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ITC INTERROBANG BINGO MAD ANGLES CASE SOLUTION

N Shriram
NSCG

IIM CALCUTTA
August 7, 2012

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...................................................................................... 5 1 .... 4 Conclusion......................................................................................................................................................................................... 1 Background of the Case ................................. 1 SWOT Analysis ................................ 4 Consumer Segmentation by Age and Likely Attributes ....................................................................................................................... 1 Porter’s Five Forces Model Analysis ............................................................................ 3 Marketing Strategy ..................................................................................................................................................................................... 4 Elements of the Marketing Strategy ....................................................................................................................................................................................................................................................................Contents Objective of the Analysis ...................... 1 SWOT and Five Forces Analysis ........

Frito Lay. several players of varying sizes existed who had a more local focus. Hence the consumers have a lot of choice with respect to the price and brands of packaged salty snacks available to them. In this sector. Strengths  Organizational Capabilities o Reliable organization led by professional and experienced managers o Pan-India Sales and Marketing expertise of parent organization o Access to capital and capability in detailed planning and control Long Term Focus o Not constrained by need for short term profitability o Ability to invest in R&D. having bulk majority of their sales in a few states or a specific region of the country. Some of them are also value players. although only one of them. could claim to be a truly national player. The questions posed by Satya in the case will be used as guidelines to channel the analysis in a relevant direction. This is followed up with a Porter’s five forces analysis to get a summary glance of the business dynamics and the levers of profitability in the industry.e. Balaji and Yellow Diamond are examples of these. Describe the backdrop of the case 2. company and industry 3. supply chain and brand equity Late entrant/Small size 1   . to generate insights. i. Additionally. packaged and unpackaged non-branded snacks (for example local cottage industries and bakeries) as well as unpackaged snacks prepared at the point of sale (such as small restaurants and road-side eateries) are a source of competition to Bingo Mad Angles. we identify the various SWOT aspects of Bingo Mad Angles and compare ITC on these aspects with the competitor. it is useful to apply a SWOT analysis of Bingo Mad Angles with competitor comparisons. for example Haldiram.Objective of the Analysis The objective of this case analysis is to understand the factors that drive growth and profitability in the salty snacks category of the Food and Beverage industry. For this. analyze ITC’s strengths and opportunities with respect to its product Bingo Mad Angles and suggest strategies aimed at the continued success of this product. the SWOT analysis is best done in a relative manner. SWOT and Five Forces Analysis Given the diversity and intensity of competition faced by ITC in this sector. SWOT Analysis Given the heterogeneity in business models and geographical spread among the competitors. Create a Marketing Strategy consistent with insights from the analysis Background of the Case Bingo Mad Angles made its entry in a sector that was populated by several large players.. The methodology followed in this case analysis is 1. they gave more quantity of the product at every price. Analyze the product. Some local players commanded a premium price.

Organizational capabilities and Long term focus separate ITC from the discount and/or local players. Opportunities  To grow the sector and capture market share o Develop brand equity to counter Frito Lay and local players o Penetrate the traditional hot snacks space and offer an alternative o Improve scale and efficiency to rival quantities per pack of discount players o Scale up to capture previously unserved geographies o Customize on flavors to offer scope while retaining scale of base product These opportunities have a synergetic effect on each other. where exploiting any one makes some others more attractive as well. the first two of the weaknesses listed should be tackled aggressively in the short term as they stand in the way of growth. whereas the late entrant advantage gives it an edge over Frito Lay. these take on a special 2 . While some of these should be expected to become less important with increasing size and development of capabilities and experience in the segment.o Brand novelty and flexibility in brand positioning o Ability to reconfigure Sales and Distribution to suit current needs Among the strengths listed above. For a new entrant facing a large established competitor. Hence the strategies to be developed could be aimed at a combination of these opportunities with no one opportunity having priority. Threats  Frito Lay’s ability to counter strategies o Price based competition to exacerbate cost pressures o Mimicking new product launches coupled with costlier branding strategies o Leveraging existing distribution network for superior market presence Stability of distribution channels o Distributor’s turning to other companies due to slow growth o Retailers developing resistance in the face of better promotions by competitors o Glitches in supply chain due to scaling up and geographic expansion  Threats arising from the opponent’s counter strategies are expected in a highly competitive market. Weaknesses  Late entrant/Small size o Resistance to adoption by consumers due to lack of familiarity with the brand o Hesitance and demands of channel partners due to uncertain prospects o Non-viability of huge advertising campaigns due to cost pressure o Learning curve in understanding consumer preferences o Break-even pressures due to up-front investments in S&D and manufacturing The weaknesses identified are all due to the small size and late entrance of Bingo onto the salty snacks scene. and hence are not shared with the other players.

