tree mplc COpies toqUtllified managers and reaoers.mne fer young. All pnnted ""pressed Prlnt. Rajmohan from S·21. plea e write to sublllgo-roagaZlne. amblUous managers. February 2009 3 .blz Go 100. Ltd: pllnted at G.'Britannia has grown strongly and maintained HOlISe (lw. Tanejal Medm R. All mate(fal 00 magazine's rmssion IS to help rn~nagers.repreneur: Algerian phoenix Academia: Sou ttl African BPO Trends: Nollywood 59 iDGM Manlsh Dep"!) Kaden1 M'anager :1:8 22 24 32 EAST AFRICA 60 '61 i Mano] Sonl SERVICES DCM • LoglsUcs B FINANCE UNDER THE HOOD: Satyam B OPERATIONS LINGERIE: Inside underwear OTHER FEATURES B TECHNOLOGY -64 62 RaJeev Mehandru DGM • Customer Relations Hemanl Wadnawan anager. we welcome all comments ana feedback.e Foundor & Editor Chnslap er Fodor 10dor@Quantummedla. & Published by R.bi7 For ubSC"p\IQn .aha (Deihl! Nlli. S. Okh! Industrial Area Phase Editorial Director Mlchaet Fodor Oe$lgn Rey oeierne Danrs Fuentes GO is Publ Shed In Ihe Middle East by Corporate Publishing tnternauonat. B ACADEMIC FORUM B CUTTING EDGE ShaadJ's success Executive compensation Organisation redesign 44 50 B AMERICAS Entrepreneur: Anti-poverty VC Trends: Container homes Academia: Internal corporate venturing ~ EUROPE 54 B MIDDLE CASE STUDIES FJ MARKETING BRAND EXTENSION: Leveraging the brand Entrepreneur.Ide~s. Send an emau With }Wr name. and lI1us their career opportunities. Phase·i.I$Or..lUdles.ed mailer contained In trus magazine are based on Information from 1I10S8featured In I tne I<'WS.JOb uue and phO~e number to sub@go-magaZlne. GOmagazine gladlyse. as well a. LUI. MISSION STATEMENr GO magazine IS a mam>gement mag. Reproducllon 11\ any manner Is prohibited. New Oelhl110 020 and publlshl:d by fl. GOmagazine covers marxetmg. )\·2:>6.eCi:h. fla)mohan on behall Of Images MullHl'Iedia Pvt. bus".MUslng Kllishnanand OM· Circulation Anil Nagar Branch Managers RaJeev Man. (B'IOle1 DOSSIER B STRATEGY B SECTOR WATCH B FINANCE Growing Food Commodity Britannia markets 04 WaSeem Ahmad [Murnbar) Pi~1I Roy Oberl!ll (KOlkala) Sr. cross allindustiles and functiOns.{agallne.ess school sl~delllS. RaJmohBn Editorial Contributors Red Tree Convergent Sunaina Anand Sahana Ghosh Kavlta Kukday Alok Pandey Sridhal Raman A"d. What did it do could it do more? Edltor·ln·Chlel Arnnabh Ianeia I President & Publisher R. P. 10 Improve their management skills and kl1owledge.H Prints Private Ltd. comments and oPinions are solely of thOse featured and the EdllOr and PublISher do I\Ot neccssarily subscribe to tile same. S.ooml for granting access to lts cas s. Of bam and each of Ihem M. Manager· Circulation 10 12 times 40 B ASIA Trends: Advertising on cars Entrepreneur: Electronics 16 17 29 30 31 C-SUITE B LEADERSHIP B ENTREPRENEURSHIP Leading Shrlsh MUdgal "'anager· Advertising Anlrban Sarkar (Kolka.elsl(>cI emlulrles. lI1e core dISCiplines of busness administration.. NI!'N Delnill0020 Editor Amllilb Taneja For feedback write to Info@g(».w.SubscrlpUons Aparna John B MANAGEMENT CHARTS: Visual intelligence ~ BOOKS ~ DOING BUSINESS IN: Frankfurt 66 GO magazine tha~ks tne European Case Clear. O~hla Industllal Orea.. finance. which are most helpful In preparing some of the edItorial rnatertal. printed In IhlS publication Is the sole property Of ChnSl(Ipher Foclor or Images MultimedIa C'OPl'nghlSon thetr respeeuve materials. Swiss drugs 37 Trends: Driving so tware 38 Academia: Responsible procurement 39 Ent. 'M~nager· ClrculaUon in troubled R.'· 'MarkeUng Ravlndra Klltl IPflDDUCTIOfj.P. operaUons and general management. Singh (Mumbm) Dr" Manage.bIZ. Rrtt/ Anja Ii Sandhi Art Director Pawan Kumar Verma De$ign Mohammad Shakeel RaM Juneja Photo Coordinator DeepakJhB BUSI ESS orsrcs 'IlP· Advertising Deepa Gopmalh GM • Ad.

