PEL Refrigerator

Introduction
Pak Elektron Limited (PEL) is the pioneer manufacturer of electrical goods in
Pakistan. It was established in 1956 in technical collaboration with AEG of
Germany. In October 1978, the company was bought by the Saigol Group of
Companies. Since its inception, the company has always been contributing
towards the advancement and development of the engineering sector in Pakistan
by introducing a range of quality defined goods and by producing hundreds of
engineers, skilled workers and technicians through its apprenticeship schemes and
training programs.

The company comprises two divisions:

• Appliances Division
• Power Division

PEL Refrigerators

The manufacturing of refrigerators started in 1986-87 in technical collaboration

with M/s IAR-SILTAL of Italy. Like the air conditioners, PEL's refrigerators are
also in great demand. Today, PEL Crystal has 30% market share. Its cooling
performance is tested and approved by Danfoss, Germany and its manufacturing
facility is ISO 9002 certified by SGS Switzerland.

Power Division
PEL Power Division consists of three plants. These are Energy Meter Plant,
Transformer Plant, and Switch Gear Plant. All these plants are now ISO
9001:2000 Certified.

PEL Power Division manufactures energy meters, transformers, switch gears,

Kiosks, compact stations, and shunt capacitor banks. All these electrical goods are
manufactured under strict quality control and in accordance with international
standards.

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PEL is one of the major electrical equipment suppliers to Water and Power
Development Authority (WAPDA) and Karachi Electric Supply Corporation
(KESC), which are the largest power utilities in Pakistan.

Over the years, PEL electrical equipment has had been used in numerous power
projects of national importance within Pakistan. PEL has the privilege of getting
its equipment approved and certified by well-reputed international consultants
such as, Preece Ensa, France.

In spite of stiff competition from emerging local and multinational brands, PEL
Group's appliances and electrical equipments have remained in the spotlight due to
constant innovation. Strategic partnership with multinationals of repute have
enabled the PEL Group to incorporate new technologies into existing product
ranges, thus giving the Pakistani market access to innovative, affordable and
quality products.

Energy Meters

Single-Phase Energy Meters PEL manufactures Electro-mechanical Energy

Meters under licence from ABB (USA). The quality of PEL meters has been
certified by KEMA Laboratories (Holland) and conforms to IEC 521. Moreover,
PEL Energy Meter plant is ISO 9001:2000 certified by SGS Yarsley, U.K.
PEL type M8C is a direct connect single-phase meter. The design and
constructional features include overload compensation, temperature compensation
and self-cleaning, non-aging and tamper resistant magnetic bearing system. Thus
providing maintenance-free operation over a longer period and accurate
measurement of electrical energy. The frame is sturdy in construction and
enclosed in unbreakable high-impact polycarbonate plastic security box. Ratings
Voltage Frequency 10(40)A 240V 50Hz

Poly-Phase Energy Meters PEL type C8L is a direct connect poly-phase energy
meter having improved load performance and accuracy over a wide load range. All
meter parts are corrosion protected for long-term reliability. Like single phase
energy meters C8L also possesses non-aging, self-cleaning magnetic bearing
system, which ensures virtually frictionless operation of the rotor while
withstanding abuse from surges and magnetic tampering. The meter is available in
high impact polycarbonate security box, which is extended type and completely
shrouds service cables. Ratings Voltage Frequency 15(90)A 3*230/400V 50Hz

Three Phase Solid State Energy Meter Three Phase Multi-rate Solid State
Energy Meter (PE3-D) is used for the measurement of energy in three phase four
wire networks. It is a direct connect meter that complies with the IEC 62052-11,
IEC 62053-21 (IEC 61036) and optionally with the standards. PE3-D meters are

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manufactured in compliance with the ISO 9001 standards. Ratings Voltage
Frequency 10(100)A 3*230/400V 50Hz

Three Phase Solid State LT Type CT and HT Type CT & PT Operated

Energy Meter PE3-C is 3-phase 4-wire, multi-functional electronic meter with
the accuracy of Class 1 for active energy and Class 2 for reactive energy
measurement. It is connected Via CT’s & PT’s. Meter complies with the IEC
62052-11, IEC 62053-21 (IEC 61036), IEC 62053-23 & ISO 9001 standards. LT
Type CT Operated Ratings Voltage Frequency 10(100)A 3*230/400V 50Hz

Single Phase Solid State Energy Meter PE1-6 is single phase meter designed to
meet the needs of domestic users. It supports single wire operation providing
maximum security against tempering. PE1-6 conforms to IEC 62053-21 & IEC
62052-11 and ISO 9001:2000 standard requirements. Ratings Voltage Frequency
10(40)A 230V 50Hz

Market Share:
Directors' Report to the Shareholders

The Directors are pleased to present Annual Report together with Company’s
audited financial statements for the year ended June 30, 2009.

