Vision statement:

“TO MAKE THE COMPETITION IRRELAVENT” Mission statement:

“To provide the best quality product to the potential customers comparatively at low price and high quality by using effective distribution channels “

ENVIRONMENTAL ANALYSIS:

Competitive Forces:

POLITICAL

The political stability of Pakistan is highly uncertain therefore every

investor has to think intensively before investing his capital. But from

last few years, Pakistan’s industry is showing considerable growth and

opportunities for new investments, due to consistent policies of the

Musharaf government.

In this industry there is not proper Trade association based on which

are platform regulatory requirements could be set.

Challenge faced in this sector lie in the face of smuggled goods that

penetrate into the market and present branded products with stiff

competition and the price conscious consumer in Pakistan on average

ends up buying the foreign smuggled product, which is cheaper and

more affordable only realizing through experience if the product used

is suitable.

Government taxes formulate at least 50% of the product price other

than the cost of production.

Generally 40% taxes are applicable on FMCG.

Import duty of 15% is charged on importing shampoo’s raw material

and it adds the 25% value to custom duty. Besides this there is not

check and balance on import that means an ordinary person/company

can also import on same rate of duty on which a giant company is

importing.

Manufacturers in Pakistan are offered with so called incentives to

compete with other imported goods in terms of their quality and value

to customers.

Govt. of Pakistan doesn’t offer subsidies to its industry like in China;

electricity is subsidized for its industrial units.

ECONOMIC ENVIRONMENT:

GDP is targeted to grow by 8% in 2005-06, with a growth in

manufacturing (10.2%) and continuing robust performance in

services (15%) and agriculture (5%-6%).

Exit from the IMF Program marks an important milestone.

The overall fiscal deficit that averaged has declined to 3.2% in 2005-

06.

The per capita income of Pakistan has reached up to $847; Pakistani

market is quite unsaturated for introduction of new drinks products

regarding sports drinks. With rise in per capita income and standards

of living, consumption of per capita income is expected to increase.

Targeted trade deficit for the year 2006-07 is $ 9.4bn while it had

been crossed $ 2.3bn in just two months after budget speech.

Rate of inflation is increasing on fast pace, which directly affects new

investments, because inflation is directly proportional to interest rates.

The literacy rate of Pakistan is estimated at 54% which is good for us

to launch a sports drink because with the increase of knowledge sports

person are more conscious about their health.

Cost of production and imported raw material are very high but in the

case of drink manufacturing most ingredients are less costly and

locally available.

Expo canters are being introduced in some major cities to robust

Pakistan’s export revenue so we can also export sports drink in future

and the Expo centers display will help us a lot.

In 2006-07 trade policy, Freight subsidy scheme has been modified for

diversification of markets/products, which will reduce the further

manufacturing (plant) cost because we are to import one part of our

manufacturing plant.

SOCIAL ENVIRONMENT:

As the standard of education is rising and the awareness is increasing

regarding the health.

Now a day’s people are becoming more health conscious so they

prefer and demand for products which fulfill their body needs.

As the people are becoming more health conscious and like indulging

their-selves in sports activities, they want to have products which

maintain their body requirements like sports drink, energy drinks and

food supplements.

As imported and internationally renowned brands are assumed to be

prestige to use, but they are expensive product, which are not under

the reach of average people so people want the same quality product

at some low price.

People like to socialize and as the activities have increased where

different sports games are enjoyed this new trend is boosting the

overall drink industry in Pakistan.

TECHNOLOGICAL ENVIRONEMENT: -

Technological environment in Pakistan taking its robust because of

new investments in country.

Comparing with Multinationals industry in Pakistan, local industries are

trying to use advanced technology in its operations.

Spirit sports drink is manufactured using latest technology through

which we are cutting our manufacturing cost and making our products

environment friendly that is allowing us to act as green marketer.

IT trend is allowing us to do our operations effectively and efficiently.

B. Target Market:Identification

1. Demographic characteristics:Sex: male & female, Trend toward playing game is increasing as the awareness is increasing. Age: 15-30 years, Physical active males and femalesOccupation: Occupation, Vary form person to person.Ethnic Background: in Pakistan people are from different ethnical backgrounds but there is no discrimination of races in playing sports. People of different races play sports Family Life Cycle:

2. Geographic characteristics:Location:

Region = South EastCountry = PakistanProvince = Punjab and we are currently choosing only

urban areas City = Lahore’s porch areas and also near playing areas climate = mostly hot through out the year but 3-4 months

of winter from December to March.Density = Population density is very high in the area of Punjab and in Lahore, Lahore is one of the dense populated area of Punjab

