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United foam industries (pvt) limited; A case study of LUMS

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Tayyab Ali Baig (LION)
Tayyab Ali Baig (LION)

A case study of LUMS, Pakistan. Detailed review with the recommendations at Bachelors level for the students.

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United Foam Industries (PVT) Limited Case Study Presentation Strategic Marketing Group Members Tayyab Ali Baig Sana ullah Abdul Jawad Khattak
United Foam Industries (PVT) Limited Case Study Presentation Important Points to remember; Change in production technology occurred over the time causing lower production cost with 20% less wastage. Cost of production was influenced by procurement policies. External factors like Government policies also impacted cost of foam manufacturing.
Competition Increase in competition of foam industry in Pakistan was caused by following factors. low entry cost Rapidly developing market Simple technology for production
Q1. Compare and contrast marketing strategies of different players in foam industry All the players in market got benefit from the change in government policies for locating plants in tax free zones. This gave the edge to the companies to spend more on their advertisements and marketing. Brands/ Factors Master Diamond Mehran Al-khair United Dealer Margin 18% 20% 27% 30% 24% Marketing Budget 20M 10M No advertisement high 2M Sales Force 30 55 12 - 2 Plant Location (Gadoon) Yes Yes Yes Yes No
Q1. Compare and contrast marketing strategies of different players in foam industry (cont.) Difference in strategies can be understood with the following Porters competitive strategy model.
Q1. Compare and contrast marketing strategies of different players in foam industry (cont.) All the players except United foam were using Cost Leadership Strategy as the market was price sensitive due to a large target market being middle class and lower middle class. United foam on the other side using Differentiation strategy, was not able to fight against the following things. Higher margins to dealers Low promotional budgets High production prices
Problems faced by United Foam United foam faced numerous long term and short term problems that took it to a verge of dissatisfied dealers and continuous drop in its sales volume. In general the problems that are faced by united foam are as follows. Uncertainty Innovation Policy and regulation Technology Diversity Supply chains
Q2. what short term and long term problems are faced by United Foam industries (Pvt) limited. Short Term Problems 1. Decrease in Sales 2. Frustrated Dealers 3. Low Prices by Competitors 4. Dealer Bad Debt 5. Consumers Preference
Q2. what short term and long term problems are faced by United Foam industries (Pvt) limited (cont.) Long Term Problems 1. Production Cost and Facility 2. Technology Up-gradation 3. Brand Positioning and Image 4. Internal competence in Value Chain 5. Lack of Managerial and Financial Resources
Q3. As Uniteds Managing Director, What would you do Being Uniteds MD, I would have taken following steps to tackle the situation faced by the company. 1. Re-branding 2. Choosing a competitive advantage 3. Heavy Advertisement with Value Added Features 4. Raising Dealers Margin in Different Foam Quality 5. Raising IPO (going Public) (Exit Strategy)
Q3. As Uniteds Managing Director, What would you do (cont.) Re-branding. Partial re-branding by changing logo, re-defining target audience in advertisements, re-inventing tag lines. Choosing Competitive Strategy. Just like competitors, instead of lowering quality and price, introduce more products of lower quality and lower price for price sensitive target market. (Product Line Extension).
Q3. As Uniteds Managing Director, What would you do (cont.) Heavy Advertisement with Value Added Features. Advertisements with some value added features could get customers attention by engaging dealers services and essentially providing value to the dealer as well.
Q3. As Uniteds Managing Director, What would you do (cont.) Raising Dealers Margin and Maintaining Relationship As done by other players, the dealers margin are maximized more on the low quality foam category. Greater margin %ages on category C or D products will enable dealers to push products to the market.
Q3. As Uniteds Managing Director, What would you do (cont.) Raising IPO (Going Public) For getting financial stability to operate more effectively in market and survive, raising IPO is one of the best option. Perks of raising IPO; Enough financing to develop new facility. Starting retail setup. Continuously raising capital for meeting dealers demand.
United foam industries (pvt) limited; A case study of LUMS

