Marketing Trends in Pakistan

Marketing Trends in Pakistan

Lecture 2: Marketing Tools and Implementation

Majid Aleem Date: 29/09/2011

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Political Outlook Core Scenario Pakistan has been ruled by dictators for half its

history Political tug-of-war between civilians and

soldiers still continues. The chief threat comes from outside parliament

militants opposed to Pakistan pivotal role in the US-led war against terror.

Efforts to combat militancy are being frustrated

close ties between some militant groups and the state Inter Services Intelligence unit (As per international Community).

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SWOT Analysis – Political Outlook Strengths

Condemned for testing a nuclear bomb in May 1998, Pakistan has since won Western acclaim for its leading role in the US-led war on terror. Washington has lifted sanctions and, in June 2004, President George W. Bush named Pakistan a ‘major non-NATO ally’.

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SWOT Analysis – Political Outlook Weaknesses

Civilian institutions are weak in Pakistan. Parliament, comprising the National Assembly and the Senate, has had its powers vastly reduced during President Pervez Musharraf era which still continues as it is

Poor relations with India and other neighbours. The two nuclear-armed neighbours have gone to war three times since they were ‘partitioned’ after independence from colonial master Britain in 1947.

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SWOT Analysis – Political Outlook Opportunities

Pakistan could build stronger civilian institutions through meaningful democratic reform. However, we believe these are unlikely for the time being.

Ongoing peace talks with India provide Pakistani leaders with an opportunity to ease tension in the world’s most dangerous nuclear flashpoint.

SWOT Analysis – Political Outlook Threats

Escalating violence by militants opposed to Pakistan's leading role in the US-led war on terror poses a key risk to stability.

Attacks on president and prime minister- a concern for international business community

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Economic Outlook

Core Scenario Economy has strengthened considerably

due, firstly, to wide-ranging reforms aimed at reining in the government’s budget deficit

Assistance from foreign governments eager to reward Islamabad joining the US-led coalition against terror

Huge losses due to natural disasters Rising Inflation

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SWOT Analysis - Economic Outlook Strengths

A gradual tightening of monetary policy by the State Bank of Pakistan should moderate high inflationary pressures.

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SWOT Analysis - Economic Outlook Weaknesses

As a result of the massive earthquake hitting Pakistan in October 2005, Floods in 2010 and 2011 economy suffering from very slow growth

Subsidies to loss making, state-run enterprises continue to stretch public finances

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SWOT Analysis - Economic Outlook Opportunities

The lapsing in January 2005 of the WTO’s Multifibre Agreement, which regulates the global textile trade, will provide Pakistan with an opportunity to boost exports.

The local textile industry is competitive enough to prosper in a free-trade environment.

BUT WILL IT BE POSSIBLE?

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SWOT Analysis - Economic Outlook Threats

Pakistan’s military-backed/dependent government lacks legitimacy and may abandon economic reforms for fear of alienating public opinion.

Persistently high global oil prices pose a threat to Pakistan’s balance of payments. Pakistan imports more than 50mn barrels of oil a year to satisfy local demand for fuel products and record-high prices have led to widening of the trade deficit.

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Business Environment

One of South Asia’s most liberal foreign investment regimes.

Pro-market reforms during the 1990s opened most sectors of the economy to foreign participation.

One hundred percent foreign ownership is permitted in the manufacturing sector, though ownership restrictions remain in place in agriculture and services.

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Business Environment

Foreign firms are allowed to repatriate capital, profits and dividends.

Security risks are the chief concern for investor with foreign-owned businesses targeted by anti-Western militants in recent attacks.

Businesses must also contend with poor infrastructure, bureaucratic bottlenecks and widespread corruption. Ongoing reforms will help here.

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SWOT Analysis – Business Environment Strengths

Pakistan has one of the most liberal foreign investment regimes in South Asia. One hundred percent foreign equity is permitted in the manufacturing and infrastructure sectors.

Ongoing reform of Pakistan’s trade regime is reducing tariff barriers. Duty on capital goods, plant and machinery not manufactured locally was cut to just 5% from an earlier range of 5-25%.

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SWOT Analysis – Business Environment Weaknesses

Failing infrastructure, bureaucratic delays and widespread corruption are key concerns for investors looking to do business in Pakistan.

Intellectual property rights are poorly enforced. Pakistan, a leading producer of counterfeit goods, was one of 36 countries named on the Office of the US Trade Representative’s Priority Watch List.

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SWOT Analysis – Business Environment

Opportunities

Pakistan is committed to selling off state-owned assets and a series of firms are expected to going under the hammer in the coming years.

Threats

Anti-western militants have targeted foreign-owned businesses in recent attacks. A suicide bomber killed eleven French engineers employed by the Naval Construction Directorate in May 2002 as they boarded a bus in Karachi.

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3-4 years of strong growth

Resilience against shock and extra ordinary jerks

Rise in per capita income for US $ 503 in 2002 to US $ 847 in 2006

Robust Consumer spending

Substantial increase in private sector credit

Balance between fiscal deficit and growth

Medium Term Development Framework

Maintenance of external and domestic debt within limits

Reach to Global Capital Markets

Geo political situation post 9/11

Stable exchange rate

Higher foreign direct investment

Reduction in poverty level

Pakistan Economy – SWOT Analysis

Credibility of statistics

Sharp increase in prices of food items

Incompatible contributions of various sectors of economy in tax revenue.

