KURDOLA: PRODUCT PORTFOLIO DECISION

The medical research findings in a reputed medical journal published in January 2012
had established that edible oil with a combination of Poly Unsaturated Fatty Acid
(PUFA) and Mono Unsaturated Fatty Acid (MUFA) was better for the heart than the pure
PUFA based edible oil. This medical research was widely accepted and the reports from
the research agencies indicated that medical fraternity in India had already started to shift
its recommendation from higher PUFA oils to balanced blend of PUFA and MUFA oils
for patients with heart related ailments.
MOMCO was a leading manufacturer and marketer of branded edible oil in India. In its
product portfolio, Kurdola was a PUFA based premium edible oil, positioned as the best
product for keeping the heart healthy. Its portfolio also had Healty tasty blend, a
balanced blend of PUFA and MUFA, which was positioned as economical product with
considerably lower margins. Based on the new research findings, the best solution for
heart patient from MOMCOs edible oil portfolio was not Kurdola but Healty tasty blend.
This completely turned the core value proposition of Kurdola and its extensions upside
down and could lead to serious brand dissonance for the loyal consumer base.
The competitors were likely to be aggressively using these findings to erode the market
position of Kurdola branded products and more significantly, the credibility of MOMCO.
It would most likely require major revision in the positioning of MOMCOs existing
product portfolio and pricing aspects as the target markets, margin structure and volumes
were quite different for each of the products.
The entire top management and edible oil marketing team was meeting at MOMCOs
Mumbai (financial capital of India) headquarter on the 2nd April 2012 to take decision on
its edible oil product portfolio under the premium brand Kudola . There had to be
immediate action in the market as the current positioning and margin structures could
lead to serious damage to the brand, cannibalization of the main brand by low margin
products which could drastically reduce the profitability of the company and jeopardize
all other businesses.
Company Background
MOMCO was a leading Indian group operating in consumer products, aesthetics services
and global ayurvedics 1 businesses. MOMCOs FY 2011-12 sales was almost Rs. 2 9
Billion (USD 180 Million) from 12 brands. MOMCOs brands and their extensions
occupied leadership positions in respective categories like the edible oil, hair nourishing
oils. Every month, MOMCO sold over 76 Million consumer packs to about 100 Million
consumers. MOMCO had leveraged four core sources of competitive advantage viz.
Branding, Distribution, Cost Management and Innovation to set up a fast growing

1
2

A traditional medical system of India

Rs. = Indian Rupees

franchise of new products and businesses, whose share in total turnover had moved up
sharply from 3% in FY3 2008-09 to 18% in H1 4 FY2011-12.
MOMCO groups history could be traced back to 1882 when Ramji Loharji, started a
small trading business in Mumbai. The family set up the Ramji Oil Industries Ltd (ROIL)
in 1950 with manufacturing facilities in Mumbai for coconut oil extraction plant,
vegetable oil refinery and a chemical plant. ROIL soon became one of the leading players
in industrial chemicals. Over the years, ROIL expanded and diversified through fully
owned subsidiaries.
MOMCO was incorporated in 1995 to take over the then 45- year old consumer products
business of ROIL. The division was engaged in marketing of coconut oil, edible oil,
instant starch, branded processed fruit etc. ROIL retained fatty acids and chemicals
division. MOMCO made its initial public offer for equity shares in March 1998. Earlier
Kurdola and Parachute brands were owned by Ramji Oil Industries Limited and
MOMCO was given access to use these brands for perpetuity. In FY2005-06, the brands
were transferred to the company for a consideration of Rs 500 Million.
MOMCO had factories located at Thane near Mumbai city, Sarang near Pune city and
Jalgaon district in Maharashtra, Palakkad district in Kerala, and Ponda in Goa. It also got
its products manufactured through suitably located subcontractors.
MOMCO had a well established distribution network of 27 depots, 3800 distributors,
25,000 wholesalers and 1.9 Million retailers in 2012. MOMCO had entered into
distribution alliances with a number of companies for distribution of their products to
exploit its distribution reach and clout.
Kurdola: the initial days
Kurdola, a premium cooking oil, was launched in 1975 by Ramji oil Industries Ltd.
Kurdola was essentially oil made from Kardi seed, popularly referred to as Kardi oil
(KO) and hence named as Kurdola. KO contained high level of PUFA, which was proven
by medical research to be good for the health of the human heart. KO was mostly
imported and hence considerably costlier to produce.
During the initial period of launch, edible oils were viewed as a commodity and not much
marketing initiative was taken. So, whatever little brand ing was done was based on
better quality to justify the premium price that the product charged. There were no
serious marketing initiative s by the manufacturer at differentiating their product (for
example: based at the heart care platform; which was inherent to the product
formulation). The awareness level of the people other than Kurdola consumers for heart
care, was also low. Kurdola being healthy for the heart was not communicated to the
consumers very effectively. The brand was marketed in North and Western part of India.

