pel

STUDY OF MARKETING SYSTEM

Of

Pak Electron Limited

Submitted By:

Group (D) MBA (A)

M Naveed Aslam 05

Madeeha Razzaq 85

Imran Naseem 40

Tariq Mahmmod 77

Sadia Riaz 21

Pak Electron Limited Change your Life

Uzma Khalid 76

Submitted To:

Dedication:

We dedicate our project to COMSATSAnd all the students of the university.

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ACKNOWLEDGEMENT:

A million thanks to the Almighty, without whose support, there can be no work. I

would also like to take this opportunity to extend my appreciation and gratitude to

Mr.Zeeshan Ullah, without their counseling and parallel skills I would have never

been able to prepare this report. We owe special thanks to PEL company for

assistance, Development Work and data collecting.

Finally we owe many thanks for the participation of all group members and their

coordination to accomplish the task.

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TABLE OF CONTENTS:

EXECUTIVE SUMMARY 06

VISION 08

MISSION STATEMENT 09

HISTORY OF PEL 10

PEL COMPANY STRUCTURE: 11

SITUATION ANALYSIS:

Market Research 13

Porter’s Model 17

SWOT Analysis 20

OBJECTIVES OF PEL 26

STRATEGIC MARKETING PLANNING:

BCG Matrix 27

Strategies of PEL 29

COMPATITIVE ADVANTAGE 30

MARKET SEGMENTATION 31

TARGET MARKET 32

POSITIONING 33

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MARKETING MIX:

PRODUCT MIX

Product Lines of PEL 35

Features of product line 40

Product life cycle 42

PRICING 44

PROMOTION:

Promotional Strategies of PEL 47

Methods of promotion 47

Advertising 48

PLACEMENT 51

COMPETITION:

Direct competitor of PEL 54

Indirect competitor of PEL 55

COMPARISON BETWEEN PEL & DAWLANCE 56

GROWTH RATE OF PEL 57

QUALITY AWARD 58

FUTURE OUTLOOK 59

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EXECUTIVE SUMMARY:

PEL and PEL appliances fall under the Saigol Group of Companies. PEL has long

been known in Pakistan as a company that produces quality products. PEL has created

a brand loyalty among its users and the company credits that to its high quality and

vast product range. PEL has been continuously adding new products to its range. As a

result, PEL has registered a significant increase in its sales volume, during the last ten

years.

One sector in Pakistan that has grown considerably in the past is the Home

Appliances Division. There is great competition in this sector and PEL has survived

this competition with great flair. PEL enjoys good reputation in the market for its

home appliances.

PEL is in a growth phase in this sector. This sector carries a lot of potential and PEL

can capitalize on this fact.

My stay at PEL was very beneficial due to the fact that I got the opportunity to learn

the trends in the market in this sector. The company takes it as a liability to take care

of its employees. The corporate culture at PEL was very healthy and induced work

habits. This atmosphere helped me in building self-confidence and belief. At PEL I

had an opportunity to deal directly with the customers and find out their demands and

problems associated with PEL. I got to know about the trend in the industry and also

conducted a research through which I got a better understanding of the consumer

buying behavior.

I also got a chance to improve my decision-making skills. Further more, working at

PEL also helped me in becoming a better time-managed person. I got to know the

importance of teamwork at the work place.

In the end, all the experience that I have gained during my stay at PEL has helped me

a lot in becoming a better organized person and will definitely help me in becoming

an even better person in the future. I can say this with out doubt that the values that I

have gained while working at PEL will be applied to wherever I go to work in the

future.

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“To excel in providing engineering goods and services

through continuous improvement”

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To provide quality products & services to

the complete satisfaction of our customers and

maximize returns for all stakeholders through optimal

use of resources.

To focus on personal development of our

employees to meet future challenges.

To promote good governance, corporate

values and a safe working environment with a strong

sense of social responsibility

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Pak Electron Ltd. (PEL) was established in 1956 with the technical collaboration of

M/S AEG Germany and is the oldest composite electrical equipment manufacturing

unit in Pakistan.

In October 1978 the company was taken over by the SAIGOL GROUP, which is

one of the leading industrial and commercial groups of Pakistan. The products

manufactured by PEL have always been of a high standard and the name “PEL is

synonymous with quality all over Pakistan.” PEL, since its inception, has been acting

as an institution working for the advancement and development of engineering and

modern technology in Pakistan

Since its inception, the company has been working for the advancement and

development of engineering know-how in Pakistan. The company has produced

hundreds of engineers and skilled workers and technicians through its apprenticeship

schemes & training programs.

PEL has been continuously adding new products to its range. As a result, PEL has

registered a significant increase in its sales volume, during the last ten years

In 1978, the Saigol Group of Companies purchased major shares of Pak Electron

Limited. At that juncture, the company was only manufacturing transformers and

switchgears. With the Saigols in management, PEL started expanding its product

range by entering into Air Conditioner manufacturing.

In 1981, PEL window type air conditioners were introduced in technical collaboration

with General Corporation of Japan.

In 1986-87, the company started manufacturing of refrigerators in technical

collaboration with M/s IAR-SILTAL of Italy.

In 1987, PEL deep freezers were also introduced in technical collaboration with M/s

Ariston of Italy.

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In 2006, the Company has started manufacturing of split type air conditioners of

various capacities as the customer choice has shifted from window type to split type.

The product has been well received in the market. This encourages the company to

multiply its production in the coming year.

Today, PEL has become a household name. Its products are not only in great

demand in the local market but the Company has started exporting its appliances

division products.

Pak Electron Limited (PAEL or PEL) is the pioneer manufacturer of electrical goods

in Pakistan. The company is listed on all the three stock exchanges of Pakistan. Its

principal activity is manufacturing and sale of electrical capital goods and domestic

appliances.But now, PEL is operating a single business entity without any

division.

