Ici Marketing Project 551g3p

MARKETING PROJECT ON ICI USMAN ALI MALIK M. BILAL SHEHZAD ALI

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COMSATS ISLAMABD

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BRIEF INTRODUCTION OF COMPANY

HISTORY OF COMPANY: Imperial chemical industry it is British chemical subsidiary of a Dutch conglomerate and one of the largest chemical producer in the world. It is based in Manchester square London. It produce paint and specialty product (including ingredients for food, specialty polymers, electronic materials, fragrances). It employs around twenty nine thousand people and had a turnover of just over 4.8 pound billion in 2006. Since January 2008, ICI has been a subsidiary of Dutch chemical group AKZONOBAL, which is the process of fully integrating two companies. ICI PAKISTAN: ICI Pakistan has consistently developed new and innovative areas of business since it’s formation in December 1926, by the merger of four of the largest chemical companies in the UK. ICI today is a collection of world-class businesses, many of them leaders in their sectors. They are strongly led, technologically sophisticated with healthy and sustainable long-term growth prospects. ICI Pakistan Limited was set up as a public limited company in Pakistan in 1952. ICI’s presence in the public limited company and indeed , Pakistan itself. The Khewra Soda Ash Company, a predecessor of ICI Pakistan itself. The Soda ash manufacturing facility in Khwera in 1944 with a capacity of 18,000 tones per annum. This facility was sited next to the salt range as rock salt and limestone; two key raw materials for manufacturing soda as were available here in abundance. ICI Pakistan operates a diverse portfolio of business, which along with the other company in the group, Pakistan PTA Limited, has combined sales of over 50 billion Pak-rupees, equivalent to 1 percent of the country’s GDP. With this diverse portfolio, ICI is proud to improve the quality of life of millions of people by providing services to a number of diverse industries in the Country-to name a few, they are Textiles, Glass, Pharmaceuticals, Agriculture Livestock, Construction, Automobiles, Chemicals, Cement, Fertilizer, Rubber, Detergents, Footwear, Food & Beverages and Leather, with back-end relationships in twenty three countries. As an investment drive, ICI Pakistan is developing export opportunities in the regional markets especially in the Middle East, Iran and Central Asian states. Currently, products are being exported to six countries (Bahrain, Uzbekistan, Iran, Afghanistan, UAE, and Oman).

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In 1995 ICI Pakistan Limited set up a USD 490 million PTA manufacturing facility at Port Qasim, near Karachi, which was commissioned in 1998. In 2000, the business was de-merged to form Pakistan PTA limited, which was at the time subsidiary of ICI Plc UK. The turnover of ICI Pakistan limited in 2007 was 25.97 billion Pak-rupees and the profit tax crossed 2.77 billion Pak-rupees. It is one of the largest quoted companies on the Karachi, Lahore and Islamabad Stock Exchanges with a paid up share capital of 1.39 billion Pak-rupees. The company has around 1300 permanent employees. Business Portfolio: Today ICI Pakistan’s five businesses, Polyester, Soda Ash, Paints, Chemicals and Life Sciences

ICI Pakistan

Polyester

Soda Ash

Paints

Chemicals

Life Science

 Polyester Business: ICI Pakistan pioneered Polyester Staple Fiber (PSF) technology in Pakistan through its investment in a 12000 tones per annum PSF Plant commissioned in 1982 in Sheikhupura, near Lahore. Successive expansions and de-bottlenecking in the late 1980’s, major expansion in 1996 and a recent Asset Modernization and Improvement Project in 2006, have ensured ICI Pakistan retains its strong position in this industry thus placing the Business as one of the leading fiber suppliers in Pakistan.  Soda Ash Business: 2006 marked the 62nd Anniversary of ICI Pakistan’s Soda Ash plant in Khewra. While the plant dates back to 1929, commercial production began in 1944. Over the years the capacity of the plant has been increased through expansion in line with market demand. The total capacity of the plant today is over 280000 tes after commissioning to the current 50ktpa expansion. In1995, the business commissioned a 10ktpa plant for the manufacture of Soda Bicarbonate, which was further expanded to 20 ktpa. Sodium Bicarbonate is a byproduct of Soda Ash. ICI Pakistan’s Soda Ash Business caters to approximately 70% of the country’s total Soda Ash requirements.

