Reports

Strategic Marketing At DALDA (ODF DIVISION)

by Ravi Magazine · Published 10th November 2015 · Updated 10th November 2015

Strategic Marketing At DALDA (ODF DIVISION)

Unilever’s Philosophy

“Success depends upon providing the right mix of international and local brands for the local consumer.”

“International expertise means we can focus relevant experience and people on new markets – fast.”

“Research must be consumer focused and technology driven – a worldwide commitment.”

“Our international competitive strength is the depth and quality of our people and their ability to network.”

Unilever’s Corporate Purpose

“Our purpose in Unilever is to meet the everyday needs of people everywhere – to anticipate the aspirations of our consumers and customers and to respond creatively and competitively with branded products and services which raise the quality of life.

“Our deep roots in local cultures and markets around the world are our unparalleled inheritance and the foundation of our future growth. We will bring our wealth of knowledge and international expertise to the service of local consumers – a truly multi-local multinational.

“Our long-term success requires a total commitment to exceptional standards of performance and productivity, to working together effectively and to a willingness to embrace new ideas and learn continuously.

“We believe that to succeed requires the highest standards of corporate behavior toward our employees, consumers and societies and world in which we live.

“This is Unilever’s road to sustainable, profitable growth for our business and long-term value creation for our share-holders and employees.”

Unilever History

Today, Unilever – the Anglo-Dutch consumer goods business – is one of the largest companies in the world with sales (1996) over $50 billion.

Lord Lever Hume packaged the first bar soap and named it as SUNLIGHT thus changing the complexion of a industry that could have thrived as a cottage industry.

Lever Hume with Sunlight on his bicycle used to go to ladies and tell them that this yellow color perfumed soap was specially branded for them. Although there were some resistance in the initial stages of its launch but the high quality and consumer oriented product was accepted by the majority of target market. Increasing sales instigated him to stock and to add outlets and distributors. Lord Lever Hume was the buying man, manufacturer, production manager, quality assurance manager, distribution manager, marketing manager and everything of the company. He soon established soap factories in Europe, North America, Australia and the Far East, and oil mills at Port Sunlight in the UK and Balmain, Sydney in Australia. His diligence, hard work and passion for innovation added different products to the Lever’s product mix.

The reasons behind the creation of Unilever in 1929, when the merger of Margarine Unie and Lever Brothers created it, were sound commercial ones. Margarine Unie of the Netherlands and Lever Brothers Limited of the UK competed for supplies of oils and fats that they put to different uses, but they were both in the business of supplying goods for household needs.

After 1917 he moved into the food trade, acquiring fish shops and canned foods, meat and ice cream businesses.

The rapid post-war economic growth and technical progress provided great opportunities for Unilever. The company soon recognized that it must adapt to new markets and new technologies, investing significantly in its research facilities and expanding through acquisitions in new geographical and category areas.

The Company moved into chemicals, packaging, market research and advertising, and the number of these businesses increased through acquisitions during a period of further diversification in the 1970s. By 1986 the company had sold most of its service and ancillary businesses, many of which had grown to a considerable size. At the beginning of the 1990s Unilever’s packaging companies and the major part of its agribusiness interests were also sold, leaving four core product groups – home and personal care, foods and specialty chemicals – which by then (1991) accounted for 96 per cent of sales.

Unilever clearly recognized the need to expand into emerging markets. An increasing proportion of the Company’s resources has been invested in emerging economies, growing from 16 per cent of total Unilever investments in 1985 to 27 per cent in 1996.

Unilever’s designated core categories are now: laundry, personal wash, prestige, mass skin, hair, oral, deodorants, ice cream, yellow fats, tea and culinary products. Other categories, including frozen foods and home care, are regarded as offering much potential in the more distant future.

Worldwide strategy for the core categories is combined with custody of the so-called “Unilever brands” – those brand names that are present across several regions and whose central strategic co-ordination will add significant value. The companies are still free to innovate when developing brands to suit their particular market place.

