Reasons for loss of Shan Foods Market Share in spice industry.

Institute Of Business Management

Reasons for loss of Shan Foods Market Share in spice industry. Fall 2012

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Reasons for loss of Shan Foods Market Share in spice industry.

SHAN FOODS (Pvt) Ltd

While analyzing the market share of spice industry of Pakistan, Shan realized downfall in their market share. Shan Foods (Pvt) Ltd, a Global Food Company from Pakistan, stands as one of the most reputed food company having powerful global brands in more than 50 countries, across 5 continents since 1981. In Pakistan it is a well developed brand with its high quality, exotic flavor, unique aroma and exquisite taste. The major competitor of Shan Foods is National Foods Limited. Historically Shan had strong place in the market but when the company began selling whole new range of tasteful spices in the central Pakistan their market share declined. Shan has overall market share of 32% and their major competitor National has 68% of market share. Shan lost its overall share due to less demand in central Pakistan which consists of 56% of overall countrys population. In 2009-10 their market share was 32% in central Pakistan only but in 2010-11 it declined to 27% which reduced their overall market share. The exotic flavor and rich taste of Shan had a contribution in monetary losses and became a cause of wasted sales opportunities in central Pakistan, as it proved to be very piquant for the consumers in that region.

PLAYER DISTRIBUTION -

Market Share 2009-10

37%
Shan National

Market Share 2010-11

32%

Shan National

63%

68%

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Reasons for loss of Shan Foods Market Share in spice industry. KEY CITY WISE Market Share

CITIES Shan FAISALABAD MULTAN LAHORE RAWALPINDI GUJRANWALA 30% 15% 19% 32% 6%

2008-09 National 70% 85% 81% 68% 94% Shan 35% 18% 25% 39% 19%

2009-2010 National 65% 82% 75% 61% 81% Shan 26% 15% 26% 38% 29%

2010-11 National 74% 85% 74% 62% 71%

The solution of this problem will earn profits and increase their market share and more customer loyalty will be created overall. Shan Foods will have a strong stand in market. If this problem is not addressed properly then chances are that Shan may lose its business to its competitors even more. As Shans spices have become obsolete in central Pakistan therefore their business is at risk and this pushes investors away. Presently the issue can result in loss of revenues and greater market share loss in future.

ALTERNATIVES Change in Price Factor Shan Foods could decrease their prices this may lead to increase in sales, but the disadvantage would be it will affect the brands image and the customers may feel that the quality is not up to the mark anymore. Awareness We would like to change consumer perception about our products and make them realize that we provide more then what the consumer requires Sikandar Sultan- CEO Shan can come up with different campaigns to make consumers aware of the quality they provide. Shan does not compromise on quality. They can teach people how much quantity to use. If a family does not prefer high spicy food, they can use less quantity instead of consuming the whole packet at once. It will help company attracting customers and increase brand recognition.
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Reasons for loss of Shan Foods Market Share in spice industry.

Shan could create awareness by making maximum use of advertisements. This may lead to increase in investments at start but if they are able to reach to their customer and have consumers mind and heart share, this will increase their profits in future. Build taste for their products Also, Shan could build taste by door to door selling and wet sampling outside supermarkets and malls. This way people will experience Shans products at earliest which will attract them towards their products. Disadvantage may be that consumers may develop negative feelings about the product after wet sampling as the taste might be unpleasant for them.

Availability Shans products are only available in 3000 shops out of 22000 shops in central Pakis tan. Shan can go for more intense distribution strategy and reach as many shops and so that it may be available for consumers. But as we know Shans demand is less therefore there are less chances people will buy even if their products are available. Improve their management At present Shan does not have regional sales manager. Shan could hire regional sales manager that would understand the people of central Pakistan in a better way. It may lead to an increase in expense related to recruitment, advertisement for position available, etc.

RECOMMENDATION The organization can adopt the alternative of creating awareness for their brand, in terms of quality they provide and usage. The awareness can be done by using certain advertising mediums. Through advertising they can inform consumers that it does not compromise on quality. Shan values its customers more than their personal profits and therefore provides products of high quality (they do not make use of artificial colors). Shan can then take full advantage of Print Media. They can advertise their products in cooking magazines, usage of their products in different recipes, etc. They can teach people how much quantity to use. It is not necessary to consume the entire packet at once, if someone does not like piquant food than they can use the product as per their taste.

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Reasons for loss of Shan Foods Market Share in spice industry.

The 5% decrease in market share of Shan in central Pakistan affected overall market share of Shan and Shan lost its consumers to its competitors in central Pakistan. The less demand of Shans spices in central Pakistan is the key decision criteria for our recommendation that serve as the basis of our suggested alternative. While creating awareness in central Pakistan, there is a chance of lower revenues and more cost but communicating awareness in an effective manner will eventually increase demand which will lead to higher profitability. Shan should try to make its business more appealing to customers. Increasing market share is important as it makes them the market leader and this attracts competitors customers and as a result the respective profit margin increases. GOAL AND OBJECTIVES OF RECOMMENDATION Time that would take to achieve the objective of increasing the demand of their product would approximately be 10 to 15 months as the tasks requires spreading the awareness in the huge area.

ACTION PLAN The problem focused in the case study was that, in central Punjab the demand is less as compared to Sindh, due to difference in taste preferences among the people of the two provinces. Basically people in Punjab prefer less spicy food unlike people in Sindh, secondly less awareness among the people regarding the quantity usage of the product also contributed equally towards the problem, as a result there was decrease in demand therefore decrease in sales which eventually became a major cause of low market share and monetary losses. In accordance with this problem the best alternative recommended by us was to provide awareness among the people regarding the usage of the product which will satisfy their respective taste thereby making regular meals more delightful and exceptionally tasty for them. Most importantly they should also bring consumers attention about the authenticity of the product with respect to price, as its prices are comparatively higher than National this is mainly because they do not compromise on quality and avoid usage of artificial colors. We provide customers more than they require- says Brand Manager

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Reasons for loss of Shan Foods Market Share in spice industry. ACTIVITIES

The plan through which they can work out to create awareness is, firstly they could make maximum use of electronic media i.e. local channels and specially cookery channels. They could convey their messages through prominent and most recognized personalities like Zubaida Apa or Chef Zakir, they are the opinion leaders who are admired by most of the people and their ideas or advices are honored by majority. Secondly they can also make use of radios to convey their messages, they should develop effective communication system that would bring in consumers attention that Shan cares for its customers and therefore does not compromise on quality and that is why Shan has set premium prices. This alternative can only work if the brand managers focus on formulation and proper execution of the messages otherwise under developed communication effort can lead towards formulation of negative image in consumers mind. Nowadays people are more health conscious there is cultural shift towards greater concern about health and fitness. Shan can also communicate the advantage of using high quality spices. They can communicate advantages of using red chili that is it prevents from cardiovascular disease and it is also effective source of vitamin A and C.

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