LAHORE FACTORY:

In Lahore Factory, Refrigerators, Transformers, Energy Meters, and Switchgears

are produced. Previously, Window AC and Deep freezers were also produced in

Lahore Factory but PEL quit these operations. However, PEL has restarted the

production of Deep freezers once again at Lahore factory.

There are following departments in the Factory of PEL:

Production department.Research and development.Quality control department.Human resources department.Marketing department.Finance department.

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The company comprises two divisions:

Appliances Division.

Power Division.

APPLIANCES DIVISION :

PEL’s Appliances Division is the flag carrier of the Saigol Group involved in home

appliances manufacturing.

Air conditioners.

Refrigerator.

Deep freezers.

Microwave oven.

Washing machine.

Generators.

POWER DIVISION:

PEL Power Division manufactures energy meters,

Transformers

Switchgears

Kiosks

Compact stations

Shunt capacitor banks

Energy meters

Generators

All these electrical goods are manufactured under strict quality control and in

accordance with international standards.PEL is one of the major electrical equipment

suppliers to Water and Power Development Authority (WAPDA) and Karachi

Electrical 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.

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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.

MARKETING RESEARCH:

It is a set of activities which are performed for the purpose of getting customer knowledge in the form of Feedback to provide them ultimate satisfaction through improved and desired products. PEL is taking keen interest toward marketing research activates to know about customer desires. For this purpose, company is taking services from several research agencies. MRL (market research link) is one of these agencies providing their services to PEL and ensuring to provide authenticated results in the form of Feedback. PEL do not compromise on quality and customer satisfaction so the company provides 100% importance to the Feedback generated through research agencies. While conducting research for PEL, MRL also look forward to collect data about customer awareness towards new launched product.

FINDINGS AND ANALYSIS:

Area

55 17.9 18.3 18.3

28 9.1 9.3 27.7

19 6.2 6.3 34.0

28 9.1 9.3 43.3

70 22.7 23.3 66.7

18 5.8 6.0 72.7

35 11.4 11.7 84.3

28 9.1 9.3 93.7

19 6.2 6.3 100.0

300 97.4 100.0

8 2.6

308 100.0

Defense

Cavalry Ground

Gulberg

Liberty

Abid Market

Allam Iqbal Town

Main Market

Moon Market

Link Road Model Town

Total

Valid

SystemMissing

Total

Frequency Percent Valid PercentCumulative

Percent

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Brand Preference (Dawlance)

2 .6 .7 .7

10 3.2 3.3 4.0

45 14.6 15.0 19.0

73 23.7 24.3 43.3

170 55.2 56.7 100.0

300 97.4 100.0

8 2.6

308 100.0

1

2

3

4

5

Total

Valid

SystemMissing

Total


Percent

Brand Preference (PEL)

3 1.0 1.0 1.0

30 9.7 10.0 11.0

89 28.9 29.7 40.7

121 39.3 40.3 81.0

57 18.5 19.0 100.0

300 97.4 100.0

8 2.6

308 100.0

1

2

3

4

5

Total

Valid

SystemMissing

Total


Percent


Income

22 7.1 7.3 7.3

47 15.3 15.7 23.0

59 19.2 19.7 42.7

125 40.6 41.7 84.3

47 15.3 15.7 100.0

300 97.4 100.0

8 2.6

308 100.0

Below15000

15000-25000

250000-35000

350000-40000

upto50000

Total

Valid

SystemMissing

Total


Percent

BRAND PREFERENCE TOWARD DIFFERENT BRANDS

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Brand Preference (Others)

100 32.5 33.3 33.3

73 23.7 24.3 57.7

59 19.2 19.7 77.3

27 8.8 9.0 86.3

41 13.3 13.7 100.0

300 97.4 100.0

8 2.6

308 100.0

1

2

3

4

5

Total

Valid

SystemMissing

Total


Percent

Brand Preference (Haier)

156 50.6 52.0 52.0

124 40.3 41.3 93.3

8 2.6 2.7 96.0

5 1.6 1.7 97.7

7 2.3 2.3 100.0

300 97.4 100.0

8 2.6

308 100.0

1

2

3

4

5

Total

Valid

SystemMissing

Total


Percent

WHICH BRAND DID YOU ALREADY HAVE?

Brand Already Have.

104 33.8 34.7 34.7

54 17.5 18.0 52.7

92 29.9 30.7 83.3

7 2.3 2.3 85.7

43 14.0 14.3 100.0

300 97.4 100.0

8 2.6

308 100.0

Dawlance

Waves

PEL

Haier

Others

Total

Valid

SystemMissing

Total


Percent

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WHY DID YOU BUY IT?

Brand Purchase Due to (Quality)

2 .6 .7 .7

42 13.6 14.0 14.7

256 83.1 85.3 100.0

300 97.4 100.0

8 2.6

308 100.0

3

4

5

Total

Valid

SystemMissing

Total


Percent

Brand Purchase Due to (Brand Name)

21 6.8 7.0 7.0

59 19.2 19.7 26.7

220 71.4 73.3 100.0

300 97.4 100.0

8 2.6

308 100.0

3

4

5

Total

Valid

SystemMissing

Total


Percent

Brand Purchase Due to (Features)

2 .6 .7 .7

27 8.8 9.0 9.7

65 21.1 21.7 31.3

206 66.9 68.7 100.0

300 97.4 100.0

8 2.6

308 100.0

2

3

4

5

Total

Valid

SystemMissing

Total


Percent

Brand Purchase Due to (Re/Frnds)

16 5.2 5.3 5.3

49 15.9 16.3 21.7

152 49.4 50.7 72.3

81 26.3 27.0 99.3

2 .6 .7 100.0

300 97.4 100.0

8 2.6

308 100.0

1

2

3

4

5

Total

Valid

SystemMissing

Total


Percent

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The final out come of the research was that PEL has lost its competitive edge

when it comes to other brands. I shall now discuss why is this so in the light of the

Porter’s Five Forces Model. These five forces are following.