All these moves reflect the needs of a business, which is expanding ever further throughout the world and facing tough competition. Unilever is now well placed to meet the opportunities in developing and emerging markets that the twenty-first century will offer.

LEVER BROTHERS IN PAKISTAN

Lever Brothers Pakistan Limited (LBPL) was first incorporated in Pakistan in 1948 and work started in the present factory in Rahim Yar Khan. Dalda Banaspati was the first product from that factory followed by Lux soap in 1954.

LBPL pioneered the business of processed animal and poultry feeds in Pakistan in 1960. However due to immense difficulties this business had to be closed down in 1980.

Surf, first of the non-soapy-detergent powders was introduced in 1963. It was produced by arrangement with Futehally Chemicals (Pvt.) Ltd.

The present Karachi Edibles Factory was acquired in 1965 from A&B Oil Industries Ltd. Modernization and expansion of the factory has been a continuing process.

The head office shifted from Rahim Yar Khan to Karachi in 1966.

LBPL moved into the personal products business in 1981. Further diversification on the foods side of the business has taken place with the introduction of margarine and cooking oils. They have a seeds business, an industrial detergents business, and an ice cream business.

Unilever had acquired Lipton’s business worldwide In Pakistan Lipton was merged with LBPL in 1984. Legal merger became effective in 1989.

Report basically focuses on the ODF DALDA brand of levers. We have decided to include or discuss all the topics and sections given below some of which have already been completed:

Target Market and market segments
Product Positioning
Consumer Markets and Consumer Behavior
Competitors
Product Development
And Competition Analysis
The Marketing Mix
Product i.e. all the products under the Dalda brand of Lever Brothers Pakistan Ltd.
Packaging, Branding and Life cycle stages will be covered
Price and Pricing Strategies will be discussed
Distribution system is discussed in detail and Lever’s Strategies regarding the promotion of Dalda brand are also covered

Also anything else, which comes to our mind, will be covered as we go on with the report.

Current Market Situation:

Market Background

The market is highly commodity driven and the consumers are extremely price sensitive. The final selling price of edible oil and banaspati is highly dependant upon the prevailing world oil prices. So Dalda has to make sure that it maintains a balance with the fluctuating world oil prices. This is the reason why Dalda uses replacement cost pricing rather than stock recovery.

Banaspati:

Hydrogenated vegetable fat, semi solid granular product with a slip melting point of 38 degree centigrade.
Traditional cooking medium, especially for meat curries and sweet meats.
Mainly consumed in central and northern areas especially by the lower income/rural consumers.
Lever Brothers Pakistan Limited pioneered this category in Pakistan, with Dalda.
Banaspati is perceived to be old fashioned and unhealthy by the upper income/urban consumers.

Cooking Oil

Sharply divided into branded and unbranded segments.
Branded segment s premium priced and relatively a recent development.
Unbranded segment comprises of unrefined soybean, rapeseed and cottonseed oil sold loose to rural/lower income consumers.
Branded oils (mostly soybean), sold mainly in the urban areas especially in the south.
Lever Brothers Pakistan Limited with the entire product range of Dalda and Planta is the largest player, closely followed by Habib.
Lately sunflower and canola based single oils have aggressively entered the market.

Developments in the “Product Line”

Dalda Banaspati first launched in British India (1938)

Dalda Banaspati launched in Pakistan (1952)

Dalda Cooking Oil launched (1981)

Lever Brothers Pakistan Limited entered single oils market with Dalda Sunflower Oil (1991)

Dalda Cooking Oil Vitamin E (1994)

Planta (1994)

Dalda Banaspati re-launched with enriched flavor (1997)

Dalda cooking oil re-launched with addition of vitamin E (1997)

VTF Dalda Banaspati launched (1998)

Test market launch of Dalda Lajawab (1998)

Dalda Crisp n Dry launched (1999)

Competition

Basically the branded market of edible oil and banaspati is dominated by four players namely; Dalda, Habib, Tullo and Soya Supreme. There are approximately 172 registered banaspati brands. Besides this there is a very large unquantifiable unbranded market selling banaspati, unrefined soybean, rapeseed and cottonseed oil loosely to the rural and lower income consumers. Therefore it becomes highly difficult to estimate the market size.