dominated old __ timers. Danon is trying to exit the partnership. unlike other food giants in the world Rather thau ventureinto new product categori . small-quantity packs.. building on existing strengths. Tl'C's massive foray into this market is all B!ralfldilng There are three segments in the Indian biscuit industry (see box). By and large then. known as nano packs.'o.201l8. Britannia runs a distant second with 19%. Jagdeep intriguing oue as it is not a product-centred one.a Group acquired a 44% take in Britannia and sub quently. Britannia's ob] ctive has been to be present ill! all three segm nts. took the helm in 2005. 4. To reach thi position.8 . Ianaging Director of Samsika Consulting notes their success in thisregard: "Britannia's major strength has been to build presence across all price segments. through its Tiger brand.. when he was sacked over allegations of financial lrregularities. rather than creating new ones from cratch.9% and 7.1. Sunil Alagh served as Managing Director of the company until 2003. while IT comes in at arou nd Foods The 10%. A strategic move occurred in the 70S when it took over biscuit distribution from Parry's (1975). under pressurefrom raw material cot inflation. Analysing Britannia's current position is thus amatter of examining Ms Bali's strategic initiatives.Britannia has usedline extensien. an old presence ill the segment and the market leader. 2007 third of revenues.5%. rrc Foods. the strategy has been Associated Biscuits Interuational. In 1993lhe Wadi. Kapoor. One. Before jumping into that 20th 21" and 20{18. was created in Kolkata in 1892. Britannia has g1. and one new kid all the block. but an acceptable compromise has yet to be negotiated. r. each segment a contributing approximately three players account for some 75% of the market. The Go Indla February 2009 4 . their recent strategy has been to leverage well-establishedbrands rather thaa establish new ones.28% and 17%. They have succeeded in doing so in II wellbalanced mann 'I ndia's big and growing by three players: lWO bi.000 442. tonnesl) Year founded in competition. Britannia. staying within existing categories and introducing product variations (often around nutritiousness). there is little nsk-taktng. but an advertising-and distribution-centred one.5CUilllla:l"ketis. Chosen for her marketing exp rti acquired at Cadbury and CocaCola.vnat over 15% over the last thre years. i a recent standpoint.4%. The third player. So Britannia is a leader in terms of market share and has appreciabl mom ntum in th form of strong revenue growth wliile maintaining II respectable return on sales. Camp titian in thi glucose segment is fierce. which holds a controlling take in Britannia.rh~21l09 year-to-date growth l-ate is 24%. but return on sales has nevertheless been a respectable 8. a bit of century background. with the introduction of lowprice.000 25. which i't launched in 1997. Britannia and Parle each command over 30% of the total market. Britannia's strat >gj' has b n one of incremental rather than radical innovation." Britannia approaehes the high-volume low-price category. posting sales increases of 13% •. One reeentvisiblearea of innovation has b.STRAT'EGY -~---- DOSSIER . Britil!ll1ia and Parle.9 its cash for massive advertising campaigns and it ubiquitous distribution system to offer con umers biscur the way '[annes of biscuits 2008 Sales 2008 ('As billion) PAT 2008 (~s billion) it offers them igarttes. Profitability. Vinita Bali. Today. From II brand. has been more volatile. the current Managing Director. with its Sunfeast brand. Parle through its Parle G brand. some of which build upon Mr Alagh's legacy. Two other major playersare a conservative one. using a strategy of incremental innovation.FOOD TOO RISK AVERSE? Although Britannia biscuits is growing healthily. controls 67% of the segment. in the fiscal years of 2006. became 311 equal partner with the French food giant Group Danone in Biscuit production . ITC is not leveraging any particular baking experienc but is using 1892 Bangalore Headqua:rters Employees 2. in the number lor 2 market share position. century strategy. ITC Foods. en packaging.

