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Pak Electron Limited Change your Life

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

2 Dominator Group
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Pak Electron Limited Change your Life

Uzma Khalid
76
Submitted To:

Dedication:

We dedicate our project to COMSATS


And 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

MARKETING MIX:
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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.

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.

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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.

The company comprises two divisions:

 Appliances Division.
 Power Division.

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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.
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.

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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

Cumulative
Frequency Percent Valid Percent Percent
Valid Defense 55 17.9 18.3 18.3
Cavalry Ground 28 9.1 9.3 27.7
Gulberg 19 6.2 6.3 34.0
Liberty 28 9.1 9.3 43.3
Abid Market 70 22.7 23.3 66.7
Allam Iqbal Town 18 5.8 6.0 72.7
Main Market 35 11.4 11.7 84.3
Moon Market 28 9.1 9.3 93.7
Link Road Model Town 19 6.2 6.3 100.0
Total 300 97.4 100.0
Missing System 8 2.6
Total 308 100.0

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Income

Cumulative
Frequency Percent Valid Percent Percent
Valid Below15000 22 7.1 7.3 7.3
15000-25000 47 15.3 15.7 23.0
250000-35000 59 19.2 19.7 42.7
350000-40000 125 40.6 41.7 84.3
upto50000 47 15.3 15.7 100.0
Total 300 97.4 100.0
Missing System 8 2.6
Total 308 100.0

BRAND PREFERENCE TOWARD DIFFERENT BRANDS

Brand Preference (PEL)

Cumulative
Frequency Percent Valid Percent Percent
Valid 1 3 1.0 1.0 1.0
2 30 9.7 10.0 11.0
3 89 28.9 29.7 40.7
4 121 39.3 40.3 81.0
5 57 18.5 19.0 100.0
Total 300 97.4 100.0
Missing System 8 2.6
Total 308 100.0

Brand Preference (Dawlance)

Cumulative
Frequency Percent Valid Percent Percent
Valid 1 2 .6 .7 .7
2 10 3.2 3.3 4.0
3 45 14.6 15.0 19.0
4 73 23.7 24.3 43.3
5 170 55.2 56.7 100.0
Total 300 97.4 100.0
Missing System 8 2.6
Total 308 100.0

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Brand Preference (Others)

Cumulative
Frequency Percent Valid Percent Percent
Valid 1 100 32.5 33.3 33.3
2 73 23.7 24.3 57.7
3 59 19.2 19.7 77.3
4 27 8.8 9.0 86.3
5 41 13.3 13.7 100.0
Total 300 97.4 100.0
Missing System 8 2.6
Total 308 100.0

Brand Preference (Haier)

Cumulative
Frequency Percent Valid Percent Percent
Valid 1 156 50.6 52.0 52.0
2 124 40.3 41.3 93.3
3 8 2.6 2.7 96.0
4 5 1.6 1.7 97.7
5 7 2.3 2.3 100.0
Total 300 97.4 100.0
Missing System 8 2.6
Total 308 100.0

WHICH BRAND DID YOU ALREADY HAVE?

Brand Already Have.

Cumulative
Frequency Percent Valid Percent Percent
Valid Dawlance 104 33.8 34.7 34.7
Waves 54 17.5 18.0 52.7
PEL 92 29.9 30.7 83.3
Haier 7 2.3 2.3 85.7
Others 43 14.0 14.3 100.0
Total 300 97.4 100.0
Missing System 8 2.6
Total 308 100.0

WHY DID YOU BUY IT?

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Brand Purchase Due to (Quality)

Cumulative
Frequency Percent Valid Percent Percent
Valid 3 2 .6 .7 .7
4 42 13.6 14.0 14.7
5 256 83.1 85.3 100.0
Total 300 97.4 100.0
Missing System 8 2.6
Total 308 100.0

Brand Purchase Due to (Brand Name)

Cumulative
Frequency Percent Valid Percent Percent
Valid 3 21 6.8 7.0 7.0
4 59 19.2 19.7 26.7
5 220 71.4 73.3 100.0
Total 300 97.4 100.0
Missing System 8 2.6
Total 308 100.0

Brand Purchase Due to (Features)

Cumulative
Frequency Percent Valid Percent Percent
Valid 2 2 .6 .7 .7
3 27 8.8 9.0 9.7
4 65 21.1 21.7 31.3
5 206 66.9 68.7 100.0
Total 300 97.4 100.0
Missing System 8 2.6
Total 308 100.0

Brand Purchase Due to (Re/Frnds)

Cumulative
Frequency Percent Valid Percent Percent
Valid 1 16 5.2 5.3 5.3
2 49 15.9 16.3 21.7
3 152 49.4 50.7 72.3
4 81 26.3 27.0 99.3
5 2 .6 .7 100.0
Total 300 97.4 100.0
Missing System 8 2.6
Total 308 100.0

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Threat of Substitute

Bargaining Bargaining
Dawalance
Power Of Power Of
Buyers Suppliers

NEW ENTRANTS

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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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

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

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stocks are not sold and the production is in process for 24 hours a day then the
company faces such problems.

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

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 Export opportunity
 Increase in production capacit
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

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profit margin of each company and increases the bargaining power of the buyers
who will demand higher quality of products at lower cost.

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

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

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:

STAR:

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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

Dog

Cash Cow 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.

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

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

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Encirclement attack:
It involves launching grand offenses on several fronts attack on every feature of
opponents products
As 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 freezer
PEL 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.

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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.

Segmentation

Geographic Demographic Psychographic Behavioral

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.

Psychographic Segmentation:

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• 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.
:

Product
is
“heart”

Price Promotion

Place (Distribution)

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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

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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:

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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

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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:
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

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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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Sales
and Sale
Profits s
($)
Profit
s
Tim
Product Introducti Growt Maturit e
Declin
Develo on h y e
p-
ment
Losses/
Investments
($)

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.

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 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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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
2010-STAR PLUS 17000
2300-STAR PLUS 17500
2500-STAR PLUS 18500
2300-PREMIER 17900
2500-PREMIER 18900
WHITE BODY
20140--Crystal Classic 20500
20145-Crystal Classic 21000
20165-Crystal Classic 22500
2017-Crystal Classic 25500
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 customers
through news papers, television and posters about the product available in the market.

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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. :

The company highly believed in advertising. The company is expanding a lot of money
on different advertising media which are:
- Television
- Hording

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- 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.

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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
 Road shows
 Promotion schemes etc.

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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

Installment Facility:

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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
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

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-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:


These points are specially considered while allotting dealership:
FINANCIAL BACKGROUNDS/RESOURCE:

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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

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.

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“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

 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.

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

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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

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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 2006- 2005-


Million) 07 06
13,07
Gross Sales 11,042
7
Profit before tax 707 516
Profit after tax 582 442
Earnings per share (Basic) -
6.87 5.04
Rupees
Earnings per share (Diluted) -
6.65 4.82
Rupees

Graph - Gross Sales

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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.

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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.

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