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 Paint Business: The paints business in Pakistan operates in the Decorative, industry and the refinish segments. It is the clear market leader in all the three segments. Quality of products and services, innovation and a legacy of branding have been the foundations of this enterprise. With opportunities arising within the country and contiguous markets, the business has articulated a grow aggressively strategy. The endeavor is to further strengthens ICI;s position locally while expanding into near markets. The Decorative Business, with its dominant position, aspires to restructure the market creating a super category with innovative products and services, leveraging the Dulux brand and capitalizing on the growing mid tier with a comprehensive channel strategy. In OEM and Refinish segments the focus on services and technical competence will drive differentiation ed by strategic Japanese partnerships.  Chemical Business: ICI Pakistan chemicals business consists of a unique and diversified portfolio encoming general chemicals and specialty chemicals (formerly Uniqema). The General chemicals segments include trading and polyurethanes and are involved in the import, manufacturing, sale and distribution of industrial chemicals. The trading segment comprises and extremely diversified portfolio of fourteen major product groupings with over extremely diversified portfolio of fourteen major product groupings with over 250 product/variants, including sixteen well-reputed trading partners such as National Starch & Chemicals, Huntsman polyurethanes, Ineos Choir, Nalco, Huntsman toxide, supplemented by imports of complimentary product lines from companies in the USA, Europe and the Far East. This segment markets a diversified product range used for various applications by nearly every industry in Pakistan, prominent amongst which are power, cement, textiles, paints, pharmaceuticals, personal care, food & beverage, solvents, detergents, footwear and household appliances.  Life Science Business: The Life Sciences business consist of three division; Pharmaceuticals, Animal Health and seeds. Each division has a strong portfolio of leading brands and impeccably researched products which promise to improve life. In line with its aggressive strategy to bring in rapid growth and expand, the Business is entering newer and larger segments by introducing n novel and innovative products and is also actively exploring export markets for some of its brands. The Pharmaceutical division having attained leadership positions in the Cardiovascular & Oncology market has entered into the lucrative Anti-infective segment. Animal health division being dominant in the livestock segment with established brand equity has aggressive plans in place to enter and become a major player in the Poultry segment.

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SELECTED BUSINESS PORTFOLIO Our selected brands are related to the paint portfolio of ICI. Therefore, we need to discuss the overall vision of the ICI Company as well as the mission of ICI paints. The goals and objectives of ICI paints are also given; ICI Vision: The company vision is to compete in the industry by emphasizing on customer needs and to build and promote a culture of continuous improvement. Mission Statement: “The ICI paints team intends to remain market leader in the paints business. We wish to be recognized for offering the best products and excellent customer service. We will run a high quality, profitability and growth oriented business in an exciting safe environment. Goals: 1. Total adherence to HER. 2. Dedicated involvement of every employee at all levels of the organization to the total quality management concepts. 3. A complete focus or prevention of non conformance through cohesive team work. 4. Constant emphasis on “doing it right the first time and every time” 5. Improving the quality of every thing we do, to the complete satisfaction of internal and customers. Objectives: 1. 2. 3. 4.

To be No.1 in all its 6 Pakistani businesses To achieve turnover of 20% in 2002 from over all business portfolio. To reduce its industrial wastes by 50% till 2004. To contribute at least 25% in overall ICI Pakistan profits.

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SWOT ANALYSIS OF ICI PAINTS:

Strengths: The major strength of ICI paint Pakistan is affiliation with Akzonobel network and its latest technology Large amount of latest color scheme. Quality of products is also a major strength because ICI paint is providing high range of products. ICI paints cover almost all major markets of Pakistan. Weaknesses: Promotion is most important tool in order to attract customer to your product by this factor significant part of ICI cost. Price factor is another weakness of ICI paint because its competitors are offering fewer price and other attractive incentives to their customers. So, it has to give weight to this factor. Opportunities: ICI can capture more market share by increasing promotions, by exploring new markets. Threats: Increase in Competition. Political instability in Pakistan

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Dulux is a renowned brand the world over, and here in Pakistan it’s no exception. Wherever you travel in the country, you are likely to see paint brand of ICI at work beautifying and protecting people’s homes and workplaces. As a brand Dulux has been known and trusted for generations. ICI is proud of that, and work hard to ensure not only that it gives consumers the same top quality products they have grown to rely on, but also that ICI keep innovating to create new products for the ever-evolving paint market. Whatever your paint needs, ICI sure you will find something in Dulux range to give you the results you want. There are 6134 color shades available in DULUX brand. The range of DULUX consists of;    