In the banaspati market, Dalda VTF is a sure shot market leader. However, it is a market challenger in the cooking oil category lending the first place to Habib cooking oil. If Planta is considered along with Dalda then Lever Brothers Pakistan Limited (LBPL) accounts for the highest sales volume.

Consumers all over the country have great trust in the brand name of Dalda, which is considered to be a very traditional brand. The brand awareness and recall is 97%. It enjoys hard core loyalty in the 35+(female) age bracket. However, Dalda is weak in the younger segment, here it suffers at the hands of boredom. In this younger segment Tullo gold and Habib are the “in” brands because their packaging is trendy and the attire which they portray in their promotional campaigns is very young and energetic.

Another problem is that Unilever International dictates the ingredients and the quality control terms for the entire product range of Dalda. This increases the final selling price, making it a premium product. LBPL has no leverage to come up with cheap ingredient brands. Therefore, they lose out to competitors like Habib who has Habib Nayab and Habib Handi catering to the lower income segment.

Credit Terms of Dalda and Competitors

Dalda	4 Day cheque
Habib	3 day cheque
Soya Supreme	15 day cheque
Imported Oils	Cash

Overall Market Scenario for Oil and Banaspati

1st	Dalda and Planta	35 %
2nd	Habib	28 %
3rd	Tullo	17 %
4th	Soya Supreme	14%
5th	Others	06 %

VISIBILITY

DALDA

Low Medium High

BANASPATI AND OIL STORES

DALDA

Low Medium High

KIRIANA

Low Medium High

DALDA

GENERAL STORES

DALDA

Low Medium High

SUPER STORES

Swot Analysis:

Strenghts:

Dalda’s greatest strength is the blind trust of the consumers in the brand.
The entire product range has an extremely high brand awareness.
The brand recall is as high as 97%.
The quality of the product is maintained at high standards under the supervision of Unilever International.
In the Banaspati category it’s the only Trans fat free brand available.
LBPL with the entire product range of Dalda and Planta is the largest player, closely followed by Habib.

Weakness:

The brand suffers with an image problem. It is perceived as an old brand and the consumers are bored with it.
LBPL has very little say in the matter and all the terms and Unilever dictates conditions. In the case of Dalda it poses great difficulties, as it is a regional brand catering to Pakistani and Indian markets only.
There has been no innovative packaging change since 1994.

Opportunities:

Dalda can cash up the banaspati market in Northern and Central areas of Pakistan where there is a large consumption especially by the rural and lower income groups.
The branded market has been receiving a warm welcome lately in the metropolitan areas of Pakistan.
People are becoming health conscious and are switching to brands offering vitamins and cholesterol free attributes.
There is a growing segment of working women in search of modern and convenient methods of cooking. Therefore, the flavored oils stand a very good chance.

Threats:

Fluctuations in the world oil prices.
Banaspati is perceived to be old fashioned and unhealthy by the upper income/urban consumers.
Lately sunflower and Canola based single oils have aggressively entered the market.
The unbranded segment comprises an enormous 50 % of the edible oil and Banaspati market. This is sold loose to the rural/lower income consumers.

CURRENT PUNCH LINE

“Jahan Mamta Wahan Dalda”

UNIQUE SELLING PROPOSITION (USP)

Its USP is taste and Quality. It aspires to be viewed as a “cooking expert”.

BOSTON CONSULTANCY GROUP MODEL (BCG MATRIX)

Dalda is a cash cow and the other LBPL brands are milking resources from it.

The entire product range alone accounts for 30 % profitability of the firm.

