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Incorporated on 24 August 1910 as the Imperial Tobacco Company of India Limited, the company's name was changed to ITC Limited in 1974. Rated among the 'World's Best Big Companies' by Forbes magazine, ITC ranks third on all major profit parameters among India's private sector corporations. ITC employs over 20,000 people at more than 60 locations across India. It has a turnover of $3 billion.
Growth and Diversification:
ITC is one of India's foremost private sector companies with a market capitalization of nearly US $ 18 billion and a turnover of over US $ 4.75 billion. ITC is rated among the World's Best Big Companies, Asia's 'Fab 50' and the World's Most Reputable Companies by Forbes magazine, among India's Most Respected Companies by Business World and among India's Most Valuable Companies by Business Today. ITC also ranks among India's top 10 `Most Valuable (Company) Brands', in a study conducted by Brand Finance and published by the Economic Times. ITC has a diversified presence in Cigarettes, Hotels, Paperboards & Specialty Papers, Packaging, Agri-Business, Packaged Foods & Confectionery, Information Technology, Branded Apparel, Personal Care, Stationery, Safety Matches and other FMCG products. While ITC is an outstanding market leader in its traditional businesses of Cigarettes, Hotels, Paperboards, Packaging and Agri-Exports, it is rapidly gaining market share even in its nascent businesses of Packaged Foods & Confectionery, Branded Apparel and Stationery. As one of India's most valuable and respected corporations, ITC is widely perceived to be dedicatedly nation-oriented. Chairman Y C Deveshwar calls this source of inspiration "a commitment beyond the market". In his own words: "ITC believes that its aspiration to create enduring value for the nation provides the motive force to sustain growing 1
shareholder value. ITC practises this philosophy by not only driving each of its businesses towards international competitiveness but by also consciously contributing to enhancing the competitiveness of the larger value chain of which it is a part." ITC's diversified status originates from its corporate strategy aimed at creating multiple drivers of growth anchored on its time-tested core competencies: unmatched distribution reach, superior brand-building capabilities, effective supply chain management and acknowledged service skills in hoteliering. Over time, the strategic forays into new businesses are expected to garner a significant share of these emerging high-growth markets in India. ITC's Agri-Business is one of India's largest exporters of agricultural products. ITC is one of the country's biggest foreign exchange earners (US $ 2.8 billion in the last decade). The Company's 'e-Choupal' initiative is enabling Indian agriculture significantly enhance its competitiveness by empowering Indian farmers through the power of the Internet. This transformational strategy, which has already become the subject matter of a case study at Harvard Business School, is expected to progressively create for ITC a huge rural distribution infrastructure, significantly enhancing the Company's marketing reach. ITC's production facilities and hotels have won numerous national and international awards for quality, productivity, safety and environment management systems. ITC was the first company in India to voluntarily seek a corporate governance rating. ITC employs over 21,000 people at more than 60 locations across India. The Company continuously endeavors to enhance its wealth generating capabilities in a globalizing environment to consistently reward more than 3, 88,000 shareholders, fulfill the aspirations of its stakeholders and meet societal expectations. This over-arching vision of the company is expressively captured in its corporate positioning statement: "Enduring Value. For the nation. For the Shareholder."
Mission & Vision
To enhance the wealth generating capability of the enterprise in a globalising environment, delivering superior and sustainable stakeholder value
Vision Sustain ITC's position as one of India's most valuable corporations through world class performance, creating growing value for the Indian economy and the Company’s stakeholders
• • • • • •
Chairman: Y C Deveshwar Executive Directors: Anup Singh and K Vaidyanath FMCG Businesses: K N Grant Hotels & Travel: Nakul Anand Finance: Rajiv Tandon R&D, Projects, EH&S: T V Ramaswamy
1. R K Kaul 2. S H Khan 3. S B Mathur 4. D K Mehrotra 5. H G Powell 6. P B Ramanujam 7. Anthony Ruys 8. Basudeb Sen 9. B Vijayaraghavan
• Non Executive Directors:
ITC LIMITED 37 J.L.Nehru Road Kolkata – 700071 India
INDIAN SNACKS INDUSTRY: An Overview
Snacks are a part of Consumer Convenience/ Packaged Foods segment. Snack is described as a small quantity of food eaten between meals or in place of a meal. Snack food generally comprises bakery products, ready-to-eat mixes, chips, namkeen and other light processed foods According to the ministry of food processing, the snack food industry is worth Rs 100 billion in value and over 4,00,000 tonnes in terms of volume.