The risk of new entry by potential competitors

Rivalry among established firms

The bargaining power of the buyer

The bargaining power of the supplier

The threat of substitute products

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Dawalance

Threat of Substitute

Bargaining Power Of Suppliers

NEW ENTRANTS

Bargaining Power Of Buyers

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DIRECT COMPETITORS

The direct competitors of PEL are Dawlance, Waves, LG, and Haier etc. The

Dawlance is market leader in the refrigerator and PEL is still on second number. But

in window room air conditioner (WRAC) the PEL is market leader

REFRIGERATORS.

Total market sale of refrigerator in 2003 was 367000 units. Last year sale was 256900

units. These figures show 30% market growth. But the average growth was 13% to

17%. And the PEL sale growth is 70%, which is a great achievement.

Dawlance is a market leader in refrigerator with 46% share.

PEL has 32% market share.

Waves has 11% market share.

11% shares are others.

WINDOW AC.

PEL is a market leader with a market share of about 60% in local manufacturing

industry. And overall has 35% market shares for this product.

LG has about 32% market share and stands on number two.

And rest of the manufacturers have 23% marker share.

Indirect Competitors:

The indirect competitors for PEL in this industry are Samsung, Orient, Mitsubishi,

Sabro, Nobel and others Chinese brands available in the market. The PEL has no big

threat from all these companies. But the Sabro pioneer for introducing the split air

conditioner in Pakistan. Now days the sabro has lost its market share to other

companies for the business of Split AC.

RISK OF NEW ENTRY BY POTENTIAL COMPETITORS

High Investments.

Threat for new entrants is high in this industry, partly due to the fact that this industry

is a lucrative industry and is very attractive for foreign companies. But in order to

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really make a mark in this industry, you need to have strong investment and funding.

For this matter, PEL is at risk of the influx of foreign investments in this sector.

Foreign Brands.

Foreign brands like LG, Sony, Samsung, Mitsubishi and Haier etc. are a big threat for

local brands. The quality and brand image of foreign brands is high as compared to

local brands. Foreign brands have captured the market of split AC and television. LG

and Sony are the market leader in television sector. Local brands can’t compete with

these companies in this sector.

THE BARGAINING POWER OF THE BUYERS

Company’s buyers are the people who ultimately purchase and consume its products.

If there are so many brands and products available in the market at different prices,

the bargaining power of the buyers will be high because they have many alternatives,

they can demand to lower the prices. On the other hand if there are few brands or

companies in the market, then the buyers will be in a weak position to bargain. As a

result, the company can raise its prices and earn greater profits. If we see the Pakistani

industry the bargaining power of the buyers is very high because a variety of products

are available in the market at different prices. So the buyers can choose the product

according to his requirements.

THE BARGAINING POWER OF THE SUPPLIERS:

Suppliers can be viewed as a threat when they are in few numbers in the market. In

that case, the suppliers are able to force up the price of inputs. The after effects of that

can result in the reduction in the quality of inputs. If the suppliers of PEL Company

are weak then company will force the suppliers to reduce the prices of input and

demand for higher quality. If the suppliers are selling the products that have very few

substitutes and are differentiated from others, then the suppliers are always in good

bargaining position.

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SUBSTITUTE PRODUCTS

There is no real substitute for the products of this industry. Refrigerators and deep

freezer have there own attributes. Cold stores can be substitutes for these products,

but these substitutes are more costly and can’t be easily approached.

The strengths, weaknesses, opportunities and threats of PEL are discussed

below:

Strengths:

PEL has the following strengths.

Brand Name

Strong Dealer Network

Quality Products

Best Sales Services

Market leader in WRAC

Number 2 in Refrigerators in Pakistan

Strong Management Team

Distribution of Authority

Research and Development Department

Free Customer Service

Brand Name:

PEL has created a strong brand image in the mind of the customers

through higher quality and low prices. The customers of PEL always prefer its

home appliances like Window AC, split AC and refrigerators, during the time of

purchase. PEL is a popular company in Pakistan and every one knows about the

PEL products and its brand name. That’s why PEL is a market leader when it

comes to Window AC.

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Strong Dealer Network:

It is also the plus point for PEL that it has developed a strong dealer

network in the market. The dealers always try to sell the PEL products to the

customers because, the company for its products, gives them a high margin. The

management of PEL also provides more incentives to their dealers than their

competitors. Dealers are very conscious about the PEL products and always

guide the customer in buying the PEL products.

Quality Products:

PEL is also in a strong position because it provides superior quality

products to customers. So it gives an edge to company over its competitors. Due

to best quality, guarantee of products of PEL is more than its competitors.

Best Sales Services:

PEL provides the after sale service to customers which increases the

customers satisfaction. The biggest strength of services department is that it

handles a complaint within 24 hours in any part of the country, that helps in

increasing the satisfaction level of customers.

Market leader in WRAC (Window Room Air Conditioner):

It is also strength of PEL that it is a market leader in WRAC. Costumer

always gives preference to PEL in window AC market because of low price, high

quality and durability.

Number Two in Refrigerators in Pakistan:

After the Dawlance refrigerators, PEL has the second position in the

refrigerators market. PEL is gradually coming up in refrigerator market and

increasing its market share. Due to improved quality, innovative features and

good sales services PEL is becoming the first choice for customers.

Strong Management Team:

It is another plus point that PEL has a strong management. Its employees

are competent, efficient, skilled and knowledge. They always cooperate with the

top management in achieving of goals that are assigned to them. Employees are

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well aware about the company objectives and are committed to the development

of company.

Distribution of Authority:

Top management of PEL delegates the power to the subordinates for

achieving the marketing objectives in a specified time period. So every manager

has an authority to take decisions to achieve the goals of company. In this way

they save the time and react quickly.

Research and Development Department:

PEL has a strong research and development department that is

continuously trying to develop new features for the products. R&D department

spends huge amount of money for the development of new products.

Free Customer Service:

PEL provides free customer service for one year to its customers. The

customers who buy the PEL products become brand loyal due to this facility.