Several of the product introductions have been centred all increased product nutritiousness. Nutrichoice (1998) and Treat (2002.2007 the Indian packed food market was estimated at iRs600bn.004 2005 _Sales 2IJOO ('000 tnnnas] 2007 Sales (Rs bllUon) 2OOIl1pmj.. marketing is a key 'to competitive entries pose a menace.OVEINS CHIUiRNINIG lndlans love their biscuits.llse the strong Jagdeep Kapoor believes likewise: "The strategy has b en one of tweakings and timings. and Tiger Banana (2008). it was rrc that. Jagd ep Kapoor underlines the success of lndlan biscutt market I . Given the lierc competition in the low-end segment. in which Britannia is accusing Danone of selling the Tiger brand in. 50:50 brands (1993) and Milk Bikis (over 40 years old) brands. Production rose from 0. Britannia is present through its Marie Gold (over 17% an 110t I 8% re pectively.trategy of continuous product introduction . But here too.8 million tonnes in 2004 to 1. n AdY. Overall.. It is leveraging its brand equity rather than entering into new food categories. younger brother of the late biscuit baron brand names and introduce safe product variations.some of its overseas markets."lhitarlnia introduces ·Go l!!!li. Testimony to the brand equity is the legal wrangle between Group Danone and Britannia. February 2009 5 . the biscuit market constitutes about 13% or some Rs 75 has adopted a . often centred 011 improved healthiness. As in. with over 4096 share. consumption is a quarter of Europe.11 the food busine s.a:llagillg Director .j _ AC.segment. And those sorts of growlh rates are sustainable .) brands. ntered the fray in a b~g way. rather than radical innovation . by AC Nielsen. one of incremental innovatiou.3 million tonnes in 2007. In the hierarchy of world biscuit producers. Rather than a strategy of innovation... substantial cash at the disposal of the cigarette behemoth has allowed it to build lip a w% market share in Uris segment.. In the [ow-end segment. Thal means that a doubling of Indian biscuit manufacturing in the medium term. i also attentive to this segment as managing director of til Indian arm of the Australian company. while Parle and ETC control only se king prior p rmisslon. Such intellectual property protection problems are the price of branding success . The biscuit market is a growing one: 15% in 2005. in the nonglucose segment. . a 50% Increase In 4 years." Another third of r-ev nues is generated in the pI" mium-price segment through the br-ands Good Day (1986). Britannia has constructed a cleat market leader Rajall Pillai and head of the Europe-based B ta Group. 22% In 2006.despite the famed Indian love affair with biscuits. Within all three segments.Research at IDFC-SSKI. India stands on the third step of the podium.. Here is how it is summarised by Nikhil Vera.elrt:ising The success of Britannia's brands has been the result of sound product quality and astute advertistng. without thelower-price glucos . Is not an outlandish targe·t. it is better to speak of a strategy of continuous renovation. This segment contributes around a third of revenues for Britannill. the strategy is one of continuous leverage. at some Rs 75 bililion L billion in sales. Chota Tiger (201)7). Bl"itannia can rest on its laurels . In the non-glucose mid-price segment.•Just as new in the low-price segment. thanks in particular to astute advertising around game shows and World Cup eri ket. Unibic Biscuits. 17% In 2007 and 200815 projected at close to 20%. 1. ikhil Sen. n Within that. Britannia 50 years old). its non-glucose strategy is to bring about new product variations. These efforts have allowed it to maintain the 50:50 brand: "Britannia has succeeded in dev loping this well named brand. Tiger reams (2002). Pillai ha been keeping his eye on the top end of the biscuit market (evaluated at Rs 400 crore). A former chief operating officer of Britannia. n position.witness Tiger Coconut (200L). third in the world. In the higher-price segments the threat takes the form of Rajmohan Pillai. that near 20% market share (which contributes a third of its revenues' and al 0 brand consumption and half of Southeast Asian countries. more than it attempts to create blockbusting novelties. behind the US and China. product variations within its brand families.. if not counterfeiters. That makes for a huge market. a successful brand as Britannia has with Tigert and you are hound to have to deal with imitators.