the established competitor may resort to price based competition by cross subsidizing loss leaders from more profitable brand lines. The established competitor may also be able to easily appropriate product innovations of the new entrant by leveraging existing R&D capabilities and may even be able to market them in a more effective manner. and hence will be analyzed.significance. but have to maintain this with high advertising costs (at least in the case of Frito Lay) that sustain the brand value that generates the premium. the product needs to be augmented with other attributes. o Consumers: Consumers have a variety of options in terms of prices and brands to choose from. Frito Lay does this by means of expensive advertising (mainly celebrity endorsements). leading to less turnover as opposed to an established brand. to generate brand equity. and the major competition to Bingo from this sector would be in the form of small tea shops. since the demand pull form consumers for a product with relatively less brand recall is likely to be less. roadside eateries and local bakeries. the distribution channel partners have a great deal of bargaining power. o Discount players with branded products cut down on the advertising expenditures to earn their profits despite charging a smaller price. customs and other cultural bases. which provide a product similar in its mode of consumption to Bingo. To extract a premium from consumers. Bargaining power of buyers: Buyers include both the final consumers as well as distribution channel partners (distributors. Customers and Substitute products are probably more relevant than the others. Suppliers.  Competitors: The competition has been described in the Case Background on page 1. Some aspects relating to the margin and profitability of the competitors deserve mention: o Premium packaged branded products command the highest prices. Retailers too would require more persuasion to stock the product. This is a highly dispersed group. Porter’s Five Forces Model Analysis A five forces model helps clarify how the firm’s business environment is affected by five important groups of stakeholders: Competitors. Buyers. tradition. o Distribution channel partners: For a new entrant with a young product yet to establish itself as well as its better known competitors. As a result their revenue is completely dependent on pricing. They are also regional players and their ability to scale up and spread out while maintaining the pricing point is suspect. Substitute products: A substitute for packaged snacks is hot traditional Indian snacks. The exit of the new entrant being a real possibility. New entrants and Firms with substitute products. which has a history longer than any packaged snack brand. wholesalers and retailers) who buy the product from ITC. especially since its introduction of the e-chowkpal. and a brand equity that derives from habit.   3 . This is because ITC itself can be considered a new entrant into the industry and is also reputed to have an excellent supplier management system. Of these Competitors.

