HISTORY

Three college friends, Ch. Nazar Muhammad, Ch. Muhammad Hussain and

MianMuhammad Saeed founded Service Industries in 1941 at a small scale at Lahore. Atthat

time, they only manufactured handbags and some other sports goods. Due totheir

dedication and hard work, the business flourished remarkably and they

weresupplying their products to every corner of India before partition of Indo- Pak. Almosta l l

depa r tmen t a l s t o r e s i n Mumba i , Madra s , Ca l cu t t a , Laho re and Ka rach i

we re selling their products.It was engaged in making travel goods at that time. After

Independence in 1947, theystarted to make Army boots and tarpaulin for Defense forces. Then

company enteredin to c iv i l ma rke t by manufac tu r i ng shoes i n t he i r newly bu i l t

f a c to ry i n Gu lbe rg Lahore. In 1954, company opened its first outlet of shoes at Mall road

Lahore.In the meantime, a tannery Unit named “Hilal Tannery” had already been establishedin

Gujrat to provide export quality leather for shoes factory. In 1963, second

shoefactory in Gujrat was set up. The company entered into export business in 1957 andfor the

last three decades, Service is the largest exporter of footwear from Pakistan.S IL expo r t s i t s

p roduc t s t o d i f f e r en t coun t r i e s o f Eu rope l i ke Un i t ed K ingdom, Germany,

Netherlands, Sweden and Italy.Due to excellent quality, the company awarded “President

Export Trophy” in 1968and “Pride of Performance Trophy” in 1977. In 1988,

Service group opened a newshoe-manufacturing unit in Muridke, which is the most modern

in Pakistan.

SERVICE GROUP

Service Group is well known for its products and comprised of four companies of

various kinds and sized. Service Industries Limited is the parent company and othersare sister

concerns. At the moment, service group consist of following units:

S e r v i c e I n d u s t r i e s L i m i t e d ( P a r e n t C o m p a n y ) :

D e a l i n g w i t h manufacturing and exports of footwear’s, manufacturing of tyres,

tubes anddefense related projects.

Hilal Tanneries Limited

:

Manufacturing of export quality leather for SILproducts.

Dar-us-Salaam Textile Mills:

Dealing with manufacturing of export qualityyarn.

Service Sales Corporation

:

Dealing with retail and wholesale of thefootwear products in local market.

GOALS & OBJECTIVESGOALThe ultimate goal of the Service Industries Limited is to deliver the tyres (motor cycle& cycle) and shoes to the general consumers to their maximum satisfaction. And itsg o a l i s b e i n g a c c o m p l i s h e d t h r o u g h r e t a i l i n g . T h u s i n t h e f i e l d o f c o n s u m e r marketing, retailing is the front line, the final step and also the marketing system for producers. It is the retailer who “takes the temperature” of the consumer and gather informat ion for future market ing strategies. By reta i l , we mean a l l act iv i t ies andservices, at a reasonable profit for the use of generalconsumer.OBJECTIVESBasic concern is to satisfy customer To provide good job opportunities and satisfaction to peopleTo provide better quality products to consumers with low priceTo be ahead of its competitorsTo make optimum use of the physical and financial resources to increaseproductivity

Never be sat is f ies with the level of qual i ty , a lways str ive for cont inuous improvement using latest techniquesEmployees are assets and as important as external customers.

Product policiesWhile deciding about the product policies service industries considered the followingthings:-•Product line decisionIn the product line the major decision is the expansion of product line or thechanges in the product mix which consists of the product lines. The marketingdiv is ion of the Serv ice Industr ies has to check what is the re lat ion of newproduct to its existing product line. On the other hand it also has to check thatw h a t w i l l b e t h e e f f e c t o f i n t r o d u c i n g t h e n e w p r o d u c t u p o n t h e e x i s t i n g products line or the company image.T h e e x p a n s i o n i n p r o d u c t l i n e , i n S e r v i c e I n d u s t r i e s , i s s u c h t h a t i t c a n introduce a new product without pruning any product from the product line. Or the company may introduce a new product while prune another product fromthe product line. There are some reasons for the pruning of a product fromthis product line. One reason may be that the product is not producing thedesired profits.•Package decision

