Marketing Application and Practices

Topic: FMCG
Group Members: Ketki Kadam 61 Salman Khan 77 Deven Maker 93 Febin Thomas 101 Neha Ashokan Vinit Paul 118 Submitted to Prof. Deepa Rohit

the smaller makers can often charge higher prices than the biggest manufacturers. although some find it difficult to price their products competitively with the larger manufacturers. tea. Personal care items as shampoos. Many compete only on a regional level. 2. etc. Kleenex. The smaller producers are more likely to specialize. Global leaders in the FMCG segment are Nestlé. Hindustan Unilever Limited. Larger manufacturers are generally full-service snack companies--those offering a full range of products. shaving products. coffee. If their products meet with success among customers. Reckitt Benckiser. Although the industry has some elements of a monopoly (aggressive pricing and distribution policies among chip makers). the fourth largest sector with a total market size in excess of USD 13 billion as of 2012. Carlsberg. as well as the rural sector. since Frito-Lay. FMCG can broadly be categorized into three segments which are: 1. Overview The burgeoning middle class Indian population. controlled about two-thirds of the total market share. Others. Numerous companies of varying size make up the snack industry. toothpaste. Unilever. The FMCG sector in India is at present. Coca-Cola. Procter & Gamble. and so have a quick rate of consumption. create a market niche. Gillette etc. Packaged snack food industry The salty snack foods industry has a unique structure. Household items as soaps. In India the easy availability of raw materials as well as cheap labour makes it an ideal destination for this sector. These are items which are used daily. This sector is expected to grow to a USD 33 billion industry by 2015 and to a whooping USD 100 billion by the year 2025. Issues relating to FMCG sector . the regional presence of many large and small manufacturers keeps it highly competitive. ITC. a division of PepsiCo. and a high return. present a huge potential for this sector. General Mills. There is also intense competition between the organised and unorganised segments and the fight to keep operational costs low. and other salty snacks. detergents. household accessories. Pepsi. however. Food and Beverages as snacks. soft drinks etc. edible oils. processed foods. This sector is characterized by strong MNC presence and a well established distribution network.INDUSTRY DETAILS: What is FMCG? Fast Moving Consumer Goods (FMCG) goods are all consumable items (other than groceries/pulses) that one needs to buy at regular intervals. etc and finally 3. including potato chips. sometimes with a specialty product such as kettle-style potato chips or baked chips sold through health food stores.

It has products under the category of namkeen. It was founded in 1937 by Gangabisenji Agrawal. Due to the shore supply of that product they decided to make their own product line in year 1982. Lehar foods were formed to counter the local namkeen producers like Bikaji. Maharashtra and Rajasthan region Balaji Group is now looking forward to march over India. . irrespective of recession or inflation. Quenching the demand of Gujarat. etc. It entered the market on 2007 with very famous Bingo product. Uncle Chips and other namkeens. bhujias and varities of snacks. and demand for these goods remains more or less constant. as retail sweets and namkeens shop in Bikaner. India. The fame of taste reached to the whole Gujarat hence it was time to take over the whole Gujarat so that biggest automatic plant of Gujarat came in to the picture. Whoopies. Haldiram: Haldiram's is one of India's largest sweets and snacks manufacturers.     Managing the price increase Promotional pressure Price war Cost of production Local market This sector will continue to see growth as it depends on an ever-increasing internal market for consumption. Instead of preparing wafers by the traditional frying method this semi automatic plant boosted the quality. taste and more sales also. India. Boletos. Hence this sector will grow. though it may not be a smooth growth path. ITC food products: The Indian subsidary of TC is second to Frito-lays in terms of producing western snacks. based in Nagpur. Namkeens. An American multinational with over a billion dollars in sales and holds the largest market share in the entire salted snacked foods. For supplying wafers and namkeens to local brands to the patrons of Astron Cinema. By the overwhelming retail success they inspired to set a semi automatic plant. Rajkot. due to the present world-wide economic slowdown. Kurkure. It has successfully emulated lays in the indian snack market giving lays a tough competition. Balaji. rising inflation and fall of the rupee. This sector will see good growth in the long run and hiring will continue to remain robust. Rajasthan. Takatak. Minute Khana (Microwaveable Food). Major Market Players: Frito-lays and Lehar foods a division PepsiCo produces products like Lays. Balaji: The journey of Balaji Group in year 1976 by the member of Virani family.