shouldn’t be corny. perception of quality and taste important. The characteristics attributed to each group are based on the personal perception and experiences of the author of this report. naughty/mischievous ads may appeal. any brand still better than no brand. humor in ads welcome. value for money. learns from and influences friends. humor in adds effective. 2. For instance “Not having fun yet? Try Bingo Mad Angles for a whole lot of fun!” In the hours leading up to the sponsored show reminders of the same format could be telecast. psychological satisfaction of good purchase important. any good brand. A punch line could be added to indicate how Bingo is as much fun or more fun than the chosen program. but value includes brand value.still in school): Possibly brand loyal. fresh). may be price conscious. knows why they go for what they go for. opinion leaders. possibly influenced by TV ads. like a toy/tattoo inside. aspirational. and are not the result of marketing/consumer research. strong advocacy of personal brand preferences in groups. tune into Bingo Mad Angles Funny Show for maximum fun”. value for pocket money. need variety and novelty. companionship over brand. possibly no brand loyalty. This would have the added effect of moderating any idea of Bingo purchase as an individualistic impulse purchase and lend it an aura of legitimacy and 4 . may yet be more open than others to experiment. The objective would be to bring Bingo from the realm of individual outdoor convenience consumption to within the house as a snack for family consumption by coupling it with wholesome entertainment programs that are deemed suitable for the whole family. 1. celebrity endorsements may matter. Adult (30+): Choosy. All segments except campus youth and young adults would be natural targets for such a strategy. instant gratification. in group may not be choosy. choosy. brand over price. knows his brand names. Young Adult(Out of college – 30): Know their brands and what they like. Children/Kids (5-12): Brand name makes them empowered while asking for product at retailer’s. Elements of the Marketing Strategy  Have a lot of fun: In addition to the humor based advertisements running on Television as of now. 4. receptive to naughty/mischievous ads. informed by TV ads. would require persuasion to switch. 3. lots of brand recall. a new campaign to highlight how Bingo Mad Angles is fun can be launched. influenced by peers and own judgments. taste may not be enough. not brand loyal. tastier is better. Teens (13. for instance “Not having fun yet. Campus Youth (In college): Developed brand preferences. individually needs to feel psychological satisfaction of good purchase decision based on well-informed choice.Marketing Strategy Consumer Segmentation by Age and Likely Attributes The consumers may be segmented by age to identify certain target groups and to identify the marketing levers to broaden the appeal of Bingo to wider audiences. have money to spend. brand a useful shortcut to perception. can be an opinion leader. appreciate taste and quality (crispy. The concept would be to run short one line ads alongside TV programs identified as being entertaining. 5. taste may be enough.

However. Hence the flavors should be customized to achieve a greater penetration of Bingo Mad Angles into the Southern and Eastern states. The format for the Bingo Mad Angle snack was obtained from a North Indian snack. The challenge in changing this base product. This approach has a self-confident and courageous quality to it. without any great loss of economies of scale. “Super Sambhar” for the South and “Chilli Chingri” for the East may be probable candidates. The aim is to prevent the customer rationalizing that the value brands and Bingo are similar except for brand name. a challenge may be held where random passersby in a mall or a similar social space are invited to try Bingo and a mimic product launched by a competitor. this approach would have to be abandoned. campus youth and young adults that Bingo is tastier than the alternatives. enabled the synthesis of a marketing strategy consisting of four elements that can be implemented separately or in combination. Conclusion In this report. If in trial runs. Then. which prevents his aspirational purchases of Bingo. make its customization unviable. the finger snack product of ITC in the salty snacks category. as identified by Satya. Better in South and East as well: The case suggests that there exists opportunities for Bingo Mad Angles to do better in East and South India. These strategies are expected to achieve the increase in sales growth that the management team seeks. or there are legal implications that may deter implementation. a SWOT analysis and a Five Forces Model analysis were done to identify the business dynamics and profitability levers of the industry. more people are seen to prefer the competitor’s product. This could effectively address Satya’s concerns about broadening the base of consumers. The righteous and gutsy undertones might resonate with the age groups targeted. it can be replicated in a large number of places to create a buzz around the product among the audiences targeted. in terms of the R&D effort and the loss of economies of scale. A print and radio campaign to popularize the slogan “Zyada se no fayda. Bingo is tastier) or something similar and catchy to establish a sense of superiority in taste correlated with the higher price point for Bingo will help change this situation. when coupled with an age based customer group segmentation. This strategy specifically targets the issue of copy-cat products. These led to insights which. Bingo khao taste aayega” (More isn’t better. the flavors can be varied a great deal. The motivation for this strategy is the R&D head’s assertion that Bingo is a better product than those launched by competitors and that this fact has been borne out by tests. whereas in the rest of India they have a much smaller share of the market. The provided case was studied to understand the case backdrop and the challenges faced by the management team. an effort was made to arrive at a marketing strategy aimed at increasing the sales of Bingo Mad Angles. and decide which they would prefer. If else. as this need is satisfied by value players at a lower price. More is not better: Annexure 3 of the case shows how the discount players are formidable in Western India in the finger snacks category. Better From All Angles Challenge : In order to send the message across to the consumer groups of teens. The success in the challenge will also add to the desirability of the brand by adding a component of achievement to the brand identity. who possibly have similar sentiments.   sanctimony for outside the house purchases. 5 .