3. psychographic Attitude = the attitude of people is changing regarding there life styles and they prefer to buy branded and Quality Products.Activity = People love having get together parties and playing games.Opinion = Interests = Every sport person want to keep him self active and want to be ahead in games.Motives =Lifestyles =

4. product-usage characteristicsUsage rate = Benefits sought = Remove exhaustiveness, quench thirst and fulfill the body requirement after playing games or doing physical exercise.Need Analysis = Branded sports drinks is available in the market are fulfilling the need of potential customers. Currently available Sports drinks improve performance level, quench thirst and refresh body but their distribution is done through ineffective channels. Market survey shows that the imported sports drinks are not available at convenience places. Research also showed that people are ready to buy sports drinks comparatively at low price. There is no

proper promotion of sports drinks in Pakistan so people especially players are unaware of these types of sports products.Imported energy drinks also advertise itself as a product to remove exhaustiveness gain energy and quench thirst, but energy drinks used caffeine as ingredient which is not good for health. Health conscious sportspersons are not recommended to use energy drinks regularly. Internationally sports person are advice not to use caffeine. As these days there are also concerns about players that whether they are drug edited or not.Due to lack of local distribution channels energy drinks are not available near playing areas as well as in different shopping stores. We can say water is satisfying a need to quench thirst, refresh body and it uses a very effective distribution channel to make the product available near to sports areas. It is not satisfying fallowing needs: like remove exhaustiveness, remove loss minerals and vitamins. Supplements are used as weight gain and fulfill the requirement of body, but it is little bit time consuming activity to make a drink using health supplement. A person in a state of exhaustiveness is not convinced to make drink. Supplements are available only on big stores.

Need of our target audience expected to change in the future:Need of our target audience are not expected to change drastically. It’s human psychology that drinks are always preferable to use at while playing or doing physical exercise. The maximum expected change in near future is to manufacture a sports drink using different ingredients or with different formula which can fulfill the requirement of a sport person more effectively.

SWOT Analysis:

Strength: Unique product design Own logistics Quality product at low price Target market encircles the age group from 15 to 30 years Skilled workers Hi Technology First sports drink manufacturer in Pakistan Product price low with respect to the competitors Easy and convenience availability It is made of Halal ingredients

Weakness: Limited budget as compare to our foreign competitors Less Advertisement No brand awareness due to new brand

Threats: Entrance of the new competitors Globalization due to WTO Competitors’ strategies Fluctuation in the economy Government policies Changing fashion of the target market Single product company Threat from other sports drink exporting countries Wide availability of sub-standard substitutes.

Opportunities: Increase in the population Launch internationally To create brand awareness Decrease in production cost Currently no one is manufacturing sports drink locally High Export potential Reduction in excise and import duties on food processing machinery.

PORTER’S FIVE FORCES MODEL FOR INDUSTRY STRUCTURE AND COMPETETION

BARGAINING POWER OF BUYERS:-

In cosmetics and toiletries industry particularly in shampoo, bargaining power

of buyers is high because of some following reasons.

Buyers have not got many other options available in market

There are few number of international brands are available in market

Switching cost of buyer is quite high because of low range in

international brands.

Most of the customers are not well aware of their distinctive value

added features.

In Pakistan buyer’s power is also high because they feel prestige to buy imported

brands than locally manufactured.

BARGAINING POWER OF SUPPLIERS:-

Bargaining power of suppliers is low because,

Most of their raw material is easily and locally available in Pakistan.

Major suppliers of chemicals and other ingredients are located in

SINGAPORE, PAKSITAN, CNANADA, ENGLAND and GERMANY, so they

have got a choice among suppliers.

Bottled packaging is imported from Singapore and one of its suppliers

is located in Karachi, named decent packaging and few more on

different locations internationally. So, they can chose among them.

Printing is done from Packages , their bargaining power can be high

because packages is number one packaging/ printing company in

Pakistan so they can also have bargaining power on some issues.

Threat OF SUBSTITUES products:-

Sports Drink’s substitutes are ENERGY DRINKS and SUPPLIEMENTS.

Energy Drinks: - Energy drinks has low bargaining power as compare to

Sports Drinks because People are more conscious about their health and they

believe that Sports drink is far better than removing tardiness and quench

thirst by Energy drinks.

Energy drink cannot fulfill the demands up to the extent where Sports

dirnks are fulfilling.

Some people prefer to take energy drinks while playing because in the

long run it harms the health of the player but it temporarly boosts

energy.

SUPPLIEMENTS: -

Locally manufactured supplements are of low price as compared to

Sports drinks so cost of switching may be high or low.

It can be low at the same time because customer may not be able to

differentiate between suppliements and sports drink.