Weaknesses of PEL:

Like other companies PEL has some weaknesses. If PEL overcomes these

weaknesses then it can become a market leader in home appliances. PEL looses

some competitive edge in the following areas:

Financial Problems

Lack of advertisement

System variations

Lack of Product range

Less Utilization of capacity

Financial problems:

Sometimes PEL faces the financial problems because its stocks are so

much piled up in the stores that creates problem of cash flow because when the

stocks are not sold and the production is in process for 24 hours a day then the

company faces such problems.

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Lack of advertisement:

It is a second major weakness of PEL that it is not a vigorous advertiser.

Only recently has PEL invested a considerable amount in advertisement, but

when we look at its competitors, PEL still has to do a lot in this sector.

System variations:

It is also the main weakness of PEL that there is a rapid change in polices

of selling the products. That creates problems for the selling team to sell the

products to the dealers because the top management requires urgent amount of

money. Thus the products are sometimes sold on hard cash that reduces the

prices of products that creates problems for the management.

Lack of Product Range:

PEL has introduced more products of consumer items but there are more

needs to develop new consumer items like PEL washing Machines, Vacuum

cleaner and other items.

Less utilization of capacity:

Due to lack of finance a company cannot utilize all its resources on its

full capacity. It increases the cost of products per unit that decreases the profit

margin of each consumer item. Sometimes, the company cannot allocate the

resources according to the requirements of the production department, which

later on becomes a problem for the complete utilization of resources.

Opportunities for PEL:

For PEL, there are more opportunities for expansion in business. Following are

the opportunities for the PEL.

Exploration of market in Pakistan

Increase in product range

Export opportunity

Increase in production capacit

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Exploration of market in Pakistan:

PEL has the opportunity to explore the market in all over the Pakistan.

Even though PEL has introduced its products in many cities of Pakistan but there

are so many places that are yet to be exploited.

Increase in Product Range:

PEL can increase its product range that will be more profitable for the

company. There are more needs to develop new consumer items like PEL

washing Machines, Vacuum cleaner and other items.

Export opportunity:

PEL has also the opportunity to export their products in other

international countries like UAE, SAUDI ARABIA, and other Arabic and

African countries.

Increase in production Line:

Company can also increase its production line at the maximum level that

will increase the efficiency of the employees and will also reduce the total cost.

Threats for PEL:

Following are the main threats for the PEL:

Strong competition

China’s product introduction in the market

Price war

Slow growth rate in Pakistan

Instability of government

Tax department

World Trade Organization

Strong competition:

There is very strong competition in the home appliance division. Every

company adopts different strategies for selling of the products. It reduces the

profit margin of each company and increases the bargaining power of the buyers

who will demand higher quality of products at lower cost.

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China’s product:

China’s products are another threat for the Pakistani companies because

these products are cheaper than the Pakistani products. China products stress the

indigenous companies to lower the quality and prices that will not be profitable

in the long run.

Price war:

As there is stiff competition in the home appliance market that will cause

the price war.

Slow growth rate in Pakistan:

There is also slow growth rate of home appliance in Pakistan that will

increase the stocks of the company. Although, this industry is in the growth

phase, but the speed of the growth is very slow.

Instability of Government:

The rapid changes in governments will become a threat for the companies

because every government adopts new policies for the industries. So it

increasesthe uncertainty for the investors who want to invest heavy amounts in

their new projects.

Tax department:

Tax department is another major threat for the company that will restrain

the business expansion. There is a most complicated tax procedure operating in

the country that creates hurdle in the production and smooth functioning of

different companies in Pakistan.

World trade organization:

World trade organization will give the permission in 2005 to each company of

home appliance to export their products after paying less duties or duty free products.

That will increase the pressures for the indigenous companies to reduce the prices and

increase the quality. It will increase the competition among the foreign companies and

indigenous companies.

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The objectives and mission for which the company is established are as following:

To carry on the business or businesses of manufacturing,

selling, installing, maintaining designing and dealing in all kinds of

electrical equipment.

To carry on any business whether manufacturing or

otherwise which maybe found convenient to undertake in connection with

or in addition to any of these objectives mentioned above.

To do all such things that are incidental for the attainment

of the above objectives or any of them.

To produce high quality and standard products.

To produce equipment to be used in numerous projects of

national importance.

To secure a high share / quota of WAPDA’s demand for

power products.

To produce skilled workers and technicians through its

apprenticeship schemes and training programs for engineers and

technician

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BCG stands for Boston consulting group. It is a portfolio planning method that

evaluates the company’s strategic business unit .Using this model an organization

classifies each of its separate business units (SBU) according to two factors:

Market share relative to competition and growth rate of the industry in

which SBU operates

When these factors are divided into high and low categories, a 2 x 2 grid is

created as displayed in following figure:

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STAR:

Star is a business unit that has large market share in fast growing industry. Such unit

requires more investment to generate more cash. If due to more investment it will

become successful and become cash cow and it will reach at maturity stage. For star

product the strategy is called harvest

Refrigerator of PEL is the product having high market share and high annual

growth rate.

Cash Cow:

It is the business unit sometimes known as problem child. It has a large market share

and low annual growth. Each cash cow requires little investment and it generates

more cash that can be used for investment purpose in other business units. For cash

cow the strategy is called HOLD, you must preserve market

Split air conditioners is the product of PEL having high market share and

low annual growth rate.

Question Mark:

It is the business unit that has a low market share and high annual growth. These

business unit requires resources to grow market share but if they succeeded that will

become STAR. For question mark the strategy is called BUILD, you try to make up

the market share.

Washing machine and microwave oven are the products of PEL having low

market share but high annual growth

Dog:

Dog is the business unit that has small market share as well as low annual market

growth rate. A company normally would be unwise to invest substantial funds in

SBUs in this category. Marketing strategies for dogs are intended to maximize any

potential profits by minimizing expenditures or to promote a differential advantage to

build market shareAnd the company can diverts or liquidate the dog product

Deep freezer is the product of PEL having low market share plus low annual

growth share.