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United foam industries (pvt) limited; A case study of LUMS

  • 1. United Foam Industries (PVT) Limited Case Study Presentation Strategic Marketing Group Members Tayyab Ali Baig Sana ullah Abdul Jawad Khattak
  • 2. United Foam Industries (PVT) Limited Case Study Presentation Important Points to remember; Change in production technology occurred over the time causing lower production cost with 20% less wastage. Cost of production was influenced by procurement policies. External factors like Government policies also impacted cost of foam manufacturing.
  • 3. Competition Increase in competition of foam industry in Pakistan was caused by following factors. low entry cost Rapidly developing market Simple technology for production
  • 4. Q1. Compare and contrast marketing strategies of different players in foam industry All the players in market got benefit from the change in government policies for locating plants in tax free zones. This gave the edge to the companies to spend more on their advertisements and marketing. Brands/ Factors Master Diamond Mehran Al-khair United Dealer Margin 18% 20% 27% 30% 24% Marketing Budget 20M 10M No advertisement high 2M Sales Force 30 55 12 - 2 Plant Location (Gadoon) Yes Yes Yes Yes No
  • 5. Q1. Compare and contrast marketing strategies of different players in foam industry (cont.) Difference in strategies can be understood with the following Porters competitive strategy model.
  • 6. Q1. Compare and contrast marketing strategies of different players in foam industry (cont.) All the players except United foam were using Cost Leadership Strategy as the market was price sensitive due to a large target market being middle class and lower middle class. United foam on the other side using Differentiation strategy, was not able to fight against the following things. Higher margins to dealers Low promotional budgets High production prices
  • 7. Problems faced by United Foam United foam faced numerous long term and short term problems that took it to a verge of dissatisfied dealers and continuous drop in its sales volume. In general the problems that are faced by united foam are as follows. Uncertainty Innovation Policy and regulation Technology Diversity Supply chains
  • 8. Q2. what short term and long term problems are faced by United Foam industries (Pvt) limited. Short Term Problems 1. Decrease in Sales 2. Frustrated Dealers 3. Low Prices by Competitors 4. Dealer Bad Debt 5. Consumers Preference
  • 9. Q2. what short term and long term problems are faced by United Foam industries (Pvt) limited (cont.) Long Term Problems 1. Production Cost and Facility 2. Technology Up-gradation 3. Brand Positioning and Image 4. Internal competence in Value Chain 5. Lack of Managerial and Financial Resources
  • 10. Q3. As Uniteds Managing Director, What would you do Being Uniteds MD, I would have taken following steps to tackle the situation faced by the company. 1. Re-branding 2. Choosing a competitive advantage 3. Heavy Advertisement with Value Added Features 4. Raising Dealers Margin in Different Foam Quality 5. Raising IPO (going Public) (Exit Strategy)
  • 11. Q3. As Uniteds Managing Director, What would you do (cont.) Re-branding. Partial re-branding by changing logo, re-defining target audience in advertisements, re-inventing tag lines. Choosing Competitive Strategy. Just like competitors, instead of lowering quality and price, introduce more products of lower quality and lower price for price sensitive target market. (Product Line Extension).
  • 12. Q3. As Uniteds Managing Director, What would you do (cont.) Heavy Advertisement with Value Added Features. Advertisements with some value added features could get customers attention by engaging dealers services and essentially providing value to the dealer as well.
  • 13. Q3. As Uniteds Managing Director, What would you do (cont.) Raising Dealers Margin and Maintaining Relationship As done by other players, the dealers margin are maximized more on the low quality foam category. Greater margin %ages on category C or D products will enable dealers to push products to the market.
  • 14. Q3. As Uniteds Managing Director, What would you do (cont.) Raising IPO (Going Public) For getting financial stability to operate more effectively in market and survive, raising IPO is one of the best option. Perks of raising IPO; Enough financing to develop new facility. Starting retail setup. Continuously raising capital for meeting dealers demand.