Operating Results

The Board is pleased to report that despite economic shocks due to global
financial crisis, internal strife and political instability during financial year
2008-09, the Company has been able to maintain growth during the current
year as well. Sales grew by more than 16% with a commensurate growth in
gross & operating profit. The economic shocks resulted into sharp increase in
interest rates consequent to which financial cost went up by Rs. 400 M.
Reduction in carrying value of investments amounted to Rs. 87 million. Net
profit after tax has resultantly dropped by Rs. 196 M from Rs. 457 M to Rs.
261 M.

Summary of key financial results is as follows:

Financial Results (Rs. in Million) 2008-09 2007-08

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Gross Sales 16,117 13,927
Gross Profit 3,337 2,850
Operating Profit 1,757 1,602
Profit before tax 394 635
Profit after tax 261 457
Earnings per share (Basic) - Rupees 2.17 4.14
Earnings per share (Diluted) - Rupees 2.09 4.14

Economy
Pakistan’s economy continued to struggle during 2008-09. Major factors that
affected the growth of the economy included high volatility in world
commodity prices, significant supply shock especially in case of provision of
energy leading to rise in inflation that resulted in tight monetary policy by
State Bank of Pakistan.

Another shock emanated from adverse effects of turmoil in global financial

markets which resulted in collapse of external demand for the country’s
exports and a sharp decline in the availability of external capital to finance its
fiscal and current account deficit.

On top of all above was internal strife and intensification of domestic security
challenge which caused an extremely high cost to the economy both in terms
of direct cost of war against extremism and in terms of knock-on effect on
investment inflows and market confidence.

While the economic environment remained inhospitable for growth and

investment during the first half of 2008-09, different policy interventions
succeeded to restore macroeconomic stability in the later part of the year and
now the economy looks well on its way to recovery. Rupee stabilized after
losing 20% in value against US Dollar and this stability should end volatility
in cost of imports. IMF’s program is now in place, World Bank and Asian
Development Bank have pledged sizable support.

These developments have caused the foreign exchange reserves to cross US$
14 billion mark. The stock exchange has bounced back to win confidence of
its investors. A bumper wheat crop and good price received by farmers has

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given enough disposable income to farmers to purchase goods and services
and hence boost economy. As such the outlook at the end of year is
encouraging for companies to do a good business during next year.

Business Overview - Power Division

The continued demand of energy is undisputed which will lead to the
expansion of electricity networks and an intense focus on energy efficiency.
Ever increasing demand of electricity has resulted into rampant load shedding.
These factors have forced utility companies to re-assess their plans for
strengthening and expansion of T&D systems. At present, DISCOs have
signed loan agreements of sizeable amounts with both ADB and the World
Bank. The pace of procurement had been slow during the year but is expected
to accelerate in coming years. These developments add to PEL’s strength.

In view of above outlook, 2007 & 2008 were years of capacity expansion and
completing projects. We are near to complete our state of the art
manufacturing facility at 20 km from the present factory on Ferozepur Road.
The facility would enable to produce and deliver products of high energy
efficiency and world class quality so that our customers in utility companies
can distribute electricity more efficiently and thus slash down their line losses.
Similarly our commercial and industrial customers will be enabled to cut their
business and production costs. With completion of this factory our efforts to
achieve access in the international markets are also expected to materialize.

Sales in Power division grew by 33% over previous year. This is encouraging
considering the slow down of the economy in 2008-09. Increase has been
observed in almost all product lines in this division.

PEL strives to achieve customer satisfaction at all costs. Thus our customer
base keeps on increasing. This provides motivation and impetus to keep
serving the customers with more focus, greater efficiency and increased
innovation. Over the past year, Power division was able to grow in all relevant
areas of operation.