This initiative has earned it international attention . The strategy was to introduce new. Britannie is the first Indian biscuit player to enter this arena. Think better'. aimed at the head. Illa~nched I Over 40 years Old Milk Blkls 1986 Good Day I 1993 50:50 1991 Tiger 1998 Nutf. A new premium price brand was created.1 2002 'Brand Name Marie I Treat IBRnANNIA PRODUCT LAUNCHES wa . to reinforce the corporate brand and build distinct images for its various bi cuit brands. such 11.. Over the last years Britannia has Developed that health-based strategy by introducing products with nutrient's and without trans success as Nikhil Vora insists: "The major competitors in the biscuit market al! have good distribution systems and the re 'is no major difference ill product t elrnology. Those are not real dif£ renriators: marketing is. hut ahead of its archrivals Parle (3nl plac ) and Sunfeast (8. That repositioning was summarised in a new second place.FOOD BRnANNIA 'BRAND nMEUNE Over 50 years Old . Britannia fats. the companycould leverage this first player advantage. Tiger Iron Zor. the World Bank Institute Britannia mentione d this effort .Britannia is one of only five brands that has been in the top 10 each year for the past fiv years.h place). behind Tata Salt. (linked to World Cupcricket TV shows for example) a mix of more functional and more emotional advertising spots.Britannia has promoted its brand through 6 . In this way . In a survey of food brands (the 2008 Ec(momic Times. Memorable tag lines. 'the sort of brand leveraging practised by Britannia does make sense. Brand Equity ranking). The company spends about 7% of its revenues all. J agdeep Kapoor confirrns Britannia's advertising savvy but worries about the rec nr mphasis on ranked 7'\ while its rival Parle was 10 places back at l7'h. more nutritious biscuits in the various price segments. ill an attempt to attract healtb-eonselouscustomers. havs fostered brand recognition. A third is biscuits with no' trans fat.1112007. 'Eat healthy. This reputation has spread outside India's borders. Doe focus has been high iron biscuits. To g t at impulse buyers in particular you need to get at their emotions." holds Barish Bijoor.lchoice . Britannia partnered wtth the Global Alliance for Improved utrition (GAIN) and the Naandi Foundation to upply its iron-fortified Tiger biscuits formid-daj meal programrn s in Indian schools. In a case study en ways of combating malnutrition." rnanufaeturlng Various brand rankings attest to Britannia's marketing success. DOSSIER . When you have that sort of brand renown. "Britannia has done a good job of 111 illg lip functional and ix celebrity campaigns. was alsoinvited to Healthillnd Delight Back in 1997. appropriately baptised Nutrichoice. EO of Harish 13ijoor Consul ts. perhaps creating something of a s If-reinforcing feedback loop . Brand Equity compiles a li I ofmost trusted Indian bra lids . Were Indian join the Clinton Global Initiative which brings tageth r global leaders to invent and implement solutions to the world's nutrition problems. the advertising has more recently b en.. such as Nutriehoice 5 Grain. a two-year market research campaign led to a repositioning of the mother brand." food regulators toirmtate their European and Am riean peers. "Because ofthe emphasis on health. or It might be-time to target the heart again. innovative campaigns. Britannia has also used its turn toward nutrition to build a reputation for corporate social responsibility. advertising and it appears to spend it to' good effect.STRATEGY I. In its most visible initiative. . Anotherarea has been highfibre biscuits.