REPOSITIONING

Need for Repositioning

The brand Dalda entered the Pakistani banaspati market in 1952 and launched Dalda Cooking Oil in 1981. Since then there haven’t been much changes in the 4 Ps of Dalda Cooking oil and Banaspati. The only minor changes included a slight flavor change of Dalda banaspati in 1993 and the launch of Dalda Crisp n Dry and Dalda Lajawab in 1997 and 1998 respectively. This proves that all through out Lever Brothers Pakistan have maintained their conservative strategies in marketing Dalda Cooking Oil. Neither environmental factors nor changes in consumer trends have been taken into consideration while marketing the brand. One of the reasons for this is the strict policy structure and dictation of all goals and strategies by Unilever International.

Although consumers all over the country have great faith and trust in the brand name and quality still its perceived as an old brand. Its viewed as cooking oil or banaspati used by older generations and one that does not fit the lifestyles of younger people. This is the primary reason why Dalda has lost its market share to Habib and Tullo. Habib Cooking Oil has the youngest image in the mind set of the consumer, as it was the first one to market cooking oil in trendy, disposable plastic bottles. Soya supreme and Dalda trying to keep up with competition also introduced plastic bottles. However, only Habib owns this trait in the mind of the consumer. Foreseeing, this shift towards modernization of this market Tullo has introduced Tullo Gold in the market. They are using younger models and lending the line extension- Tullo Gold a very trendy and modern look.

Trying to topple over competition Dalda came up with Dalda Lajawab and Dalda Crisp n Dry in 1997 and 1998. However, this diversification failed miserably as the consumers could not differentiate between the taste, quality and purity of ordinary Dalda and Lajawab or Crisp n Dry! In short the consumer was not getting the Unique Selling Proposition (USP) of the new extensions which where being promoted and for which he/ she was paying.

Diversification growth makes sense when good opportunities can be found outside the present businesses. A good opportunity is one in which the industry is highly attractive and the company has a mix of business strengths to be successful. Dalda with Lajawab and Crisp n Dry tried the concentric diversification strategy. They sought new products that had technological and marketing synergies with the existing product lines, even though the new products could have appealed to a different consumer group altogether. They overlooked the fact that the operating market had intense competition with new entrants picking up market share. At that time what was needed was simply modernization of the brand without confusing the consumer by adding similar products to the clutter.

To top it all off the last packaging change was done back in 1994 and that too was not very different or distinct from other brands. One of our observations is that there is hardly any difference between the package color or design. All the brands have pretty much the same look. Moreover when they are kept in the aisles of retail outlets all one can spot is a bunch of containers with either yellow or green packaging.

PROPOSED MARKETING STRATEGY

Line Modernization

Even when the product line length is adequate, the line might need to be modernized. The issue is whether to overhaul the line, piecemeal or all at once. A piece meal approach allows the company to see how customers and dealers take to the new style. It is also less draining on the company’s cash cow. This is the reason why we have planned a piecemeal approach for repositioning Dalda. In this, we would be continuing the marketing of Dalda (VTF) banaspati, Dalda cooking oil and will stop manufacturing and selling Dalda Lajawab and Crisp n Dry.

In rapidly changing product markets, product modernization is carried on continuously. Companies plan product improvements to encourage customer migration to higher valued, higher priced items. LBPL will try to do a similar thing with Dalda through the introduction of flavored oils. This will be a line extension catering to the needs of women between the ages of 20 and 45 and belonging to the upper income strata of Rs. 10,000/- plus.

Segmentation:

Market segmentation at the level of “segment marketing” will be practiced for Dalda in order to increase targeting precision. It is recognized that buyers differ in their wants, purchasing power, geographic locations, buying attitudes, and buying habits. However, it is not possible to customize the offer/communication bundle to each individual customer. Therefore, Dalda will try to isolate some broad segments that make up the market for different items on its product line. For example, health conscious consumers for Dalda cooking oil with vitamin E. Similarly, modern working women looking for convenience for the Dalda flavored oil market (this is a line extension we have proposed in this report and will be discussed later in greater detail).