Though very large and diverse, the snacks industry is dominated by the unorganized sector. According to an Apeda survey almost 1,000 snack items and 300 types of savouries are sold across India. The branded snacks are sold at least 25% higher than the unbranded products. Savoury snacks have been a part of Indian food habit, since almost ages. Though there is no particular time for snacks, normally they are consumed at teatime. The variety is almost mind-boggling with specialties from all regions, which have gained national acceptance.
The industry has been growing around 10% for the last three years, while the branded segment is growing around 25% per annum to stand at Rs 5,000-Rs 5,500 crore, due to various reasons like Multiplex culture, snacking at home while watching TV, pubs and bars (where they are served free). AC Nielsen's retail audit shows that the large sales volumes are due to a marked preference for ethnic foods, regional bias towards indigenous snacks and good value-for-money perception. Of course the branded segment is much smaller at Rs 2,200 crore, which is what makes it so attractive to food Companies that are looking at bigger shares. In the branded snacks market, to get down to basics, Frito Lay commands a share of 45%, followed by Haldiram’s at 27% and ITC at 16%. The rest is divided between a handful of new entrants, wannabes and many regional players.
Of the wide range of snacks available, potato chips constitute a sizeable segment of the Indian snack food industry, according to India Infoline. The potato chip market is generally an unorganized industry. Nearly all potato chip snack products are manufactured and sold locally. There is also no uniform standard for packaging, as there is in Europe, the United States and other more developed regions. Many snack foods are sold loose or packaged in poly-pouches, which may only be folded, or in some cases, stapled closed. As the Indian economy continues to grow, and production standards improve, many snack food companies are making significant investments into plant equipment and packaging machinery.
Pepsi Foods Ltd., now known as Frito-Lay India Ltd., produces India's largest snack food manufacturers brands, including Ruffles, Hostess, Cheetos and Uncle Chips. Frito Lay's story is an example of how American recipes were adjusted to satisfy local tastes. Procter & Gamble's Pringles brand of potato crisp was launched in Delhi in 1999. Pringles is also a baked potato crisp, unlike many other potato based Indian snack foods that are fried. P&G currently imports the Pringles product and therefore the product has been priced at a premium and is marketed to a micro-niche.
Market and Competition
Indian Foods market is a monopolistic market. There are many competitors in all the categories and although they all have similar products available at similar prices, they are trying to prove themselves different through their marketing strategies. However, entry to this business is easy and ITC has utilized this fact very efficiently to their benefit as they entered into the several categories among this Foods business.