3
4

FY = Financial year, which was 1st April to 31st March of next year
H1 = 1t half of year, 1st April to 30th September

It was doing well as per the companys expectation and enjoying a year on year growth
based on the natural expansion of the market.
Over time, gradually the Kurdola brand was marketed by leveraging the health benefits,
via a product story Good for your heart; Good for your familys health. The basic
differentiators used here were heart care, product features (high PUFA content, Low
Saturated Fat content) and doctor endorsements. There was not much of a marketing
effort exercised on the part of organization in tapping the mass market. The company
continued to focus on markets in North & West India, and the product was priced at 20%
premium over all the other cooking oils available in the market. Sales volume by the end
of 1990 was 250 Kiloliters per month (klpm).
The Company continued with this strategy till middle of 1990s, by that time the volume
had increased to 350 klpm essentially driven by the greater consumer awareness about
Kurdola through word of mouth propagation, recommendations of medical practitioners
and a general trend towards consuming healthy products.
The evolution of Kurdola
By the middle of 1990s, the consumer products market in India witnessed a few
discernible changes. Notable among them were, increasing purchasing power of the
family, shift of decision making power to the wives, greater overall awareness of heart
diseases and definite link of heart problems to cooking medium. This opened up a
window of opportunity for Kurdola. Market research was conducted with potential
consumers, which concluded that concern for heart was mainly due to the shifts in
consumer demographics. There numbers of nuclear families were increasing and aware
educated wives were making purchase decisions. The Indian economy was also growing
& middle class was burgeoning, increasing the natural target group of the product.
In order to orient itself to these changes and reap benefits from it, the company went for
sustained marketing initiatives which included use of mass media like television
advertising to promote Kurdola, positioning it as a heart specialist. It introduced strong
emotional payoffs in the edible oil category (see Exhibit 1, which gives an example of
their print communication). Though the creative execution of most of the Kurdola brand
communication was based on use of fear, it consolidated the heart platform with a clearly
focused target audience of heart patient and their families. Thus, it could enjoy higher
premium in its price of Rs.77/- per liter (while other products like sunflower oil were
priced in the range Rs 50-60), and yet doubled the sales to 800 kilo liter per month by the
year 2003. A part of the growth could be attributed to increased distribution effort of the
company which made the product much more widely available. Distribution network for
MOMCOs branded oil category increased from about 0.5 million retail outlets to about
1.2 million retail outlets on an all India basis during this period.
To track consumer response to the products and brand communications, research was
regularly conducted. Such researches consistently revealed that the focused positioning
and the product attributes of Kardola had definite advantages, but also had associated

limitations. The taste of KO was not appealing to majority of consumers, affecting

consumer acceptance. Since it was recommended by doctors and there was no real choice
heart patients used it diligently and sometimes their family also shifted a common
cooking medium. The second limitation was the sharp positioning on patients of heart
problems, which was significantly limiting the target consumer base. The company didnt
make much modification to the product offer. The strategy was continued and sales and
grew steadily to a volume of 900 klpm by 2005.
Though the brand was growing, two significant changes were of concern to the
management. The increased acceptance of premium sunflower oil in the market making it
grow very fast, while MOMCO was absent in the segment. Though the data in the
category was not very reliable, it was conservatively estimated that in the last three years
the growth had been 37% on a year on year basis, and the share of Sunflower oil in the
branded edible oil segment had increased from 3 % to 6% in the last three years. Thus,
compared to the rest of market, Kurdola was losing share and the rate of growth of
Kurdola was tapering off. The possible reasons for the same were analyzed to be:
a. The target segment was too narrow and hence the product was reaching its
peak sales volume and stagnating there.
b. The taste and price was coming in the way of expanding the consumer base.
c. The Premium Sunflower Oils (PSFO) in the market was able to grow faster
because of better price, more acceptable taste and also able to gain ground as
healthy cooking oil medium.
The company tried to address the first issue by extending the target group from patients
to whole family, focusing on families that were concerned about keeping their heart
healthy. This was achieved only by making suitable change in their consumer
communication (see Exhibit 2 for their revised communication). The sales showed
immediate increase in 2007, but it could not sustain the same growth rate and finally
stabilized at 1100 klpm by mid 2008.
So far the company had only modified product offer involving no change in the
composition of the product, but only changes like packaging, communication and
promotions etc. They were effectively using marketing communication by expanding the
appeal of the product from heart patient to people who want to have a healthy heart.
The growth in sales could be mostly attributed to the marketing success and the
increasing consumer concern for healthy heart. It was becoming clear that some steps
were needed to be taken to sustain the growth of Kurdola in the increasingly competitive
branded edible oil market of India.
The composition of the packaged edible oil had to be prominently put on the product
livery, as per the statutory requirements. Most consumers did not specifically refer to the
composition during their purchase, and did not expect any change either. The consumers
were however keen about the product price and the date of manufacturing and expiry,
which they checked almost every time they made any purchase. The distributors, retailers
and the doctors (who specifically recommended specific cooking medium), were

