This action might not be possible to undo. Are you sure you want to continue?
Sameer Alve – Section A
PART A EXTERNAL INDUSTRY ANALYSIS
The biscuit industry is been experiencing steady growth of 14-15% annually. In 2008, the growth exceeded 16% mark on account of exemption from Central Excise Duty on biscuits.
Annual Growth Rate of Biscuit Indusrty in India
18% 16% 14% 12% 10% 8% 6% 4% 2% 0% 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 Annual Growth Rate
Two Sectors of Biscuit Industry
Unorganized Sector 40%
The organized biscuit manufacturing industry‘s annual production figures show YOY growth indicating rising consumption pattern in India.
Annual Production Figures in Million Metric Tonnes
2.00 1.80 1.60 1.40 1.20 1.00 0.80 0.60 0.40 0.20 0.00 2003-04 2004-05 2005-06 2006-07 2007-08 Annual Prod. Fig
• • • • • • • • • HLL, Bisk Farm, Anmol, Elite, Cremica, Dukes, Anupam, Craze, Nezone
Major Market Share Holders – Organized Sector
Others 10% Priyagold 15% Parle 35%
Political • Taxes • Production and Distribution licenses Economical • ↑ in per capita income • India’s GDP growing at an average 8%
Social • ↑ in per capita consumption • India is 3rd largest producer of biscuit • Age • Lifestyle • Perception
Technological • Innovation • R&D
-Capital intensive manufacturing, advertising and distribution system. Low
Threat of a new entrant
The ingredients are basic commodities such as wheat, sugar etc. Internal Rivalry High
- High competition among existing players to capture maximum market share. High
Power of Buyers
Power Low of Suppliers
-Traditional Indian home made snacks - Bread -Growing packaged snacks industry
-Availability of many biscuits from low to moderate prices - Availability of biscuits from nonorganized sector Threat of substitute
Opportunities & Threats
- Indian Biscuit Manufacturers’ Association (IBMA) estimates annual growth of around 20% in next couple of years. - The $220 Billion food industry is expected to grow to $300 Billion by 2015. - Per capita consumption of Biscuits in the country is only 1.8 kg as compared to 2.5 kg to 5.5 kg in South East Asian countries and European countries, and 7.5 kg in USA. - Growing demand of Sugar free cream crackers & diet biscuits - Opportunity to further grown in Urban & Rural market; Current penetration levels are Urban Market : 75% to 85% Rural Market : 50% to 65% - Grow in southern and east India
- Fluctuations in the prices of transportation costs & distribution cost due to high wedges and oil prices - Entry of ITC (having very good distribution channels) in to biscuit industry
Priya Sunfeast Gold
KSFs & Threshold Factors
KSFs • Price • Distribution Network • Nutrition content • Brand • Innovation Threshold • Technology • Packaging
Matrix – Put market share as last row
KSFs Price Distribution Network Nutrition Content Brand Innovation Total Score Weighted Score Market Share Weight Parle 35% 25% 20% 13% 7% 9 9 8 9 9 44 8.8 35% Britannia Priya Gold 8 5 8 8 9 9 42 8.2 31% 6 5 6 7 29 5.52 15% Sunfeast 4 4 4 5 5 22 4.2 9% Marico 2 3 4 3 4 16 2.92 6% Horlics 2 2 4 3 2 13 2.53 4%
PART B INTERNAL ANALYSIS
Parle - Company Background
• India's largest manufacturer of biscuits for almost 80 years. • With a reach spanning even the remotest villages of India. • 35% share of the total biscuit market in India.
“The great tradition of taste and nutrition is consistent in every pack on the store shelves, even today. The value-for-money positioning allows people from all classes and age groups to enjoy Parle products to the fullest”
Source – http://www.parleproducts.com/about/about_core_values.asp
Parle Products – Biscuits
• Parle – G • Krackjack • Monaco • Kreams • Hide & Seek • Marie • Milk Shakti
Parle Production Factories
Opportunity To Grow
- Strong sales / distribution N/W - Healthy Products - Value for money products - Understanding of consumer psyche - Geographically located factories - Effective brand marketing - Newer & Innovative products - Attractive packaging
Sustainable Comp Adv:
- Strong sales / distribution N/W - Value for money products -Understanding of consumer psyche
Distinctive Competency: Strategic Competency:
- Strong sales / distribution N/W - Value for money products - Healthy Products - Understanding of consumer psyche - Newer & Innovative products - Strong sales / distribution N/W - Value for money products -Healthy Products - Understanding of consumer psyche
- People - Brand - Market Knowledge - Distribution Channels - Machinery - Factories - Technology
- Healthy Products
-Geographically located factories - Effective brand marketing - Attractive packaging
- Newer & Innovative products
- An in-depth understanding of the Indian consumer psyche - Nutritious Products - Newer & Innovative products - Strong sales / distribution N/W - Value for money products
KSFs • Price • Distribution Network • Nutrition content • Brand • Innovation Competencies • An in-depth understanding of the Indian consumer psyche • Healthy Products • Newer & Innovative products • Strong sales / distribution N/W • Value for money products
We at Parle continuously strive for high quality & nutritious biscuits meeting your changing health needs at every corner of India by producing new value-for-money products.