READY TO EAT ITC entered into the branded and packaged foods business in with the launch of Kitchens of India brand. In 2004, the company launched KoI brand fruits and spice conserves and cooking pastes. The fruits and spice conserves, were developed jointly with Karen Anand, a food expert. Priced at Rs. 70, these were targeted at the premium segment. The KoI cooking pastes, which were priced at Rs.30 for a 100g pack, also targeted the high-end market. Multi-purpose cooking pastes were also launched under the Aashirvaad brand and these were priced at Rs. 10 for 80g pack. The manufacturing of these products was outsourced to contract manufacturers for saving the operating cost. ITC entered the branded spices market in 2005 and the Instant Mix segment in 2006, both under the Aashirvaad Brand. As on April 2006, the total turnover in the Indian ready-toeat and ready-to-cook segments was only around Rs. 700 million, but it continued to post an annual growth of 20%. By early 2006, though ITC had captured a 35% market share in the ready-to-eat segment, MTR was the clear market leader with close to 60% in market share. ITC exported 40-50% of KoI brand products (in terms of volumes) to the US, Canada, the UK, Switzerland, and Australia. In May 2006, ITC planned to introduce ten more varieties under the KoI brand within a price range of Rs. 35 to Rs. 98. In 2007, some new products have been launched under Ready To Eat category like chutneys, curries, conserves, biryanis (Noor Mahal, Bhori 8
Biryani and some new range of products under Gharana (Paneer Malai, Keema Mutter). After launching all these products ITC FOODS is looking to share 50 to 60% of market by 2008-2009.Following are the major competitors ITC is competing with in Ready to Eat category:
Description Gits produces the selected range of popular ready to cook and instant foods that cover a range of ethnic Indian cuisine-and where the recipes have "Global pallete acceptance". Offers packaged Bhel puri chats such as Sev Puri, Chana Masala, Samosa, Pakoras, Alu Tikki, Pao Bhaji, Gol Gappa, Dhokla among others Offers packaged sweets,syrups,namkeens, cookies, pickles, aloo Masala, Bhujia, Bhelpuri, Chana Dal, Kajui Ladoo and many more items. MTR foods currently comprise twenty-two delicious and completely authentic Indian curries, gravies and rice. Priya has a range of popular traditional recipes starting from Dal Makhani, Navaratan Kurma to Palak Paneer, Paneer Butter Masala, Punjabi Chhole and Rajma Masala along with true southern delicacies like Andhra Veg Pulav, Mango Dal, Gongura Dal.
Ethnic Kitchens MTR
Market Share - Ready To Eat
9% 8% 48%
ITC Ltd. MTR Kohinoor
Others(Gits, Priya Foods etc.)
as on June, 2009
CONFECTIONERY Confectionary market in India is about Rs.2500 crore. It is loosely divided into seven categories: 1. Hard boiled candies 2. Toffies 3. Eclairs 4. Chewing gum 5. Bubble gum 6. Mints 7. lozenges ITC has currently in market with its two brands “Mint-o” and “Candyman”. ITC’s Mint-O fresh secured a 17% share of Indian cough lozenges market ahead of former leader Perfetti which only achieved 14.3% with chloromint. The Indian giant marked the confectionary sector in 2002 and has only two brands “mint-o fresh” and “Candyman”. But in overall confectionary market they are lagging behind having just 3% market share as compared to market leader Perfetti with more than 37% market and providing larger number of brands.
Market Share - Confectionery
ITC Ltd. Perfetti Van Melle 42% 37% Cadbury Nestle 7% 11% Others(Parle, Joyco, HUL etc.)
as on June, 2009
BISCUITS Indian biscuit market is estimated to be around 5000 crore. Biscuit industry in India in the organized sector produces around 60% of the total production, the balance 40% being contributed by the unorganized bakeries. ITC with its premium product, SUNFEAST, is acquiring a big share of market. Within few years, they are able to get 12% share of the market.
Britannia Tiger Nutrichoice Junior Good Day, 50 50, Treat Pure Magic, Milk Bikis Good Morning.
ITC Ltd (Sunfeast) Marie Dream cream Milky Magic Fit kit Choco Nut Butter Nut
Parle Parle-g Krack-Jack Monaco Kreams Hide and Seek Milk Shakti
Priyagold Butter Bite Classic Cream Butter Lite Big Boss Marie Lite Magic Gold
Market Share - Biscuits
ITC Ltd. Priyagold Britannia Parle
Others(Bonn, Anmol etc.)
as on June,2009
No Confusion Great Combination
The Bingo brand of chips was launched by ITC on 14th March 2007 with an aim to
capture at least 25 percent market share of the Rs 2000 crore branded snack market within five yrs. The launch is symbolic of ITC Foods' distinct approach of introducing innovative and differentiated products in a largely undifferentiated market place. Bingo’s launch was strategically timed around the World Cup. The idea was to get the consumer to take that first bite. This was an extremely ambitious target according to observers as the market was dominated by the Frito Lay group (owned by Pepsi Co) with a slew of brands like Lays, Kurkure and Uncle Chipps holding 50 per cent of the market share. The other was the Haldiram group with 25 percent of the market share. Bingo’s portfolio includes an array of products in both Potato Chips & Finger Snacks segment. Bingo! is positioned as a youthful and innovative snack, offering the consumers a choice of flavours that are fast becoming popular. Bingo used combination of leveraging synergies, building on consumer insights and high decibel advertising can win the game. The company leveraged its existing distribution network and relationship established with farmers. Its earlier foray into categories like atta and biscuits had already given it access to the supply chain.
