Вы находитесь на странице: 1из 20

Principles of Marketing

PEL

MARKETING ANALYSIS OF

PEL

Presented to

Presented By

Principles of Marketing

PEL

Acknowledgments
We would like to acknowledge a few people here without whom this report would have
been impossible. We are grateful to professor, Mr. Muhammad Zahid for guiding us along
this project and for offering his valuable suggestions.
We are indebted to a number of people at PEL for sparing time for us and providing us
with material, which helped us in putting this report in order. We would especially like to
thank Mr. Mahmood Ali Mir, the Marketing Manager, PEL for giving us a lot of time on
this analysis. Mr. Kashif Shafique, Media In charge, for getting hold of some brochures
for us.
We would like to thank Ali Shan, for helping us put this report in order. Last but not the
least, we would like to appreciate each others work and contribution. It was a delight
working as team.
It will be a source of great pleasure for us if anyone would like to have any kind of added
information on this project. We will be glad to assist you in any way we can.

Principles of Marketing

PEL

EXECUTIVE SUMMARY
The purpose of this project was to identify the product line of a company, what its current
position in the market is as compared to its competitors and the companys marketing
strategy.
We choose PEL keeping in mind the variety of products it is offering currently and the
fierce competition it is facing form multinationals in all its product ranges.
PEL was an eye opener in terms of marketing strategies it is using as compare to other
multinationals.
Why was it an eye opener?
While interviewing the marketing manager of PEL we observed that the company
followed the push strategy. It considers its dealers its customers, which is contrary to
what many multinationals do. It does not emphasize on advertising and at the time of relaunching a particular product its main focus is to attract the dealers. It gave us an insight
into the various marketing strategies practiced by Pakistan in the industrial market.

Principles of Marketing

PEL

PAK ELEKTRON LIMITED (PEL)


Introduction
PEL was established in 1956 with the technical collaboration of M/S AEG
Germany and is the oldest composite electrical equipment-manufacturing unit of
Pakistan.
In October 1978, the company was taken over by the Saigol Group, which is one
of the leading industrial groups in Pakistan, having diversified business activities in the
fields of:

Textiles
Engineering
Fuel and Energy
Trading
Automobiles
On the engineering front, PEL group is the flag carrier of the Saigol Group.
The PEL group is organized into two business divisions.
1.

PEL Appliances

2.

PEL Power Division

Power Division
PELs Power Division manufacturers transformers, switch gears, electric motors, energy
meters, kiosks, compact station, shunt capacitor. Banks of highest quality and of latest
international standards. PEL is one of the major electrical equipment supplies to Water
and Power Development Authority (WAPDA) and Karachi Electrical Supply Corporation
(KESC) while are the largest power companies in Pakistan.
PEL equipment has been used in numerous power projects of national importance within
Pakistan over the years and PEL has had the privilege of getting its equipment approved
and certified from well-reputed international consultants.

Appliances Division (Product Portfolio)


1.

Refrigerators (Direct Cool)

2.

Window type air conditioners PEL

3.

Split type air conditioners Carrier

4.

Deep freezers

5.

Microwave Ovens

6.

Televisions

7.

Compressors (Fractural horse power)


4

Principles of Marketing

PEL

The Appliances Division was established in 1980-81 when the company


introduced its first consumer product i.e. window type air conditioners in Pakistan. This
was followed by refrigerators and deep freezers in the year 1986-87, compressors in 1993
and carrier window and split air conditioners in 1997. It is now the largest manufactures
of home appliances in Pakistan.

Principles of Marketing

PEL

PRODUCT WIDTH AND LENGTH


Product Categories
Air Conditioners

Splits

Deep freezer

Microwave

Refrigerators

PAC 12 K

PS 95K

PDF-175

PMO 17

PC 2008

PAC 19 K

PS 125K

PDF-275

PMO 170-3

PC 2009

PAC 24 K

PS 185K

PDF-370

PMO 23

PC 2010

PS 245K

PDF-370

PMO 36

PC 2011

PDF-410

PMO 52

PC 2300 JF
PC 2012
PC 25005 F
PC 20145
PC 20165
PC 2015
PC 2017

PEL REFRIGERATORS
PEL Refrigerators were started in 1997 onwards. They were very well received by the
Pakistani market, making PEL products the number one choice of Pakistani customers.
It has a long range of refrigerators that recently launched keeping Crystal Star.

Target Market and Segmentation


The PEL refrigerators cater to all the segments without focusing on any particular class or
segment.
Both male and female are involved in the buying process but more influence comes from
the male.