PEL has successfully benefited through opulent times and shown resilience
during difficult economic times when going is tough. This was possible with
strong tradition of corporate confidence, highly capable human resource and
skillfully chiseled proactive strategies. We have deep and time tested expertise
of the industry and the products. We are well aware of customers’ business
and demands they face. These are formidable strengths and we draw on them
to create new solutions.

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EPC contracting of Grid Stations:
Ongoing economic recession has adversely affected the construction activities
in the country but our contracting business has been able to achieve its
budgeted targets mainly due to diversification in the range of products being
handled in this division. We are currently engaged in the construction of 132
KV grid station on EPC basis and electrification of private projects. One of
our major electrification contracts from DHA phase 8, Lahore is almost near
to its completion.

As already mentioned, now that financing from ADB and World Bank is
available to utility companies, more projects are expected to be contracted
next year. Besides marketing efforts are being made to increase market share
by exploring following areas.

• Grid-stations of industrial customers.

• Power delivery systems of private small power producers.
• Alliance with power plant EPC contractors to take work of their switch
yards of new IPPs in thermal and hydropower sectors..
• Power collection and power delivery systems of up coming wind power
plants and other renewable energy plants.

We are receiving enquiries from above segments of market and expect to

expand business in these areas.

In order to enhance our contracting activities, we have also started developing

our resources and capacity to undertake projects of 220kV and 500kV.
Outlook in this market are encouraging and we expect to harvest the potential
in coming years.

Business overview - Appliances division

In 2008-09, demand for Home Appliances market remained sluggish due to
slow down of economy. Our customers’ purchasing power reduced due to
soaring inflation rate, energy crisis resulting in massive load shedding
changed our customers’ priorities to buy alternative power solutions instead of
buying home appliances products. Material cost also went up in first half of
the year under review because of both i.e. increase in world commodity prices
as well as impact of devaluation of Pak Rupee. This resulted in increase in
selling prices which also affected demand of home appliances products. Sales
in the northern part of the country were badly affected due to unrest in the area
causing displacement of majority of the population.

However despite this turbulent business environment, net sales for the year for
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Appliances Division have grown by 7%.

In the year 2009, PEL entered into strategic alliance with LG Electronics
Korea so as to provide more options to the segment of market that requires
technology intensive appliances with greater value for money. At heart of this
endeavor is objective to empower the customers to match their life style with
efficient appliances.

Work on improving energy efficiency of PEL’s own product line of comfort

producing and empowering appliances is also being done with a clear focus of
assisting customers and the economy of the country to save costs and
resources.

LG Electronics is one of the world’s top three companies in Home Appliances

products, and under our agreement the company has been given distribution
rights to assemble and sell, five of their products i.e. Refrigerators, Split air
conditioner, Microwave ovens, Washing machines & Vacuum cleaners.

Discussions on technical collaboration are underway whereby our

manufacturing facilities will be assessed and if required, made fit, for
producing LG brand products to be sold locally. This arrangement will go a
long way in providing world quality products in Pakistan in enhancing
technical capabilities of the Company and bringing greater revenues and
profitability to this division.

Refrigerators:
Despite recessionary trend in the economy, sale of Refrigerators was not
affected as much as it affected sales of other home appliances products.
Material cost although increased substantially in first half of the year but it
remained stable in the peak season i.e. 2nd half of our financial year which
helped us in achieving our budgeted targets.

During the current year, we introduced economy models in our existing range
of Refrigerators and due to substantial increase in selling price of our other
models, these were received well in the market. These have now become a
permanent addition to our refrigerators’ model line up.

Progress on bringing cost efficiencies through innovative production

processes, use of latest designs together with training of personnel is
continuing and we are committed to provide a world quality product to our
customers.

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After Sales service:
In case of consumer goods like home appliances, after sales service plays a
vital role in achieving customer satisfaction and strengthening of brand. In
some situation it even affects the buying decision of the customer while
selecting a brand. Realizing the importance of this area, we have made
substantial investment in improving the infrastructure of our after-sales
network, latest equipment and have hired trained personnel to ensure our
customers getting a timely and prompt response.

Future Outlook
Economy is expected to perform well in the next year however it is exposed to
certain challenges like current account deficit, lower exports, unstable law and
order situation but it is still hoped that next year will be relatively stable which
would bring expanding opportunities for the Engineering Industry and for
your Company.