it provided only 5% ofrevenues. trategic weakn has b 'en the inability to tryout two or lin . Th . dairy and bread.To u e a metaphor . the three segments are fairly balanced [around th Rs 25 . (Delight and Lifestyle _ 20 10 0'----Mas. "Til ere i little synergy ben c n the milk and the bi cuit busines es. This portfolio itructuring i ace mpani d by a new slogan which brings tog th r th h 0 categori . to calc up in categorie out id of bi cult . Britannia is the lead r In the other two. with the popular segment ahead of the mass and premium segments. . than 6% ofre enues. to J l a low of 22% in the high-price segment. th Britannia product is of go d qualit • and the price p ~nts and r aS011S: food categorie .n Jagdeep Kapoor also points to pu sillanimity: "Britannia's major . Fonterra Group. breakthrough concepts in diff rent food ategori . in .DOSSIER . In terms of value contribution. m in Lifi or adding life (styl ) to life (long \Ii I ).'!opm nt of th health-bas d produc has allowed Britannia tu maintain their visibility:' Now ilia! the health-bas d trategy Outside of biscuits? Britannia remain. Britannia is now organising itself to have its cake (Health and Wealthne s) and eat it too. with 67% market share. with enior marketing executive a sign d responsibility for each ofthem. Parle is the clear leader in th~ mass segment. The urban/rur I dlvide is fairly pronounced. first and f remost a hi cuit cornpa 11 • The twn other division. . the inability to nter and good to se management pay attention t br ad and cake. xmtribute only orne 1 % of rev nue. As Tlarl h Bijoor points out." Y ars but from a very man ba e . giving the mass. the product portfolio has I' 50 c ntly • been divided into two categorie Health and Welln .Jagdeep Kapo r it SI? • rhe B R strat gya follows: -u is J billion range). ocial consciou ·ness. but provid sic. cake and ru k (B R). and therefore also at Britannia's strategy.. Adopting such a perspective.. th re are three categories: the mass segment with a low priced biscuit (the Rs 40/kg range). Britannia is att mpting to cliffer ntlate and maxirni e the benefits of th two pole of it biscuit business. the newer nutritiou ne s pol and th older indulgence 101.FOOD STRATEGY THE TRINITY OF BISCUITRY I The most common segmentation of the biscuit market is by price point. from the baking bu iness. They grov in other food categories i worri orne: "The one di appointing thing about Britannia' p rforrnance ha been it inability to rt nd the strong mother brand into new Go I"db February 2009 7 . after year of relative neglect." ikhil ora poin out. Th B R division ha mol' potential. likebi cuits. with 40% market share. Britannia has 'not b n abl .in 2008 .' I'll U R has doubled in siz 01\1 r the Ia t h.sSegmenl distribution yst III arc suitable. '(ndingly. the popular or mid-priced segment (the Rs 50/kg range) and the premium segment (the Rs 60/kg and above range). Urban markets account for at least 60% of biscuit sales.997 and then spun it off as ajoint venture with the New Zealand giant. Rural penetration van s from a high of 55% in the low price segment.. Jagdeep Kapoor C0111m nt on the health-be ed strat gy: "Th shift toward nutrition was a smart ne. There is yn rgy. is by price point.2002 . Th divi ion has becom cash po itive. and Delight and Lif tyle. i all about baking and baked products. Britannia nt red the dairy business in 1. • Rural ponetratlon in segment has succeeded in solidifying autrition-centred brands and product . popular and premium segments basic way of looking at the blscult market. B R however. CIt·\. Ru k hould continue to grow for thr e it 'fit th Indian palate.