The package decis ion about the product is another important area. Manymarketers have cal led packaging as the f i f th ‘P ’ of market ing. In Serv ice6

Industries, zonal managers do the packaging. They call the designers to makethe package design and select the best out of the total design.•Branding decisionB r a n d i n g d e c i s i o n i s a l s o o n e o f t h e m o s t i m p o r t a n t d e c i s i o n s i n t h e m a r k e t i n g . S e r v i c e I n d u s t r i e s h a s b r a n d e d i t s p r o d u c t s b y t h e n a m e o f “Servis”.•Style and design of productAnother way to product distinctiveness is through style and design. Somecompanies stand out for design distinctiveness. Service Industries is also oneof these companies because i t has i ts own sty les and des igns. In serv ice industries the styles and designs are made with the help of local purchaseofficers who are responsible for making new design.

StrengthHighly Qualified ManagementOne of the most sa l ient advantages S IL has i ts h ighly qual i f ied, competent andexperienced management. All heads of

departments are quipped with theoreticalknowledge along with vast part of experience of getting things done properly.Excellent Managerial PoliciesA part form highly qualified management, policies and practices are very progressiveand growth-ridden. Every personnel form top to bottom are bound to abide the rulesand regulat ions lay down by the board of d i rectors . Promot ions, recognit ion of employees and respect for every one is the strong pillars of organizational culture.Loyal EmployeesThe company is enjoying another strong benefit that hardly few companies enjoy thatis employee’s loyalty. Every organization does it best to hinder the employees fromleaving the job. If turnover rate is high then it had negative impact upon profitabilityand vise versa.Self Motivated Work ForceSIL enjoys another excellent competitive advantage that it has got self motivatedworkforce. People at SIL take on responsibility as their duty not as burden. Theyembrace every assignment whole heartedly and strain every nerve to accomplish it.32

Brands StrengthThe brands of the service industries have a good strength. Their brands like DonC a r l o s , L i z a , S k o o z , T o z , C a l z a a n d c h e e t a h a r e c o m p e t i n g w i t h t h e o t h e r competitor, which are included Bata Pakistan, Hush Puppies, Ihsan shoes etc. Dueto quality and reasonable price which is increasing the brand strength and customersreliability on the service brands. Innovation in brands also strengthProduction UnitsThey have two production units.•Service Shoes Industries Limited, Muridke.Most of local (Don Carlos, Liza all ranges, Skooz, Toz) and export articles areproduced in Muridke Unit•Service Shoes Industries Limited, Gujrat.Local articles like (Duke, Calza, Cheetah etc.) and many articles of exportsare produced at Gujrat Unit.Cost DepartmentOnly few companies in the world has cost department and service is one of themwho has independent cost department. Cost department control over per unit costw i t h a l l a s p e c t s s u c h a s m a t e r i a l c o s t , l a b o u r c o s t , a n d r a t e s c o n t r o l b y b i l l ver i f icat ion. Cost department never compromise on qual i ty they bear thei r

ownrejection but they did not deliver low quality shoe to the customer that is the cause of their effective and efficient management.Advanced TechnologyT h e y h a v e a d v a n c e d t e c h n o l o g y a n d c o m p u t e r i z e d p l a n t s a n d m a c h i n e r y i n production process. The computerized machinery and plats using at Service in theproduction process are not having any other organization, even, BATA Pakistan havenot such kind of machinery and technology. The computerized machinery and plantshas the approximately value of Rs. 10000000 each.33

