DELISH RICEConsumer DynamicsMuhammad

Zakaria

SP16-ES-0032

RICE SECTOR OF PAKISTANPakistan is the 4th largest producer of rice following China, India, and Indonesia.

Rice is the major export product of Pakistan following wheat, cotton

Rice export earns about 13% of the country’s foreign exchange making it the second most important source of foreign exchange

Rice is cultivated over 10% of total cropped area of Islamic republic of Pakistan.

It is contributing approximately 6.7 % in value addition of agriculture and the contribution of rice in GDP is about 1.3-1.6% in total GDP.

PRODUCTION

Rice contribution of provinces in its production, Punjab ranks 1st by contributing 58%, Sindh ranks, 2nd by contributing 29%, Balochistan ranks 3rd and its contribution is about 3 % and Khyber Pakhtoun Khawan ranks 4th by contributing 10 %.

There are many varieties which are being cultivated in Pakistan like super kernel basmati, super basmati, irri-6, irri-9, pk-385 basmati rice, pk-198 basmati rice etc.

MARKET INSIGHTS

Presence of some brands have been strong in urban areas

Local players competing by trade relationships and price discounts

Market SizeTotal population of Pak = 196,174,380

Urban population = 36.2% of total that is 71,015,126

So if we target only 5 big main cities of Pak = Around 3.5 Crores.

GAP AREA

Pakistan is a 4th largest producer of rice while in Pakistan still Quality branded rice are not available in all over Pakistan.

In Pakistan 4-5 Rice Brands are available but their distribution networks are not wide.

Right now we are introducing a Rice brand in Pakistan with strong distribution to the major cities of Pakistan.

CONCEPT IDEA

We are introducing branded rice in urban cities of Pakistan as we have a big potential market and there is no big brand introduced till yet.

Still consumers are facing a lot of issues in purchase of Branded rice sometimes distribution issue and sometimes quality issue.

Category Value determinants 1.Price

2.Quality

3.Availability (Strong Distribution)

PRICE SENSITIVITY

Segmenting The food preferences are generally Geography based. In the 1st year, it is advisable to start with Karachi, Lahore, Islamabad, Peshawar, Quetta as it is has high rice consumption and provides a direction towards the other cities of Pakistan launch in the coming years

TARGETING

Customers who mainly visit Hyper Markets, Large retailers or Departmental stores

Who look out for premium quality products which delivers the optimum value

Target- SEC A, SEC B

Positioning A rice brand which offers the best export quality rice with Aroma, taste at the best local price.

BRANDING STRATEGY

For a category like Rice brand, a Brand name adopted Delish and line extensions will be done as and when a new variant needs to be introduced like Delish Basmati, Delish Sella, Delish Super kernal etc.

Points of Difference The brand has to introduce a container packaging that helps in storing as well as pouring out the rice from the air tight container.

The value created for the consumers who can forget the hassles of storing and taking out the rice which no competitor offers.

Points of parity There are a lot of parities with the competitor brand as it is a low differentiated product

§Quality

§Pricing

CUSTOMER VALUE HIERARCHY

Augmented Product

Air Tight Container Packaged Premium Rice

Expected product- High quality Rice

Basic Product- Rice

Core benefit- Food Pricing

P O I N T S T O B E C O N S I D E R E D W H I L E P R I C I N G T H E P R O D U C T

Low-involvement category

High level of price sensitivity

So pricing needs to be considered very carefully as it has a high relevance for a consumer

1.Pricing objective: Market entry

2.Demand: High price sensitivity

3.Estimating costs: Production costs + Transportation costs + Marketing costs + Miscellaneous costs

4.Analyzing Competitor: Costs, Prices and Offers

5.Selecting a Pricing method: Going rate pricing i.e. basing the prices on competitors’ prices

MARKETING CHANNELS

As it is a low involvement and highly price sensitive product, channels play a significant role in ensuring availability and controlling the price 1-Considering the Segmentation and Target markets as mentioned earlier  2-Channel strategy needs to be adopted 1. Modern retailIncludes Supermarkets, Hypermarkets and Large retailers 2. Traditional channel In certain localities for easy availability to customers in the coming years i.e. 2nd or 3rd year Trade margins Trade margins play a significant role in sales as the store keepers tend to push those products. So a higher margin in comparison to the competitors needs to be given to create the initial push to the brand.

