Assignment (Management)
Assignment (Management)
Assignment (Management)
, I' I
Case
Abstract
On September 17th, 20 I 5, Mr Hasan Jameel, Head of Marketing at Dawlance', needs to firm up marketing
mix details for the planned launch of their first microwave oven with air fryer technology. The original
plan was to launch the air fryer as a five-in-one microwave oven which would allow consumers to heat,
cook, bake, grill, and air fry food items using the same oven. Some managers at Dawlance; however, are
concerned that offering so many options In one oven would increase the complexity and costs leading
to high prices and reduced sales. They think that air fryer technology should be offered as a stand-alone
unit, similar to those of competitors. Pricing is also a concern. Various price points from PKR I 8,000
to PKR 30,000 are possible. Finally, the advertising and distribution spend is under consideration. Mr
Jameel needs to finalise his recommendations for the upcoming presentation to the MD.
Keywords
Marketing, air fryer. product launch, Dawlance, marketing mix, diffusion of innovation
Discussion Questions
l. Would you rate Dawlance as a successful company? If yes, then what in your opinion are its
KSFs?
2. How do Pakistani homemakers go about purchasing their durables?
3. Why is the microwave penetration in Pakistan far lower than that of other major durables?
4. As Hassan Jameel what marketing mix decisions would you recommend for the air fryer launch?
Why?
On 17 September 2015, the marketing team of Dawlance (Private) Limited; hereafter, Dawlance, was
engaged in animated debates regarding the planned launch of their first microwave oven with air fryer
technology. Dawlance, headquartered in Karachi, Pakistan, was a leading player in the consumer durable
Corresponding author:
Ehsan ul Haque, Lahore University of Management Sciences, Lahore 54792, Pakistan.
E-mail: [email protected]
·: .·._, .·:_- .A~ian_Jo_wr.0 !.~f ~ -~~~gc~.e_n ~ 1
2 . . . , ·. ·· . .. ·.. , # • • • : ·. • ~: ': • ' . • • • • ·, • : .
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.' ·.tq._·ME. ,; B~r..Dawood ..CEO "and .found~r. and the maJOO · ·e, roduct·s ailP..h~..to9k_po_os~_· · ;_ l ·,.-k~
: -~~i~~,~·uy p_l~i.~cl ~ l~~~~g_·_role i~.:th~ marketing of_Dawlan:~l ~en( dt.th~:·t'aun~ii'P:~~-~~
_·-•~}~$: r?le, C~n~eqitently; M( Jamee\ wartted to ensure that no -~th ·eiein~nts.. or.·the; fuarketingr.i_u •· ·
~~~~-rJ-ifr·
· · Th-e. debate atnongst"the ma'rketing team was on almost all e . microwave oven. This would
Jameel was keen to launch the air fryer microwav~ oven as a ~ve-~:;~ the same microwave o-ve?.
allow c~~sum_ers to heat, cook, bake, grill and air fry fo~d ite_m ca a~ility. Some managers were m
Competitive air frying products in the market offered only air frying .p The second area of debate
favour of launching a less souped-up version or, better still, simply an atr fry~r- Id at two price points,
was the price of the product Competitive air fryer only products were bemtso Janee was thin.king of
PKR 2~,000' or anywhere b~tween PKR 12,000 to PKR 18,000. Given !hat :wld be charged without
laun_chmg a five-in-one product there was a debate as to how much premium s 0 f
th
ommunication
tummg off the price sensitive market. Finally, there was a fierce debate o_n e. mar s:;!:s a significant
t
plans for the launch. Given that the air fryer concept was new to P~stam hou h traditionally d
market communication investment was needed for consumer education. Dawlance a . • The
re ried on its
· extensive
. network of dealers to educate the market wit• h some support from telev1s1on. . f
air fryer microwave oven market seemed too small for any significant TV-based commumca ton.
However, some managers worried that not going on TV might lead to disappointing sales.