For the next year’s business, a number of positive factors are expected to
result in substantial growth of Company’s revenue and profitability. These
include lowering of financial costs, stable exchange rates, induction of LG
business and stability in all our raw materials in the international markets.

Corporate Social responsibility

In addition to business considerations, the social dimensions of our corporate
activities play an increasingly important role in overall assessment of our
Company.

Dividend and equity

No dividend was declared for the year ended June 30, 2009.

Transactions with Related Parties

Transactions with related parties were made at arm’s length prices determined
in accordance with the comparable uncontrolled price method. The Company
has fully complied with the best practices on Transfer Pricing as contained in
the Listing Regulations of Stock Exchanges in Pakistan.

Material Changes
There have been no material changes since June 30, 2008 and the Company
has not entered into any commitment which would affect its financial position
at the date.

Statement of Ethics and Business Practices

The Board has adopted the statement of Ethics and Business Practices. All
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employees have been informed of this statement and are required to observe
these rules of conduct in relation to customers, suppliers and regulations.

Earnings per Share

Basic Earnings per Share works out to Rs. 2.17 (2008 : 4.14).

Operating and Financial Data:

The key operating and financial data for six years is annexed.

Appropriations

Rupees in
Thousands
Amount available for appropriation 2,428,744
Dividend on preference shares @ 9.50% 49,994
Un-appropriated profit carried forward 2,378,750

Corporate Governance – Statement of Directors' Responsibilities

In compliance of the Code of Corporate Governance, we give below the

statements on Corporate and Financial Reporting Framework :

 The financial statements, prepared by the management of the

Company, present fairly its state of affairs, the result of its operations,
cash flows and changes in equity
 Proper books of account of the Company have been maintained
 Appropriate accounting policies have been consistently applied in the
preparation of financial statements and accounting estimates are based
on reasonable and prudent judgment.
 International Accounting Standards, as applicable in Pakistan, have
been followed in preparation of financial statements and any departure
there from has been adequately disclosed.
 The system of internal control is sound in design and has been
effectively implemented and monitored.
 There are no significant doubts upon the Company’s ability to continue
as a going concern.
 There has been no material departure form the best practices of
corporate governance, as detailed in the listing regulations.
 Value of investments of Provident Fund as on June 30, 2009 is Rs. 204
million.
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  Board meetings :
During the year under review, Board of Directors held four meetings on
October 8, 2008, October 30,2008, February 28, 2009 and April 28,
2009. Attendance by each director during these meetings was as
follows:

Number of Meetings
Name of Director
Attended
Mr. Naseem Saigol 3
Mr. Azam Saigol 1
Mr. Murad Saigol 1
Mr. Haroon Ahmad Khan 4
Mr. Homaeer Waheed 2
Mr. Muhammad Rafi Khan -
2
Mr. Gul Nawaz (NIT Nominee)
(Resigned)
-
Ms. Neelofar Hameed (NIT Nominee)
(New Appointment)
-
Mr. Masood Karim Sheikh (NBP Nominee) -
(New Appointment)
Mr. Wajahat A.Baqai (NBP Nominee) 2
Mr. Tajammal H. Bokhari (NBP Nominee) 1
2
Mr. Rizwan Hameed (NBP Nominee)
(New Appointment)

Corporate Governance
The statement of compliance with the best practices of Corporate Governance
is annexed.

Pattern of shareholding

The information under this head along with information under clause XIX (i)
and (j) of the Code of Corporate Governance is annexed.

Auditors and their Report

M/s Yousaf Adil Saleem & Company, Chartered Accountants, Lahore, retire
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and being eligible, have offered themselves for re-appointment. As suggested
by the Audit Committee, the Board of Directors has recommended their re-
appointment as auditors of the Company for the year ending June 30, 2010, at
a fee to be mutually agreed.

Acknowledgement
We take this opportunity to thank all our customers, shareholders, bankers,
employees, CBA and workers for their continued help, support and guidance.

MARKETING STRATEGY OF
PEL
The study is based on the comparison of marketing strategy applied in PEL. In this
study, the main focus to see the effectiveness of the marketing strategy applied by
both the companies — PEL, for selling their products particularly Refrigerators.

Just to understand the marketing strategy in general and refrigeration market in

particular, one should know that what marketing strategy ought to be? Who are the
main players in the market? What kind of other products do they produce? How do
they promote and supply their products? What type of competition is going on in
the market? And finally what are the marketing strategy being applied by both the
companies? These are the questions to be addressed, but the main theme is the
marketing strategy of PEL Refrigerator. This paper is mainly divided in to four
sections.