however aware of the composition and valued the superior heart care properties of KO
oil. Sometimes, they recommended the specific formulations that were good for the
health of the patients. Overall, 50% of the consumers could be considered to have
referred to the composition of the oil, sometimes or other.
The changed regulatory scenario - Article 43H:
Change in legislation (Article 43H of PFA5 Acts and rules) in 2006 restricted the strong
usage of heart in the communication and labels by the oil marketers. In a single stroke of
legislation, the most potent marketing tool available to Kurdola was rendered ineffective.
So the company was faced with the problem of sustaining growth while not being able to
use the well established, tightly focused positioning it had created in the consumers
mind. The dilemma was what to do? In case it decided to advertise Kurdola, there
was a need to dilute the heart platform (to comply with legislation), which would have
created dissonance in the consumers mind and risked all the accumulated brand
franchise. The other option was to stop advertising Kurdola, but this entailed the risk of
the brand losing its presence in the consumers mind; especially in light of the powerful
advertising by the Poly Saturated Fatty Oils (FSFO - like Sunflower oil), brand erosion
and a time bound loss in sales. None of the choices looked attractive or prudent.
Developing a new product seemed to be the only way out. The challenge was to develop
a new product offer, which provided the company the following:
a. The ability to advertise within the ambit of Article 43H of PFA rules.
b. Where the Kurdola brand franchise could be leveraged, and if possible, even
strengthened.
c. Expanded the consumer base, which entailed a marketing platform, keeping
the product affordable, as well as removing the unpopular taste associated
with the KO
d. Provide an alternative in the product portfolio of MOMCO to address the
significantly higher growth of the PSFOs, if possible.
However, the above was a prima facie overall need for the market, it needed to be much
more detailed and adequately validated for taking any decision on ne w product offer. The
company thus commissioned a very detailed New Product Development Process, which
was followed.
New Product Introduction (NPI) Process at MOMCO
Formal NPI process was followed for minimizing risk of falied introduction and
associated techno commercial losses. The process was built on encouraging dissent, to
capture the alternate points of view, which minimized the risk of not considering all the
options and was one of the core values in the process. The steps were:

PFA= Prevention of Food Adulteration

a. Understanding the consumer need: Research was conducted by professional

outside agency to precisely measure the consumers needs from cooking oils and
how they were met.
b. Members from marketing and the research and development (R&D) team were
entrusted with the development of new product brief: The team mapped the
market and identified the gaps in the key areas of price, distribution and brand
benefits.
c. The team came up with proposed solution by essentially using the process of
decoding and synthesizing the information available: The steps involved were:
i. Developing options
ii. Solution generation (with feasibility in mind)
iii. Sought help from multiple sources with an effort to gain advantage
of the multifunctional perspective.
d. The QFD (quality function deployment) model of new product development was
applied to:
i. Identify the differentiator
ii. The premium the customer was likely to pay for the differentiator
The product development brief was developed. The use of multifunctional team
was enriched by consciously discussing with the consumer as well as other influencer
groups like doctors, FDA in informal as well as formal manner.
e. The NPI Team was formed and entrusted with the NPI Project: The NPI team was
a task force, comprising members from R&D, Materials, Production, Marketing
and assisted on a need based manner by the finance and information technology
team.
f. The R & D developed the new product as per specifications given in the new
product brief.
g. The product was tested in with consumers for the delivery of benefit and also
checks the product concept. The process was termed as Consumer Usage Testing
(CUT) by MOMCO.
h. In case the product passed the CUT, the financial, packaging and marketing
aspects of the product were finalized. This lead to confirmation of the final
product specifications and the marketing plans.
i.