Consumer Behaviour
.th a population of over 190 million in 2015 (around40 per cent living in urban areas}, had a large
Pa ki stan, w1 . I d .h b .
market for consumer durables. Steady economic progress, coup e wit _ur an migration and exposure to
. . t dards had created a huge demand for durables. Increasingly many homemakers in urban
mo dem I1vmg s an
Haque
J
households were tnkin u ·ob . . .
products The cli f g P~ . s outside the house leading to increased demand for time- and effort-saving
and nir ~ond't' ma IC con hons of extreme heat during summers also led to a demand for refrigerators
1
. toners amongst those who could afford them. During the first decade of the twenty-first-
ce~tury s:vemment policies of easy availabOity of consumer credit gave a major fillip to both manufacture
an pure nse of consumer durables. Th.is trenl· however slowed down somewhat with the change of the
government and, more importantly, with the ~sive in~rease in electricity load shedding on account of
th e poor supply situation. The price of electricity also increased significantly from 2008 to 2014 in order to
bolh man_nge th~ de~and and circular debt created in the process. Nevertheless, the penetration of various
durables m Pakistani households continued to grow (see Exhibit 2 and 3).
Consumer buying of durables in Pakistan was no different from those in other countries. Major pur-
chases were made during the establishment ofa new household or for replacement purposes. I~ Pakist~;
how~ver, the mn~age season created a strong blip in the overall demand. Many parents gifted maJ~r
appliances to their daughters in order to assist the smooth settlement of the newlywed couple. In addi-
tion, many times families replaced their old appliances when shifting to a newly construct~d house.
Dnwlnnce managers did not have exact data on this; however, anecdotal accounts of their dealers
suggested that durable purchases were split evenly between new and replacement pur~hases. .
Most household durables like an air conditioner, TV, refrigerator, gas cooker, washing machines~ ~tc.
lasted anywhere from five to ten years. They were expensive and involved some awareness and fa1n1har-
ity with technology. Consequently, durable·purchases were well thought out and planned. Purchasers
would rely on their own experiences with currently in-use brands, recommendations of family and
friends as well as information collected from various media sources like television. By 2015, word of
mouth via social media had also become a significant source on account of the rapid growth of smart
mobile phones. According to Dawlance managers, while brand reputations were fairly important, the
role of dealers, who made the eventual sale, was critical in the purchase decision. As most dealers selling
durables in Pakistan were specialized durable retailers they invariably carried a whole range of competi-
tive products. Consequently, the enthusiasm and knowledge of the sales person could influence both
category and brand purchase decisions at the dealer premises. Most of these dealers were also clustered
in few locations (called markets) in the city. This made comparison shopping easy for the purchaser and
most customers usually visited a few shops before making the final decision.
According to Dawlance managers, conswners considered a variety of factors while making durable
purchases. Features like capacity, size and price were fairly important. However, the availability of the lat-
est models and innovative features were also considered. For some customers, aesthetics, colour and style
were important as most of these durables were part of the kitchen or living room. The customers were
conscious of the looks as it reflected their tastes and lifestyles and enhanced the decor of their homes.
Other attributes customers factored in were after-sales service, easy availability of spare parts and
warranties. According to research, 85 per cent of the customers considered after sales service when buy-
ing durables. On account of the importance of after-sales service, most customers preferred buying
established and trusted local brands compared to new foreign brands.
Competition
In 2015, there were four broad types of companies competing in the Pakistani home appliance business.
First, old, established Pakistani companies, such as PEL, Dawlance, Waves, etc., who manufactured-
cum-assemblcd many ?f th~se_ applia_nces loc~lly: Se~ond, global brand names, such as Samsung, LG,
Sony, etc., who were pnmanly 1mportmg and d1stnbutmg their high-quality products with uncertain plans
. Asian Journal of Managemen: ~ ,
4
·
fi cussed more
on the TV and entertanun:
t .1
1
for fu~e local manufacturing. These brands see_med to h~v~_oshares of such players wer~ airy s~~ll,
categones in Pakistan In other appliances, while the market rs One reason was their advert1smg
~heir brand names we.re very well established with the custome d~ertising spill-over from the Indian
investments in Pakistan which were further bolstered by strong a K nwood etc. who took advantage
c h annels. Thud,
· new international players, such as Gree, H0 mage ' ·d· e g products
' ' of good qua1I·ty and
of sourcing from low-cost Chinese manufacturers. They were prov1 mhOle range of mushroom brands
were sow 1 lYimproving
· their marketing presence. F.ma11Y, there was. a w •th limited market pene trafion.
which would pop up seasonally offering cheap products and pnces w~ ican and European made
In addition to regular competitors a few high-end retail outlets ~ept er e negt 1·g1·bte in Pakistan.
r ' . • h· t shares wer
app iances_. However, on account of their fairly high pnces, t eir uru . .
