Introduction

National Foods initially started its operations as a spice company in 1970 .The Company has
frown its operations and now produces a number of products from Masalas to Achaars and other
products which includes Ketchup and Rice. The company has over 100 SkUs.There are two
divisions, Food Division and Kitchen division and products are divides into 13 categories.
It has over 150 products further they also serves the international market by providing them with
over 100 different products NFL has broad range of innovative products that are quick and
convenient for consumers, National is there to support you and make sure that you and your
family consume safe and healthy foods . Basically the philosophy of the company is to focus on
the customer needs and serve them with quality products at affordable prices.
The main objective of the National food is to reduce the time women spend in Kitchen crushing
different masalas and adding ingredients themselves especially working women as their purpose
is to change lifestyle of people and give them ready made recipe just add and cook.
National Food Products

1. Recipe Masalas
2. Ketchup
3. Jams
4. Rice
5. Desserts
6. Powered Drinks
7. Pickles
8. Chinese
9. Snacks
10.Plain Spices
11. Salt
National Foods has improve and innovate itself as a brand and strives to achieve a position as the
market leader in Pakistan and international Market. The company focus heavily on product
packaging and pricing so that it appeals the consumers and able to capture a position in minds of
consumers that products are carefully wrapped to achieve maximum hygiene. The management
had designed there structure in a way that it not only benefit company but also the employees but
training them a giving them environment to work happily and actively for company. NFL has a
total sales of Rs.12 billion Food division contributes 43% and Kitchen Division 57%.
Background

Mr. Rana Muhammad Azam General Manager National Foods was not happy with the
performance and shows his shock and anger at the Monthly Joint Sales Meeting. The people who
are present in the meeting include the national sales manager (NSM), the regional sales manager
(RSM), the senior zonal sales manager, the zonal sales manager and the four area sales managers.
Basically he reviewed the target achievement report and was not happy as reports showed the
sales for March 2013-2014 compared to previous year showing a huge decline in both Food and
Kitchen division, the GM demands answers from all the employees asking if the current situation
isnt addressed and the next year is the same as this one, the chances of them achieving Rs. 50
billion by the year 2020 are very slim because he believed that business is uniquely positioned to
deliver as per plan and to achieve success NFL should have grown at average of 23% but
currently growing 12% annually. The comparison that has been carried out shows that the
budgeted sales for March 2014 and the actual sales for the Food Division have a difference of
-36% and for the Kitchen Division the difference is -40%.
Formulation of new sales force program
There should be a separate division for dealing with key accounts and customers so team focus
should be on them and provide them with better service and much larger volume of sales.
Secondly by concentrating on few customers the account manager can become familiar with
each customers problem and provide time to each customer solving problems and provide them
with better service able to build a stronger customer relationship moreover by hiring a new sales
force, they would be able to make sure that there are no delays that take place while delivering
the goods to the customers and they will not switch to competitors.
Secondly, Redesigning of the territories they proposed the strategy that number of distributor
should be reduced and one distributor should cater the entire Lahore region and one region
further employ sub distributors to better control and manage the supply chain system and better
reporting system to main distributor.

Sales Structure
General
Manager

National
Sales
Manager
Regional
Sales
Manager
Zonal sales
manager

Manager
SCM
special
category

Manager
rural
developm
ent

Sales
Supervisor

Sales
Executive
Distributors
Order
Bookers

Delivery
Men

Manager
Account
public

Zonal sales
Manager

Sales
Executive

Booker

Manager
Internation
al modern
Trade

Supervisor

Merchandis
er

Zonal sales
Manager

Booker

Exhibit analysis
National Foods Limited has two divisions, one is FOOD division and other one is KITCHEN
division. It becomes a huge company earning total sales of RS 12 billion. Out of this RS 12
billion food division contributes to 43% of sales while the kitchen Division contributes to 57% of
sales. (See graph)

Food Division; 43%

Kitchen Division; 57%

Under food division there are 7 different categories of products name, pickle, ketchup, chinese,
jams and jellies, instant powder drink, and desserts. The following chart further breaks down the
sales figure:

instant powder; 5%
desserts; 9%
jam and jellies; 8%
product; 42%
chinese; 9%

ketchup; 28%

Pakistan is divided in to 6 regions geographically. The table below shows the regions:

REGIONS
1 Karachi, Quetta
2 Multan and Faisalabad
3 Lahore
4 Gujranwala
5 Pindi City Centre (Pindi till Jhelum)
6 KPK and Rest of Pakistan
Under every region there are 4 zones. The zones are divided based on geography as well as the
business that they generate. Lahore region is divided into 4 zones. Lahore DHA zone, Lahore
Central zone, Lahore Johar zone, and Lahore North zone. The following table explains the
Lahore Zone:

ZONES

Lahore DHA Zone

Lahore Central Zone

3
4

Lahore Johar Zone

Lahore North Zone

Exhibit 2 and 3 provide data for the 2 division sales comparison 2013-2014 VS target 2012-2013
After analysis of both the figures it is clearly shown that sales target are being not met.
The primary target for food division in march 2014 was Rs 73003780 whereas actual sales in
march was Rs 38464860, showing a decline of -36%. The primary target for Kitchen division in
March 2014 was RS 85242200 whereas actual sales in March were Rs46309438, showing a
decline of -40%.
The bar graph shows the target that needed to be achieved in March, last year base and also the
sales up to 21st march of FOOD division. Targets were in line with last year base however this
year sales were not up to the mark that why each zone and overall total Lahore is going on
declining growth. The overall target achieved percentage is too low for total Lahore zone, only
52.69%

The chart below shows the decline in growth as per each zone of Lahore.

North; 29% DHA ; 22%

JoharCentral
; 15% ; 34%

The bar graph shows the target that needed to be achieved in March, last year base and also the
sales up to 21st march of KITCHEN division. Targets were in line with last year base however
this year sales were not up to the mark that why each zone and overall total Lahore is going on
declining growth. The target achieved percentage is too low for overall total Lahore, only
54.33%

The chart below shows the decline in growth of KITCHEN division as per each zone of Lahore.

Problems:
1) Focusing on product launches instead of marketing the existing ones:
In order to become a 50 billion company by 2020, NFL was focusing on new product
launches and was not trying to market the product in order to achieve the sales. Although,
NFL had lower sales in some products in the food division such as deserts and powdered
drinks and it should focus on getting the sales from those products rather than going
towards new products.
2) Lack of Forecasting:
The major reason that was contributing to the decline in sales was that the management
did not use any of the forecasting techniques in order to set the targets for the years
(2013-2014). Due to this reason, there was decline in sales for food division i.e. -36%
and for kitchen division there was a decline of -40%.
3) Increase in Administrative expenses due to intermediaries:
NFL assigned five distributors in the region of Lahore in order to manage the ordering
and delivery of products in various retail stores. This incurred higher costs for the
management. This was also leading to an increase in logistics cost as multiple distributors
were supplying the stock to the areas that were not that far apart.
4) Major focus on primary sales:
The GM made the budgets for the entire hierarchy but his major focus was on the primary
sales for target setting. This was a drawback as NFL relied on the distributors for making
the final sales through order bookers and they need to focus on setting the secondary
sales targets as well.
5) Improper territory design
Territory was divided on the basis of geographic areas but some territories

were

large as compared to others so they needed to have different strategies to be followed by

the sales people in order to achieve the sales target for that particular territory.
Core Problem:
Improper territory design and size:

The main issue that is leading to the decline in sales is the territory design as it is
contributing to the increase in administrative cost because of the number of distributors.
The size of the territory was not equally divided among the salesperson in different areas
due to which some of them were burdened while others were not. This was also because
there was no proper forecasting in the organization due to which the GM did not foresee
the potential in particular areas and failed to assign the quotas according to the territories.

Solution
Forecasting and allocation of quotas
General manager makes entire budget by focusing on primary sales rather
than secondary sales. GM should focus on both primacy and secondary
sales. Eventually focus on secondary sales as some products have very less
shelf life due to which they get expired and wastage for the company. So if
GM made forecasting considering secondary sales would eliminate wastage
cost.
Reduce expenses
Company expenses are increasing due to distribution, high inventory and
logistic cost. Although they have planned to change reduce their distribution
from 5 to 1. Which is good move but eventually it has to be done step by

step. Giving to one distributor would increase risk as all the distribution
would be under one party. So company should be reducing the distribution
from 5 to 3 and then so on after realizing the effect.
Territory design
As in case it mentions most important thing is effective marketing rather
than introducing a new product. So National foods should change to product
oriented sales structure. This would help to focus on each specific product
and marketing.

Core solution
Marketing
To achieve target of 50 billion rupees company was focusing more on
launching new products. Whereas they should be focus more on existing
brands which are declining. Company should invest effective market
strategies to increase their market share and sale. In order to achieve target,
they should build strong brand identity in consumers mind. Improving
existing product would be much easier and cost effective than launch of new
ones.