THREAT OF NEW ENTRANTS: -

In this industry, new entrant can be threat or potential at the same time

because, opportunity in terms that there is not any local company operating

in industry and new entrant can help to grow the market. And threat is that,

market share will be divided in many parts, our company and companies of

international brands may lose their some part of market share. So always

existing companies try to put some entry barriers or sometimes they think of

alliance against the new entrant.

There is a threat of new entrants especially of new imported brands that is a

threat that they can plan to target this segment in Pakistan. Some companies

which are in beverage industry like multinational can also manufacture sports

drinks in Pakistan and some new local manufacturers can also come in this

industry.

WTO is a big threat due to which we have to compete with other international

brands.

Possible Entry barriers can be,

Strong capital base is big threat because existing international

companies are operating with huge capital base.

For national new entrants it’s difficult to face multinational giants .

It’s difficult to overtake the customers’ brand preferences & loyalty

because they are internationally renowned.

It’s difficult to maintain an extended distribution channels and

networks.

New entrants would have to spend huge amount on advertising to shift

the customers’ loyalty.

Sometimes it’s difficult to produce economies of scale to bring the

fixed cost at zero.

INDUSTRY COMPATITORS, RIVALRY: -

In beverage industry rivalry tends to be intense because of very close

competition with another international brand. While there are only few

companies’ products in industry but still they are very close to each

other in terms of catering the market share.

Rivalry also becomes more complex because competitors are also

offering almost same product line.

As product is highly differentiated and buyers switching cost

is quite low which makes the rivalry stronger.

As industry is highly concentrated in 2 players so its

competition is so intense and both are chasing the same

customers.

Rivalry is high because demand for shampoo is increasing and

players are same to fulfill their demand, so every company is

trying to grab more market share.

FORCES FOR CHANGE (HOW PEST IS IMPACTING THE FIVE FORCES)

RIVALRY

SUPPLIERS

BUYERS

ENTRANTS

SUBSTITUTES

Smuggling making the competition intense because it is penetrating in market.

Import license is good move because only legal companies can import the raw material.

Approximately 50% of taxes are reducing the probability of price wars.

No trade association can impact its rivalry because there is not platform where you can settle the matters rather competing on them.

Overall high tax rate is a threat to new entrant to produce economies of scale and make its fixed cost zero.

Not considerable incentives and subsidies are not attracting to the new entrants.

Again smuggled goods are threat for new entrant that they are wasting some portion of legal share which new entrants can probably grab.

Buyers bargaining power is high because of getting variety of smuggled imported brands.

More taxes on industry are directly affecting the cost and price so; buyers will be looking for substitutes.

Problem with shipments and transportation strikes can be harmful for industry because it may create the shortage in market and it can hurt the firm’s brand image.

Smuggled products are also impacting the supplier’s power because customers are directly getting imported shampoo.

Import license is treating the supplier because they would also be willing to supply to small companies who don’t have import licenses.

Due to imposing more taxes and duties, company’s production may go down because of low demand which is impacted by high price.

Political environment has almost equal impact on substitutes because they are in same industry but herbal shampoos can get edge on chemical shampoos because they don’t have to import their raw material and they price low than chemical shampoos.And affect of smuggling is also low on substitute because most of the smuggled shampoos come of chemical category.

As GDP is growing, it shows the growth of the market and indicating more competition.

Rising inflation rate can make rivalry intense because of high cost and price buyers may shift to substitute or low cost product

Subsidy on freight may make the rivalry strong due to lowering the composition of.

Growth in GDP and manufacturing may attract the new entrants to be a part of new market.

Inflation rate is reflecting more risk for new entrants.

Increase in literacy rate creates more awareness and market growth increases which can be attractive for new entrant.

As per capita income is increasing it may increase the bargaining power of buyer.

As GDP is growing and market potential is increasing which attracts the new entrants and it creates the more options for buyer. Which ultimately reduce the switching cost of buyers.

Increasing GDP can impact the supplier’s power in either way.

As our company’s base is multi national, it imports most of the raw material from different countries, so its supplier’s bargaining power depends on supplier’s country’s political and economic situation.

By growing GDP, substitute’s power can go either way. It can be high if substitute grows more rapidly than other products.

Here as per capita income is increasing, power of substitute is lowering. In case of herbal it can be high if they buyers are more aware with herbal technology.

By increasing more awareness about beauty and health, people are more demanding about shampoo’s so increase in demand is increasing revelry

As weather is becoming warmer and consumption of this industry tends to be increasing so there comes the more competition for growing

Increment in awareness is giving room for market growth so new entrants might analyze it as a good signs for them.

Now days everyone likes to buy his/her own shampoo rather using one brought for whole family, so there is an opportunity by changing their usage patterns.

As companies are competing

By increasing more consciousness for beauty, buyers bargaining power is increasing.