.
fthe appliance categones.
11
lnterestmgly, no Pakistani brand had an equally strong brand franchise m ad fio chise in the refrigerator,
On account of being first movers in the category Dawlance had a strong bran_ ran k t shares of various
PEL · th · •. . ' t ry Over tame mar e
m. e air conditioner, and Waves m the deep freezers ~a ego · . . for market share data).
competitors had changed; however, market perceptions contmued (see Exhibit 4
Marketing at DAWLANCE
D aw1ance took pnde
· m. prov1dmg
. . Pakistaru
. . customers the most modem and re1·iable products.at competitive
.
· -r · d 1· ·
pnces. iop management closely monitored new product and technology mtro uc 10ns m vanous trade
. fairs
in Europe and the USA. In addition, close tracking of the Indian durable market was _do~e for regionally
relevant market insights. 'Innovation is the key concept in Dawlance's success story', mamtamed ~- Jameel.
Dawlance offered a broad range of npplinnces that included refrigerators, deep freezers, nucrowave
ovens, washing machines, air conditioners, etc. Within each product category, various SKUs were offered
in order to cater to the varying tastes, needs, and capacity to pay off the heterogeneous Pakistani market. In
order to expand the portfolio, a range of small kitchen appliances, such as juicers, blenders, toasters, etc.,
were introduced in late 2014. Dawlance dominated the market in only a couple of durable product catego-
ries, i.e., refrigerators and microwave ovens. However, its product quality and reliability had led to a very
strong brand reputation overall. According to a consumer perception survey conducted by IPSOS in 2014
Dawlance was rated as the number one brand (by a wide margin) in the appliance category in the country.
Go to Market System
Dawlance ensured that its products were available in almost all appliances markets of Pakistan. In 2015,
there were approximately 2300 dealers of appliances all over Pakistan and Dawlance worked with 1900
of them. The dealers were chosen by gauging their reputation in the market, credit history, financial
strength and the attractiveness of the area where they wanted to locate. During the first year, dealers were
given products only on an advance cash basis. This was different from the practices of many competitors
who not only gave credit of 60 days but also provided a few items free for display pwposes. Once
Dawlance was comfortable with the credit wo~hin~ss of deal~rs they were offered a fifteen-day credit.
Sales volumes of dealers were dependent pnmanly on t~e size and affiuence of their catchment areas.
Large dealers in metropolitan cities sold close to 30,000 umts per year while small dealers in small towns
could only manage around 400 units. Some competitors offered different tenns of trade to dealers accord-
. to their volumes, making the large ones even a sub-dealer to service smaller dealers. Dawlance·
ro~ever, had a policy of not discriminating amongst its dealers on any basis. The top management fel~
Haque 5
in-depth survey of ~2 homemakers in Karachi listed the following reasons (respondents' words) for lack
of regular use of Illlcrowaves for cooking:
Thanks to Dawlance's aggressive development of the microwave category the ove~all market had
expanded to around 400,000 units by 2015. Dawlance offered a broad range of IDICr_owav~ ovens
providing multiple choices to customers. The 24 SKUs offering various features and pnce points are
presented in Exhibit 10. The more inexpensive models (less than PK.R 10,000) contributed around 6 5-?S
per cent of unit sales while models above PKR 15,000 contributed around 5 per cent.
Launch Decisions
Dawlance to O15 with a half-yearly sales
target of
12
&1 m~agement wanted the product to be launched in October 2 and focus to the debates
going b uru~. The anno~ncement of the launch date brough~ an urgency ushing for different
price ~ a out vanous marketmg mix decisions. Different marketmg grou~s "!'ere ~ that the current top-
O
f th p~mts. The sales team strongly suggested a unit price of PKR 18,000 pomtmg ou ld be difficult
0
~ e- me Dawlance microwaves were similarly priced and that achieving sales targets wou • emium
Wt out an attractive introductory price. They informed that even with this price there w~ a pnce pr Id
of PKR 6,000 over Ch'mese lDlports.