Main Competitions
Dawlance has proved to be the main competitor for PEL refrigerators since it started
manufacturing in 1987. Dawlance sold 75 to 80, 000 units in 1997.
PEL refrigerators positioning in the market 1997-1999.

Dawlance
Philips
Indus
PEL
Reason For Failure And Enhancement of The Product
During 1997, the quality of the PEL refrigerators was not good at all. It had no marketing
deportment except for a soles department. No focus on advertising was given and the
quality was poor.
Customers complaints were normal.
1.

Noise level of compressor

2.

Low cooling

PEL was manufacturing their own compressor and so closed the business and signed a
deal with DANFOSS a German company. PEL gave term their specifications for a
quality-enhanced compressor.

Relaunching In 1998
PEL Crystal
This new brand was relaunched in 98 with the German made compressor. This product
was relaunched as a Silver Bullet Brand a sub brand that positively influences image of a
main brand or mega brand. It can be a powerful force in creating or maintaining brand
image.

Principles of Marketing

PEL

Sales Figures for PEL Crystal


Units Sold

Year

40,000 50,000

1998

80,000

1999

100,000

2002

170,000

2003

Market Share
The total market for refrigerators in the year 2003 is 525,000 units. PEL captured 425,000
units. Dawlence sold around 165,000 units.

Marketing Strategy
PEL Refrigerators since it is the main brand for PEL appliances has basically adopted the
Push Strategy. Their main aim being to purchase market shares through dealers by
offering better margins as compared to their competitors.
PEL claims itself to be Challengers to Dawlence who are right now the countrys
leading refrigerator manufacturer. They are going contrary to Dawlences current market
strategy which is Pull Strategy.
Waves another competitor for PEL has adopted the advertising strategy. They advertise
much more than PEL and Dawlence combined but the product is still perceived by the
general public as a low quality product.

Principles of Marketing

PEL

DEEP FREEZERS
PEL Deep Freezers were introduced in 1987, in technical collaboration with M/S Ariston
(Italy).
The chest type freezers from PEL, are available in two different types i.e. single door and
twin, in five different models and 2 different colors.
1.

Single door Deep Freezers are available in three sizes, with capacities from
175 liters to 370 liters.

2.

Twin Freezers is a unique product, with one compartment working as a


refrigerator and the other as a freezer. This product is available in two sizes,
i.e. 370 and 410 liters.

The high quality of PEL Deep Freezers was recognized equally well by the
consumers and multinational companies. (Lever brothers Pakistan Limited asked PE:
to manufacture a special freezer for them when they launched their World famous
Walls Ice Cream in Pakistan). Today PEL is the preferred source of freezers for the
major multinational ice cream companies in Pakistan.

Market Segmentation and Target market


The PEL Deep Freezer was launched in 1987. At that time Deep freezer was more of
a luxury rather than a necessity. Thus it was catering this product to more of the
upper-middle class rather than the middle and upper class.
Deep Freezers were designed for both Refrigerator use as well as the deep freezer use
as in the twin freezer. The single door product was catering to the middle class.
Much of this particular product was specially manufactured for various multi-national
companies for their stores. Lever Brothers purchased many for their Walls Ice
Cream. Thus now the deep freezers are targeted towards multi-nationals for their
perishable products. Residential use is mainly taken up by Waves.

Main Competitors
At the time of its launching the main competitors for PEL Deep Freezers were
Waves. There was Dawlence as well but Dawlence was concentrating on its
refrigerator brand rather than expanding their focus market.
Waves was the leading deep freezer manufacturer at that time and no matter how hard
PEL tried for Market development they just could not out do Waves.

Reasons for Failure of PEL Deep Freezers


When PEL Deep Freezer was launched, Waves was the market leader and thus the
market as a whole did not accept this product.
The dealers were apprehensive about keeping these appliances in their shops since the
consumers were hooked onto Waves.
PEL entered the market at a low price as compared to the other deep-freezers at that
time. These deep freezers were being imported to Bangladesh and Afghanistan until
9

Principles of Marketing

PEL

the September 11 event. Because the product was launched at a relatively low price, it
was perceived by the customer as a low quality product.

Market Share
The year it was launched, PEL Deep Freezer sold about 45,000 units. The following
year the dealers refused to keep the product and PEL disposed off the brand
altogether.
PEL now only manufactures deep freezers for multi-national companies for their icecream products in Pakistan.