Before the Launch
Research: After making the decision to launch Bingo it started by sending a crossfunctional team of eight individuals were sent across the country to research the snacking habits of the Indian consumer. After travelling to 14 cities and speaking to more than 1,000 people, the team came back with an insight that Indian consumers were looking for novelty and excitement in existing snacks.
The team found that while vada pavs and samosas still sell vada pav with cheese and paneer-filled samosas, or for that matter, tomato-flavored khakra were the ones that excited the Indian consumer. Based on this information, the company decided to look at chips with innovative flavors. Taste: For the recipes, the company went to the chefs in its hotels. The chefs came up with 16 flavors with innovative twists like bindaas masti chaas, chatkila nimbu achar and tandoori paneer tikka-flavoured potato chips, chilli and tomato-flavored mad angles — inspired by khakras — and other snacks. The organized snacks category is subdivided into the Traditional segment (Bhujia,Chana etc) dominated by Haldiram. The second category is the Western segment (potato chips,cheese balls,puffs etc) and the Finger snacks segment which is an adaptation of traditional snacks to the western format. The latter two categories are dominated by the Frito Lay group. ITC has launched an aggressive marketing campaign to gain entry into and capture a sizeable market share in the extremely competitive world of snack foods. 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.
The packaging is very attractive with dominant variant color, crimp border colors and a pictorial view of the flavor. This property of flavor depiction is very informative for consumers and a layman can also associate with it. Bingo has a unique musical sound that is loved by everyone. It is one of the properties that are remembered by everyone and it is used to recall the brand by every age group.
1. Frito-Lay • • • • Lays Kurkure Uncle Chipps Cheetos
2. Haldiram 3. Regional Players like Balaji
Comparison of Prices:
Product Price (ITC Ltd) Bingo Rs. 5 Rs. 10 Rs. 20 Product Price (Frito Lay) Lays Rs. 5 Rs. 10 Rs. 20 Uncle Chipps Rs. 10 Rs. 20 Kurkure Rs. 5 Rs. 10 Rs. 20 Product Price (Haldiram) Namkeen Rs. 5 Rs. 10 Rs. 20
Bingo provides innovative finger foods like the pakoda inspired Live Wires, Khakra inspired Mad Angles and time pass snack in the form of Tedhe Medhe. The Potato Chips offerings include Salted, Masala and Tomato flavours, Chatkila Nimbu Achaar, etc. Bingo! – International Cream & Onion is the brand’s latest addition to its existing unique and exciting range.
• • • Variety & innovation in a largely undifferentiated Variety & innovation in a largely undifferentiated market. ITC launched BINGO in 16 flavors to cater to tastes of the country. Foray into the “Health Snacks” segment by introducing Bingo as baked-chips.
Major Strategies Adopted by ITC for Bingo
1 Product - Assortment of flavours and eye catchy packaging. 2. Price - Pricing Strategy 3. Place - Widespread availability at big and small retailers across the country. 4. Promotions - T.V. Advertisements
Bingo! positioned itself with its Indian flavors such as Tandoori Paneer, Tikka, Spice Paneer etc. For the South Indian market, Bingo! had flavors such as Chatkila Nimbu Achaar, Achari Masti etc. 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 flavors more easily than the small kids. 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 flavors. Additionally a 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. Packaging- ITC has done the packaging such that the product attracts the buyer. Apart from it has also launched packs with different quantity keeping in mind the specific consumer demand.