Preferences

Research indicates that the edible oil and banaspati market has distinct preference clusters, the natural market segments. Some consumers look for pure banaspati with a rich taste and smell, there is simply no way that they want to give up on the typical, cultural taste of their food. Along with them are consumers who are very health conscious and are not ready to compromise their healthy diet patterns under any circumstances whatsoever. Then there are nuclear families with working mothers who are trying to build trendy and convenient eating habits. Thus, the best solution for Dalda is to have a separate product positioned in each different segment. Dalda banaspati for the first set of consumers, Dalda cooking oil with vitamin E for the second and Dalda flavored oil for the working mothers.

Bases for Segmenting Consumer Market

Geographic Segmentation

The market for oil and banaspati is highly commodity driven. Moreover, the perceived difference between various brands is very little. Therefore, Dalda has to ensure easy access and availability or else it would lose out to competitors.

Keeping in mind the strategic importance of a good distribution network, LBPL has divided Pakistan into six geographical locations. These include Karachi, Lahore, Hyderabad, Faisalabad, Islamabad and Multan. The neighboring areas of these metropolitan cities also report to the above mentioned six branches.

Demographic Segmentation

The target audience will be primarily females starting from the age of 20 to round about 45 years of age.
For Dalda banaspati and cooking oil the income strata would be Rs. 4000/- plus. However, the new flavored oils would be targeted at the upper strata of Rs. 10,000/- plus. As the loose oil/banaspati consuming segment comprises around 50% of the market, therefore, Dalda junior would continue targeting this segment.

Psychographic Segmentation

The entire product range would be targeted at females leading a trendy and modern lifestyle. Flavored oils would especially be marketed to working women looking for convenient and smart recipes.

Behavioral Segmentation

We will try to increase the occasions of oil and banaspati consumption. Soon after Moharrum the marriage season will begin. This will be a good opportunity to cash on the seasonality effect.
Through the introduction of flavored oils, we will be inducing new usage patterns. Following are the extra uses for this category:

Can be used for grill basting.
Can be used in salad dressings, dips, mayonnaise, etc.
Can be used as a drizzle in presentations.
Can be used in soups and stews.
Can be used for shallow, griddle and deep-frying.
Can be used for sauntering vegetables, sea foods and meats.
Can be used for brushing pizza dough
Can be used for adding lemon flavor to curry.
Can be used for marinating meat.

PLACEMENT

Edible oil and Banaspati is highly commodity driven. The final selling price is greatly dependent on the prevailing world oil prices. Besides this the perceived difference between the various brands ion this price sensitive category is almost negligible therefore thew placement at retail outlets greatly determines the sales volume.

In order to cash on the shelf space all through out the year LBPL lays great stress on having a strong distribution system. It has Six Branches one each in the cities of Karachi, Hyderabad, Multan, Faisalabad, Islamabad and Lahore. Each branch has a branch manager to whom several Assistant Branch Manager report. Under each Assistant Branch Manager are Lever’s Distributor Managers. Each Distributor Manager is responsible for Five Distributors of Lever Range of Products. The entire inventory leaves the factory and goes to the depot where each distributor has already submitted the total week’s requirements.

Bearing this in mind we strongly believe that Dalda is suffering at the hands of growing competition. To counter this we would improve the current shelf placement of Dalda by offering higher margins and substantial trade discounts.

Higher margins would be tied with the sales delivered/achieved.

For Example

Sales exceeding Rs. 100,000/= would entitle the retailer a commission of 5% of the total Rupee Sales.
Similarly on the sales of 100 units of the five liters pack the retailer would be given five extra units free of cost. While on the sales of 100 units of the two and a half liters pack the retailer would be given two extra units free of cost.