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Question Mark Star

.


STRATEGIES OF PEL AS MARKET CHALLANGER

In competitive environment challengers strategies are very significant to survive in

the market. Firms in this category can adopt one of the following strategies:The leader

is attacked but it is very risky and high payoff.Company can attack unprogressive and

under financed firms, it is less risky and less payoffIt can also attack on small local

and regional firms, it is neither risky nor high payoff

Choosing A General attack strategies:

Frontal attack:The attacker matches its opponent price, product, advertisement and distribution. The principle of force says that side with greater manpower (resources) will win

Flank Attack:The attacker can attack along two dimensions:

Segmental. Geographical

Technological leap fogging:Challenger patiently researches and develops the next technology then launches its attack

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Cash Cow

Dog

Deep freezer of PEL has low market share in low market growth rate. So it regarded as a dog. So company should drop this product.


Guerrilla Warfare:It consists of small but continuous attacks to harass and demoralize the opponents.

Encirclement attack:It involves launching grand offenses on several fronts attack on every feature of opponents productsAs far as PEL is concerned, it uses technological leap fogging strategy to attack. PEL is launching products having several innovative features to differentiate its product from competitors

Water dispenser refrigerator is the product having innovative feature of getting cool water without opening refrigerator

6- Series refrigerator is the product having differential feature of light bulb in freezerPEL Genset Aircon Power Electric generator is the product having following differential features:

Performance capable of running following items continuously for 10 hours. One 1.5 ton split One television Six tube lights One computer One fridge Five fans One deep freezer

The main compatitve advantage of PEL is it is pioneer company of PAKISTAN.

PEL companies engaged in same business of Home Appliances. However, PEL is also

making Power Products like Energy Meters, Transformers, Switch Gears etc.

PEL is pioneer of eletrical appliances in Pakistan as it started its activities in 1956.

PEL was taken over by Saigol Group of Companies. PEL is awarded SuperBrands

Pakistan 2007-08. The Brand Ambessdor of PEL is Hadiqa Kayani which is famous

singer of Pakistan.

Dominator Group (D)

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Segment marketing offers several benefits over mass marketing. The company can

more easily select the best distribution and communication channels and it will also

have a clear picture of its competitors.Market segmentation refers to the different

areas of the population that companies can aim their products towards. The market

segment that PEL has chosen to aim is the quality conscious people.

Geographic Segmentation:

PEL is doing mass market which is not limited to one county but all over the world.

The main target of PEL is Pakistani market.In Pakistan,PEL is available at every city

because its very famous and good product of market.

Demographic Segmentation:

PEL divide its market on the basis of following characteristics of population

Age group:

Earlier PEL used to segments its market among people age ranges from 35-----

45years.But Now PEL focus between the age group ranges from 25----35 years.

Gender group:

For the segmentation, the company is recently focusing on young graduate girls and

the latest ad of PEL reveals the fact in which famous singer Hadiqa is representing

young college girl.

Dominator Group (D)

Segmentation

Geographic Demographic Psychographic Behavioral

31


Psychographic Segmentation:

Income group:

PEL is offering its several products to different income groups of society

In case of Generators, company focuses on elite class.

In case of refrigerators, split air conditioners, washing

machines, deep freezer.

Televisions Company focus on middle class.

In case of Microwave oven, the company focuses on elite and

middle class.

Behavioral Segmentation:

We provide a quality product for our customers. It is purely base on local

demands and needs, and we sure that our product will be appreciated by that

people who are quality conscious.

It is

the segment for which the seller designs particular marketing mix.

Target market Strategies:

Following are the target market strategies:

Aggregation strategy

Single segment strategy

Multiple segment strategies

Aggregation strategies :

In this strategy total market is treated as a single segment and single market mix is

developed to reach the customers in the entire Market.The company offers a single

marketing mix.

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Position is the way a firm’s product, brand or organization is viewed relative to the

competition by current and prospective customer.

Positioning is a firm’s use of all the elements at its disposal to create and maintain in

the minds of a target market particular image relative products.

PEL has different positioning levels for different products,

In case of refrigerators the company is challenger of DAWLANCE.

In case of air conditioners company is challenger for WAVES and MITSUBISHI.

In case of televisions company is challenger of LG and some other companies.

PEL doing the mass marketing and using only one marketing mix for the complete

Pakistani market.

:

Dominator Group (D)

Promotion

ProductProduct is

“heart”

ProductProduct is

“heart”

Place (Distribution)

Price

33


Product mix is a set of all products that are offered for sale by a company. Product

mix consists of both breadth and depth.

BREADTH:

Breadth is a measured by the total number of product line offered by a company.

DEPTH:

Depth is the variety of sizes, colors and models offered within each product line

PORTFOLIO OF PEL

PEL divides its portfolio in two divisions

Appliances division.

Power division.

PORTFOLIO OF APPLIANCES DIVISION

Following are the products of appliances division:

Air conditioners

Refrigerator

Television

Microwave Oven

Washing machine

Generators

Dominator Group (D)

34


BREADTH DEPTH

REFRIGERATORS: MODEL SIZE

1. PREMIER SERIES:

PC 20185 15Cft

PC 20165 14Cft

PC 2017 16Cft

PC 2500 10Cft

PC 2300 8Cft

2. CRYSTAL SERIES:

PC 2012 10Cft

PC 2010 8Cft

PC 2009 7Cft

3. 6-SERIES:

Dominator Group (D)

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PC 6400 12Cft

PC 6300 11Cft

PC 6200 10Cft

4. MINI-SERIES:

PMR 110-S

PMR 11

PMR-111

(DS)

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MICROWAVES: MODEL SIZE

PMO 1052 2CF

TG (Silver)

PMO 23 1.5CF

Manual (Silver)

PMO 20 1CF

Touch (White)

PMO 23 2CF

TGS (Silver)

WASHING MACHINES: : MODEL SIZE

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Magic Clean 10KV

(PWM-7700)

Magic Clean 5KV

PWM 0510

AIR CONDITIONERS: MODEL SIZE

Silver Line 1,1.5 (QB) & 2ton

High Vita 1.1.5

(HV7) & 2Ton

WAC 1.5Ton

(19K)

Floor Standing Air Conditioners

Dominator Group (D)

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WATER DISPENSORS: MODEL SIZE

PLS 691 SL 360x390x1035

(Silver & White)

PLS 681 SL 385x395x1025

(Silver)

PORTFOLIO OF POWER DIVISION

These are following products of power division.

