Business Research

26th February 2010

S. Rashid Hussain
Assistant Professor- Marketing
rashid.hussain@umt.edu.pk
Office Hours: Tuesday & Wednesday : 10:00am – 1:00pm
Let’s have an INTRODUCTION
 Who are You???
•Introduce Yourself (Name)
•Major Area of Study
•Your CGPA (so far)
•Your hobbies
Why have you chosen this
Course?
 S. Rashid Hussain (Edu.Profile)
• Schooling  Karachi
• High School  Germany
• International Baccalaureate in Economics- RWTH University
of Aachen
• Bachelor of Science “ International Business Studies”
Maastricht University, Nederland.
• Master of Science “ International Business Studies”
Maastricht University, Nederland
• M.Phil ; “Strategic Marketing & Planning”Maastricht
University, Nederland
• Post Graduate Diploma in Public Administration – University
of Karachi
• Certified Professional Marketer (Asia Pacific)
Work Profile
 Work Profile
• Sales Division Citi Bank (Pakistan)
• Business Research Analyst University of Aachen (Germany)
• Research Wing German Ministry of Development & Planning (Germany)
• ‘ Marketing Consultant’ Global Marketing Division Merck KGaA- Pharma
(Germany, UK)
• Production Division Volkswagen AG (Germany)
• ‘ Consultant’ Enterprises Consultancy Caps Gemini Ernst & Young (The
Nederland, Luxembourg, Belgium)
• ‘Marketing Manager’ Marketing & NPD Division Diagenics International
Corp. (U.K, Germany, Italy, Spain)
• ‘Senior Manager’ Research Services Division (Unilever- Regional)
ACNielsen (MENAP,)
• Head of Marketing / Consumer & Channel Development  Hilal
Confectionery (Pakistan)
• Assistant Professor- Marketing Institute of Business Management- Karachi
• Assistant Professor Marketing PAF KIET- Karachi
 When to start with Research

• Entirely new business situation

• Issues never handled before
• New Opportunities
• Threats
• Not knowing exactly if to go with a decision,
or not
Decision Problems & Research
Problems
 Styles of Research

• Basic Research  a general and broader

approach to enhance the already possessed
knowledge (do not deal with any specific issue)
• Applied Research  an approach that handles
specific issue/problem about a particular course
of action or decision
• Scientific Research  to analyze empirical
evidence in an attempt to confirm or disprove
prior conceptions
Decision & Research Process
 Basic Concept & Business
Research Vocabulary
• Hypothesis  a proposition (statement)
that is empirically testable
• Deductive Reasoning is the logical process of
deriving a conclusion about a specific instance based on a known
general premise or something known to be true. (e.g. all students
are human being--- Daneesh is a student, then we can deduce
that Daneesh is a human being)
• Inductive Reasoning is the logical process of
establishing a general proposition on the basis of observation of
particular facts. (e.g. all students that have ever been seen are
human beings; therefore, all students are human beings)
 Research Vocabulary (cont.)

• Variables Anything that may assume

different numerical values (e.g. gender, religion,
age etc.)
• Independent Variables
• Dependent Variables
• Moderating Variables\
-- Example: The switch to commission from a
salary compensation system (IV) will lead to
increased sales productivity (DV) per worker,
especially among young workers(MV)
CASE STUDY
PAKISTAN
- Consumer Trends
- Demographics
- Economic Trends / SWOT / Challenges
PAKISTAN
- Consumer Trends
Four cultures unite under the umbrella of
religion
The Shops they Visit
 The food they eat

The food they eat

Shifting Values
Media Liberalization

City FM 89

Radio One
FM 91
Communication on the go…
 Cultural Norms

• Family - the main institution

• Women - a strong traditional role “care giver”

• Though expanding her role in the family - “Home Manager”, transition
from “Notice Me” to “Appreciate Me”.

• Strong sense of duty to take care of family

• Male still remains the primary bread earner, supplemented by other
family members
• For females, though family remains their universe, they are
trying/demanding to balance their life between their ‘duties’ & ‘their
personal moments’.

• Ethnic differences across provinces

 A Typical Day in Kids’ Life

6-7 am Gets up early, mother prepares him/her for school

10 am Break time : younger kids eat items brought from home
slightly older kids buy items from school canteen
(mostly chips & cold drinks)
1 pm (Some) buy items on their way back
2 Have lunch at home
2-5 Some do home work, go to tuition or for Quran studies, some sleep
5 Evening Tea/snacks
5-7 Play time
7-9 Watch TV, Dinner with other family members
9-10 Spend some time playing with bro/sis and then sleep early

• Impulsively try things which they see other children eating, also influenced by TVCs
• Watch Dramas in detail as much any other favorite program
• Favorite programs / TVCs : Fast paced with an element of surprise & humor
 Daily Routine of a Housewife