WINDOW TYPE AIR CONDITIONERS


The manufacturing of Window Type Air Conditioners was started under the brand
name of PEL in technical collaboration with General Corporation of Japan. With
PELs dedicated efforts in quality control and customer service, this product soon
became the market leader and has been successfully maintaining this brand leadership
in the air conditioner market of Pakistan, with a market share of 45%.
These Window Type air conditioners were imported to Bangladesh and Afghanistan.

Market Segmentation and Target market


At the time of its launching, PEL window type air conditioners were targeted towards
the middle and upper class. They were being manufactured for commercial as well as
for the industrial markets.
These Air conditioners were manufactured for specific room sizes therefore there was
no restriction on where they could be used; residential purposes, commercial purposes
and industrial purposes as well.
Karachi and Lahore are the main and biggest markets for electrical appliances;
therefore their target markets were focused for these two cities.

Main Competitors
Before 1995 the main competitions for PEL Air conditioners were General Air
conditioners that were smuggled in from Afghanistan. These smuggled Air
conditioners were being sold at a much lower price and therefore PEL remained No.
2.
General (smuggled)

Rs. 18,000/-

PEL Air conditioners

Rs. 24,000/-

In the year 1996-97 LG launched its Air conditioners and became a looming threat for
PEL Air conditioners. There was a price differentiation of around Rs. 2000/- but apart
from that LG was perceived by the public to be a better brand since the price was
higher and its was being imported from Korea.

10

Principles of Marketing

PEL

Other main competitors

National
Samsung
Market Share
In the year 2002, the total market for window type air conditioners was around 7075000 units. This year the market reduced to a mere 50,000 units. The major reason
for this decrease was the influence of Chinese products in the market. Consumers
could purchase the same products from the Peshawr or Pindi Baras at a relatively low
cost. But these products came without any guarantee.
LG being the main competitor for PEL was aggressively marketing its air
conditioners and in order to make PEL go out of business they reduce their prices
from 26,000/- to 18,500/-. PEL followed by reducing their prices from 24,000/- to
15,000/This lowering of price was followed by 5 to 6 adds to inform the customer. By this
year till June 2003, PEL has sold 14,000 units and are still booked.

Market Competition
Total Market for Window Type

Units Sold
55,000

Air-Conditioners
PEL

16,000-18,000

LG

8,000-9,000

Re-Launching of PEL Energy Saver


PEL Air conditioners despite being the number one air conditioner manufacturers in
Pakistan did receive a number of complaints from their customers regarding the
amount of energy that these appliances were using and the heavy electricity bills that
the customers were having to pay.
Keeping these complaints in mind, PEL re-launched its window type air conditioners
now under the name of PEL Energy Savers. These air conditioners came with
added features such as Fan speed select, Lower control etc. They claimed it to be
the Revolutionary Energy Efficient Design.

11

Principles of Marketing

PEL

PEL SPLIT TYPE AIR CONDITIONERS


In March 1997, the company entered into an agreement with Carrier Corporation USA,
in the field of air conditioning. As a first step, carriers premium quality Split-type air
conditioners were introduced in 1997 in the local market.

Target Market and Market Segmentation


Split-type air conditioners were targeted towards the upper-class. It was given much of
the focus basically because of the pricing.

Main Competitors
PELs Split-type air conditioners were being marketed in the face of fierce competition
from quite a number of market leaders.
1. LG
2. Samsung (Korea)
3. Sabro (Local)
4. Waves
5. Daikan
PEL is currently number 2 in the Split-type air conditioners.

Market Share
PEL imported around 7,000 splits last year and sold all. This year they plan to sell 25,000
units. Market share of LG reduced drastically from 75,000 to 30,000 units as soon as PEL
Energy savers hit the market.

TELEVISIONS
In 1995, another joined venture was signed with DAEWOO electronics, Korea. As a
result, a new company PEL DAEWOO Electronics Ltd. was formed to produce colour
televisions.
PEL DAEWOO Electronics Ltd. was producing world class colour televisions in 14, 20
and 21 screen sizes. The plant was one of the latest and most modern in Pakistan, with
an annual production capacity of about 100,000 colour TV sets of international standards.

Main Competitors
PEL DAEWOO Electronics Ltd. Had to face fierce competition from all sides. Lot of
smuggled televisions was being brought in from Afghanistan and China. PELs television
was hit dramatically with competition from:
1. Philips
2. Sony
3. Samsung
4. LG
12

Principles of Marketing

PEL

The business dint take off quite well, so they had to close down.

MICROWAVE OVENS
PEL launched its microwave oven products in the year 2002. It is a fairly new project that
the company has started and are right a bit apprehensive on weather to continue or not.

