MANAGEMENT GURU

SUBMITTED TO: PROF. ISSAC JACOB SUBMITTED BY :
NAME: ROLL NO. CLASS: Devanshu lamba 125 MMS B

Devanshu Lamba-125, K.J Somaiya Institute of management studies and research Page 1

1. OVERVIEW
The Fast Moving Consumer Goods (FMCG) sector is the fourth largest sector in the economy with a total market size in excess of Rs 60,000 crore. This industry essentially comprises Consumer Non Durable (CND) products and caters to the everyday need of the population.

Product Characteristics Products belonging to the FMCG segment generally have the following characteristics:
• • • • •

They They They They They

are are are are are

used at least once a month used directly by the end-consumer non-durable sold in packaged form branded

Industry Segments The main segments of the FMCG sector are:

Personal Care: oral care; hair care; skin care; personal wash (soaps); cosmetics and toiletries; deodorants; perfumes; paper products (tissues, diapers, sanitary); shoe care.

Major companies active in this segment include Hindustan Lever; Godrej Soaps, ColgatePalmolive, Marico, Dabur and Procter & Gamble.

Household Care: fabric wash (laundry soaps and synthetic detergents); household cleaners (dish/utensil cleaners, floor cleaners, toilet cleaners, air fresheners, insecticides and mosquito repellants, metal polish and furniture polish).

Major companies active in this segment include Hindustan Lever, Nirma and Reckitt & Colman.

Branded and Packaged Food and Beverages: health beverages; soft drinks; staples/cereals; bakery products (biscuits, bread, cakes); snack food; chocolates; ice cream; tea; coffee; processed fruits, vegetables and meat; dairy products; bottled water; branded flour; branded rice; branded sugar; juices etc.

Devanshu Lamba-125, K.J Somaiya Institute of management studies and research Page 2

Major companies active in this segment include Hindustan Lever, Nestle, Cadbury and Dabur.

Spirits and Tobacc Major companies active in this segment include ITC, Godfrey Philips, UB and Shaw Wallace.

An exact product-wise sales break up for each of the items is difficult.

1) The Indian FMCG sector is the fourth largest sector in the economy with a total market size in excess of US$ 13.1 billion. 2) It has a strong MNC presence and is characterised by a well-established distribution network, intense competition between the organised and unorganised segments and low operational cost. 3) Availability of key raw materials, cheaper labour costs and presence across the entire value chain gives India a competitive advantage. 4) The FMCG market is set to treble from US$ 11.6 billion in 2003to US$ 33.4 billion in 2015. Penetration level as well as per capita consumption in most product categories like jams, toothpaste, skincare, hair wash etc in India is low indicating the untapped market potential.

5) Burgeoning Indian population, particularly the middle class and the rural segments, presents an opportunity to makers of branded products to convert consumers to branded products. 6) Growth is also likely to come from consumer 'upgrading' in the matured product categories. With 200 million people expected to shift to processed and packaged food by 2010. 7) India needs around US$ 28 billion of investment in the food-processing industry. 8) Major Global Players – HUL, Procter and Gamble, Colgate – Palmolive Devanshu Lamba-125, K.J Somaiya Institute of management studies and research Page 3

9) Major Players in India – HUL, ITC, Procter & Gamble, Dabur India.

OVERVIEW
According to a study by McKinsey & Co, the Indian food market will grow two fold by 2025 with the rapidly growing Indian economy and improving lifestyles of Indians contributing in a big way to this growth. Quoting the study by McKinsey & Co, a report by the US Department of Agriculture stated "The market size for the food consumption category in India is expected to grow from US$ 155 billion in 2005 to US$ 344 billion in 2025 at a compound annual growth rate of 4.1 per cent."

The Indian snacks market is worth around US$ 3 billion, with the organized segment taking half the market share, and has an annual growth rate of 15-20 per cent. The unorganized snacks market is worth US$ 1.56 billion, with a growth rate of 7-8 per cent per year. There are approximately 1,000 types of snacks and another 300 types of savouries being sold in the Indian market today. Indians in the western regions eat the maximum amount of snacks, followed by the people in northern region. "Consumers are willing to pay a premium for both value-added private and branded products, creating immense opportunities for manufacturers and retailers,' the report stated. Potato chips and potato-based items are the most popular products with more than 85 per cent share of the salty snack market, the report said. In the organized potato chips market, some of the leading players are Pepsi, Haldiram's, ITC, Britannia, Bikano, Balaji, Marico, Dabur etc.