The first section deals with the marketing strategy in general. The second section
focuses on the main players of Refrigerators in the Pakistan market. The third
section sheds light upon the marketing strategy of PEL. Though the marketing
strategy of all the products may be the same. But mainly it has been focused on the
refrigerator marketing strategy here. Finally, the paper is concluded in the last
section.

All the information that is presented in this paper has been acquired and extracted
from various primary and secondary sources. In this study, best possible efforts
have been made to collect the correct and uncovered information. For this, the
information has been collected by both primary and secondary sources. Primary
data is based on the interviews from the top officials of both the companies based
on the semi-structured questionnaire. The secondary data is based on the published
reports and Internet.

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1. MARKETING STRATEGY IN GENERAL

Fluctuating customer requirements and competitive forces are putting more

pressure on marketing and are demanding superior marketing strategy and tactical
execution. The cycle time from product creation, to product launch, for a winning
go-to-market strategy, leaves no margin for error.

Marketing puts the customer at the center of the organization. The organizations,
which do so, reap the profits. The idle marketing ought to be or the key steps to a
successful strategy can be summarized as:

1.1 BE CLEAR ABOUT MISSION

The common, customer-orientated thread running through all the activities of the
organization and how we define the kind of market oriented organization we want
to be.

1.2 MARKETING RESEARCH

In marketing strategy some one should do know about the marketing potential for
his the product and should find out through research that:

WHO ARE OUR CUSTOMERS?

• What do we really know about their needs, preferences, behavior and

their life styles?
• What can we offer them... at a price... that other companies do not?
• How do we perform in comparison to our competitors?
• How are we currently performing for our customers?
• Where are the gaps, the weak points, the fudges, and the point of
excellence... the USPs (Unique Selling points)?
• How are we different?
• Why are we different?
• How can we better delight?
• How do we change?
• What do we change?
• How clever are we with our market intelligence?
• How well is our market research working?

• 1.3 Set Strategic Aims

• Market Penetration
• Market Development
• Product Development
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 • Entering new Market
• 1.4 Segment the Customers

Consider groups who share a similar need and who will respond in a similar
way.

• 1.5 Design a Marketing Strategy

• To achieve specific marketing objectives, based (e.g.) on the Marketing
mix.
• 1.6 Set Tactical Plans, Budgets, Programs
• Assign individual responsibilities to achieve the objectives.
• 1.7 Monitor Progress

MEASURE AGAINST STANDARDS AND CONTROL.

2. Main Players of the Refrigerators in Pakistan Market

Just to understand the refrigeration market, first of all we should know who the
main players in the market are? Actually there are two types of marketers: those
who manufacture refrigerators locally and those who import and market the same
in Pakistan.

Local Manufacturers of Refrigerators are: Dawlance, Waves, Pel and Singer.

These manufacturers roughly cater 80% need of the market.

Parties import refrigerators from their principal and market the same in Pakistan.
In-fact these all parties contribute only 20% of the market requirement. The above
all are direct competitor of PEL electronics.

3. "Marketing Strategy PEL Refrigerator"

Before discussing the marketing strategy PEL, first we will go through the profiles
of the companies in brief.

PEL:

PEL United Refrigeration Industries Ltd. was established in 1980. It is the Largest
Company in Pakistan engaged in appliance business. PEL stands for durable &
reliable household appliances. Its refrigerator Factory is located in Hyderabad. The
main Objectives are to provide dependable and reliable product at reasonable price
to majority of Pakistanis and to enhance their quality of Life. Present Market
Share of PEL product is: refrigerators 65%, Washing Machines 35%, Microwave
Oven 40%, Chest Freezers 45%, Air Conditioners 15%,

3.1. MARKETING STRATEGY

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The marketing mix is the organization's overall offer, or value, to the customer.
'The basic marketing mix is often nick named "the 4Ps" (product,
place/distribution, pricing, promotion); these are elements in the marketers armory
— aspects that can be manipulated to keep ahead of the competition'. Here I've
explored the marketing strategy of PEL in terms of marketing mix have been
explored.