Opportunity 1. Estimated annual growth of 20% 2. The 220 B$ food industry is expected to grow to 300 B$ by 2015. 3. Low Per capital consumption of Biscuits (1.8 KG) as against 5.5 KG in South East Asian countries. 4. Increasing demand for Sugar free cream crackers & diet biscuits 5. Current penetration levels Urban Market : 75% to 85% Rural Market : 50% to 65% 6. Growth in southern and east India Threats 1. Hike in cost of production due to hike in prices of raw materials and increase in transportation plus distribution cost due to high wedges and oil prices 2. Entry of ITC (having very good distribution channels) into biscuit industry
Strengths 1. Parle Brand 2. Diversified Product Range 3. Extensive Distribution Network (Availability in most remote villages) 4. Low & mid range price segment catering to mass 5. Better understanding of consumer psyche S–O 1. Increase penetration in southern India and eastern India (S1, S5, O6) 2. Expand in rural market (S1, S2, S3, S4, S5, O5) 3. Cater to new diet conscious segment (S1, S3, S4, S5, O4) 4. Advertising of Parle products using celebrities such as sport person (Cricketer – very popular game in India) (S1, S5, O2, O3, O5, O6)
Weakness 1. Dependence on retailers & grocery stores for displaying diversified Parle products on shelf to induce impulsive buying 2. Dependence on Parle-G (glucose biscuit) under Parle umbrella
W–O 1. Heavy promotional campaigns in rural areas , southern & eastern India to increase brand awareness to boost ‘top of the mind recall’ sales. (W1, O3, O5, O6) 2. Advertise and promote Parle’s nutritious brands other than ParleG in educated urban market looking for healthy products (W2, S3, S4, S5, S6)
S–T 1. Shift towards products (SKUs) that are highly appreciated in urban market (heath conscious mothers) and price sensitive rural market rather than just increasing no of SKUs (S1, S3, S4, S5, T1, T2)
W–T 1. Capture more market share of other biscuit segments using distribution channels by associating individual products with a promotion. Example – the stylish cream biscuit is promoted by bollywood star, Marie products are branded as family snacks product etc. (W1, W2, T1, T2)
Recommendations To get benefits of growing biscuit industry, I have following 3 recommendations to Parle.
Promotion of Parle brand
a. Promote Parle brand through schemes such as “Parle Gramin Swastha Yojana” (a network of ambulance van visiting rural areas giving basic medical treatments educating people on nutrition deficiency problems and promoting Parle nutritious products) b. Promote Parle brand through T. V. shows such as “Parle Sakhi” (“Parle Friend of Women”). The weekly T. V. show will cater to health issues of women and children and will explain long term benefits of healthy diet) Results Expected – Improved sales through “Top of mind recall”. Reduced competition for ‘visible shelf space’ in small grocery and retail stores. Brand Loyalty. Communicating Parle value of ‘Nutrition Product’.
Study revenue and cost of each of the SKUs (products) of Parle
ITC’s entry into the biscuit industry will pose challenges to the number one position Parle has held over decades. Before further diversifying into producing more products to cater to market niche, I recommend Parle to carry out detail study of each SKU. This is to avoid adding more complexity to existing production & distribution process with addition of SKU eventually leading to lowered net income. Results Expected – The study should help Parle forecast and plan future launches, stop producing unprofitable products and focus on emerging / highly demanded products. The study will also help Parle utilize its deep distribution channels effectively and efficiently as per consumer demand.
Advertise products segment wise as follows
a. Nutritious/Glucose biscuits
Advertisement by doctors/dieticians to explain the benefits to heath conscious consumers Advertisement by cricketers (Cricket is a very popular game in India) to attract youth
b. Cream biscuits
To be endorsed by bollywood (film) starts c.
To be advertised as a family tea time snack Increased penetration in rural, southern and eastern market. Attracting health & diet conscious people.
Results expected –
How the industry success factors will change over next 8-10 years?
Biscuit industry going forward
With GDP growing at average of 8% and government’s spending on infrastructure projects, many local distributors will evolve and existing players will have penetrated deep inside urban and rural markets.
Thus, Distribution will no longer be a KSF
Sunfeast Priya Marico
Gold Britannia Parle
Promotion & Alliances will emerge as new KSFs
Promotion – Industry’s ability to connect to large
population through various promotional events (such as school’s industry visits to plant, talk & TV shows, rural programs) to target different age segment will decide the market share.
Alliances – The biscuit manufactures able to maintain
good relations with distributors, whole sale suppliers and regional institutions (through CSR and other community oriented activities) will have greater market share due to BUZZ (mouth publicity) and media attention.
Will Price be still a success factor?
Yes, very much.
The industry players will try to lower the procurement, production and distribution costs through programs such as JIT, JITD, TQM, Per SKU cost/Revenue analysis and will pass on these benefits to end consumers in terms of lowered prices.
What will the new value proposition be for Parle?
KSFs • Price • Nutrition content • Brand • Innovation • Promotion • Alliances Competencies • An in-depth understanding of the Indian consumer psyche • Healthy Products • Newer & Innovative products • Value for money products
Parle provides nutritious and innovative products through better understanding of consumer needs. Parle promotes relations with customers and its rapport with business partners help it achieve operational efficiency and manufacture ‘value for money’ products.
• Thank You. - Sameer Alve. (Section A, MBA2009_B3) Asian Institute of Management. Makati, Philippines. Write to – firstname.lastname@example.org
This action might not be possible to undo. Are you sure you want to continue?
We've moved you to where you read on your other device.
Get the full title to continue listening from where you left off, or restart the preview.