BREADTH DEPTH

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TRANSFORMER : 25 KVA

50 KVA

100 KVA

1250 KVA

ENERY METER: VOLTAGE 220-240V

CURRENT

(NOMINAL) 10,

20,40A

SWITCH GEARS : CURRENT

(MAXIMUM) 40, 60,

80,100A

GENERATOR: Model No.

Capacity

PG5040D 5.2KVA

FEATURES OF PRODUCT LINE

Air Conditioners:

PEL window-type air conditioners were introduced in 1981 in technical collaboration

with General Corporation of Japan. Ever since their launch, PEL air conditioners have

a leading position in the market. PEL air conditioners cooling performance has been

tested and approved by Copeland and ITS USA. With the shift of users preference

from window type to split type air conditioners, PEL has started manufacturing split

type air conditioners

Refrigerators:

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

M/s IAR-SILTAL of Italy. Like the air conditioner, PEL refrigerators are also in great

demand. Today, PEL Crystal has 38% of total market share. Its cooling performance

is tested and approved by Danfoss, Germany and its manufacturing facility is ISO

9001 certified.

Deep freezers:

PEL deep freezers were introduced in 1987 in technical collaboration with M/s

Ariston of Italy. Due to several reasons the production of deep freezers was stopped

but now company is restarting its production again.

Microwave Oven:

PEL the trustful company name in home appliances all over the country, now

introduced all new models of "PEL Power Wave" Microwave Ovens. Now PEL

customers can have four models of PEL Power Wave in which they can enjoy the

grilling feature as well. PEL Microwave Ovens are available in different sizes, inner

cavities (steel & painted) and features.

Washing Machine:

PEL introduced washing machine in 2006 first time and it got appreciative response

from customers, Now it is being produced by the company on large scale and due to

its improved quality its sales volume is increasing.

Generators:

Generator is another product of PEL that is used to generate electricity. It is very

famous product in elite class. It has several features as self start, no noise, digital

display panel, dual exhaust system (environment friendly), special air cooling system,

continuous 10 hours running at 3 KV.

PRODUCT LIFE CYCLE

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A product life cycle consists of aggregate demand over an expected period of time for

all brand comprising a generic product category. A life cycle can be foraged by

plotting aggregate sales volume for a product category over time usually years

Stages of product life cycle:

Management must be able to recognize what part of life cycle its product is in at any

given time. The completive environment and marketing strategies that should be used

ordinarily depends on the particular life cycle stage

There are four stages of product life cycle and explanation of each is given below

Introduction:

This stage some times known as pioneering stage in which a product is

launched into the market in a full scale marketing program it has gone through

product development, including idea generation, idea screening, prototype and

market tests. For new products normally there is very little direct competition.

GENERATORS are on introduction stage.

Growth:

Growth stage also called market acceptance stage.

In this stage sales volume and profits rises and

competitors enter the market. At the end of growth

stage , profit starts to decline.

Dominator Group (D)

TimeProduct

Develop-

ment

Introduction

Profits

Sales

Growth

Maturity

Decline

Losses/Investments ($)

Sales andProfits ($)

42


Water Dispensers are on growth stage.

Maturity:

During Maturity stage, sales continuous to increase but

at decreasing rate. When sales level off, profits of both

producer and middlemen decline. The primary reason is

intense price competition

Refrigerators of PEL on the maturity stage.

Decline:

This stage is inevitable. In this stage profit and sales volume of the product both

decrease rapidly and finally its life comes to an end.

Longest life cycle:

As far as PEL is concerned, the longest product life cycle is of crystal classics

refrigerators having three years duration.

Shortest life cycle:

Life cycle of crystal classic 2009 refrigerator is the shortest among the portfolios of

PEL appliances.

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43


Price is a strong element in the marketing mix. It has a direct impact on the customer,

business. To the consumer, the price is a major indicator of the quality of good and an

important factor in making decision about it’s purchase

In deciding the price the business management must consider the kind of competition

in the market for the good, the elasticity of demand for product, its cost of production

etc

As far as PEL organization is concerned, sets its prices of product line regarding the

competition in the market.

Prices of product line varies from product to product, some of its product’s prices are

set on quality base

PEL organization is very well aware of the limited buying power of the average

population of Pakistan so to uplifting their living standard & trying to meet their

expectations regarding necessities of home appliances. So company tries to focus on

this portion of society, while setting the prices.

Internal costs include in prices:

1- Raw Material

2- Labor Charges

3- Factory Overheads

4- Advertisement Cost

5- Governmental Duty

6- Excise Duty

7- Company's Profit Margin

PEL PRICE LIST

Model Prices

(Rs)

REFRIGERATOR

SLIM LINE

2009-VCM 15500

2010-VCM 16500

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2012-VCM 18000

2009-STAR PLUS 16000




2300-PREMIER 17900

2500-PREMIER 18900

WHITE BODY

20140--Crystal Classic 20500

20145-Crystal Classic 21000



20140-Premier 21000

20145-Premier 21300

20165-Premier 23000

2017-Premier 25000

6 SERIES

6200 20000

6300 20500

6400 21000

MICROWAVE OVEN

PMO-20 Manual 4200

PMO-20 Touch 4700

PMO-23 M 4900

PMO-23 TG 5800

PMO-23 TGS 6300

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PMO-36 TG 7000

PM0-36TGS 7400

PM0-52 7400

WASHING MACHINE

PWM-508 5500

PWM-510 5700

PWM-7500 7500

SPLIT AIR CONDITIONER

1 TON 19400

1.5 TON 25900

2 TON 36700

GENERATORS

PG 5040-D 74000

Promotion is an essential for increasing the demand of the product. Promotion

includes advertising, personal selling and sales promotion. The seller informs the

Dominator Group (D)

46


customers through news papers, television and posters about the product available in

the market.