Pu ProductsThe major production of service industry is in Pu sole. They import Pu material fromICI chemical, France. Pu material is very lightweight sole. By wearing Pu sole wefeel bear footed. They are leader in market in Pu product. They also have introducedthe direct injection that reduces the cost of production.Employees Education OpportunitiesService also provides education facilities to its staff. Higher education is encouragedfor valuable increase in his staff education that up the moral of the organization andmake better/positive changes within the organization. And lead to introduce newtechniques of production.TanneryThey have their own tannery for meeting the urgent requirements of orders. If theypurchase all the leather from outsider parties then there will be a possibility to delayin dispatch in leather order that can be reason of delay in order dispatch.WeaknessesAdvertisementNow a day electronic and print media play very important role in success of anyorganization. Through media we can increase revenue for many times. As they arep o p u l a r t h r o u g h o u t t h e c o u n t r y t h e y h a v e n o t p r o p e r p l a n n i n g r e g a r d i n g t o advertisement. Like their big competitor Bata Pakistan they have not proper way toadvertisement on TV & Internet.No Job RotationLeading companies pursues the strategy of job rotation in which one employee isposted at different position after elapsing certain period of time. SIL does not followthis strategy yet. The managers are appointed in particular department forever. Incase any employee abandons the job due to particular reason there becomes pausein the department that creates some intensive problemLittle Empowerment

The management of SIL is highly centralized and almost every decision is taken attop management. Lack of authority is found to take independent decision by middle34

managers. Most of companies execute the policy of deregulation of authority thatp lays an important ro le in sat is fact ion of consumers. In th is d i rect ion because motivation level of employees hinges greatly upon the autonomy of personnel.OpportunitiesE-Market DevelopmentService has the opportunities of establishing and exploring new market like Internetmarket. Service has introduced the e- shops where customer can buys shoes & tyresand tubes with out any botheration. It has given new dimension in sales of productsand also a way of introducing company and its products internationally.Joint VentureI n t o d a y b u s i n e s s t o i m p r o v e t h e e f f i c i e n c y o f t h e i r p r o d u c t a n d t o a t t a i n n e w technology firms made joint venture with each other. It is also made for research andto compete with the large firms. Keeping in view this service has made joint venturewith LEVIS and NIKE. This will open new window for service in international marketand in expanding business.Changing Customer PreferencesThis modern world is the world of continuous changes. Innovation in products is theykey element of businesses for their survival. Customers taste changing day by day.To meet the requirement of customers and taste there is a need of cont inuous introduction of variety. Services industry has the opportunity to grasp market bybringing innovation in their design and services. Service captures a huge share of local market by providing their products according to customer taste.35

Entering New Segments of MarketsSIL is considered as the shoes & tyres and tubes of motorcycles for some particular and limited market. Pakistan is one of the most profitable market that consist of hugenumber market segments. So, Service has a great opportunity to enter in the newmarket segments. They should concentrate on entering new market segment of ladies shoes and new coming motorcycle companies like Ghani motorcycles, Super Asia

motorcycles companies. Large revenue can be generated from this marketsegment.ThreatsCompetitorsService is facing the threat in shape of new competitors in footwear market. Thecompetitors are both local and multinational companies. In local market ServiceIndustries is competing with local shoe manufacturer. In multinational competitorsService has to compete with BATA the giant in shoe industry and other internationalbrands like HUSH PUPPIES. China and India are also the new threats in today’smarket for services.Price War with CompetitorsToday’s wor ld is the wor ld of compet i t ion and to compete with the compet i torscompanies rapid ly changes their pr ice strategy. Organizat ions set thei r pr ices according to their competitors to survive in the market. In shoe market service havethe price war with BATA, and other local competitors. Now service also has price war with china. In price war the firm who control their cost of production and provide their products at cheap prices can one this war.Rebate ReductionRebate is the subsidy which government provides to exporters to enhance exports. If Rebate has reduced which increases cost of production due to which company hasto face tough competition. Since last two years government has reduces rebate from12% to 5 %, which increase the cost of production. Due to which service industryfacing tough competition.36