Devanshu Lamba-125, K.J Somaiya Institute of management studies and research Page 4

Overview of Firto-Lay (PepsiCo)
Frito-Lay North America (FLNA) is a division of PepsiCo, Inc. which manufactures markets and sells a variety of corn chips, potato chips and other snack foods. FLNA is headquartered in Plano, Texas, a suburb of Dallas. The company's current form is the result of a 1965 merger of Frito-Lay, Inc. and the Pepsi-Cola Company, which resulted in the formation of PepsiCo, Inc. Products sold under the Frito-Lay name are now recorded by two PepsiCo divisions: Frito-Lay North America (North American sales) and PepsiCo International (international sales) On June 8, 1965, the merger of Frito-Lay and Pepsi-Cola Company. Today, PepsiCo is organized into four divisions:
1) Frito-Lay North America. 2) PepsiCo Beverages North America, 3) PepsiCo International and 4) Quaker Foods North America.

Although products sold in the United States under the Frito-Lay brand name are also sold internationally, international sales are reported by the PepsiCo International division.

Devanshu Lamba-125, K.J Somaiya Institute of management studies and research Page 5

Overview of Bingo (ITC)
The launch of Bingo represents ITC Foods’ fifth major line of business after the highly successful staples, biscuits, ready-to-eat and confectionery products. Introduced in the market in March 2007.

MARKETING WARFARE B/W FIRTOLAY (PEPSICO) AND BINGO (ITC)
Currently, the size of the snack food market is estimated to be Rs 4,500-5,000 crore of which branded players account for Rs 2,000 crore. The snack food market is growing at 30 per cent annually and foods and beverage giant Pepsico’s Frito Lays is the dominant market leader with a market share in excess of 80 per cent.

Summary of PepsiCo First Quarter 2007 Results
Volume (Servings) Revenue Division Operating Profit Net Income Earnings Per Share

% Growth Rate 4 9 9 16 17

Bingo was launched in India on Mar 14, 2007 during the world cup time. Main aim of ITC Bingo advertisements was to create buzz among customers. Most of the advertisements of Bingo were considered vague and stupid but I feel that was the best form of communication any marketing company has ever done. Within a month of launch of initial advertisements, 70% of
Devanshu Lamba-125, K.J Somaiya Institute of management studies and research Page 6

the viewers could recall the brand and that was their main aim. Brand recall along with 16 flavors in three SKUs helped ITC to capture 16% of market share in just 18 months. The initial offerings from Bingo include an array of products in both Potato Chips & Finger Snacks segment. The Potato Chips offerings comprise of four innovative variants inspired by the snacking habits of different parts of the country as well as Masala, Salted and Tomato flavours. Additionally a south-inspired dairy option has also been introduced under the potato chips offering. The offerings under the Finger Snacks segment are equally unique presentations with innovative finger foods like the pakoda inspired Live Wires, Khakra inspired Mad Angles and the specially developed time pass snack in the form of Tedhe Medhe. Each offering under this segment is available in two variants making it a total of 6 products in the Finger Snacks portfolio.

FIRTOLAY (PEPSICO) AND BINGO (ITC)
The segmentation was mainly done on basis of the age of the people. The primary target for Bingo is 18-30 year old people, who are willing to try out new flavours more easily than the small kids. Bingo is positioned as a youthful and innovative snack. In a survey done by ITC, it has been found that 70% of respondents liked Indian flavors like bhel, golgappas etc. Initial pricing of ITC bingo is directly with pricing of Rs 5,

frontal attack on Frito lays

10 and 20.