When ITC launched Bingo, its main challenge was to compete with the players who were already there. To overcome this challenge, ITC realized that they have to offer products at a price which is either equal or less than what the competitors are offering. To do this, they planned to capitalize by leveraging the strength of the group’s other businesses. ITC’s printing and packaging business provided high-quality, cost-effective, and innovative packaging. ITC also enjoyed cost advantages over its competitors owing to its electronic procurement system called e-Choupal. This helped ITC to compete with the best. Initial pricing of ITC bingo is a direct frontal attack on Frito Lays with pricing of Rs 5, 10 and 20. Now Frito Lays has launched small packs of Rs 3 each. It needs to be seen whether ITC can leverage upon its huge distribution network to counter this.
ITC has adopted a Market Challenger strategy with the launch of Bingo! and has chosen a combination of flank and frontal attack against the market leader Frito Lay’s. The Company has 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 FritoLays introduced its own version of wafer racks. Within six months of the launch, Bingo was available in more than 2,50,000 retailers across the country. ITC has 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 stock only ITC’s Bingo. HORECA (hotels, restaurants and cafes), entire cigarette distribution network including betel shops are being used to distribute the product to a wide range of consumers. Initially Bingo sponsored many Bingo Remix nights in various clubs as well.
T.V. AD Campaign: Bingo’s launch was strategically timed around the World Cup to cash in on the tremendous popularity that such leisure and cocktail snacks would find among cricket lovers in the country. The idea was to get the consumer to take that first bite. Not only the flavours but also the advertising was supposed to have an Indian touch. Within a month of the launch of the initial advertisements, 70% of the viewers could recall the brand thus capturing a share of the mind of the consumers. Brand recall along with 16 flavors in three SKUs helped ITC to capture 16% of market share in just 18 months. The advertising strategy used humour to sell Bingo. Bingo!’s advertising follows the AIDA model (Attention, Interest, Desire, Action). The clutter-breaking ads with their slapstick humour and irrelevant themes garnered enough eyeballs to create awareness of the product and generate an interest towards the product in the minds of consumers. The ads are simply insane & nonsensical to the point of being bizarre & utter crap. And that is why they are so funny. This resulted in high product trials. What’s interesting is the fact that Lays uses a brand ambassador approach with the celebrities having mass appeal such as Saif Ali Khan, Juhi Chawla & M S Dhoni whereas Bingo has managed to do well without one. It still doesn't have an ambassador. Bingo! Mad Angles Twister is a crazy application with which can turn the status messages upside down on facebook which can make the users and viewers go crazy trying to figure out your secret of that twisted message. So this was another kind of strategy being used for promotional purposes apart from advertisements , ringtones and videos promoting the same.
On television, the company booked 10 to 15 spots per channel per day on youth channels such as MTV and Star World, mass Hindi channels like Zee and Star TV, and news channels. It also had around 20 spots on a variety of radio channels and advertised in most leading national dailies. In the top-30 cities, over 1,000 outdoor hoardings advertised the product. According to industry estimates, ITC spent close to Rs 100 crore on marketing.
Bingo has managed to do a dent in Lays market share. Is the fact that ITC spend close to 3 years researching, finding and analyzing the Finger snack segment to come up with its own indigenous variety responsible for Bingo's success The 'insanity' in Bingo's promotion is a carefully knitted strategy that was instrumental in Bingo's instant success. Marketing Guru's call it "Disruptive Advetisement" This is one those cases where advertisement/promotion has been the biggest factor in the success of a brand. The fact that ITC has a well established distribution network has also helped it increase consumer interaction points.
The adverts which were full of humor, cheesy & non-sense jokes, and relevancy with the brand helped in establishing the brand Bingo. While I agree the theme of the adverts were irrelevant from the product point of view, they were relevant and totally associated with the brand image (which was also present in its tagline - No confusion, only great combinations). With the help of all the above strategies, ITC finally tasted success in Bingo in 2008 when it became a profitable business for the first time since its launch in 2007.
Major Hurdles faced by Bingo
• • • • Brand Loyalty of Lays customer is posing threat to Bingo Stagnant Market Share Unawareness of the variety of flavours introduced by Bingo Threats of local players
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.
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.
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).
Since Bingo 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.