As usage patterns are variating, buyers’ bargaining is also increasing at the same proportion.

As customers are more influenced with advertisement, so as much advertise will

By increasing the level of consciousness, impact on bargaining power of supplier can go on either side, by increasing the consumption supplier’s margin of profitability will also increase so his bargaining power might go low but if there are only few suppliers then he will show high bargaining power.

As more the awareness about beauty and care that much bargaining power of soap will go down and if people become aware about the harmful affects of chemical then bargaining power of herbal shampoos can be high.

consumption.

As people are more influenced with media and advertisement so every rival is trying to increase the competition.

by doing more advertisements, it is difficult for coming new local entrant to compete with existing giants.

be done by someone as much bargaining power of buyer will increase for others.

At the time both the big giants are operating at almost the same level of technology, so here rivalry is on moderate level.

Entrants may have threat of competing on technology because they might not have sufficient base of capital to operate with that high leveled technology.

More technological used product would be, i.e. more variants would be available in the market that much bargaining power of customers will increase.

Supplier’s may have negative impact by changing technological level, because company might have to change their suppliers according to new technology,

At the moment with existing technology, power of substitute will remain the same but by changing its trend it may go either side, it depends on substitute’s growth along with advancement in tech.

smuggled

products

Higher tax

rates

Penetratin

g the

other

brands in

the

market.

Impacting cost and price structures.

Creating brand

Awareness.

Increase the price of product or decrease the profit margin.

Growing GDP

and rate of

production.

Rise in

inflation

Subsidy on

freight.

Opportunit

y to

broaden

the

market.

Increase in

cost

structures.

Lowering

down the

cost of the

per unit.

Will try to

expand by new

variants.

Reducing the

profit margin.

Or the use of

technology in

manufacturing will

allow us to reduce

manufacturing cost.

Factor / Trend Business Implication Company Response

More

awareness

and

consciousnes

s to people.

People

concerns

Environment

al affects.

People are

going

towards

sports.

Opportunity to target the new segments.

Positive change in sales.

More

demand is required from customer.

Will

continuously

offering new

values and

change the

features of

product

according to

the changing

trends.

We are making

sports drink

and its’ design

environment

friendly.

We will

enhance

product line,

promote our

products and

make people

brand loyal .

Advancemen

t in

technology.

Its threat if company doesn’t react

Company is on right pace with changing tech.

STRATEGIC GROUP MAPPING

placeNON CHEMICAL / HERBAL

CHEM. + NON CHEM

Thirst quencher

Energy Gainer

Remove tardiness

Medicam,Selsun Blue

Head & Shoulders

,Life

Buoy, Pert Plus

Bio Amla

Pert Plus, Pantene, Herbal Essences.

Sunsilk

white

Most of the sunsilk’s variants,

Herbal Essences

Bio Amla, Herbal

Essences, Lifebuoy

Marketing P’s

ONE MORE STRATEGIC GROUP MAP CAN BE,

Sunsilk,pentene

Damage Dry Medicated Shine Silky Anti dandruff

Chemical & herbal mix

Herbal

Chemical Sunsilk,pentene

Sunsilk,pentene

Sunsilk,pentene

Sunsilk,pentene, H&S, Pert +, life boy

Selsun blue

Bio-amla,

Herbal essence

Medicam

Market size:

No of Competitors:We divide our competitors into 3 categories. First Category

comprises all those companies which are dealing in energy drinks. The 2nd category consists of those companies which deal with sports drinks and come under the direct competition. 3rd category contains all other available drinks use to remove exhaustiveness and thirst.

Relative Position in term of market segment:

Perceptual positioning:

Product definition (positioned according to price, quality) Excellent quality

Min price Max price

Least quality

Sports Drinks

Locozede

Milo

GatoradeRealmadrid

Spirit Sports

Snapple

Marketing objectives:

Building brand image in the market and create awareness in the mind of people. Getting highest market shares Increase in profit margin of retailer Increase in profit margin of wholesaler Create good image in the mind of retailers and customers. Profit Maximization: Through mass customization we will be able to enhance our

profit. Sales Maximization To capture expected Market share. Continuous line extension to meet the changing preferences of customers and to

remain ahead of competition. We are also intended to expand our product line by introducing different flavors

and sizes during the year To make available spirit sports at right place through effective distribution

channels to our potential customers.

Financial objectives

Societal objectives:

Be socially responsible organization through working as a corporate citizen. We are using latest technology in our operations because of which we are able to reduce the wastage of raw material and wastages. The design of sports drink packaging is like that it exhibits less energy during manufacturing. Spirit sports drink’s components are of recyclable material. Through latest technology and Operations Management techniques we are less polluting the environment and providing Spirit sports at less cost which is benefiting the masses.