. 'How much more premiums do you think Pakistaru consumers wou
Th
pay for Dawlance?' they asked. The new products team was pushing for a p~ce of~~ ,000~ :~ 27
argu~d th~! the customers will only be from the upper class; hence, not very pnce sensitive. They gu
that if Philips air fiyer, with no additional features, could be sold at PKR 24,000 then customers would be
more than happy to pay a premium for Dawlance five-in-one air fryer microwave oven. In any case~ affluent
customers with health issues would be looking at product benefits rather than price. The marketmg team
insisted that the air fryer microwave be priced PKR 24,000 at parity with Philips. They were of the view
that at the time of the launch price of the new product should be the same as that of close competitors. Once
the market was better understood Dawlance could always charge a premium.
Pricing issue was linked with the product design issue as well. While the customer and dealer survey
conducted by Dawlance was of a five-in-one microwave product, some managers felt that this was
overkill. They argued that most high income households in Pakistan already have a microwave oven.
Why would they want to purchase another microwave oven only to get the benefit of an air fryer? They
suggested that Dawlance should follow Philips idea of producing a standalone air fryer. This product
could be then sold profitably at a much lower price point (around PKR 14,000) and with the strong brand
name and marketing clout of Dawlance a huge market could be captured.
They asked:
This product has the potential to be a 'hit' mass product in Pokistan. Remember how our consu _ • t d
·
pricing of microwave change d the comp Iex1on
· of the m· dus try m
. 200 l. As a standalone air firy •t mer
h onen
h e
· · b · h d
potential. Why are we forcing 1t to e a me e pro uct ? er, 1 as t e same
Opponents of this idea felt that a five-in-one decision had already been made and th
· I l ere was no need to
revisit it even 1fthe expected sa es were ow.
Coming up with an appropriate marketing communication plan had also engende d .
· re an arumated debat
The low awareness levels of customers about aJr fryer technology suggested an . . e.
· h d 11 k · aggressive marketmg ca
paign including all elements ofp_u~ an pu mar etmg. The ad agency had made a few fl e m-
dealer and retail out!ets (see Exh1b1t 12). They could even be used as print ads if there w Y rs for use at the
no TVCs were envtsaged. The brand team was unhappy about this. They felt that as a nee~._1:1°wever,
would not be able to create strong awareness and believability of product b fi BTL achv1ttes alone
PK.R 30 million was needed to break the clutter in the television market Th ene its.1:1ey felt a budget of
rod
television commercial itself required close to PKR 5- 7 million. The broad ~.P uctton of a good 30-sec
. PKR 25 million for reasonable GRPs. Dawlance management· how cas mg coS ts would be additional
' ever, was reluctant to provide this
Haque
II
amoWlt. They argued that all Dnwlnnce product lines had paid for their advertising budgets. An expected
annual sales of 2400 units of air fryer did not provide the gross margins needed to indulge in any ambitious
TV campaign. In addition, they argued that this was a niche product in any case which did not require mass
marketing. Some managers suggested sponsoring popular cooking shows instead. They believed that by
spending around PKR 1 million Dawlance could not only introduce the product to the relevant target mar-
ket but also demonstrate its proper use by celebrity chefs making exciting fried products using only one
drop of oil. This could be supplemented by using social media. Live streaming of cooking fries and fish
could be done using Dawlance's Facebook page at a cost of around PKR 1 million.
In the absence of an aggressive pull campaign, the brand team suggested a strong push campaign.
They suggested conducting forty seminars in various cities and towns of Pakistan where chefs could
demonstrate the use of the new product to invite dealers. Dawlance salesforce could also participate in
these seminars and get the first-hand experience of the air fryer product and its benefits. The cost of such
a campaign would be around PKR 15-20 million. However, the bigger issue was that it might lead to
postponing the launch date by two months if all forty seminars were to be completed before launch.
With all the debates about air fryer launch buzzing in his head, Hasan Jameel sat down and turned to
his computer. There was no time left. He had to present his launch plan to Mr. Bashir Dawood next day
for the final go ahead.
Funding
The author received no financial support for the research, authorship, and/or publication of this article.
Appendix
Year Activity
1980 Began Operations
1981 Introduction of Refrigerators
1988 Introduction of Deep Freezers
1995 Introduction of Microwave Ovens
2000 Production of Washing Machines
2001 ISO 14000 Certification
2004 Introduction of Split ACs
2007 Introduction of Cook King Microwave Oven and
Reflection Glass Door Refrigerator
2010 Introduction of Health Zone range of Appliances
2012 Launch of world's largest Direct Cool Refrigerator
2014 Introduction of the small Kitchen Appliances Category
2015 Introduction of Health Zone Plus series
Source: Company documents.