6 am Prepares breakfast / lunch for children and husband

7-8 Breakfast with husband
8-10 Dusting / Cleaning
10-12 Relax - Watch TV / Read Magazine / some sleep for an hour / grocery
shopping
1-2 pm Serves lunch to their children on their return from school
Lunch is less formal then the dinner

2-5 Children sent to tuition & then takes afternoon nap

5-6 Tea time
6-9 Prepares dinner
Shopping – Grocery for household / personal products
9-10 Serve dinner / Watch TV
Dinner has its special significance, basically cooked for the male members of the family
10-11 Does ironing and kitchen cleaning
Sleep late
 Major Consumer Trends

• More focus on ready-to-use products

• Children influence the decision now
• Consumer financing – increased demand for durables, lifestyle products
• Pakistani consumers are now more quality conscious
• Health and wellness concept on rise
• Trend of getting packaged and processed food more often
• Contemporary fashion popular with youth
• Food the major reason to go out
• Growing media choices
• Penetration of tvs and number of tv channels
• The mobile revolution
• Modern retailing
• Real estate – tremendous hike in price
PAKISTAN
- Demographics
 Country Demographics

• Country of 157 million people

FP
residing in more than 23 million
: 13%
households.
: 9%
L value contribution: 5%
apita spend on UPL brands: Rs. 41 • Popn is growing at rate of 1.9%

• Average life expectancy is 64 yrs

slightly higher in female (65 vs. 63
yrs in male).
Punjab
pop: 56%
area: 26%
UPL contr: 63%
Per capita spend on UPL brands: Rs. 154
lochistan
p: 5%
a: 44%
L contr: 2% Sindh
capita spend on UPL brands: Rs. 68 pop: 23%
area: 18%
UPL contr: 30%
Per capita spend on UPL brands: Rs 175
* : based on CP for all UPL categories.
 Country Demographics

• Sixth most populous country – pop. estimates ranges between 157 - 165 Mn for 2007.

• The rate of pop. growth (1.9%) is higher than the Top 5, and rest of South
Asia.

• Rate of urbanization is higher than the rate of growth; thus split between
urban and rural by 2010 is expected to be 45:55.
Urbanization Rate
Rising urbanization is on account of
45% improving living standards/infrastructure
25% 28% 33%
in rural rather than migration to urban
1972 1981 1998 2010 areas.

• Average Household size remained 6.75 (6.6 in urban & 6.8 in rural). Growth in human pop
& household pop was remained more or less the same, as reflected through steady HH size over the
years.
HH size % of pop.
1-3 12
4-5 24
6-7 29
8-9 20
10 + 15
 Country Socio-Demographics

100%
90% 19 14 15
24 22 21
80% 9 7
12 11
70% 15 13
29
60% 33
50% 34
37 36
35
40% 22
30% 24
20
20% 16 17 19
20 27
10% 16
11 11 12
0%
2002 2003 2004 2005 2006 2007
Face of Pakistan remained young with
A B C D E median age of 19.8. However, country is a
passing through a demographic transition.
Young population as a % to total is declining, whereas older
A: 11,000 & above segment is increasing.

B: 7,500 – 10, 999

Dependent population
C: 5,500 – 7,499 declining resulting in
increased consumer
D: 4,500 – 5,499 affordability.
E: 4,999 & less2
 Country Socio-Demographics
Literacy

• Literacy is crucial in shaping consumer behavior. Today’s consumer is much

more informed because of improved literacy.
Males are significantly more literate than females. Also, literacy in urban areas continue to remain
better than rural.

Literacy Rate 10+ (%)

01-02 04-05
Overall 47 53
Urban 70 74
Rural 39 45
PAKISTAN
- Macro Economic Trends 07
 Macro Economic Trends

GROWTH IN GDP 12.7 13.0

11.8
11.3
(%) 2004-05 2005-06 2006-07 10.6 10.8
9.8
GDP 9.0 6.6 7.0 * CPI-Overall 9.2

Manufacturing 15.5 10.0 8.4 7.8 7.9 7.9

Large scale manufacturing 19.9 10.7 8.8

5.7
Small scale manufacturing 6.3 8.3 7.7
4.4 4.57
Construction 18.6 5.7 17.2 3.6 3.5
3.1
Agriculture 6.5 2.5 5.0
Livestock 2.3 7.5 4.3
Services sector 8.5 9.6 8.0

'Jul-Apr07
1990-91

1991-92

1993-94

1994-95

1997-98

1998-99

1999-00

2000-01

2001-02

2003-04

2004-05
1992-93

1995-96

1996-97

2002-03

2005-06
GNP 8.7 6.4 6.9

Government failed to curb inflation below

6.5%. Main reason was significant jump in
Food inflation (from 6.9% to 10.2% this
year).

