltd.Mr.Omer Raza.The case study lists the problems face
by company regarding drop in sales in Karachi, different strategies used to
cope up with them,competetitors and new similar product n effects their
launch had on milk pack and its sales in Karachi.
The product Milk pack launched was Homogenized, hygienicallypacked, UHT milk, which it marketed under the brand name Milkpak.the
UHT process involves rising the temperature of milk up to 145 degrees
centigrades for 3 seconds. The milk is then forced to pass through a very
narrow slit.
This process is called homogenization. Since before that the only
source of providing milk was Gawallas. So it was a very different and new
thought. Packaged milk had added advantage of being bacteria free and had
a three months long shelf life unlike the milk provided by Gawallas.

Identification Of Problems
1. The first problem of reduced sales in Karachi was difference in prizes
as compared to Lahore. The price of Milkpak was Rs/- 4.50 in Lahore

Group # 4

MBA-1

SectionC

and Rs/- 5.50 in Karachi. Although this difference was fully covered
Milkpak cost of spoilage, transportation to distributors and payments
of transport taxes such as Octori.
2. The 2nd major issue faced by Milkpak was to pay security deposits on
plastic cases in which Milkpak was delivered and stored. The combine
cost of amortization and other operation cost using the plastic crates
came to rs .25 per liter, as against Rs/- 80 per liters if one wat card
board container was used.
3. Thirdly, the margins given by Milkpak to its distributors and retailers
were lower than what competition offered in Karachi. Milkpaks
margin to distributor was rs .20 per liter in Lahore and rs.25 per liter
in Karachi.
4. Whenever Milkpak was introduced to new city, it was supported by
extensive media advertising. Milkpak had highest advertising budget
in the industry. Still there was tendency at milkpak to regard
advertising as a superfluous expenditure. Consequently, whenever the
net profit of the company fell below a certain level, the first expense
to be curtailed was advertising.
5. Milkpak was introduced in Karachi in 1982, it was heavily advertised
on local television in Urdu and English magazines, and points of
purchase but no consumer discounts or incentives were offered during
the promotional period as a company considered profit margin to be in
adequate support such schemes.
6. Karachis market already had a very strong hold of fresh milk
providers and powdered milk. People preferred cheaper milk which
had low prize over good quality milk provided by tetra packs.
7. Lastly Milkpaks first direct competition was UHT packaged milk
bands like Milk pure and Pura Brand. These competitors marketed
similar kind of product with the same prize and packaged as Milkpak,
and competed by using huge sums of money on product promotions
like video cassettes recorders, free tea bags and raffle draws for free
air tickets. Although this problem was temporary but it affected
Milkpak, which was not doing very well in the first place.

Group # 4

MBA-1

SectionC

8. Mr. Omar was of the opinion that milk was generally regarded as only
a tea whitener in Pakistan. He also believed that milk was considered
good for growing child. Its also Omar belief that consumer could not
be forced to change either their habit or their thinking by the force of
media. He thought that media could only be used as a reminder to
purchase milk.

Justifications
Justification of the first problem was the fact that company had to bare
the expenditure of spoilage and long distance transpiration. So the prize was
raised to meet these expenditures. Milko being quality conscious wanted to
make sure that there product looked good as well not realizing that this will
affect them adversely at a scale this large. They proffered to display their
product in a good plastic case as compared to plastic crates.
The reason behind asking retailers to pay more was the same that
Milkpak used their revenue to make their product look appealing hence they
spent more they had to sell their product at higher prize. Since media plays a
very effective role in our daily life, advertising has major influence over
people in making the decision when it comes to buying stuff. That is why
they invested a major chunk of the revenue on advertising Milkpak products.
As company was already spending a major amount of revenue on
advertising, it was enable to manage funds to offer such incentives. Quality
always is expensive. Milkpak had to go through a standard process to make
the milk Bacteria free, homogenized and UHT treated. Off course to do all
this Milkpak spent money, hence the resulting product was expensive but
better in quality.
Making Milkpak a less likely choice of people having a cost effective
approach. Milkpak was unable to introduce such schemes because of
financial constraints so it was not able to offer such incentives to customers.
The companies which were offering such incentives to customers were also
not able to continue because this required continuous flow of revenue. So
they went out of business soon whereas Milkpak is still in the market.
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MBA-1

SectionC

Omar perception that the money these people saved, was invested
either business of was sent to Back home (somewhere in the north of the
country) that is why he has started believing that people preferred cheaper
milk.

Analysis
30% to 40 % of Milkpak revenue was being spent in Karachi although
the transporting and spoilage was an unavoidable expenditure but it should
have been accommodated from advertising budget and the customer should
not have been made to pay the obvious expenses. That way the prices would
have remained the same in both the cities and since advertising was not
playing a major role in Karachi and cutting its budget short would not have
had any adverse impacts, creating a win-win situation.
Milkpak could have use plastic crates rather than using plastic cases
which are less expensive there by saving revenue themselves as well as
having retailers to pay less revenue and using that revenue elsewhere to
make the product and its marketing more effective.
Similarly the third problem which was offering less margins to
distributers and retailers, occurred because of mismanagement of revenue.
Had revenue been invested correctly and in correct places, it would have
been much easier to manage such problems.
The advertising campaign took major part of revenue generated,
whereas the manager was aware of the fact that media wasnt playing a very
effective role in promoting milkpak. I think a separate advertising campaign
should have been designed for Karachi, given the other difficulties milk
pack was already facing in this particular city.
Lastly, the minute company has realized that sales are going down in
only Karachi city, new strategy should have been laid for this particular city.
For example, spending of revenue should have been altered by lowering the
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Group # 4

MBA-1

SectionC

standard of every product activity and campaign that was not directly
affecting the quality of key product, should have been lowered. E.G. Using
plastic crates rather than plastic case designing in new add campaign for
specifically Karachi city that was effective yet in expensive and spending
that revenue on providing customer benefits such as lottery schemes. Low
prices at least the price should have been uniform country wide.
After managing lots of expertise he started thinking that people or not
really willing to buy more for quality Milkpak but they preferred to save
money as he had not seen any success in Karachi.

Suggestion & Recommendation

The strategy design for this campaign was obviously planned by an
extra ordinary individual who may have thought through every aspect
related however I would have adopted different approach. In this case study
I have seen that the strategies for campaign should be different for different
cities depending on different circumstances faced by different cities.
For instants as mentioned earlier Karachi had different needs as off
other cities in Pakistan so the first step to make situation work in companies
benefits was to arrange for cheaper transportation alternatives. Secondly add
campaign should have been approached in such a way it does not lose it
basic effect but also should not have swallowed up major chunk of
companies revenues.
Thirdly, one of the reasons why tetra pack was not a success in
Karachi, because the fresh milk that was available easily and at a lesser price
already had better quality. Therefore while designing the add campaign for
Karachi, the focus should not have been the quality of fresh milk as apposed
to packaged milk instead this should have been the benefits of having milk
preserved in tetra packs which protected milk from bacteria and gave it
longer life than fresh milk.

Group # 4

MBA-1

SectionC

In my opinion Omar needs to try something new or innovative so that

people buy Milkpak products. They preferred Milkpak other than Pura Milk
or Fresh Milk. His belief forcing him to give up and try focusing other
markets and thats the main reason his marketing strategy was screwed in
Karachi. He needs motivation so he thinks more positive for the marketing
strategy in Pakistan.