Main Competitors
PEL has marketed its microwave ovens with a host of competitors on all sides. It has
launched its oven and marketed it as PEL Power Wave.
PELs main competitors right now are: 1.
Dawlence
2.
LG
3.
Singer
4.
National
5.
Samsung

Market Share
In the year 2002, the year of its launching, PEL Microwave Owens sold around 6,000
units. This year they are planning to sell around 20,000 units.
The major market for Microwave Owens has increased to around 40%. This is largely
due to the role that Dawlence has played in bringing this product into the market.

MARKET STRATEGY FOR COMPETITIVE


ADVANTAGE FOR PEL
PEL takes immense pride in the fact that it is the countrys largest manufactures of
appliances after LG. It has improved quite a lot in its manufacturing after other
competitors launched similar products in the local market.
PEL claims itself to be a Challenger to many of the products that LG has launched in the
Pakistani market. It maintains this approach specifically in the refrigerator line of
products. PEL has aggressively attacked the refrigerator line of Dawlence as well as that
of LG, in order to gain the market share.
PEL follows the Push Strategy concentrating on the dealers rather than the customers.
It focuses on dealerships and attracts dealers while launching a new product.
13

Principles of Marketing

PEL

MARKETING STRATEGY FOR PEL


PEL is basically divided into 2 divisions:
1.
PEL Appliances
2.
PEL Power Division
PEL Power Division supplies its industrial products to WAPDA, LESCO etc. It has a set
standard of production and no strategy as such.
PEL Appliances is a consumer market division what manufactures products for
residential, commercial and industrial use. It has developed a marketing strategy for itself
to compete fiercely with its two major competitors, Dawlence and LG.

MARKET POSITIONING
PEL has a clear-cut position in the market currently and it is striving hard to maintain this
image in the local market. It wants to be known as the Quality Producing Appliances
Manufacturer in Pakistan.

Dealer is our Customer


At PEL, customers have no direct link with the company. It is the dealer that is linking
the organization with the consumer. The dealer buys the stuff from PEL and then resells it
to the consumer.
In case of complaints, the customer will deal with the dealer and the dealers inform PEL
about the various problems being faced by the customer.
PEL mainly relies on the dealership arrangements for their distribution channels and have
no display outlets in the market. They did try it once but the project failed drastically.
Their view being, the more a product line we have the more reasons well have for a
display center.
Currently PEL has only 2 major products: refrigerators and Window Type Air
conditioning.

Not A Market Oriented Company


PEL claims itself to be a dealer-oriented company rather than a market-oriented one. It
does not allocate sufficient budget for advertising purposes since it does not believe in it.
PEL simply manufactures its products and delivers it to them. They gets all the
information they need about the current state of the market and how many units were sold
by which company.
14

Principles of Marketing

PEL

When PEL does advertise, it focuses its adds on the prices, not the features that the
product is offering.

TARGET MARKET
PEL targets all the segments of the society. The target market according to PELs
Marketing Manager, is Bottom to Up, which entails all the upper, middle and lower
classes.
These days, the market has been saturated by an influx of Chinese products and other
companies. The competition has increased and therefore the prices have decreased fairly.
This has given the chance to consumers from lower classes to be included in the target
marked as well.

CONCERN FOR THE ENVIRONMENT


In February, 1997 the company also entered into a contract with UNIDO and Government
of the Pakistan for the supply and installation of equipment for manufacture of CFC free
refrigerators and Deep Freezers. UNIDO will manager the project to be funded by MultiLateral Ozone Fund (MOF), Montreal.
PEL is the first refrigeration company in company to embark upon the institute to phase
out Ozone Depleting Substance (ODS) from its products and help in making this world a
better place.

