Spice Industry-

Chapter 5
Group Members Amjad Ali Memon, Myra Abid and Yousuf Amin

Managerial
Policy
 Shan Foods

Shan started in 1981 selling recipe masalas and remained small until 1995 when it expanded its
production facilities by buying a factory in industrial area in Korangi but did not engage in any
promotional activities until 2000. Shan also started from home and to date remains a family
business. The family members (especially females) are personally involved and therefore visit
their factory regularly to mix various ingredients making the final recipe mix. These recipes are
not shared even with the employees of the company and hence the family secret is safeguarded.
Major sales of Shan recipe mixes are from Karachi region accounting for approximately 70%
while 30% of the remaining Shan sales come from Punjab. Shan was able to penetrate into the
Punjab market due to the migration of people from Karachi to Punjab during the early 90’s soon
after political instability and unrest in the metropolitan city. Shan has now enhanced its
production capacity even further with manufacturing units installed in UAE, Saudi Arabia,
United Kingdom and USA. The company now also harbors offices in Sharjah- UAE, Makka-
KSA and Manchester-United Kingdom.

Shan has 3 brands – Shan (which has mostly masalas), Delve (desserts), and Shoop (noodles).
Shan Recipes is divided in Traditional Pakistani Recipes, True Oriental Recipes and Magic
Arabic Recipes. Shan Foods has successfully achieved the brand loyalty of its customers via
continuous product development.

Shan’s target market includes both males and females between the age group of 18-45 belonging
to SEC A,B and C. the personality of a typical Shan user is confident women who know their
choices in life and why they took them. She is active, talkative, different and innovative. She
considers cooking to be an important activity in their life and much time and effort resolves
around it. Yet she looks for good taste and convenience at the same time.
Financial Stability (FS) Rating
ROI 4
Inventory turnover 4.5
Pvt Limited Company 3
Days sales outstanding 4.5
15
FS 16/4= 4

SPACE Matrix

Industry Strength (IS) Rating

Profit potential 3
Industry growth potential 4
Brand equity 5
Exports growth 5
Availability of raw material 4
21
IS 21/5= 4.2

Competitive Advantage Ratings

Product quality -1
Customer loyalty -2
Market share -2
R&D -1
-6
CA -6/4= -1.5

Environmental stability Rating

Food inflation -4
Energy crisis -4
Trade Policy -3
Inefficiency in agricultural -4
production
-15
ES -15/4= -3.75

IS+ CA= 4.2+ (-1.5)= 2.7

FA+ ES= 4 + (-3.75)= -.25
The calculation of the space matrix of shan foods is showing that it is existing in the aggressive
quadrant which is the most competitive quadrant. The market is growing which is attracting more
companies to jump in the market and also allowing the existing player to penetrate more. Hence,
Shan foods need to do:

- Market penetration
- Market development
- Product development
GRAND MATRIX STRATEGY

Shan lies in the first quadrant as result of capturing a greater market share and has been giving a
tough competition to National Foods. It has good brand recognition and customer loyalty. Hence,
it should pursue market penetration, market development and product development to cash on
this opportunity. Moreover, it could also pursue backward and forward integration as a result of
its good distribution network and nationwide acceptance.
National Foods

National Foods started its journey back in 1970 as a spice company, at that time the
product was a revolutionary that provide hassle free cooking with its recipe mix that
saved women’s time in kitchen at same time provided. Over the time founder’s
philosophy remain intact with the business as it grew over the years, the main aim
of the company to provide convenience, ease and quick preparation in line with
modern lifestyle. . Today, the Company is ISO certified, follows HACCP in production
processes and procedures, manufacturers seven food categories, exports to USA,
Canada, Europe, Middle East, Asia Pacific and Australia. It also produces a complete
Indian Ethnic food range of cook-in paste and sauces which is aimed at the
mainstream markets of Australia.

The company has almost crossed four decades passing through times of depression,
growth and boom. However the company’s focal point remains at product
development in line with changing market trends.

Today the company provides complete range of food products to its customers not
only in Pakistan but 35 other countries through it strategic partners, also making
entry in new markets worldwide. . National Foods produces over 300 SKU's in 12 major
product categories including meal solutions, pickles, sauces, ketchup's, jams and desserts

National Foods has successfully repositioned its brand from being a spice brand to a food brand.
Mass marketing also has been replaced my segmentation, targeting and identifying gaps in the
market.

As for the 4 P’s of marketing the brand follows it such way. Price that the company things suits
the customers and is value for money for them. Promotion policy has been changing dependent
on the targets the company wishes to achieve, distribution policy is to ensure availability of
products at all the outlets.

As per the National Foods spices category the brand claims to be offering distinct, delicious and
mouthwatering recipes. Their Target Market is women of 16-45 age groups of middle class
families specifically SEC A-C.
BCG MATRIX

Star Cash Cow

 Nihari Masala  Biryani Masala Range

 Qorma Masala  BBQ Range
 Biryani Masala
 Karahi Range

Question Mark Dog

 Broast Masala  Shami Kabab Masala

 Chapli Kabab Masala
 Vegetable Masala

Companies Market Share as per Euromonitor.