. J urnal of Management Case~
Asian o ....::. ,
12
Market Share
Category 2013 2014 2015 Ranking of Dawlance
Refrigerators 45% 46% 48%
Deep Freezers 24% 26% 26% 3
Air Conditioners 20% 18% 18% 3
Washing Machines 9% 10% 12% 4
Microwave Ovens
Oawlance 52% 55% 58%
10% 11% 17%
Homage
Orient 15% 16% 11%
11% 10% 8%
Haier
12% 8% 6%
PEL
Source: Case Writer's Estimates.
Haque 13
Exhibit 5. An Exam le Of
.. p Monthly Sales Policy Announcement
Exciting Sales Polic
Dawlance celebrat y ~ Ei~ ul_Azha from Dawlance
0
. . to win BUMPER
GIFTS es Eid with its Dealers by providing them a fantastic opportunity 'ded on the
on purchase of all products. Even better these BUMPER GIFTS would be prov•
regular Invo,ce
· wit
· h out any target or other conditions.
'
Video: Hen brings an egg to be hatched in a Video: Hen places the egg in the oven and
microwave oven press the start button
Audio: Mus ic and hen clucking Audio: Music and hen clucking
Vidoo: Han w~lks I\Wil)' with tht., now born VhJao: Chick stllnds In front uf O1\whrnco
Audio: 1"-falo volco ovor: Evel)•t/1/nr ters hcorcd /11 2 Mlcrowl.\VO Ovon
minu~s in Oawfoncc /v1icrowove O,-en Audio: Only Oow/onctt brlnas sofurlons.
Source: Comp11ny documents.
Exhibit 8. Consumer lnslghu for Cook Kint (Ml\)' 2008) Awnronon crnd Us&\11 or Dlff1ront
Mlcrownvo Functions
Functions Aw1ronoss Usngo
Heiatlng 86X 6◄X
Defrosting 100 ◄3
Cooking 79 21
Biaklng 54 29
Grllllng ◄3 II
Auto menu ◄3 7
Source: Comp1ny documents.
(Exhibit IO continued)
(Exhibit 12 continued)
18 Asian Journal of Management Cases
(Exhibit 12 continued)
Notes
l . ln 2015, the average exchange rate for the U.S Dollar to the Pakistani Rupee was 102.65. Source: State Bank of
Pakistan, www.sbp.org.pk/ecodata/ibf_arch.xls, accessed December 2017.
2 . OHSAS 18001, Occupational Health and Safety Management Systems-Requirements (officially BS OHSAS
18001) is an internationally applied British Standard for occupational health and safety management systems.
3 . In 2012, the average exchange rate for the U.S Dollar to the Pakistani Rupee was 93.28. Source: State Bank of
Pakistan, www.sbp.org.pk/ecodata/ibf_arch.xls, accessed December 2017.
4. In 200 l , the average exchange rate for the U .S Dollar to the Pakistani Rupee was 61 .81 . Source: State Bank of
Pakistan, www.sbp.org.pk/ecodata/ibf_arch.xls, accessed December 2017.
5 . In 2004, the average exchange rate for the U.S Dollar to the Pakistani Rupee was 58.40. Source: State Bank of
Pakistan, www.sbp.org.pk/ecodata/ibf_arcb.xls, accessed December 2017.
6 . Biryani was a popular, slightly spicy dish typically made of equal part rice and meat.
7. Korma was a dish consisting of meat or vegetables braised in a spiced sauce made with yogurt, cream and nuts.
8 . Guizar Hussain was one of the celebrity chefs of Pakistan made famous on account of the huge following of
food channels like Masala TV, especially by homemakers. Guizar was reputed for oriental and continental
dishes.
9 . In 2007, the average exchange rate for the U.S Dollar to the Pakistani Rupee was 60.72. Source: State Bank of
Pakistan, www.sbp.org.pk/ecodata/ibf_arch.xls, accessed December 2017.
1o. Samosa is a fried or baked dish with a savoury filling, such as spiced potatoes, peas, minced meat, etc.
1 l . Pakora is a fried snack (fritter).
1
12 _ Lahore, Rawalpindi, Islamabad, Quetta, Hyderabad, Karachi, Faisalabad, Gujranwala, Peshawar, Mu tan.
13 . 40 cities other than the l O key cities.