Plastic Emulsion Wall putty Matt Enamel Weather Shield Enamel

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Dulux is the world's leading brand of quality paint. It offers the DIY or professional help and inspiration to achieve lasting good looks. Whilst Dulux product ranges vary from country to country, as they are tailored to meet local needs, Dulux's ambition is constant around the world - to help people create a beautiful environment with confidence. Here is a selection of the types of finishes and products available in a wide range of Dulux colors. Matt / Flat Flat paint is non-reflective, so it conceals surface imperfections better than paints with higher sheen levels. It gives a warm, elegant feel to the room. Well suited to living rooms, dining rooms and bedrooms. Soft sheen / Mid Sheen A mid-sheen finish between matt and silk. Silk / Velvet A finish which gives a delicate shine to interior walls. Eggshell Compared with flat wall paints, these paints have a slightly more lustrous appearance. Eggshell is a good choice for rooms where some luster is desired and good cleaning properties are necessary. Gloss This is the most highly reflective paint and also the toughest, most durable and stainresistant. Often used on kitchen and bathroom walls, cabinets and trim. Satin / Semi-Gloss Semi-gloss paints provide a durable finish with a slightly glossy, medium-luster appearance. Excellent for kitchens, bedrooms, and children rooms and trim. Metallic Gives a modern metallic look, ideal for trim and accessories. Wood Stain A subtle translucent finish that colors and enhances the beauty of wood. Wood Varnish A transparent hard wearing finish, colored or colorless, which gives a glossy finish to wood.

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We all want the best quality but we also want it at a reasonable price. Paintex, is a mid-tier paint brand of ICI paints, provides you with an opportunity to enjoy the finer things in life while still spending your money sensibly. Paintex gives you a complete range of exciting color and high quality finishes for all your requirements, at an affordable price that lets you enjoy color without worrying about costs. There are 29 color shades available in Paintex range. Our Paintex range includes the following products:   

Paintex Emulsion Paintex Hi-Gloss Paintex Putty

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Financial Position of ICI Profit & Loss of ICI: Amount "000" 2008

Amount "000" 2007

Turnover

31921873

25988351

Sale tax, excise duty, commission and discount

-3957958

-2964228

27963915 -22316574

23024123 -18205369

5647341

4818754

-1220525 -1074456 3352360 -219308

-1074549 -760201 2984004 -146421

-257569

-222345

-476877

-368766

254425

153285

Particulars

Net sales, commission and toll income Cost of asset Gross profit Selling and distribution expenses istration and general expenses Financial charges Other operating charges

Other operating income

Balance Sheet: Equity and liability: Amount 000” 2008 15000000

Amount 000" 2007 15000000

Issued subscribed and paid up capital Capital reserve Inappropriate profit

1388023 466845 10830012

1388029 465845 9544582

Total equity Surplus on revaluation of property plant and equipment Non current liabilities: Provision for non mange met staff gratuity and eligible retired medical scheme Deferred tax liability net Current liabilities: Trade and other payables

12683680 962795

11398450 1012167

142250

119571

597650

-

4281110

6250235

Authorized capital 1500000000 ordinary shares

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Contingencies and committees Total equity and liability

18667685 Amount 000” 2008

18780423 Amount 000” 2007

9353769 7700 9361469 712500 330605 30684 1073789 10436258

8506736 39737 8546473 354456 582500 204867 37157 1179180 9725653

Stores and spares Stock and trade Trade debts Loans and advances Trade deposits and short term pre payments Other receivable Taxation recoverable Cash and bank balances

538540 2951956 1003612 193254 404662 749388 419934 1971081

605480 2311336 1023596 137080 341129 683461 337032 3615056

Total assets

18667685

18780423

Assets Non current assets: Property plant and equipment Intangible assets Deferred tax asset net Long time investment Long term loan Long term deposits and pre payment Current assets:

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ICI Pakistan Limited

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Financial Ratios

Financial Ratios-- Summarized Comments Year Spot Comment 2008 2007

Liquidity Ratios Cash Ratio

0.46

0.57

Slight decreasing trend. Fair

Current Ratio

1.922

1.448

Increasing trend, Satisfactory

Quick ratio

1.107

0.982

Increasing trend, Satisfactory

3951317

2804535

Increasing trend, Satisfactory

74.66

76.904

Decreasing trend, Satisfactory

Debt Ratio

26.80%

33.92%

Decreasing trend, Satisfactory, Low risk

Equity Ratio

73.10%

60.08%

Increasing trend, Low risk

Net Working Capital Operating Cycle (Days) Leverage Ratios

Times Interest Earned 6.56 (TIE) Activity / Efficiency Ratios s Receivable 17.58 Turnover Days Inventory Turnover 57.08 Days Asset Turnover 149.79%

7.507

Decreasing trend, Unsatisfactory

18.425

Decreasing trend, Satisfactory

58.47

Slight Decreasing trend, Unsatisfactory

122.59%

Increasing trend, Satisfactory

Profitability Ratios Margin Ratios Gross Margin

19.85%

20.34%

Slight decreasing, Fair

Operating Margin

11.21%

12.04%

Very slight decreasing, Fair

7.41%

7.76%

Decreasing, Unsatisfactory

Return on Assets

11.18%

9.62%

Increasing, Satisfactory

Return On Total Equity

15.16%

9.62%

Increasing, Satisfactory

Earning Per Share

14.9

12.85

Increasing, Satisfactory

Price Earning Ratio

0.67

0.77

Decreasing, Satisfactory

Dividend Per Share Dividend / Current Yield

4

3.5

Increasing, Satisfactory

40%

35%

Increasing, Satisfactory

Net Margin Return Ratios

Marketability Ratios

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Book Value Market to Book Ratio

98.31

89.41

10.71%

11.18%

Increasing, Satisfactory Decreasing trend, Unsatisfactory

Conclusion of Financial position of ICI: After going through the various ratios, I would like to state that: • The short-term solvency of the company is quite satisfactory. • Immediate solvency position of the company is also quite satisfactory. The company can meet its urgent obligations immediately. • Credit policies are effective. • Over all profitability position of the company is quite satisfactory. • Stock turnover rate is satisfactory. Stock of the company is moving fast in the market. • The company is paying promptly to the suppliers. • The return on capital employed is satisfactory.

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Distribution Strategy Of Dulux & Paintex: - 17 -

ICI paints divided whole Pakistan into three major areas for the purpose of distribution of Dulux and Paintex paint;

Pakistan

North Pakistan

Islamabad Warehouse

Dealers in North Pakistan

Final Customers in North Pakistan

Centre Pakistan

Lahore Warehouse

Dealers in Centre Pakistan

Final Customers in Centre Pakistan

South Pakistan

Karachi Warehouse

Dealers In all South Pakistan

Final Customers in South Pakistan

Above diagram shows the complete distribution strategy followed by the ICI paints. The ICI paints divide whole Pakistan into three parts; i. North Pakistan ii. Centre Pakistan iii. South Pakistan. These all areas have warehouses in the hubs like Islamabad, Lahore and Karachi. Chishti Logistic Company supplies the Dulux and Paintex to all dealers in all three areas. Then these dealers sell Dulux and Paintex to the final customer.

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PRICE STRATEGY: One of the four major elements of the marketing mix is price. Pricing is an important strategic issue because it is related to product positioning. Further more pricing effect the other marketing mix elements such as product features, channel decision and promotion. PRICE STRATEGY OF ICI DULUX: The dulux currently having the “price strategy, The dulux is providing the high quality image in the mind of consumer .This strategy is really working that now it is in the mind of the consumers that dulux is providing best quality paint in the market as compared to their competitors. Dulux is the most expensive brand in the market. The reason is that the best raw material and components are used in the manufacturing of the Dulux. Second reason is that Dulux target market is upper tier. And to some extend upper tier of middle tier. But paying more for Dulux , customer feels value . If we compare the price of Dulux with other local brands, it’s the fact that price difference is not more than 20-100 rupees. As far as quality is concerned, by paying more customers is not worried about the quality. For the market which is middle tier, ICI’s brands Paintex Emulsion and Glidden are the brands with low price and optimum quality within the tier. If we go into the comparison of Paintex and Glidden their price is low then the other paint brands selling in the market. Glidden is purely priced to cover the buying power of middle tier. The price of the products in which ICI is having technological edge over competitors is comparatively high. The reason is that ICI is enjoying state of monopoly for that product. There is no product in the market to encounter them. The price of Dulux Weathershield Fresh is Rs. 1050/-, others companies brands offered in the market are 300-400 Rs less than Weathersheild Fresh. Price Strategy of ICI Paintex: In Pakistan most of the people cannot afford the expensive paint. Therefore, ICI develop its new product with the name of ICI Paintex in which company follow the reducing price strategy as compare to Dulux, As we can see that the price of Dulux is 1050 but the price of Paintex is only 550 which shows that the ICI follows the reduced its new product price. Personal Selling Strategy of Dulux and Paintex:

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Different companies follow different methods in order to get more and more customer satisfaction. One of the method through which the companies gets the sympathy of their customer is “Personal Selling Strategy”. ICI Pakistan has a unique personal selling strategy. The company has around 3500 customer service staff who are only engage in personal selling of company’s products. The personal selling staff of ICI consists of young, energetic and experienced people. These customer service representatives;    

Answer customer queries Help customer in color selection &decoration & resolve the complaints. Find a paint store near the customer.

ICI Pakistan also gives the free services of interior decoration to their customers. Beside this the company also provides free home delivery service to its customers which are one of the main reasons of its huge sale. The personal selling team of ICI also consists of a team of technical expertise. These expertise educate customers that how they can get rid of different problems like color fading, seepage of water from washrooms and kitchens which destroy the panted walls. Due to all above personal selling strategies and customer care efforts the ICI Pakistan is one of the most popular paint providers in Pakistan with largest market share.

Advertising Strategy: - 20 -

ment plays vital role in sales of the company. There are many tools that different companies use for sales promotion e.g. Television, Radio, Billboards, pamphlets, broachers, newspapers, and magazines etc. ICI paints not too much focused on the use of all ment tools because the ICI brands have very good market reputation as well as one of the old companies in the field of paint in Pakistan. For the purpose of ment ICI makes the signboards of their dealers and sometime ICI their brands commercials on television.

Promotional strategy: - 21 -

ICI has taken many steps to promote its paint products. ICI uses multiple techniques under the promotional strategy.  Word of mouth through its sales representative  Publicity e.g. recent float truck activity is the part of publicity  ICI gives free samples to its different customers. Recently ICI give free sample to many hotels for the purpose of the promotion.  ICI offers discount to increase the no of dealers.  ICI offers a token system in the Paintex paint box in order to attract more and more painters.  ICI gives the prizes to the painters to increase it sales.  ICI gives the SINGAPUR return ticket to the most leading dealers for the purpose of encouragement of more sales.

Product Strategy: - 22 -

Product strategy perhaps one of the most important strategy. ICI paints focused on all level of the product under its product strategy. Level of the product Core benefits The core benefit what a consumer is looking for? In paint products the core benefit is protecting the walls. The safety need is high concerned with the core benefit. Basic Product: ICI basic offering is a paint which gives protection and excellent glass retention on metal and wood services. It is also in form of liquid Expected Product: The customer expects the product to be protected and have excellent retention on surface. They also except that it should spread smoothly and easily while it should give reliability. Augmented product: ICI highest quality interior/exterior hundred percent acrylic glasses finishes is specially formulated to provide exceptional toughness and durability, easy application and quick curing resulting in a long lasting uniform finish. Dulux glass also provides excellent adhesion moisture resistance coverage and application resistance, courage and application properties when applied by brush, ruler and spray. It is ideal for use on properly prepared interior and exterior substrate such as wood siding trim and sash, shingles, weather aluminum, metal, dry wall and sound painted surfaces. Potential Product: The potential product encomes all the possible argumentations and transformation the product or offering might undergo in future, the potential product “fragrance base paint”. The will be give fragrance of different flowers and roses. The next augmentation can be launch product in plastic jar. Those will easy to use and less harm to the hands, while environment protection can be increased by the product, because customer may use the plastic jar after using the product.

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ICI Dulux is a brand of quality and its all products are quality products which are manufactured to compete with international paint products. But the Paintex products manufactured in order to compete with local low quality and low price products At this time ICI also working on the new products developments. .,

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