MARKETING COMMUNICATIONS MIX

1. Sales promotionTo create the initial pull towards the brand by offering short term offers

2. Events and Experiences Sponsoring a Cookery show on TV grabs eyeballs which provides a highly targeted communication 3.Interactive marketing- Providing innovative recipe ideas using the brand’s rice through its online channel and engaging with its customers

3. AdvertisingCost effective Localized advertising and promotional activities like In-store promotions and visual display aides  

T H E S E A C T I V I T I E S S H O U L D H E L P A C H I E V E

Brand name awareness – measured based on recognition, recall and “top of mind”

Brand loyalty – Segmented into non customers, price switchers, passively loyal, fence sitters and committed and moving them to the next higher level

Improvement in Perceived quality

BRAND EXEMPTION TERRITORIES

April 2016 Brand launch with a few variants in Karachi

May 2016 A few more variants launch after gauging the response

Oct 2016 Lahore, Peshawar, Quetta, Islamabad

Apr 2016- Traditional channel operations start

Dec 2016- All targeted cities

Mar 2017- Timeline of events

COST IMPLICATIONS (ASSUMPTIONS)

1st year budget allocation (South region- largest region) = Rs. 30 Crores

2nd year budget allocation (South + Eastern region) = Rs. 45 Crores

3rd year budget allocation (All Pakistan) = Rs. 25 Crores

Total = Rs. 100 Crores

Budget reduces from year to year because of the fringe effects carried forward from the previous year

Activity Wise

All Pakistan Infrastructure including Sales and Supply chain = Rs. 70 Crores

Branding activities = Rs. 30 Crores

Total = Rs. 100 Crores

This category requires more of below the line activities over above the line

YEAR WISE SUMMARY

Going for a regional launch and then slowly moving on for a nationwide launch by gauging the response

Launching a few variants initially and then bringing in the other variants in a phased manner

High focus on the modern retail channels along with a small traditional channel to complement it

Trade promotions and discounts are the drivers to sale and less spending on traditional marketing channels like TV and print

PRIMARY FOCUS

The primary focus to promote the product in market is.

Television

Mass media

News papers

Direct Competitors Mehman Rice

Falak Rice

Mughal Rice

Classic Rice

Ideal Rice

Ponum Rice

CURRENT BUYING BEHAVIOR

Currently consumers are buying Rice from the local stores as well as from the market. Normally peoples are buying their monthly household from Super Markets and wholesale markets but for the rice they particular use the local Kiryana stores which are in front of their houses. According to the new trends consumers are moving for branded rice as well.

New Buying behaviorCustomer will buy from local stores once they will have opportunity for better quality rice

Ease to access

Availability at every store

RICE CONSUMPTION

Rice consumption of all over the Pakistan is 2.8 Billion metric tons and the export of the rice around 3.2 Billion Metric tons and total production of the rice in Pakistan around 6 Billion Metric tons.

Rice exports from Pakistan have also suffered the same fate as receipts totaled only $1.84 billion during the financial year ended June 30, falling short of earnings made in the previous year. According to data compiled by the exporters, rice valuing $1.84 billion was exported in 2014-15 against shipments worth $1.89 billion in the previous year.

In 2013-14, the price of Pakistani basmati rice stood at $1,300 per ton in the international market, but it dropped to $1,000 next year 

MARKET SHARE

Around 20% of Market share expect to cater in next 1 year.

CONCLUSION

Going for a regional launch and then slowly moving on for a nationwide launch by gauging the response

Launching a few variants initially and then bringing in the other variants in a phased manner

High focus on the modern retail channels along with a small traditional channel to complement it

Trade promotions and discounts are the drivers to sale and less spending on traditional marketing channels like TV and print

Higher emphasis on Below the line activities over above the line as it suits the category under consideration

REFERENCES

 

http://tribune.com.pk/story/922868/fiscal-year-2014-15-rice-exports-fall-to-1-84b-as-world-market-tumbles

http://www.euromonitor.com/rice-pasta-and-noodles-in-pakistan/report  

http://tribune.com.pk/story/753053/rice-industry-lack-of-branding-hurts-pakistan-india-moves-ahead

https://en.wikipedia.org/wiki/Rice_production_in_Pakistan

http://www.dawn.com/news/1216840