Increase in TaxesThere are many types of taxes which serv ice industry has to face imposed byGovernment. There is high rate of taxes due to which it increases the expenses andcost of production. Mainly taxes imposed by government are sales tax, income taxetc.Increase in Rate of DutiesGovernment has also increased the rate import and exports duties, which is also at h r e a t f o r s e r v i c e b e c a u s e i t i n c r e a s e s t h e r a t e o f r a w m a t e r i a l a n d c o s t o f production. The rate of duties is 25% while rebate has reduced to 5%. There is highfreight cost.Political InstabilityPakistan is a country that politically not stable. There is no stable government fromlast 55 years . This has a great impact on industr ia l is ts and investors . Serv ice industry has threat due to

political instability because in instable government there israpid change in laws, rules and regulations.WTO RegimeWTO means world trade organization. It is an international organization responsiblefor global rules governing trade among nations. It ensures trade free and smoothly. Itwas established in 1995. Due to WTO regime service have to face many hardshipsin shoe industry because it increase the number of competitors. And also reduce theshare in shoe market. The main threats due to WTO are china and India as theyprovide their product at low price because of cheap labor.Economic ThreatThe service industries have to face economic threats. The first economic threat is thehigh prices of electricity. There are no subsidies for the service. Another threat is therate of inflation, which causes the rise in prices of things. In recent years oil priceshave gone up due to which it has increased the transportation cost which increasethe cost of production

MARKETING STRATEGIESThe marketing mix is a strategic combination of four variables.ProductPricingPlacementPromotion

Each of these ingredients is closely interrelated with the other variables in the mix.The development of a successful marketing strategy depends upon the effectivecombination of these four elements. As the ingredients are interrelated with eachother so the decis ion in one area is def in i te ly going o af fect the other . Thus the management must select the combination of these, which will best be adapted to theenvironment.Service Industriesi s surrounded by the st i f f compet i t ion thus, cannot be sa idmonopolists. A well-known nameBatais major competitor of Service. Both of these,BataandServicehave to face the local cottage industry, which has a big marketshare i.e., 80% of the total market.Serviceshare is 9% whileBatahas a share of 11% of the total local market.In such circumstances the company’s main intention is to sell those products whichare accepted by the consumer due to their quality and price. Management of service38

industries has a keen eye in seeking different pricing strategies to compete in themarket. Thus, a mixture of different strategies is being made to serve the consumers.Following are the major policies, which the management prefers.Unit PricingUnit price means to sell the products on fixed price. In this case no bargainingis made. Service has developed unit pricing system for its retail chain stores.Odd PricingThis is just a psychological approach; after following different techniques, thecompany fix odd prices just to ensure the customers that they are not payingfull rupee. For example, instead of Rs. 126, Rs. 125.95 is printed on shoes.However this policy is not in the favor of customers because most of themnever take back their balancing paisa.

Discount & AllowancesDiscount and a l lowances resul t in a deduct ion f rom the base pr ice. Thededuction may be in different types e.g. reduced price, free merchandise or advertising allowances etc.a ) Q u a n t i t y D i s c o u n tWhen the sales exceed a specific limit, the dealers and wholesales aregiven some quantity discount. It is also a technique for sale promotion.In this way clients are encouraged.b ) C a s h D i s c o u n tA cash discount is a deduction granted to buyers for paying their billswithin a specific period of time. The discount is computed on the netamount due. This type of discount is generally, given to dealers etc.39

c ) T r a d e D i s c o u n tTrade d iscount , somet imes ca l led funct ional d iscounts . These arereductions from the list price offered to buyers in payment for marketingfunctions that they will perform. Wholesalers are given 16% discount(in case of an article of Rs. 200). On an article of more than Rs.200/-18% discount is given.Aclass dealers are further given 7% andBclass dealers are given 6% discount.d ) P r i c e D i s c o u n tSometimes, general consumers are given price discount for limitedarticles. As a matter of fact it is the company’s policy to get rid of olddesigns and dead stock art ic les . But these d iscounts are of feredsometimes to encourage the sales. For this purpose service industriesarranges clearance sales when it feels necessary. Discount in thoseclearance sales is offered from 10% to 30%.