Value Chain & Porter’s 5 Forces Model
Value Chain Analysis Of Bingo Chips
The value chain is a systematic approach to examining the development of competitive advantage. It was created by M. E. Porter in his book, Competitive Advantage (1980). The chain consists of a series of activities that create and build value. They culminate in the total value delivered by an organisation. The 'margin' depicted in the diagram is the same as added value. The organisation is split into 'primary activities' and 'support activities.'
Inbound Logistics. Here goods are received from a company's suppliers. They are stored until they are needed on the production/assembly line. Goods are moved around the organisation. Bingo receives its raw materials from potato vendors from the plantation area. Bingo has its own vehicles for carrying the goods which reduces its cost of transportation. Operations This is where goods are manufactured or assembled. Bingo chips has a big factory unit at Gurgaon where FritoLays also has a factory. Since the factory is located in National Capital Region which itself is a big market for snack lovers. Outbound Logistics The goods are now finished, and they need to be sent along the supply chain to wholesalers, retailers or the final consumer. Marketing and Sales Bingo promoted its products through many promotional events,it has tie ups with many retailers , opened many outlets and mass media campaign through actors ,heavy advertisements done during the cricket world cup 2007.Bingo also went online and opened their own website. Bingo also launched many online games to spread their product to people who were below 25 years. ITC spent around 50 lakhs for advertsing Bingo chips through web. Service Bingo has varied flavours which caters to the needs to all the types of customers in the country. ITC has started the campaign for providing education to the school children. Support Activities
This function is responsible for all purchasing of goods, services and materials. The aim is to secure the lowest possible price for purchases of the highest possible quality. They will be responsible for outsourcing (components or operations that would normally be done in-house are done by other organisations), and ePurchasing (using IT and web-based technologies to achieve procurement aims).Bingo uses poly bags which contain the chips. ITC’s procurement and manufacturing synergies across divisions have helped it to reduce costs for Bingo as well. Its e-choupal model for direct procurement is also well known, under which ITC partners with over 100,000 farmers for spices and wheat procurement. This kind of rural pedigree is hard to beat. Technology Development Technology is an important source of competitive advantage. Companies need to innovate to reduce costs and to protect and sustain competitive advantage. This could include production technology, Internet marketing activities, lean manufacturing, Customer Relationship Management (CRM), and many other technological developments. Human Resource Management (HRM) ITC build business leaders who create value. Who believe that the future belongs to those who are able to create it. Which is why it values integrity, creativity, passion, a 'will do' attitude and the will to succeed above all else. Together, these empower the prople to take risks, to experiment, to set their own goals and win in the market place. In turn, ITC encourage those who are eager to take the initiative to continuously learn and experiment. These are the qualities which will help us remain contemporary and relevant at all times. The management believe that the most enduring way to retain talent is to enable the people to continuously add value to themselves.
At ITC we believe that our mission to enhance value creation for the stakeholder can only be achieved through the quality and commitment of our people. Towards this end, we continuously strive to unleash the potential of each individual. We leverage human capital for competitiveness by nurturing knowledge,
entrepreneurship and creativity. We believe it is these strengths that will help us successfully compete in a globalised environment and exploit emerging opportunities. We reward the will to succeed and the desire to compete with the best in the world. We stimulate the drive to be the best and take immense pride in being Indian. We take an integrated view of structures, competencies, tasks and processes and link all these to our long-term goals. Our performance management systems focus on performance, meritocracy, equity and the upholding of company values. We keep our work environment simple, informal and flexible with a strong emphasis on human values. We value ideas and give people the space to execute them. We keep our people intellectually stimulated and give them the freedom to take their own decisions. And the responsibility to make ITC grow through innovation and experimentation. We have remained a vibrant company for nearly ten decades now because of our ability to manage change proactively and to reinvent ourselves continuously without compromising the ideals and values that have sustained us over the years. Firm Infrastructure. Since bingo is a product of ITC which contains the huge varied products in its factory , The snack can be organised in a well fashioned way. ITC has one of the best infrastructure in the world for food products. Hence the manufacturers can produce Bingo chips in large numbers.