It was owned by the Chauhan family of Vile Parle. The market in India is diverse and large with over 1. the market size of the sector stands at USD 15 billion and its grow ing each by almost 25%.2012 . Producing products like Bikano namkeems. Under the Snacks category is Monaco Smart Chips. bikano crunchy munchy etc.Parle food products: Parle Products company was founded in 1929 in British India. Market size: Indian packaged food industry is likely to double to USD 30 billion by 2015. on the back of arrival of multinationals in the sector and modern retail trade. Fulltoss. industry body Assocham said today. showcasing its Gluco biscuits as an Indian alternative to the British biscuits. Mumbai. when India became independent. Parle began manufacturing biscuits in 1939. Parle's Wafers. At present.000 different snack products and some 300 types of savouries. Source: Economic Times sep 26. In 1947. Bikanervala: It is another big player in the northern part of india. the company launched an ad campaign.

5 8.595.Market share: FritoLay India leads the market with a share of 40.23.5% respectively.7 8.3 48.8% branded snacks market this year.8 Rs.7% share.2 14.Below chart shows the share in two quarters last year.8% and 7.1372.4 Lays Uncle Chips Balaji Bingo Parle Wafers Haldirams Others Rs.4 7.2 6.5 8.3 8. followed by uncle ch ips and B ingo w ith 8.7 42.806.787.8 18.3 8.20 6.4 .(Source: Economic Times) ParleWafers Bingo Uncle Chips Balaji Lays 0 6.8 20 40 60 Apr-Jun'12 Jul-Sept'12 Share(%) Rs.2 19.7 40.2 0 Rs. Balaji holds 19.

Positioning Lays are available in over 1 million outlets in urban markets.frito lays is the largest contributor to Pepsico ltd . So innovation is the key for us. And this will help us cover entire range of consumers across different regions. The specific example of that were the different Lays flavours during the Cricket World Cup and the recent Daal variant of Kurkure.000 snack varieties vying for consumers’ palette. At the same time.000 crore approximately). is gradually getting cluttered. We have got a strong consumer insight set-up.2.CHEETOS.Above chart shows the share in terms of revenues of all the major in the snack foods mark. Thus. PRODUCT PORTFOLIO: Pepsico has categorized its product into 3 categories: 1)FUN FOR YOU: LAYS. They are coming out with communication and price packs relevant for rural consumers – like lesser price. increasing the worries for branded players. which they have never eaten before. and R&D set up. while the competition is on rise. Besides. our pricing will also be important. and smaller pack sizes. besides metros. this space.3 to Rs. We already have different pack sizes priced at Rs. and all their brands have the potential to crack the rural market. And branded segment makes up for roughly 50% (Rs. and other relevant local media. and we are preparing for that. especially for the market leader Frito-Lay. TURNOVER: Experts value the Indian snacks market at around $3 billion. Frito-Lay found itself in the middle of an issue with its market share falling from 66% in 2008 to 58% at present in the Rs.KURKURE ETC 2)BETTER FOR YOU: ALIVA & BAKED LAYS 3)GOOD FOR YOU: QUAKEROATS Pepsico has a turnover of 20 billon in which frito lays has contributed around 12 billon . rural consumer is a savvy consumer who looks for quality. they are investing in terrestrial media. .500 crore potato chips segment. Today. Their next phase of growth is the rural market. with approximately 1. So innovation becomes the core part of that strategy.6. Brand Strategies To offer consumers products.30. The two work very closely to come up with relevant products for the Indian consumers.