Recommendation:•The company must reduce its operating expenses in order to compete in themarket on price basis because operating expenses are controllable factor.•Footwear industry is h ighly fashion industry; hence SIL must improve theefficiency of the product development in order to bring new design and style inthe market to satisfy the consumers.•The advertisement of the company is a little bit weakening area. The companymust increase its advertising budget so that it can create a favorable image inthe minds of company. The advertisement to some extend must me accordingto comparison purpose of the product is better than their competitor becauseif their competitor first start the trend of comparing the products with other then the company will be more in trouble and will be in the position to stay inthe market for longer.•Company must pay a continuous attention to the quality of the products sothat competitors may not surpass it.•The company must seek new market segments, as it is operating in the highlypotential market of Pakistan.47

•Internet is a broad medium so they should also improve their e- business.•They should increase their exports all over the world through participate expofestivals.

TARGER MARKET

At the beginning, target market of SIL for footwear was gents of all classes.B u t i t i s a l s o f o c u s i n g o n c h i l d r e n a n d ladies.S o , w e c a n s a y t h a t t a r g e t m a r k e t o f S I L for footwear is the whole country.

Servis Group is Pakistan's largest footwear manufacturer and exporter. It also has interests inretailing. Its Group Company, SSC Private Limited, is the country's largest retailer andwholesaler of footwear.The Group was set up in 1958 and today has sales of more than PKR 9 billion.The Company runs its footwear retail business under Servis brand as Servis Shoe Stores. Ithas further established some of the most loved footwear brands including Don Carlos,Cheetah, Calza, Liza, Toz, and Skooz. It also has distribution alliances with leadinginternational brands in footwear including NIKE, CAT and exclusive franchise of ECCO inPakistan.SSC a part of Servis Group Which has a rich heritage spanning over half a century and is today regarded as one of the most respected corporate citizens. The Group invests actively inCSR initiatives and projects – nationally as well as abroad.SSC is respected for its innovation footwear designs which are a result of its considerableinvest in merchandising and product development departments. This has proven to be a

driving engine for the business that has produced millions of satisfied customers. TheCompany has strategic relationships with Group companies which offer world class footwear manufacturing facilities in Pakistan.SSC Retail Business currently comprises Company Operated Stores, Agencies, and FactoryOutlets. The business is now eyeing Large Format Stores and Franchise Stores as its futuregrowth engines.Servis Group employs close to 8000 people in its following Group Companies:•Service Industries Limited•

SSC Private Limited•Shoe Planet•Soul Collections•Servaid PharmacyAbove all are separate entities and work their own. Like there are three two outlets yet of ShoePlanet in Lahore and Karachi where there are imported brands with Servis shoes are available.Shoe Planet is a really a big outlet.Soul collection is dealing in ladies shoes and same like Stylo. There is a wide range of ladiesshoes is available all the time on Soul Collection and Soul collection has their own network.Servaid Pharmacy as the name mention is dealing in Pharmacy and has a good name in thefield of Pharmacy and this is now a growing business of Servis.

Vision StatementBe the fastest growing company in every market we enter.Mission StatementSSC will:Maximize value for its shareholders and business associates.Ensure product innovation and a buying experience that consistently exceedscustomer’s expectations.

Become a 10 b i l l ion rupee company by 2012 through leveraging i ts brands,distribution and retailing strengths.Leverage technology to gain competitive advantage.Strive to provide an environment where employees will be developed, rewarded andprovided with greater opportunities.Continue to improve the quality of life of it’s employees and their families.

Competitive AdvantageServis has competitive advantage on it product range, its brands name, and Price.Customer ServicesServis provide Customer Services through give them warranty and guarantee on shoes.Customer Relationship ManagementTo develop customer relationship management Servis provide Loyalty cards to their Loyalcustomers. Every customer who consumes 1500 RS to purchase some article can become aloyal customer and can get Loyalty card by filling a form and then after some process companydispatches the card. Company also sends catalogues on customer’s addresses. One timeentry on every 500 consumed in the shop. Last year one person won a car who belongs tofrom Jhelum then company advertise him through ads photographs and print media. Companyalso provide after sale services.Marketing StrategySSC use aggressive marketing and take advantage through give ads on TV channels, differentcampaigns and promotional activities so their competitor is so far from them on this side.AdvertisingThere is a team who plan that when there is need of advertisement and how to advertise or running a campaign but there is no advertising agency of Servis so Servis use outsourcingfrom different advertising agencies.