3.1.1 PRODUCT STRATEGY

The object of PEL is to provide refrigerator to all people who fall in lower middle,
middle, and upper middle class in this country such that most of the families
should have refrigerators in their home because they enhance better quality of life.
PEL has got products, which are as per international standards and carry all the
basic features, which need in any such type of appliances.

PEL believe that whatever they provide to their customers should be durable and
reliable. All the products, which PEL market, are durable enough and customer
can keep on using them for quite many years without any problem. It provides its
refrigerators, 3 years compressor guarantee and 1 year chest freezer, and free
service in spare parts under normal use.

Whereas, PEL’s objective is to provide world class product to upper class and
upper middle class to enjoy real luxury in their life. Since PEL is a Korean brand
and being imported from Korea, it has very advanced features, which are normally
demanded by in developed countries.

PEL also insures that whatever product they market should be durable enough
which last quite many years and give trouble free service to their customers. It
provides its refrigerators, five years compressor guarantee and one year free
service in spare parts under normal use.

3.1.2 PRICING STRATEGY

PEL has got around 52 models in their refrigerator product line. From the price list
and discussion had with their management, it appears that they have position their
product pricing in such a way that their main focus is middle and upper middle
class. However, they have some selected range for upper class as well. Product-
wise price list enclosed in appendix for reference.

PEL has got a policy that their all product price should be the same in all cities and
town in Pakistan market. PEL bear freight cost and make their product available to
their dealers irrespective of where they are located. For this, they give uniform
margin to their dealers irrespective of whether he is big or small.

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PEL consider pricing as one of an important element of marketing mix. It believes
that their retail prices should be uniform all over the country irrespective of
whether customers buy from Peshawar or Karachi. In order to maintain a uniform
price all over the country, PEL bear transportation charges and make the product
available at cost price at dealer premises.

Whereas the PEL pricing strategy is cost + fixed mark up to cover their GP. Since
they cater to upper middle and upper class, therefore their 90% dealers are in big
cities only. Product-wise price list enclosed in appendix for reference. PEL follow
pricing policy in which their normal formula is import cost + reasonable gross
profit to cover their marketing expenses and also give them reasonable profit.

3.1.3 PROMOTION STRATEGY

PEL promotion budget is around 1.75% of their turnover. 40% spending of their
budget is Print Media, 20% goes on TV, 20% on Out door activity and balance
20% on Sales Promotion activity. They believe that print media and out door
activity help them to reach to their target customer. Due to satellite transmission
and having multi-channels, it does not pay one unless you have very huge budget
to spend on this media. On promotion, their spending is more on consumer
incentive schemes. Since it pay them and there is direct relationship between sales
and consumer. Further, it gives customer a direct benefit in shape of price
reduction.

It was not possible to get the exact advertising budget of PEL, but it appears from
their spending and the figures collected from Pakistan Advertising Association and
from some other sources that their spending is around 6/7 per cent of their sales in
Pakistan territory. Due to being a multi-national company and as a part of their
global Strategy they, most of the time, divert their funds from strong market and
spend more on weak or under developed markets.

Further, as far as Sales Promotion strategy is concerned, it is being designed and

implemented by their respective agent of each product in Pakistan. For the
promotion of Home Appliances products: Hanaska International designs their own
strategy. Their major approach and emphasis on promotion through trade. They
offer very handsome incentives to their dealers, who in return push their product
among the customer and thus they get their desired volumes in Pakistan. It has
been noted that due to being import base product they are always high price vis-a-
vis other brands in the market and it is one of the reason why they give so much
emphasis on the motivation of dealers.

3.1.4 DISTRIBUTION STRATEGY

PEL has got around 800 dealers all over the country. PEL ensures that its
refrigerators are available almost in all appliances markets of Pakistan. They have
15
got 80% penetration in dealer sector. One can get very easily their product in any
city or small town of Pakistan.

PEL has got various types of dealers according to their potential. Around 25% of
dealers are "A-class" dealers who sell over 1000 units and above per year. "B-
class" dealers are those dealers who sell from 400 units up to 999 units per year.
They are around 50% in total dealer and the rest are in best 25% of "C-class"
dealers sell from 200 up to 399 units per year.