Competitive Pricing Strategy. It launched chip priced 40 percent lower than that of the premium lays brand in Gujarat and Maharashtra taking the competitor brand balaji head on. 2.3 and Rs. By targeting the health conscious customers with quaker oats Brand. Events such as cricket world cup: in order to promote lays Fruo-lay launched different flavours of lays during the world cup and used to heavily advertise during the intervals. nutritional facts are given for each of its product. Websites: Frito-lay has its websites for all its products. 4. 3. Campaingns: Fruto-lay organised different campaigns and events to promote its products like recently it organised Kurkure khao. Pricing Strategy for Premium and Super Premium Customers: apart from making its presence felt in the rural market. 3. Targeting super premium customers. Promotion Strategy 1.priced lays packed in select stores in metros. 2.Target Segment 1) Supermarkets 2) Retail shops 3) Wholesellers Pricing Strategy The Indian Snacks market has a value of around $ 3 billion out of which roughly 50 percent makes up for the branded segment. Pricing Strategy for Rural Markets: Frito lay in order to make its presence felt in the rural market launched smaller packs of Rs.5 of Kurkure and Cheetos. frito-lay is also upping its premium at the same time. Celebrities are usually used as people get easily influenced by them.a brand which controls a majority share in these markets. Celebrity advertising: Frito-Lay made an effective use of celebrity advertising for its products. in which recipes.so in order to survive and succeed in such a market a company needs to have a fair pricing strategy 1. Introduction of smaller packs targeted towards small quantity consumers and middle low income customers. it also started test marketing its rs 550/. helicopter ride pe jao contest in selected cities. Like they used Juhi Chawla for Kurkure and Saif Ali Khan and Dhoni for Lays. . The basic idea behind the move was to protect its urban turf without diluting the premium equity of the potato chips space.Frito_lay adopted a competitive pricing strategy for the Lehar namkeen brand.

Competition analysis Direct competition After spending a decade on Indian soil and creating a market for branded snacks in India. and newer entrants like Parle Products that have realised ethnic namkeen is fast gaining popularity and also offer higher margins than potato chips.400 crore in the year ended June with both multinationals and home-grown companies pushing namkeen into hinterland with attractive packaging and pricing. competition from the local players too has intensified manifold. Balaji. Thus. with approximately 1. this space.000 crore approximately) of this pie. Frito-Lay. ITC’s aggressive posturing with Bingo. increasing the worries for branded players. Perfetti." PepsiCo is facing increasing competition from companies such as. chivra. while the competition is on rise. And it’s all because of a flurry of both past and new entrants like Balaji wafers. And branded segment makes up for roughly 50% (Rs. bhujia and nuts accounted for 52% of total salty snacks sales of about Rs 9. Parle. especially for the market leader Frito-Lay. But what makes the segment most attractive for both local and branded players is its double digit growth rate that is well supported by rising income and changing consumption patterns in the country. At the same time.000 snack varieties vying for consumers’ palette. PepsiCo’s food division. a brand which is growing almost on a daily basis. and of course. Experts value the Indian snacks market at around $3 billion."A large part of unorganised market is gradually shifting towards namkeen as companies have increased availability and affordability of such products in recent times. Indirect competition Packaged sev bhujia and chanachur are replacing potato chips and finger sticks in shopping bags. Branded namkeen such as dal. Bikanervala and Bikaji. branded namkeen market leader Haldiram. .6. helping traditional packaged namkeen topple western snacks for the first time in the branded salty snacks market. is now attempting to hold on to its market share of over 50% in the particular segment. is gradually getting cluttered.

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. The other was the Haldiram group with 25 percent of the market share. Assortment of flavors and eye catching packaging 3.cheese balls. T. Kurkure and Uncle Chipps holding 50 per cent of the market share. 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. High availability at big and small retailers across the country . Ad Campaign 2.Chana etc) dominated by Haldiram. The success of Bingo’s marketing strategy can be attributed to the following 4 Ps:1.V. The second category is the Western segment(potato chips. The organized snacks category is subdivided into the Traditional segment (Bhujia.puffs etc) and the Finger snacks segment which is an adaptation of traditional snacks to the western format.COMPETITORS’MARKETING STRATEGIES Bingo Chips Strategy 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 latter two categories are dominated by the Frito Lay group.