15

Principles of Marketing

PEL

MARKET SHARE FOR PEL PRODUCT RANGE

Product

Market Share

Refrigerator
Window Type Air Conditioner
Split Type Air Conditioner
Microwave

32%
29%
32%
2%

Market Share of PEL Product Range


40%
30%
20%
10%
0%
Refrigerator

Window Type Air Conditioner

Split Type Air Conditioner

Microwave

16

Principles of Marketing

PEL

THE BOSTON CONSULTING GROUPS APPROACH

THE GENERAL ELECTRIC MODEL

A Refrigerator

D Microwave Owen

B Window Type A/Cs

Split Type A/Cs

C Television

Deep Freezers
17

Principles of Marketing

PEL

GROWTH SHARE MATRIX AND THE STRATEGIC BUSINESSPLANNING GRID


PELs core business unit right now is the refrigerator and the Window Type Airconditioners. As indicated in the table above PEL has almost 32% of the market share in
Refrigerators. In the BCG Approach we have placed Refrigerators (A) in the upper left
section of the matrix since this is a strong business unit of PEL and it wants to invest and
make it grow.
Right now PEL is considered to be # 2 in the local market in this business and that is why
the company considers this product a Star. This product has a high growth and a high
share in the market as well. The market share has deteriorated slightly for Refrigerators in
the past 5-6 years due to the onset of Deep Freezers in the market. The consumer
therefore prefers to keep a Deep Freezer rather than a refrigerator. Thus the market
attractiveness of this product has declined slightly, but it still remains the strongest
product for PEL.
PEL Window Type Air conditioners occupy 29% of the market share in the face of
competition from giants like LG and Samsung. PEL A/Cs have a loyal customer base;
and this strength provides enough strategic resources for PELs other question mark and
Linchpin Brands. PEL considers its Window Type Air conditioners a Cash Cow brand
since it has already invested in this brand a lot in the past and is right now the # 2 brand
in the market after LG. The market attractiveness for A/cs has declined in the market due
to the onset of Split Type Air conditioners. Even though this product is targeted towards
the upper class segment t has affected the Window Type Air conditioner market.
PEL signed a joint agreement with Daewoo Ltd for manufacturing Televisions for them.
Televisions were produced under the PELDAEWOO Ltd brand but this product faced a
lot of competition and was unsuccessful in the market. Right now PEL has stopped
manufacturing Televisions altogether but is planning to resume its operations for this
product next year. That is why PEL considers its television brand a Dog since it is not
willing to invest in this brand.
Microwave Ovens and Split Type Air conditioners have recently been launched by PEL
in the local market and have received a good sales figure for their first year. The industry
attractiveness for Split Type Air conditioners is very high in the marker right now but
since PEL has just launched this product its own business strength is average. However
there are sure signs that this will also be one of the major brands by PEL in the near
future.
Microwave owns having just being launched last year have shown a market share of
around 2% but PEL plans to increase this to 20% this year. Both Microwave Owens and
Split Type Air-conditioners are considered to be Question Mark Brands for PEL since
they have just been launched. But PEL wants to invest in both heavily and turn into their
Cash Cow Brands.
18

Principles of Marketing

PEL

Conclusion
PEL has over the recent years tried and test marketed a lot of products in the local
market. It has been successful in some and in others it has been hit badly. The company
follows not strict marketing strategy for its products. Its competitors are different for all
its products and therefore it has to vary its strategies for all its products. Right now PEL
is facing quite a challenge keeping up with Dawlence and LG in the market; its two
strongest competitors.
It follows the Push Strategy, targeting the dealers rather than the customer. It believes its
dealers to be its customers and implements all the complaints and suggestions that the
dealers offer.
PEL mainly relies on the dealership arrangements for their distribution channels and have
no display outlets in the market. They did try it once but the project failed drastically.
Their view being, the more a product line we have the more reasons well have for a
display center.
PEL claims itself to be a Challenger to many of the products that LG has launched in the
Pakistani market. It maintains this approach specifically in the refrigerator line of
products. PEL has aggressively attacked the refrigerator line of Dawlence as well as that
of LG, in order to gain the market share.
PEL plans to introduce new products in the local market as well in the near future. These
products will be competing with giants like Samsung, Nokia, Siemens etc. It does not
plan to formulate its marketing strategy for these products since it believes in the push
strategy.

19

Principles of Marketing

PEL

RECOMMENDATIONS AND OBSERVATIONS


1.

There is a lot of potential in institutional sales. Such institutions should be


categorized accordingly and specific focus should be made on these
categories.

2.

Advertising has to be done more frequently and more effectively. PEL as a


brand is still not fully recognized as a home appliances company.

3.

Availability of product at the right time has to be ensured, without which they
are losing their deserved market share. This also requires a minimum
inventory level has to be maintained at all times to ensure stock availability.

4.

Research and Development department has to be organized more effectively


so that they can come out with their own innovations, instead being the
followers at all times.

5.

Strong dealers should be identified and then inter personal relationship has to
be developed with such dealers.

6.

Price control has to be implemented by the company. Dealers have to be


handled very delicately in this connection.

7.

Deep Freezers should be focused, as it is required by their dealer and them to


complete our range of products.

8.

At the moment PEL refrigerators models are mostly falling in upper price
segment. However smaller models like 2009, 2010 and 2011 should be
changed from upper segment to medium price segment.

9.

For deep freezer, growth should be ensured by market penetration with


existing models and more focus on dealer network.

20