Now Frito Lays has launched small packs of Rs 3. Let us see whether ITC can leverage upon its huge distribution network covering panwaalas to small kiryana shops with a similar small pack of Rs 3. The Company distributed more than 4 lakh large racks, to display the brand at all points of sale. The racks created so much impact that even competitors like market leader Frito-Lay's introduced its own version of wafer racks. Within six months of launch Bingo was available in more than 2, 50, 000 retailers across the country. ITC made a strategic alliance with Future group according to which all retail stores of Future group like Food Bazaar, Big Bazaar, and Kishore Biyani’s Fair Price etc will store only ITC Bingo. HORECA (hotels, restaurants and cafes), entire cigarette distribution network including pan shops. Retail tie-ups, regional flavours and distribution muscle, have helped ITC hit a bull’s eye with its snack Bingo. In less than 6 months, ITC's Bingo has managed to grab 16% market share and it hopes to touch 50% in a year Bingo site (www.bingeonbingo.com) is a very different site with information about Bingo and its flavors. Even initially Bingo sponsored many Bingo Remix nights in various clubs.

Devanshu Lamba-125, K.J Somaiya Institute of management studies and research Page 7

ITC with bingo adopted a Market Challenger strategy and chose a combination of flank and frontal attack against the market leader Frito Lay’s.

Bingo Tick Tock Boing!’ mean?
Y FM radio channel. It’s an interactive game, wherein before a buzzer gets sounded, if you say ‘Bingo Tick Tock Boing!” you win a pot of money! Play it, its loads of fun! This game has attracted high participation (running into a few million) in Delhi and Mumbai and now we are running it in Bangalore. With the rise of ITC bingo in no time.

FIRTOLAY (PEPSICO) AND BINGO (ITC)
Lays has revamped its branding strategy with new promotions featuring actress like Juhi
Chawla, Kareena Kapoor etc. About 35 AC BEST buses in Mumbai and metro in Kolkata are now branded by Kurkure. Frito Lays again launched a new consumer promotion campaign, Chai Time Achievers campaign in which consumers could send their recipes using Kurkure. Lays has launched Indian flavors like Lay’s 1) Chat Street, 2) India’s Mint Mischief, 3) Wafer Style etc.

Promotional Wars
The objective was to capture the consumers’ mind first and the market later. They also had a long term ambition to overtake FritoLay’s sales and be the market leader. For the short term, they wanted to gain at least 8 per cent market share nationally, create a buzz around the brand and create a youthful brand personality.
Devanshu Lamba-125, K.J Somaiya Institute of management studies and research Page 8

The agency wanted to base the campaign on the three pillars of Product, Placement and Personality. After a few brainstorming sessions, the team realized that people in India still prefer traditional snacks, such as banana chips and biscuits. To counter that, they decided to use the familiar tastes and come up with an irresistible combination of flavours. Strategic placement of the product was also an important factor, as the aim was to widen Bingo’s reach and impact. Bingo was available in more that 250,000 stores in the first six months of its launch. Brand awareness was also built by placing the Bingo racks in local grocery stores as well as supermarkets. In most cases, a TVC is the main source of awareness for a brand, while in Bingo’s case, it was the Bingo rack. Another thing that had to be taken into consideration was the fact that snacking is a mindless activity .They wanted to promote a brand that would be deliberately mad, spontaneous and mindless.

FIRTOLAY (PEPSICO) AND BINGO (ITC)
The product launch was preceded by an online viral campaign, ‘Wait or Suffer’. The product was introduced with a television, print and outdoor campaign. The madness was also taken offline with mall activities in nine cities across India. Customer interest was retained with interactive games and product tasting sessions. This activity saw participation from 2,500 people and experienced close to 250,000 footfalls in the first four months. Various radio activities were done in Delhi, Mumbai and Bangalore to increase brand awareness. Bingo also ran a contest when Aerosmith was on their official tour to India. Contestants were supposed to record their favourite Aerosmith song in a local Indian language and submit their entries. Since it was a youth brand, digital media was used heavily for promotions. The Bingo National Gaming Championship was one such example. The event was held in four cities and saw participation from 25,000 contenders. Bingo Remix Nights were held in clubs across the country. A fun website, bingeonbingo.com was created to increase awareness about the brand. O&M claimed that the 360 degree campaign helped Bingo gain 12 per cent market share nationally, as opposed to their initial target of 8 percent. Bingo had 16 per cent market share in metros and a market share as high as 66 per cent in certain cities