RATING AGAINST CUSTOMER BUYING CRITERIA

The table below suggests what is the weightage customer gives to each of the non-priced
attributes and how Shan and National performing against them. (Company Sources)

SPACE

Financial Stability (FS) Rating

 ROI 5
Inventory turnover 5
Pvt Limited Company 6
Days sales outstanding 4
20
FS 20/4= 5
Industry Strength (IS) Rating
Profit potential 3
Industry growth potential 4
Brand equity 4
Exports growth 5
Availability of raw material 4
21
IS 21/5= 4.2
Competitive Advantage Ratings
Product quality -3
Customer loyalty -3
Market share -4
R&D -1
-11
CA -11/4= -2.75
Environmental stability Rating
Food inflation -4
Energy crisis -4
Trade Policy -3
Inefficiency in agricultural -4
production
-15
-15/4= -3.75
ES

COMPANY SPECIFIC ACTIONS

The calculation of the space matrix of National foods is showing that it is existing in the
aggressive quadrant.

Strategies for it include

IS+ CA= 4.2+ (-2.75)= 1.45

FA+ ES= 5 + (-3.75)= 1.25
  Market Penetration
 Market Development
 Product Development

SPACE MATRIX NATIONAL FOODS SPICES

Mehran Foods

Mehran Spice & Food Industries came into existence in 1975 and within a few years of its
initiation, the company expanded to become one of the top spice & food industries worldwide.
With time, the product range at Mehran has expanded from spices to adding ready mix recipes,
pickles, rice, chutneys and sweet items. Mehran is also one of the leading quality rice producers,
equipped with the most up to date and advanced rice plant from Germany.

Mehran Spice & Food Industries is a certified leader having certificates like ISO 9001 &
HACCP in the quality food business. Its mission is to always remain a consumer oriented
company with a keen insight of food products guaranteeing quality, authentic taste and
consistency to be backed up with state of the art technology with the aim of achieving optimum
results. Its objective is to build such a business where high standards overtake all other aspects of
the company. Quality is inbuilt in every individual at Mehran Spices & Food Industries. Mehran
Spice and Food Industries have been awarded with FPCCI "The Best Export Performance
Award" every year starting from 1984, along with other local and global awards. Mehran was
awarde with the FPCCI "The Best Export Brand of the Year Award" for two times, first in 2009-
2010 & second in 2012-2013. Overtime, Mehran's production facilities have been set up in both
local and global markets. Some of them include:

• 1975, Mehran Spice & Food Industries S.I.T.E Karachi-Pakistan

• 1988, Pure Food Ltd. Jebel Ali Free Zone-Dubai

• 2002, Thar Roller Flour Mill Naukot, Tharparkar ,Sindh,Pakistan

• 2003, Mehran Spice & Food Industries Korangi Industrial Area-Karachi-Pakistan

• 2007,Gul Mohammed Spice Factory Jeddah-Kingdom of Saudi Arabia

In hindsight of the global success achieved by Mehran, the company aims to establish itself in
Pakistan as well. The Pakistani Spice Market is ever growing and penetration into such a huge
market is a very demanding task. Yet, Mehran was up to the challenge and built effective
distribution networks successfully all over Pakistan. As of today by the God’s grace & support
from our valuable customers, Mehran holds a leading position in the market place.

"The world knows Mehran, now it's your turn."

SPACE Matrix

Financial Stability (FS) Rating

ROI 4
Inventory turnover 4
Pvt Limited Company 6
Days sales outstanding 4
18
FS 18/4= 4.5

Industry Strength (IS) Rating

Profit potential 3
Industry growth potential 4
Brand equity 2
Exports growth 5
Availability of raw material 4
18
IS 18/5= 3.6

Competitive Advantage Ratings

Product quality -3
Customer loyalty -5
Market share -5
R&D -5
-18
CA -18/4= -4.5

Environmental stability Rating

Food inflation -3
Energy crisis -4
Trade Policy -3
Inefficiency in agricultural -4
production
-15
ES -15/4= -3.75

IS+ CA= 3.6+ (-4.5)= -0.9

FS+ ES= 4.5 + (-3.75)= 0.75
The graph above shows that Mehran Foods lays into conservative quadrant of the SPACE
Matrix. It is positioned at the coordinates of 0.9 for x component and 0.75 for y component. It
shows that industry is doing good but the company’s market share is falling due to company’s
view that market is not attractive enough to invest much although the market is not that bad. The
business has good financial muscle and environmental stability but feels that it might have
competitive disadvantage in the market and its investment will go in drain if it invests. Mehran
Foods is looking to reduce costs and any loss making customers and products so as to buy more
time to find attractive diversification opportunities .This is why we don’t see any massive ATL or
BTL activities of Mehran Foods as their interest in this market is minimal. It should work on
building a niche for their product or any competive advantage so that good perception of their
products fit in consumer’s minds. Thus Mehran Food at this stage needs to do:

- Market development
- Market penetration
- Product development

Grand Matrix
Mehran Foods lies in quadrant 2 indicating that it is in a rapid growing industry but cannot fight
competently. They must evaluate their existing approach in the Pakistani Market, need to find out
why they are ineffective in the market and must come up with a strategy to improve their
strategic position. In my opinion, its main reason would be their lack of interest in Pakistani
Market due to which they are not following much of an aggressive strategy so as to expand their
market share. Intensive strategy could be used as a good initiation point. In Spice industry as
there is not much of a differentiation point and every company has a similar kind of a product
range, horizontal integration can also be a good option for the firm since there are many small
firms in the industry and it will help them gain higher market share. Mehran Foods doesn’t have
problem of financial stability due to its good and stable export demand for which it has received
several awards, thus a good ploy would be to invest more of those resources obtained by
exporting to increasing their local demand in Pakistani Market by investing in their local product
range i.e they can come up with new products and also spending good amount of budget in local
promotion so that brand recognition is fit into a local consumer’s mind.
Financial Stability (FS) Rating
ROI 4
Inventory turnover 4
Pvt Limited Company 2
Days sales outstanding 4
14
FS 14/4= 3.5