PRICING

Edible oil and Banaspati market is extremely price conscious. The entire product range is perceived to be premium priced. This is mainly because of the margin pressures and the high quality expensive ingredients. LBPL has no say whatsoever in determing the quality standards and the ingredients used in the manufacturing process.

The pricing strategy is cost based and we recommend replacement cost pricing for the repositioned Dalda instead of stock recovery pricing. As the current prices are dependent upon the prevailing world oil prices the new type of Pricing strategy will ensure that the spread between cost and selling price is kept to a minimum. This will make the prices of Dalda more competitive as the fluctuations in the market prices will be absorbed in the final selling price.

We will maintain the current price of the existing product range. It is given in the following table. However, Lajawab and Crisp n Dry would be withdrawn from the market. The price of flavored oils would be as follows:

Dalda Ginger n Garlic – Rs.130/- for 1.5 liters.
Dalda Lemon – Rs. 130/- for 1.5 liters.

CURRENT MARKET PRICES

BRAND	Category	Package Size	Actual Price Rs./-	Price After Discounts
DALDA	OIL	2.5 liters	168/-	–
	OIL	5.0 liters	320/-	–
	Bottle Oil	1.5 liters	109/-	100/-
	Bottle Oil	3.0 liters	197/-	185/-
	GHEE	2.5 liters	168/-	–
	GHEE	5.0 liters	320/-	–
	Crisp’n’Dry	1.5 liters	109/-	100/-
PLANTA	OIL	2.5 liters	160/-	–
	OIL	5.0 liters	320/-	–
HABIB	OIL	2.5 liters	169/-	162/-
	OIL	5.0 liters	323/-	308/-
	Bottle Oil	3.0 liters	330/-	–
	Bottle Oil	5.0 liters	500/-	–
	GHEE	2.5 liters	161/-	–
TULLO	OIL	4.5 liters	330/-	–
T. GOLD	OIL	2.5 liters	165/-	–
	OIL	5.0 liters	315/-	–
SOYA SUPREME	OIL:	1liters	165/-	–
RAFHAN	OIL	2.25 liters	190/-	–
	OIL	4.5 liters	300/-	–

PROMOTION

Seeing the current market perception of Dalda, we have decided to change the Brand personality of Dalda. It has always been seen as a very motherly brand, a brand which has been used generation after generation. The tag line “ Jahan Mamta Wahan Dalda” was the last repositioning given to this brand which yet again has its root from the motherly foundation.

We strongly feel that Dalda needs to take a diametric turn around in the message that it passes on to its consumer.

The following are the steps we have planned.

A teaser campaign for the new position would be designed. This campaign would be strictly focused on the novelty of Dalda. The 7-second advertisement would create brand awareness for the new line extension of flavored oils. This particular variant would be marketed only to a select group of consumers belonging to the upper strata of Rs.10, 000/- and above.
Besides this we will continue marketing Dalda Banaspati (VTF) and Dalda cooking Oil to not only the present segment of females aged 35+years but also to females between the ages of 20-34 years. These ads will try to portray a very trendy and modern setting, care would be taken to choose younger and fresher looking models.
Dalda Ka Dastarkhan will be re-launched with a completely new look on both FM –100 and PTV world starting from next quarter onwards i.e. May, June and July.
A newer aspect of Dalda will be brought into light in the coming year. This will reflect on the social responsibility effort those LPBL practices on its various brands. Dalda would be granting 10 students of Home Economics College for Women a sponsorship worth Rs. 150,000/- each. The scheme would start from January 1, 2001. Through this effort Dalda will be able to create a good name in its future target market. Females graduating from the institute formulate a potential consumer segment.

COSTING

Teaser: A 7- second TV commercial would be aired for one month (June).

40 spots would be aired two to three times a day, in the time slot of 6:45 p.m. to 7:45 p.m. Research has indicated that this time slot gives the highest reach of the target audience. The total cost of this campaign would come up to Rs. 2.1 million.