Test marketing was conducted with the entire new product offer, including all the
marketing mix variables, mostly in one or two reasonably isolated markets.

j. Based on the success of the test marketing exercise, the marketing mix elements
were fine-tuned and the final product was launched.

k.

Monitoring of the performance of the new product in the launch stage was done
very frequently and critically (apart from the normal tracking done for all existing
product lines).

The Genesis of Yummy Blend

The abovementioned NPI process resulted in the development of Kardi Oil + Corn Oil
blend (KOCO). The new product was able to address the basic concerns in the following
manner:
a. The core value of Kurdola brand, good for heart was retained as it was a KO
based blend 6 . It allowed the company to retain the well-established
communication platform.
b. The product had corn oil (CO) blended with KO, which was able to mask the
taste of KO and made the product tastier for an average consumer. So, the
consumer concern for the taste attribute of the original product was addressed.
It also increased the acceptability of the product to larger consumer base.
c. The CO was relatively inexpensive and hence the cost of the blend was
considerably lesser (up to 30%) than the pure KO (which was imported and
costlier). It could actually be positioned against the PSFOs if the company so
desired, and take on competition at similar price point even.
Marketing for Yummy Blend
The new product offered a potential winner in the market; it could expand the sales, drive
volume growth, increase overall profits etc. The challenge was to convert the potential to
sales figures and profits. The marketing challenge was to increase the consumer base,
retain and build on the Kurdola franchise (though sufficiently differentiating it from
Kurdola, so that there was no confusion in the consumers mind), meet the limitation
imposed by the legislation and take on the growing presence of the PSFOs.
The retention of the brand franchise was achieved through the line extension on the
Kurdola brand by naming the KOCO formulation as Kurdola Yummy Blend. To
expand the consumer base and gain wider acceptance, which the taste platform
provided, Kurdola Yummy Blend seemed to be an appropriate choice. This was priced
at a much lower price i.e. Rs70/- per liter, which allowed the product to address a much
larger consumer base including those who wanted to use Kurdola but could not afford
Kurdola because of the high price (at Rs87/- per liter), while maintaining an acceptable
gross margin of 40%7 for MOMCO.
The taste and health benefits were combined in the communication to consumers. It
retained the core value of good for heart but expanded the positioning by moving from
curative to preventive position, which targeted a much larger consumer segment.
However, the commercial did not work as desired, so it was changed, with a tag line
6
7

Blend = a stable mixture of different oils

The distribution margin was overall managed at 15% of the consumer price

sehat se jeena hai, mujhe rehna hai swasth (I have to live healthy and retain good
health)- refer exhibit 3 for a copy of one such communication. However, the changes did
not result in the desired result and the sales did not take off as planned. Further research
was conducted, which attributed the failure to lack of linkage to heart in the
communication. The marketing strategy was hence changed, to drive home the core
values of the Kurdola brand through consumer experiences. This initiative was rolled out
as a mix of doctor detailing, heart check up camps, formation of Kurdola healthy heart
foundation and web led programs (websites). The product remained the same; however,
the overall consumer offer (Product + Marketing Mix) required considerable refinement
to establish the revised marketing plank and initiatives.
The company was fully aware that in case of unprecedented success of the Kurdola
Yummy blend , the company risked a lot. Since the new product had lesser contribution
margin compared to KO, it involved the risks of converting consumers from high
contribution product to low contribution. There was danger of confusing the consumer
and losing sharp positioning and franchise of Kurdola KO, the mother brand (resulting in
huge potential loss of contribution in present as well as future). Sales figure for Kurdola
KO & Kurdola Yummy blend KOCO are given in (Exhibit 4 & 5 respectively).
Yummy blend managed to carve out a significant position for itself in the market. The
success of the Yummy blend was able to address the overall concern for the business
volume and profitability. However, the gain in sales for Yummy blend was at least partly
at the cost of the Kurdola KO and that was of considerable worry for the mother brand.
The stumbling blocks of 2010: Increase in import duty and KO Shortage
Year 2010 witnessed two major setbacks for the Kurdola. The duty structure on Kardi Oil
increased from April, which increased the raw material costs significantly. To be able to
retain its original contribution margin, it had to be marketed at a price of Rs 105/- a liter,
and the price change was implemented. The market did not support the new price point,
resulting in considerable consumer shift to other products. Only the staunchest of
Kurdola loyalist continued.
While the company was grappling with the commercial and marketing challenge, there
was a shortage of KO in the international market. There was no short-term solution for
the same. The only option was to wait for the supply conditions to improve which was
expected to take one year. During this crisis, in the first year the sales went down from
1175 Klpm to 350 Klpm. However, the increased price was not perceived to be a
temporary problem, which would get corrected on resumption of supplies, as there was
more or less a considerable price increase which looked irreversible.
The supplies improved in 2011-12, so did the sales, but it only reached a level of 500
klpm even with increased marketing initiatives. Something apparently irreversible had
happened with the KO sales. The consumers had shifted to other products and were not
reverting back. Something needed to be done. Market research highlighted the following
problems:

i.

ii.
iii.

The majority of consumer, who shifted away from Kurdola KO, did not
attach any significant benefit to KO, so as to return to the old brand. Thus,
only marketing initiative with the existing products of Kurdola would
possibly not be able to reverse the tide.
The price point of Rs 100 + per litre was possibly untenable for the type of
volume that Kurdola was looking for.
The KO shortage highlighted the problem of over dependence on any raw
material and the company needed to find long-term solution.

So the company had to look for an alternative whereby the KO component could be
reduced, lowering the risk of the company from the vagaries of international prices,
government regulations and supply conditions. It was time to look for new consumer
segments also. In effect a successful new product introduction was an imperative.
Development of the Healthy tasty blend
It was analyzed by the MOMCO marketing team that Kurdola was present in the super
premium edible oil category with very sharp positioning as a heart specialist with a
price insensitive loyal customer base.
MOMCO was also present in the growing segment of the Rs 70/- per liter price 8 band,
which was also straddled by the PSFOs, by virtue of Kurdola Yummy Blend. The
positioning was strong enough with good for your familys health platform. The new
product had to be positioned distinctly, so as not to confuse the existing customers,
reduce cannibalizing existing Kurdola customers and gain new consumers.
The new product introduction process developed at MOMCO (explained earlier) was
once again followed rigorously. Thus they developed a new blend of KO with Rice Barn
Oil (RBO). The blend was launched as Healthy tasty blend. The formulation accorded
the following consumer benefit: healthy heart (high Poly Unsaturated Fatty Acid due to
KO), good taste and economy (RBO), which enabled appealing to a large consumer base.
The following were the details of the Kurdola Healthy Tasty blend which was launched
in 2010:
i.

ii.

Was priced at Rs 55/- per liter. This allowed Kurdola to enter

potentially huge marketplace of popular edible oils. Essentially a low
margin (30% gross margin), high volume segment.
The proposition to the consumers was to appeal to the cost-conscious
customers (hitherto untapped by Kurdola) by implying to them that
they can get better health without paying more money.

Now the Kurdola product portfolio included KO, KOCO (Yummy blend), KORBO
(Healthy tasty-blend). The marketing initiative for Healthy tasty blend was to do an
extensive mass market campaign, generate trials and retain the customers. The

in the year 2001

promotional effort involved trials, free offers (popular pack of instant noodle) etc. The
sales figures of Healthy tasty blend are in Exhibit 6.
In light of the new medical research published in 2012, the challenges before the
company were the following:
1. What to communicate to the existing, loyal base of the Kurdola consumers? If they do
not inform them that this was not the best product for their heart, they would belie the
consumer trust that they have garnered over a long period. What alternative to provide?
2. The best product for healthy heart platform was possibly closest to Healthy tasty
blend (currently the low contribution product). How could they leverage the newfound
benefits associated with the product to command a premium?
3. What to do with the Yummy blend in case there was any change in the marketing of
Kurdola and Healthy tasty blend?

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Exhibit 1

11

Exhibit 2

12

Exhibit 3

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Exhibit 4
Kurdola KO sales figures*
YEAR
SALES VOLUME (in kl per month)
1999-2000
2000-01
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12

400
500
400
600
800
950
1000
1200
1000
1100
1175
350
500

Exhibit 5
Yummy blend sales figures*
YEAR
SALES VOLUME (in kl per month)
2007-08
2008-09

1000
1150

2009-10
2010-11
2011-12

1400
1575
1575

Exhibit 6
Healthy tasty blend sales figures*
YEAR
SALES VOLUME (in kl per month)
2010-11

5500

2011-12

5000

*Figures are from April 1, Year1 to March 31, Year2

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