Porter’s 5 forces model for Bingo chips
Threat of new entry:
Since snack products is a growing market , ITC may face new threat from Parle,Britannia who have tried their hand in selling Biscuits. Also the cost of chips of various companies like FritoLays are similar to bingo. The new entrant may penetrate the market by reducing the price. ITC has not yet conquered the market and hence there are chances that the new entrant may enter in to the scene.
Bargaining power of supplier:
The bargainign power of the supplier refers to the ability of the suppliers to raise input prices, or to raise the costs of the industry in other ways. Bingo is weak in providing the supplies to the retailer or the wholesaler. It cannot bargain the price to the consumers since it has not achieved the significant percent of market share in the snack industry.
Bargaining power of buyer:
Since bingo chips has 13 percent market share , it is keen to provide good service to the customers and increase its market share. It has increased its content by 50 percent to create a new taste among the customers. Since the snack market has a demand from the customers through out the year, the bargaining power of the buyer will be
Frito Lays has started a website(www.kurkure.co.in) to engage people to participate in public forum and online games . This is an attempt to indirectly drag the customers towards the product. But Bingo has tough competition from Parle which is now eying a 25 per cent market share through an aggressive marketing and distribution strategy. Mayank Shah, Group Product Manager, Parle Products, says, “We have witnessed good demand for our snacks. More people are trying our products and we will continue doing activities to generate more trials.” Parle has increased the volume of Musst in west, east and north and is now in the process of replicating it in the south. But Parle and Frito Lay can hardly afford to under-estimate Bingo. Dar says the company has several other surprises up its sleeve, which are at various stages of development and completion. Though he refuses to give details, analysts say Bingo, which is already worth Rs 400 crore, has the ability to shake up the market. Since variety is the core of a snacks brand to retain consumers’ interest, the company asked the chefs at its hotels to suggest 16 flavours with twists like bindaas masti chaas,
chatkila nimbu achar and tandoori paneer tikka-flavoured potato chips, chilli and tomatoflavoured mad angles - inspired by khakras - and other snacks. The second part of the variety came through irreverent and fun campaigns. Consumers were asked to design the ads for Bingo using the angular shape of the chips as the central theme. Marketers call this ‘crowd sourcing’, which serves two purposes — it engages the end-consumer and the campaign is done at the lowest possible cost. Bingo also ensured that it reached its audience through every possible medium. It first created a website www.bingeonbingo.com with offers, online games, downloads and even mobile games. The site was advertised with banners on websites such as Yahoo!, Rediff and Sify. Analysts believe the Bingo story is also about well-leveraged distribution. The company, for example, distributed more than 400,000 large racks, to display the brand at all points of sale. The racks created a huge impact. The importance of Bingo is evident from the fact that potato-based snacks are the largest product segment (85 per cent share) in the Indian snacks market, followed by snack nuts, chickpeas and other pulse-based savoury snacks.
Threat of substitution:
Kurkure may be considered as a substitution product for bingo. With TV ads and online forums , Kurkure has advertised heavily to attract customers. Bingo has not penetrated in to the market and there is a chance of being substituted by the other products. Also the various flavours
SWOT & PEST Analysis
ITC, the brand owner of Bingo, and various other brands, primarily the Tobacco industry, is strong enough to compete with global players. This as an added advantage can prove ITC to be an Indian Multinational company though. The diversified presence in various industries viz., Tobacco, Stationaries, food processing etc makes the base of the company stronger, and this invariably adds as a biggest strength to the BINGO brand. Moreover the distribution centers of this age old company is available with experience that can easily absorb the current trend in the market and the taste of the customer can be annotated without much negotiation. The strengths of the Brand is readily overshadowing the weaknesses, so does the opportunities to threats. But, the company should not conclude on this cold base to enjoy the benefits in the hand, rather a focus on the minor weaknesses and threats should lead to a path that paves way for the possibilities of being a brand leader, overcoming stiff competitions from Multinationals like FritoLays and Pringles, National competitors and the local products. STRENGTHS: • • • • • Availability of Raw materials Availability of Manufacturing facilities Domestic markets Urbanization Catering the market distribution