' Jagdeep apoor concurs while 1 ointing out the urban tilt of Britannia: "Britannia's dis tributionin urban ar a i xcell Itt. us > the Tiger brand.000 tonnes of biscuits am out of all th factori sin 2007. Q while th co t inflati n h ir ated h adach s for Britannia. ikhil ora pints to the own rship would like pric and low unit count ar destined to attract the on-th -go urban consumer. th ugh there has been. Management is na ttl rally distracted by th wrangling over the terms of t he exit and the legal di pute . This categori by al . rural markets can b mol' r si tant than urban on in time of reduced growth. orne 440.STRATEGY 160 140 DOSSIER .. The smaller pIa /ers often have a more difficult tim surmounting '0. bold upwa. The 10\ has b n a safe lind ucces ful strategy. md as th sal S Cl.3." he explains.ov r Danon '. February 2009 8 . Recently. well.0 2001 2002 2003 c. Hari h Bijoor not : ~TIl nt nc d to be In r risk-friendl and fear failur I ss.11 atte ntion 10 Ie eraging the trong Britannia brand. He not' that the opportunity gl\1 It th consume r to purchase very small quantities is actually a. Judging rural consumer. it should b an important g od distriburion sy l m and is maintaining it r asonabl . it can carry long-t rm b nefits in th form of a pruning ofth competitiv lands ap . Britannia has be n more adventur som ._ 2QOd 2005 U Distribution 0. how can their tmtegy b summarlsed? It ha h en ne of first building brands through product qua1i and astute adv rrising. as well a th more budget-constrained rnanagem nt team inh rit of raw material price .FOOD Britannia financia. Might: it soon be time for brand extension. t this end of th tour ()f Britannia.ks. these retail for E 2. Rural con urn r currently gen rat only abouta quart r of Britannia's sale .the nano parks should driv that percentage up. over n 'W _a a .0 _/Ii- 60 40 20 00 -1998 1999 2000 V \ /I~ r.4 and 5 and contain as f was 2 and a many as 10 bis aiits. th price rises have trigg r d a manag men I effort to control cost and thus prevent margins NEXT ISSUE.0~ c: " ~ 10. Indio. rpl ins that op rating margins and profit margins have not followed as tron 11' 3. Britannia has three [acton.upations.rd fora . Dcpeuding all th brand. such as today. in the rncdiurn-t long-t rm. Toll Ip r due c Britannia has improved oven distribution in th last f \ -ears.0 10. and crud oil inflation weighed down on distribution cost .J] thati to ay. and then lev raging tho brand through lin growth and profitabilit Packagilllg In products. The nano of producti n.0 25. All told. Kolkata and Rudrapur) which contribut 25% di pute berw en Wadia and Danone: "Danon to exit from the partn rship. a ingl unit.oflill ext nsion: 'in packaging.0 5. might prefer 1:0 call it a successful. but safe strategy. 3. Here. 011' Harish Bijoor views this of Britannia's mo t succ sful recent trategic mov First.0 ~ 80 . On success will clip e a coupl offailures. 35 outsoureed unit contribute th rest. the strategy has been a relativ 1y conservative on' .IIV • But pack srratce should th r fore feed both Britannia' growth and its rural market pen tration. AUTOMOT:IIVE I:c).wfueat and cooking oil price inflation in the 20% area affected raw material costs.1111ali. . BUo r can imagine th proportion going up to a quarter. e • (Delhi. a h-h pia -ers." The ab: nee from new categories may not be so mu ih a matter of strat gie choice as the re ult of oth r manag III nt preo . 2006 2007 2008 o 15. ort of r turn to the mid-zo" r quickly and then management could d vot it f}.20. orne onle okers though. while mor than.into new f d categorie using the Britannia bann 1'? . known as nano packs..o11 for Britannia is that it mighl function as a Darwinian ' villag and Britannia ne d to w rry m reabout tapping and th r for distributing to that mark L" p rations i not a major trategi focus. "Th mall pack are a way of building rural p n tration. arc nte mphasisen cost control. Id ally Wadi a would become full wner r v nu en rator. Howev r 72% of India' population stillliv .0 and Operations J' --Sales (Rs ~llIiQ") _R~turn on safes (%) TIl re have been no maj trat gic innovations in from plummeting.In 2007 it iatroduc d low-price smallquanti pa . \"'fhat's mar. h margin pI: s ur s than the bigg r.

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