Inefficiency in utilisation of development expenditure

High administrative costs

Perception gap between economic manager and people at large

Quality of governance

Record trade deficit

Concentration of export in restricted items and markets

High cost of doing business

Lack of focus on agriculture sector

Political instability

Shortage of skilled workforce

Energy crisis

Poor HDI indicators

Capacity constraints in Indian IT sector

Recent investment in IT sector

BPO’s potential

Telecom and Media revolution

Geo political situation

Foreign Direct Investment

Investment in education and health

Political uncertainty

Issues in Balochistan and Northern Areas

Worsening of situation on Western borders

Anti Pakistan attitude in Afghanistan

Level of corruption

Broadening gap between Rich and Poor

Social unrest

PAKISTAN ECONOMY

Weaknesses

Strengths

ThreatsOpportunities

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Strengths

3-4 years of strong growth Resilience against shock and extra ordinary jerks Rise in per capita income for US $ 503 in 2002 to US $ 847 in 2006 Robust Consumer spending Substantial increase in private sector credit Balance between fiscal deficit and growth Medium Term Development Framework Maintenance of external and domestic debt within limits Reach to Global Capital Markets Geo political situation post 9/11 Stable exchange rate Higher foreign direct investment Reduction in poverty level

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Weaknesses

Credibility of statistics Sharp increase in prices of food items Incompatible contributions of various sectors of economy in tax

revenue. Inefficiency in utilization of development expenditure High administrative costs Perception gap between economic manager and people at large Quality of governance Record trade deficit Concentration of export in restricted items and markets High cost of doing business Lack of focus on agriculture sector Political instability Shortage of s killed workforce Energy crisis Poor HDI indicators


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Opportunities

Capacity constraints in Indian IT sector Recent investment in IT sector BPO’s potential Telecom and Media revolution Geo political situation Foreign Direct Investment Investment in education and health

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Threats

Political uncertainty Issues in Balochistan and Northern Areas Worsening of situation on Western

borders Anti Pakistan attitude in Afghanistan Level of corruption Broadening gap between Rich and Poor Social unrest

Hierarchy of goals and objectives

Organizational Goals and ObjectivesMarketing Goals and Objectives

Marketing Mix Goals and ObjectivesMarketing Mix Element Goals and Objectives

Marketing Strategy Elements

What business are you in?Mission statement

Statement of marketing strategy

Indicates product, market scope

Shows growth factor

Shows differential advantage

Shows management orientation


Marketing Strategy DevelopmentRecognize and evaluate an opportunity

Market size and potentialKey competitors

Choose target marketDevelop Objectives for each opportunityDevelop Marketing Mix Strategy for each

opportunityChoose Marketing mix elements


Opportunity EvaluationReview of Requirements for Market SizeReview of Relevant Competitive Set


Target Market SelectionIntroduction to Market SegmentationReview of the Strategic OptionsEquivalent Behaviors as the Critical Variable


Structure of Marketing Mix Strategies

Are all Mix elements equally important?Product as the keyExample using Product Life Cycle



Generic Marketing Strategies

Cost Leadership▪ Lower costs of production and distribution

Product Differentiation▪ Unique product or brand

Focus▪ Focus on customer needs in a few segments

Product StrategiesProduct Mix Strategies

Market penetration versus market skimming

QualityHigh

Medium

Low

Price

High Medium Low

PremiumGoods

Penetra-tion

SuperBargain

Over-Pricing

AverageQuality

Bargain

Hit andRun

ShoddyGoods

CheapGoods


Product StrategiesProduct Market Growth Strategies

Market Penetration(increase usage)

Product Development(new uses)

Market Development(new users)

Diversification(new users, new uses)

Markets

Products

Old

Old

New

New



Market Position Strategies

Market Follower Strategies Conscious Parallelism

▪ Similar products, prices▪ Avoid unprofitable segments

Market Niche▪ Specialize in a very small group of

customers▪ Concentrated segmentation

strategy……


Market Position StrategiesMarket Leader Strategies

Increase Size of Total Market▪ Product-Market Growth Strategies

Protect Market Share Fortification

▪ Assortment of brands, sizes▪ Innovation

▪ Best defense is a good offense▪ Counteroffensive

Increase Market Share▪ BCG▪ Antitrust constraints


Market Position StrategiesMarket Challenger Strategies

Frontal Attack▪ Out-innovate leader▪ Tough to do, easier to defend

Flanking/Bypass Attack▪ Attack where leader is not looking▪ Find a new market segment


Market Challenger Strategies Price Discount Strategy Buyers are sensitive to price

▪ Works if leader does not cut price Cheaper Goods Strategy

▪ Lower quality but much lower price▪ Vulnerable to still cheaper goods

Prestige Goods Strategy▪ Increase both quality and price


Market Challenger Strategies

Cheaper Goods Strategy▪ Lower quality but much lower price

▪ Vulnerable to still cheaper goods

Prestige Goods Strategy▪ Increase both quality and price


Attacker(smaller)

Defender(bigger)

PositionDefense

PreemptiveDefense

Counteroffensive

ContractionDefense

Flanking Defense

Mobile Defense

Flank Attack

Frontal

Attack

Encirclement

Bypass

Guerilla Attack

Assignment 1

Write a review of the article top ten barriers to marketing planning according to the guidelines provided in the course outline.

Due next week in class

Assignment 2

Prepare a report regarding the product/service you chose during this lecture for Marketing Strategy Elements and discuss these elements in context of that product/service

Due next week in class

Documents

Marketing Trends in Pakistan