shapes and sizes. So cricket lovers could enjoy their favourite matches while savouring an all-new range of innovative Bingo snacks during the World Cup. in no market is it less than 15 per cent. The ones which followed were one in which a man is declared pregnant for his craving for Bingo Achari Masti and the Glad Bangles-Mad Angles advertisements. . T. Viral marketing uses social networks to create and spread brand awareness. Pricing Strategy 1. Not only the flavours but also the advertising was supposed to have an Indian touch! The advertising strategy used humour to sell Bingo. The offerings under the finger snacks segment are equally unique and consist of pakoda inspired chips like Live Wires. and corn based chips like Tedhe Medhe.V. Mainly there are two categories of products-Potato Chips and Finger Snacks The potato chips are available in many flavours inspired by the snacking habits of different parts of the country like Masala Chaas.4. Chatpata Nimbu and Paneer Tikka.Achaari Masti’. These advertisements were telecast on almost all channels-national. The advertisements were well received by the audience. to the Tamil learning bingo ad. The notable ones included the Bingo is the crunchier potato chips ad. Bingo’s market share touched 50 per cent. 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. Assortment of flavors and eye catching packaging The product offered is available in a wide array of flavours. Tomato and Salted are also available. many brands are choosing this new marketing strategy of virals to promote their products and the latest to join the bandwagon of viral ad campaigns is Bingo. regional. The idea is to get the consumer to take that first bite. sports.In all there are 16 variants of Bingo. This sudden media blitzkrieg of ads left a mark in the audiences’ minds and it showed. In certain areas. news and of course kids’ channels. In addition to these 4 flavours.com’ for ‘Bingo Mad Angles .com with an aim to target the youth online. 2. In April 2007 Bingo had also launched a website BingeOnBingo. Khakra inspired Mad Angles. the classic flavours of Masala. It has recently developed its first viral ‘petkapaap. Of late.It basically tried to engage the youth in a SecondLife type of environment to advertise ITC ‘s products.

So in small towns villages one won’t find a Lays or a Haldiram but a Bingo along with the local unbranded snacks.In India the unorganized snacks sector is twice the size of the organized sector. 3. which is what you see most when you look for salted snacks. Bingo therefore is the most seen brand when you look for snacks. The brightly coloured stands with the Bingo label on top make it stand out in a shop. red. they get paid even more. A factor that aided Bingo was the failed pricing strategy of Lays in late 2007. It's not just here that Bingo has struck at the small shops. country wide distribution network of ITC built up over the years was a key factor in Bingo’s ubiquitious availability. purple. Pricing Strategy The pricing strategy adopted by Bingo is a clever one. Bingo is available in packets in a myriad colors like orange. 4. if the display is better. Snack food is an impulse buy. It also has entered into an agreement with the Food Bazaar chain of outlets for retail of its Bingo and other brands of food products. ITC Foods was counting on Lays and Kurkure not being around. That impacted the sales of Lays which finally went back to the Rs10 formula. greatly increasing the chances of it being bought. Not only do bright colors attract the attention of little children but also of adults. By adopting a consistent pricing strategy and by offering higher margins to the retailers Bingo has won the retailers’ hearts. While backend sourcing tie-ups between the two had sweetened the relationship. . to which it's offering a margin that's 4% to 5% higher than what Frito Lays is paying. yellow. ITC Food's largesse is largely to catch up with Frito Lay's national reach of 8 lakh outlets. the bottom line is Bingo.Frito Lay had increased the price of Lays from Rs10 for 35g to Rs15 for 45g. when it entered the Food Bazaar chain. The packaging of the product has been slick and eye catching. High availability at big and small retailers across the country The large. Not just that. green. As a result one can find a Bingo pack of chips even at the smallest shop in the remotest parts of India.Bingo ensured the quality of its products due to the strong farm linkages of ITC which ensures only the selected grade of raw material goes into making Bingo chips. blue. Bingo is priced the same as the Lays brand of chips at Rs10 for a 35g packet and Rs5 for the smaller one.

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