ES
 Macro Economic Trends
Summary
• Pakistan economy has delivered yet another year of solid growth, economy grew at an average
rate of 7% per year during the last five years. Pakistan economy has been emerging as one of the
Asia’s most vibrant economies.
• Per capita income has grown at an average rate of 13% per year during the last five years, rising
from $586 in 2002-03 to $925 in 2006-07. Such increases have led to a sharp increase in consumer
spending during the last four years.
• The main factor attributed for the sharp rise in per capita income include sustainable solid growth in
real GDP, stable exchange rate and four fold increase in the inflows of workers' remittances, however
inflation remained on higher side 7.9% as against the targeted number 6.5 % for 2006-07.
• Exports during the first 10 months of the current fiscal year were up by 3.4 % rising from $13.4
billion to $13.9 billion against the same period LY.
• Agricultural sector has registered a phenomenal growth of 5% with a sharp recovery in 2006-07 as
against the previous year’s growth of 1.6 %.
• Foreign Direct Investment (FDI) has increased more than ten times during the last five years
jumped from $322 million to $3.52 billion in 2006 (bulk of the investment has gone into
communication sector 43% followed by financial business 19% and oil and gas sector 11%.

• KSE share index has reached to an all time highest figure, market capitalization has also increased
significantly by a massive value of around 1000 billion worth during the fiscal year.

• Large scale manufacturing and services sectors registered a substantial growth of 8.8% and 8.0%
respectively.
 SWOT Analysis – 06/07

Strengths Weakness
o 4-5 yrs of strong economic growth o Credibility of statistics
o Resilience against shock and extra ordinary jerks o Continued increase in prices of food items
o Rise in per capita income o Inefficiency in utilization of dev. expenditure
o Robust consumer spending o High administrative costs
o Substantial increase in private sector credit o Quality of governance
o Balance b/w fiscal deficit & growth o Record trade deficit
o Medium term development framework o Concentration of export
o Maint. of external & domestic debt within limit oLack of focus on agriculture
o Reach to global capital markets o Political instability
o Geo political situation post 9/11 o Shortage of skilled workforce
o Stable exchange rate o Energy crisis
o Higher FDI o Poor HDI indicators
o Reduction in poverty level o Increasing trade/current account deficit.

Opportunities Threats
o Capacity constraints with India in IT o Political uncertainty & current judicial crisis
o Recent investment in IT o Issues in Baluchistan & NWFP
o BPO’s potential o Worsening of situation on western borders
o Telecom/media revolution o Anti Pakistan attitude in Afghanistan
o Geo political situation o Election 2007
o FDI o Level of corruption
o Investment in education and health o Broadening gap b/w rich & poor
o Lapsing of WTO multi-fiber agreement o Social unrest
oPersistent high global oil prices
o Increasing trend of terrorist activities
o Public discontent with the policies which may threaten reform process

Source: KPMG
 Economic Challenges for 07/08

• Sustainability of growth momentum

• Job creation
• Poverty alleviation
• Inflation particularly Foods
• Improving social indicators
• Strengthening of physical infra structure
• Supply side improvement to match growing domestic demand
• Achieve political stability
• Harmonious relationship amongst federation and its units
• Equitable distribution of resources b/w federal, prov and local gov
• Revenue generation by provinces
Karachi Consumer and
Market Analysis

Beverages

July 2007
 Agenda
• Objective:

– To develop a comprehensive understanding of Karachi market for tea category.

– To analyze the performance issues for Unilever in Karachi Market for the tea category.

• Problem:

– Karachi is a big market for tea category! But Unilever’s performance has not been at par

• Scope:

– Analyze Karachi market size, growth and opportunity

– Analyze Brand shares to track market trend and movement
– Analyze SKU trend to trace the changing SKU preferences
– Analyze the distribution data to determine the strength of its relationship with volume share
of UPL brands
– Gather first hand information from consumers and retailers
 Methodology

Project
Methodology
Secondary Data Analysis Primary Data
•Retail Audit • Market Visits (U.Stores and LMT)
•Consumer Panel • Home Visits (Lapse Users)
• Factory Visit (KTF)
SECONDARY DATA
ANALYSIS
 Does Karachi consumer behave
differently in tea category?
•Cross category Analysis revealed that the Karachi consumer behaves in the
same way as the urban country in the following categories.
–Skin Cream
–Skin Cleansing
–Made-to-Drink

•In other words, Karachi consumer can be taken as a representative of the entire
urban country for these categories. Perhaps a particular marketing mix with
slight alterations can work across nation.