WEAKNESSES: • • • • • Insufficient infrastructure In-prominence in quality control, unable to meet the international standards High working capital Lack in innovation on variants Large number of intermediaries thus causing a slog in distribution
OPPORTUNITIES: • • • • • Change in consumer patterns Rise in income level of customers Change in lifestyle and demographies Opening of new international markets Integration of new technologies
THREATS • • • • • Prevalence of cultural taste brands High taxation Inventory cost Stiff competition with regional players Close competing Multinational brands
PEST analysis is one, that is merely a framework that categorizes environmental influences as political, economic, social and technological forces. Sometimes two additional factors, environmental and legal, will be added to make a PESTEL analysis, but these themes can easily be subsumed in the others. The analysis examines the impact of each of these factors (and their interplay with each other) on the business. The results can then be used to take advantage of opportunities and to make contingency plans for threats when preparing business and strategic plans. PEST analysis is a useful strategic tool for understanding market growth or decline, business position, potential and direction for operations. The headings of PEST are a framework for reviewing a situation, and can in addition to SWOT and Porter’s Five Forces models, be applied by companies to review a strategic directions, including marketing proposition. The use of PEST analysis can be seen effective for business and strategic planning, marketing planning, business and product development and research reports. PEST also ensures that company’s performance is aligned positively with the powerful forces of change that are affecting business environment. PEST is useful when a company decides to enter its business operations into new markets and new countries. The use of PEST, in this case, helps to break free of unconscious assumptions, and help to effectively adapt to the realities of the new environment. POLITICAL The ITC brand is a house hold brand in India. The political scenario in India is such that the open invitation to the MNCs to be a part of Indian Snack Industry and on the other hand the government is conservative in Indian brands too.
ECONOMICAL ITC rightly introduced Bingo in the market when there was less or no supply for Lay's in the market for a prolonged time. With this way, they developed this product,the advertisements were gived a keen focus. The same worked when the Mom-and-Pop stores across the country agreed for the trendy display of Bingo.
SOCIAL To cater the Indian demography is a herculean task with taste spread all over the country. Thus to satisfy the customers in their taste and demography, Bingo offers sixteen variants, each specially made for the respective demography. The product profile, in longer run may be truncated by keeping those products that doesn't market well. TECHNOLOGICAL The close competitor of Lay's which banks on the sentiment of being trendy and cool, though with a larger market share of 45%, is running behind Bingo in Innovation they incorporate with the product. Bingo has special variant which is baked and non fried variety of chips that can prove to be against trans fat in its covers. This in turn will not fail to attract those people who consider themselves to be strict against the usage of oily snacks.
Conclusion & Recommendation
Although Frito Lays is the most popular brand Bingo has carved a niche for itself. Bingo is in the growth stage of its life cycle. Given more time it is capable of capturing a larger market share and giving tough competition to other brands. Its focus is more on product innovation and distribution and invests heavily in promotion. In the coming years it will become a dominant player in the domestic market.
Recommendation • Brand Packaging:
Bingo can come up with different shapes of packaging. Different packaging always attracts consumers. Usage of different colors for packaging will be helpful as the customers will be able to differentiate among various products. •
Company can opt for seasonal promotions. Gift packs or combos with 4-5 flavours can be introduced. Can tie up with beverages like Coca Cola during festive season or can sponsor events like cricket tournaments etc.
The existing advertisements have been successful in creating brand awareness. Now its time to focus more on taste and variety of flavours, tempting the consumers to purchase the product. An animated character can be used to describe the flavour.
Having too many flavours is causing some problem because the customers are not able to differentiate between different variants. Even though it’s a good strategy as people are forced to try each flavour, the ones which are not going good in the market should be removed from the company’s portfolio. This would reduce the problem of confusion amongst the consumers.
The company should launch a contest like “Send in your Bingo recipe” which can help the company to increase its market share.
1. www.itcportal.com 2. www.allbusiness.com 3. http://www.financialexpress.com/news/Just-munch-it/271873/0 4. www.wikipedia.org 5. www.moneycontrol.com 6. www.economictimes.indiatimes.com 7. www.bingeonbingo.com 8. www.google.com
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