Devanshu Lamba-125, K.J Somaiya Institute of management studies and research Page 9

To pump up volumes, FritoLay is in the process of rolling out an aggressive marketing campaign led by its star endorsers, Saif Ali Khan, MS Dhoni and

Juhi Chawla
In order to add further zing to its product portfolio, in January 2008, the company launched Kurkure Xtreme, a limited edition variant in two flavors—Risky Chilli and Electric Nimbu (lime). This was perhaps a move to outdo competition from ITC’s snack brand Bingo, which was launched in March 2007, in Indianized flavors like Tandoori Paneer Tikka (spiced cottage cheese) and Chatkila Nimbu Achaar (tangy lime pickle). Bingo’s success in the market is backed by ITC’s strong distribution network, which allows it to stock its products in shops that previously did not sell snack food. Additionally, ITC Foods provides shopkeepers with plastic molded shelves that allow local vendors a convenient way to stock their product, and the company benefits by increased visibility for its brand. Taking a cue from its competition, Frito Lay India is focusing on unconventional retail points like cyber cafes and telephone booths, in order to increase brand visibility and product reach. To maintain top of the mind recall among its customers the brand has undertaken several unique communication initiatives. The most recent, for example, is called "Chala Change ka Chakkar," which is an umbrella campaign for Frito Lay India’s entire product portfolio (Lay’s, Kurkure, Cheetos, Uncle Chipps, and Lehar). This promotion will allow chosen consumers to live a day in the life of an Indian Bollywood celebrity (who are the brand endorsers) like Juhi Chawla or Saif Ali Khan. The idea is to generate excitement around the brand and have it stand out in the clutter of existing brands. The brand has undertaken similar promotions in the past. For instance, in 2004 it launched the "Kahani mein Kurkure" ("Crispiness in the Story") campaign, which was a take on Indian popular culture. The advertising campaign spoofed popular Indian TV shows like Jassi Jaissi Koi Nahin (Indian adaptation of American sitcom "Ugly Betty") to appeal to Indian housewives, the largest target audience to watch these programs. In addition to targeting housewives, who play a significant role in making purchase decisions, the brand appeals to the Indian family as a whole. The "Kurkure Chai Time Achiever’s Award" was a contest launched by the brand where families were invited to submit interesting recipes made with Kurkure. The winning family would have the opportunity to be famous and have their photograph featured on one million Kurkure packs. This direct marketing campaign was supported through television advertising, where Indian celebrity Juhi Chawla, Kurkure’s brand ambassador, announced the winners of the competition. The contest was also publicized through the website http://kurkure.co.in, specifically designed to
Devanshu Lamba-125, K.J Somaiya Institute of management studies and research Page 10

promote the contest. Using the website as a strategic tool for promotion helped the brand appeal to a young audience that spends a considerable amount of time surfing the web. Another novel branding initiative was a tie-up with South Western Railways in India to have trains called the "Kurkure Express." These were special trains that operated only during the holiday season. The brand was featured on reservation charts, coach indication slips, and during any announcements about the train. This outdoor media was a unique way to target families who travel by train during the holidays.

Conclusion:
As of now Indian snack industry = 2500 crore. Frito Lays = 48%, Haldiram = 25% market share and ITC bingo = 16% share. Rest of the market is dominated by few regional players like Balaji.

Recommendation for lays:
1) They can even target the old one and the children.
2) Firtolays also target to the disks and pups and even in various college canteens. 3) Should be focused on 3 marketing parameters:a) Undifferentiated marketing. b) Differentiated marketing.

c) Concentrated marketing. 4) Improve Loop holes (distribution channel) in Frito-Lay.

5) Lays have to change their positioning.( comes as sweet flavor).

Devanshu Lamba-125, K.J Somaiya Institute of management studies and research Page 11

Recommendation for Bingo:

1) Tie-up with coke brand for promotional offer(coke + bingo).

2) Tie –up with haldiram. 3) it can launch new flavor as in non veg.(roasted chicken chips)

Devanshu Lamba-125, K.J Somaiya Institute of management studies and research Page 12