In order to provide quick and timely delivery to their dealers: they have got big
warehouses located in almost all big cities and towns. Whenever they get order
from the dealer they try to provide supplies to their dealer from closest warehouse.
In case stock is not available in the warehouse then it is delivered directly from
Hyderabad Factory. The maximum delivery time incase stock is delivered from
Hyderabad Factory is four (4) days. However if supply is given from closest
warehouse then hardly it takes 2-3 hours time. They believe that, timely delivery
of their product to the dealer, is one of an important element in their success in
Pakistan.

They ask their dealer to maintain sufficient stock at-least 4-6 week at their end.
Rather they believe in replenishment of dealer stock based on their sales. It means
dealers stock always remain in within a limit, doesn't exceed beyond 6 week level.

As mentioned above, they have only 300 dealers mostly in big cities and some in
small towns. They also have got a policy that retail price all over the country
should be uniformed for the customers, whether he/she buy from Karachi,
Islamabad, or Peshawar.

They also bear transportation cost and thus provide supplies at uniform rate to
their dealers. They have got three big warehouses in Karachi, Lahore and in
Islamabad. From these warehouses they feed their product to their dealers and thus
they make their product available to them.

3.1.5 PRODUCT LIFE CYCLE

PEL is an ISO 9000 certified company and among its mission statement. It is one
of their missions to provide quality product to their customers. Therefore, they
ensure that every product, which is delivered from their factory, must go through
rigorous quality check. So that only perfect product, free from any defect is
delivered to their customers.

Since PEL is an international name in home appliances, therefore PEL ensures that
their product must meet their rigorous quality standard. So, when it is delivered to
the customer, it must meet customer's expectations.

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3.1.6 AFTER SALES SERVICES

PEL that after sales service is one of the most important elements of marketing
mix and thus give due emphasize in providing quality after sale service to its
refrigerator customers. PEL has got qualified foreign-trained engineers in its team
of after sale service and also properly trained technicians and supervisors who
look after service centers and provide reliable quality after sales service to its
customers.

PEL has got 17 its own service centers in different parts of country. Besides, they
have got 34 franchise workshops to cover remote areas, where its service center
doesn't exist. These are service centers and franchise workshops cover almost 99%
market of Pakistan. Wherever PEL dealer is, there you'll find PEL workshop or
either franchise workshop to take care of service need.

In order to provide satisfactory after-sales service, PEL ensures that in all of its
service centers sufficient inventory of spare parts is maintained, even these are
available with franchise workshops.

PEL has got the policy first of all to carryout repair, if required at customer place.
Incase if refrigerator problem is not diagnosed at customer premises then it is
taken to its workshop. Whenever they get any complain, they prepare job sheets
and puts its record in computer and whenever at later date if complain is repeated,
in that case they also have a history with them of such product in their data bank.
Even after five years if you want to find out from PEL service center that how
many times there refrigerators have been referred on account of technical problem
to their center, they can dig out from their computer record. In nutshell, we can say
that Dalliance's after sales service workshops are very well properly organized and
they work according to international service standard. As far as service charges are
concerned PEL that it is not a profit center rather it's a support center for sales.

CONCLUSION

From the above information, it has been analyzed that there is no comparison
between PEL. For example: PEL is a big local manufacturer of refrigeration
industry in Pakistan. It has got all engineering capabilities and very good finance
and of course technical know-how to produce internationally accepted quality
refrigerators locally. On the other hand PEL is a multinational company and has
got different agents in some of the big cities of Pakistan. It is simply an importer
and imports refrigerator from Korea and markets the same in Pakistan.

Since PEL has very strong industrial base as well as deep-rooted marketing
network in Pakistan, they don't feel any threat from any of their competitors, either
local or from importers. In the contrary PEL refrigerator is an import-based
activity. Every year due to weakness of Pak Rupee, US $ cost of import is going
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up and thus PEL refrigerator is becoming costlier day by day. Therefore, they have
a big challenge before them to maintain their market share and also to maintain
their reasonable growth against local manufacturers.

In the light of above evidences, it could be said that PEL is a leading company as
compared to PEL, due to its dominance in the market, lower prices, and
availability of spare parts and after sale service, etc. Hence people prefer to buy
their products. It means, it is not only the marketing strategy of any company
which plays a dominant role but it the success of product lies in the marketing
strategy as well as the policies of the Government i.e favorable or unfavorable. As
far as the case of PEL is concerned, it is suggested that instead of depending on
import it should install its plant in Pakistan so that it may lessen its burden on
taxes.

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