•However, the behavior as depicted for tea category requires a specific mix for
Karachi.
 Market Share in Karachi vs. in Overall
Urban Markets Skin Cleansing Skin Care
100 100

23 26
37 42
75 2 75
8 4
12 5
10
7 3 6
50 12 2
12 50
23
20
25
43 39 25
32 30
0
0
Karachi Urban Pakistan
Karachi Urban Pakistan
Unilever Kohinor Zulfiqar Industries P&G Colgate Others
Unilever Tibet Forhans Nivea Others

Made-to-Drink Tea
100 100%
11 10 7
22
20
75 33 29 75% 0
17
6 1
1
50 7
50%
18 26 58 35

25 25%
28 24
24
15
0 3 5 0%
Karachi Urban Pakistan Karachi Urban Pakistan
Energile Tang Jame-Shireen Squashes Rooh-Afzah Others UNILEVER TAPAL TETLEY VITAL OTHERS LOCAL LOOSE

Based on Consumer Panel

 Karachi Market
Volume and Growth
– Karachi makes up 35% of the urban tea market and 22% of the population of Urban Pakistan.
– Karachi market is estimated at around 12500 tonnes a year with a value of Rs. 2966 million. The
market is declining at 1.4% per year.
–The average HH consumption and expenditure on tea by Karachi consumer is significantly higher
than the average figures for Urban Pakistan.

Karachi Urban
  Market Pakistan
Population 11,405,000 52,456,000
Tea Market 12500 tonnes 35800 tonnes
Per HH consumption of tea
(kg per annum) 6.92 kg 5.36 kg
Per HH spend on tea
(Rs per year) Rs. 1656/- Rs. 1260/-
•There has been a decline in tea market but the
Based on Consumer Panel rate of decline has slowed down!
 Brand Shares
–Karachi is like mini Pakistan. It is not a uniform market. It has got different ethnic belts.

–Perhaps experimenting with brands like Pearl Dust might be beneficial since data clearly
reveals that brand like Tez Dum is picking up in Karachi. The operating domains can be
altered slightly and Karachi Market can be explored for PD as well
30.0

25
25
25.0
23 23
23
23

20.0

15.0

10.0

6 7
5 5 5
5 5
5.0 4
3 2 2 2 2 2
2 1
1 0
0.0
Lipton Supreme A1 Pearl Dust Danedar Family Mezban Tez Dum
Mixture
2005 2006 2007(ytd)
Based on Consumer Panel
 Changing SKU Choices of Karachi
Consumer
–Sachets volume share has declined across all SECs except C with greatest decline in SEC D.
–100/125gm SKU share fell across all SECs but greatest fall occurred in SEC E.
–However,30-80gm (Rs.10-15) pack has increased considerably across SEC C and D.
–Bigger pack sizes are in demand especially 400-500gm. Class A has shifted to 1000gm
pack and class B and C have shifted to 400-500gm pack
–200-250 gm remains the most popular SKU but it has declined across all SECs

Does it imply that consumer purchase frequency has fallen?

40.0 37.2
34.2
35.0

30.0

25.0 22.4
19.9 20.0 2005
18.9
20.0
2007(ytd)
15.0

10.0 7.8
6.2 6.7
3.7 4.6
5.0 3.0

0.0
Sachet 30 - 80 gm 100/125 gm 200/250 gm 400 - 500 gm 1000 gm
Based on Consumer Panel
 Brand Loyalty: UPL and Tapal
UPL
–Supreme and Lipton have a high brand loyalty
100.0
84.3
across the urban part of our country as compared
80.0 to Karachi.
60.0 52.0
44.4 48.4
39.0
40.0 27.3
23.2 21.5
20.0

0.0
Lipton Supreme Pearl Dust A1

Karachi Urban Pakistan

TAPAL

Tapal’s brand loyalty remains almost same in 80.0

Karachi and urban Pakistan except for Tez Dum 60.0

60.5 58.3 58.2
48.4 46.3 50.3
which has a higher loyalty in Karachi compared
37.1
40.0
to urban Pakistan 30

20.0

0.0
Danedar Family Mixture Mezban Dust Tez Dum

Karachi Urban Pakistan

 PRIMARY
RESEARCH
 Methodology
Primary Data Collection

Market Visits Home Visits Factory Visit

Objective
•Market Visit
To observe merchandising activities
To learn about shopper’s perception regarding different kinds of consumer promotions

•Home Visit
To conduct self-administered survey in order to gather insights from lapse users

•Factory Visit
To learn about tea blending
 Market Visit

Utility Stores
• Bath Island
• Gizri
• Sunset Boulevard
• Defence Phase 1
• Mehmoodabad

LMT
• Naheed Super Market
• Imtiaz Super Market

Key Observations:
• Availability and presence is high at these channels
• However, there should be focus on secondary shelving in LMTs and consumer promotion at utility stores
 Was that a solution???

• What would you do • Nothing………

more???

• May be some more

research…..if yes,
then How and from
Where to start???