PRMOTIONAL STRATEGIES OF PEL:

PUSH STRATEGY:

It is promotion program primarily aimed at dealers in which company focuses to sell

the product. In past PEL used this strategy to increase their sales volume by giving

more and more incentive to the dealers

PULL STRATEGY:

It is another promotional program primarily aimed at final consumer. Now a days,

PEL is using PULL strategy by improving product quality

For example: PEL is using the imported DANFOSS compressors in its appliances.

METHODS OF PROMOTION:

An organization adopts one or more of the following methods which are very

common now a day in uplifting its performance:

Advertising

Personal selling

Sales promotion

Public relations

PRMOTONAL BUDGET:

PEL spends 3% of sales on promotion.

ADVERTISING:

Advertising is non personal communication paid for by a clearly identified sponsor

promoting ideas, organizations or products. The most familiar outlets for ads are the

broadcast and print media. :

Dominator Group (D)

47


The company highly believed in advertising. The company is expanding a lot of

money on different advertising media which are:

- Television

- Hording

- Neon Sign

- Stickers

- Banners

- Point Of Sale

- Calendars

- Wall

- Clocks

- Brochures

- Key Chain

- Billboards

Organizing advertisement:

A firm can manage its advertising program through following ways:

By developing an internal advertising department

By using an outside agency

By using a combination of above both

ADVERTISING

THROUGH PRINT MEDIA:

PEL is conducting its

advertising through internal

advertising department. It is

performed by publishing ads in

hot selling magazines.

Dominator Group (D)

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ADVERTISING THROUGH ELECTRONIC MEDIA:

PEL is conducting its advertising campaigns through advertisement several outside

agencies. PEL sister concern “Red Communication” is the main advertising agency

used for the purpose of making ads according to changing trends of market and

considering ethical issues. Latest ad of PEL is designed by this agency by focusing on

a college girl and its requirements from technology and PEL is providing the

appliances which is fulfilling theses requirement.

Advertising duration :

For refrigerators and air conditioners: from March to June

For oven and washing machine: from November to March

.

SALES PROMOTION:

Sales promotions sponsor-founded, demand-stimulation activity designed to

supplement advertising and facilitate personal selling.

PEL uses out door activities:

Exhibitions

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49


Road shows

Promotion schemes etc.

PUBLIC

RELATIONS:

Public relations encompass an wide verity of communication effort to contribute to

generally favorable attitude and opinions towards an organizations and its products.

PEL also engaged in public relations activities just to create a soft image in the hearts

people.

SOCIETAL MARKETING:

Firm that sufficiently extents the breadth and commitment dimensions of its

marketing goals to fulfill its social responsibility are practicing what has become

known as the societal marketing.

In these days PEL is giving donations for rehabilitation of earthquake affected areas.

The company has donated several necessities for the help of earthquake affected

people.

PEL uses to collect zakat funds on the behalf of several charity institution as Shokat

Khanam hospital

Dominator Group (D)

50


Installment Facility:

PEL gives installment faculty to all government employees, all of the account holders of Banks Alflah Limited and bank of Punjab

This element of marketing is concerned with all those activities with are related to

move the product or service from seller to buyer. PEL uses place strategy which

ensures that product is available to consumer at the right time when they are needed

(time utility)

At the place where they are demanded (place utility) in the form or shape they are

required (form utility) and the ownership of goods is transferred with less financial

risk (possession utility)

A product reaches customer through a channel of distribution. This channel might be

short or much complex involving many kinds of middlemen but PEL uses short

channel of distribution to minimize the expenses and ensure timely supply of goods to

end user

DISTRIBUTION CRITERIA:

PEL has the head office in Lahore and it also has 22 sub-offices in different cities of

Pakistan and they have different sales manager in each city. Every manager is

responsible to maintain strict control over the market they are assigned.

The company estimates its sales volume by the past sales made by dealers and

expected future demand of authorized dealers

The volume of productions which is to be produced is also calculated by the same

methods that is the sales target given to the dealers for the year

Dominator Group (D)

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The Company imports raw material for their products. They believe that the imported

raw material is of superior quality. They are importing raw material from different

countries which are:

-Germany

-Japan

The parts which are imported:

1- Compressor

2- Copper Pipe

3- Insulation Chemicals

4- Crystal sheet

5- Thermostat

6- Monogram

7 Bulb

The parts which are locally manufactured:

1- Gas Kit

2- Handle

3- Knobs

4- Wheel

5- Wracks etc.

DEALERSHIP PROCEDURE:

PEL bases on dealers for its sales and ultimate production. That is why they have a

very strict system of giving dealership and a very efficient procedure of allotting

target to each and every dealer. The company makes a contract with every dealer for

the period of one or more years depends upon the relation with company and

efforts put by the dealers in specific territories.

Following are the considerations which company looks for while allotting

dealership.

Considerations for allotment of dealership:

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52


These points are specially considered while allotting dealership:

FINANCIAL BACKGROUNDS/RESOURCE:

Financial background is the main point of consideration for allotting

dealership PEL does not allow credit facility to its dealers they have to

pay advance payment to get delivery of goods.

LOCATION OF OUTLET:

Another major consideration in getting the dealership is location of

outlets. The selling point should in the existing market place and it

should be easily accessible by customers

EXPERIENCE AND KNOWLEDGE OF DEALER:

The dealer should have a fair assessment and knowledge about the

particular territory. He should be conscious of his good points in

persuading the customers to purchase the goods

DEALERS ATTITUDE:

The attitude of the dealer should be polite to the customers so that he may

convince them.

GOOD WILL:

Company prefers the dealers having well repute in the market and dealers are

very good in the eyes of customers

Dominator Group (D)

53


In this modern word, it is very hard to survive in the market due to swear competition

between the companies. Every existing product in the market has its substitute or

similar product.

“Competitors are the companies that satisfy the same customer needs and wants.”

To explain the competition we can classify the competitors in two ways which are

given below:

Direct competitors

Indirect competitors

DIRECT COMPETITORS

The direct competitors of PEL are Dawlance, Waves, LG, and Haier etc. The

Dawlance is market leader in the refrigerator and PEL is still on second number. But

in window room air conditioner (WRAC) the PEL is market leader

REFRIGERATORS:

Total market sale of refrigerator in 2006 is 2924905 units. Last year sale was

2091779 units. These figures show 30% market growth. But this is not the

exact figure of growth rate it varies from year to year.

DAWLANCE is a market leader in refrigerator with 46% share.

PEL has 38% market share

Waves has 10% market share.

6% shares are others

WINDOW AIR CONDITIONERS:

PEL is a market leader with a market share of about 60% in local

manufacturing industry. And overall has 35% market shares for this product.

LG has about 32% market share and stands on number two.And rest of the

manufacturers have 23% marker share.

SPLIT AIR CONDITIONERS:

The main competitor of PEL in Split air conditioner is DAWLANCE. Other

competitors are MITSUBISHI and HAIER

Dominator Group (D)

54


MICROWAVE OVEN:

In case of Microwave Oven DAWLANCE is the main competitor of PEL.

But the company claims to be the leader in this product line.

INDIRECT COMPETITORS

The indirect competitors for PEL in this industry are Samsung, Orient, Mitsubishi, Sabro,

Nobel and others Chinese brands available in the market. The PEL has no big threat from all

these companies. But the Sabro pioneer for introducing the split air conditioner in Pakistan.

COMPETITION STRATEGIES

COMPETITIVE POSITION:

According to AURTHER D. LITTLE a company will occupy one of the following

competitive position strategies:

Dominants:

At this position a firm controls the behavior of other competitor and has a

wide choice of strategic option.

Strong:

At this, a firm can take independent action without endangering its long-term

position and can maintain its long-term position regardless of the competitor’s

action.

Favorable:

This firm has an exploitable strength to improve it position.

Tenable:

This firm is performing at a satisfactory level to warrant continuing in

business.

Weak:

At this position, a firm has unsatisfactory performance and an opportunity to

improvement.

Non-viable:

Dominator Group (D)

55


At this position, a firm has unsatisfactory performance with no opportunity to

improvement.

PEL occupies the strong position in the market because, it has very good

market share of 38%. PEL is the market CHALLANGER.

COMPERISION BETWEEN DAWLANCE AND PEL

DAWLANCE PEL

INNOVATION:

The innovation process of The innovation process of the PEL is high but

Dawlance is very high and not like the Dawlance their position in the

Quick. Market.is good.

MARKET LEADER:

PEL is also the market leader

Dawlence is the market leader but it comes after the Dawlance and doing

and still maintains its first a very good job in the market.

position in the market

PRODUCT RANGE :

Product range of the PEL is nearly 10 to

Dawlance have a very good 15 which is also showing a good ratio of

product range all Product range the products of the PEL have also very good

is nearly 20to24. position in the market

All the products of the

Dawlance are doing very good

job in the market

Dominator Group (D)

56


In 2006-07, your Company has maintained the growth pattern of last 5 years. Gross

sales at Rs. 13.07 billion and Profit after tax of Rs. 582 million show an increase of

18.42% and 31.67% respectively. Summary of key financial results is given below:

Financial Results (Rs. in Million)

2006-07

2005-06

Gross Sales13,07

711,04

2

Profit before tax 707 516

Profit after tax 582 442

Earnings per share (Basic) - Rupees

6.87 5.04

Earnings per share (Diluted) - Rupees

6.65 4.82

Graph - Gross Sales

Dominator Group (D)

57


PEL was 16th Company in Pakistan which got ISO 9002 Certification in 1997, since

then PEL Management is applying this International Standard Practices for

Effectively Managing Quality of Products and Services that Company Offers. The

International Standard Practices in PEL have been Upgraded as per the Revised ISO

9001 Standards and its Scope of Application is expanding ever since and Top

Management is Committed to make PEL a Total Quality Management (TQM)

Company.

In this Company Quality is the Subject of Management at all Levels. We focus on

continuous improvement in our Systems thus establishing Good Management

Practices that ensure Product and Services Standards, we are committed to and

making continuous efforts in developing and strengthening our internal and external

customers and suppliers, employees training and development and their participation

are the KEY forces which are Increasing the Organization's Capabilities thus making

it more competitive and fast growing Company.

And thus going for State-of-the-art production facility reflects management Vision and commitment for Quality. Having around Fifty years of Manufacturing experience with a cooperative and dedicated employees and now coupled with efficiency monitoring processes and Data Analysis enable management to take Preventive Actions before things really go wrong. Elimination of wasteful activities, practices, processes, norms and behavior are the top management's priorities that need to be managed so that the philosophy of ZERO DEFECT can be taken on board.

Dominator Group (D)

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Benchmarking with National and International repute Organizations will be in our road to manufacturing excellence to prove PEL as a World Class Manufacturer.

Future Outlook:

The economy is expected to perform well in the next year however it is

exposed to certain challenges like current account deficit, lower exports,

increased competition in the international market and lack of technological

advancement as compared to competing nations. It is still hoped that national

economy will continue to grow and rising prosperity will bring expanding

opportunities for the Engineering Industry and for your Company.

The company will continue to focus on cost effectiveness, quality standards and best

after sales services to our valued customers. We expect to go farther, faster and higher

than we have ever been in serving the interests of our customers, shareholders and

employees.

Dominator Group (D)

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