Designing A Planogram

Category – Chips Professor Arun Sharma

Store Format – Super market /Hyper Group 4

market Div. – B
 Industry Analysis Competitive Brands:
• PepsiCo (Lay's, Uncle Chips)
• Haldirams (Classic Salted, Pudina Treat, Kettle Chips, Aloo Masala, Papri Chaat)
Growth: Revenue in the Potato Chips segment amounts to US$370m in 2019.The market is expected to grow • Bikanervals Bikano (Chatak Masala, Tangy Tomato, Simply Salted, Yummy Cream, Wafers)
annually by 9.7% (CAGR 2019-2023). • Balaji Wafers (Simply Salted, Magic Masala, Pizzy Masala, Tomato Masti)

Drivers of Growth : India Snacks Market is growing due to following factors Lifestyle Changes, Rising Market Share :
Urbanization, Growing Middle Class Population, Local Availability and Availability of Snacks in Small Package • Haldiram’s ‘Chips’ brand, the company holds a 14% share of the market for nationally branded potato chips
Size, Low Price and Company's Strategies to focus on regional taste. • Balaji Wafers is at 15%
• ITC is at 16%
Trends : Demand for savory snacks is increasingly moving towards healthier variants as India’s affluent urban • PepsiCo, which accounts for 40% of sales third-party market research commissioned by Haldiram to guide its
consumers seek to improve their daily diet in pursuit of better living. This is tied to other lifestyle trends such as sales.
the tendency for people to take more exercise. Indeed, healthy living generally is gaining prominence in Indian
society and this is spurring demand for health and wellness snacks, including those with reduced salt and fat
Cost structure : Margins :Large companies look for profit margins of between
content and those with enhanced nutritional benefits.
1. The machines for a manufacturing 25% and 30% when launching a potato chip product.
Consumer perceptions of packaged food generally are changing. Consumers are increasingly scrutinizing the
plant with an hourly capacity of 500 1. The cost of making a 30g pack of chips is INR10, just 25% to
calorie content and potential health benefits of all products they and their family consume before buying.
kg costs about $700,000 and, along 30% of the consumer price.
with land and buildings, the total 2. Packaging materials cost 7.5% to 10% while logistics account
Preferences : Shumitha Periyasamy, founder and CEO of Food Buddies, a consultancy based in Chennai says
cost goes up to $1.5m. for 15% and the rest is the margin of the retailer and the
Salt, pepper and chilly “are the most preferred flavors for Indians” and these are the most popular elements of
2. The cost of weighing and packaging distributor.
chip flavors.
machines is $285,000 A small company launching a product in local markets they have
3. An imported slicer costs $40,000. not tapped in the past offer a margin of up to 35% to the retailer.
Product Innovation : In 2016, PepsiCo introduced Lay’s Crispz and Lay’s Twistz potato chips – Crispz are
thinner and crispier than Pepsi’s standard lines and Twistz are sold in twirl shapes – both priced at INR5
(US$0.07). Last year, meanwhile, PepsiCo announced it had cut the sodium in its Indian Magic Masala and Primary Research To Decipher – Consumer Buying Preferences
Spanish Tomato Tango flavors by 13-15%.
Responses : 59 Do you always buy the same brand ? When Do generally buy chips ?
Technology : Nitrogen-filled packaging systems keeping potato chips dry and preventing damage to the Region : Mumbai
product are important and expensive. For higher altitude areas, companies have to adjust packaging by adding Age : 18- 45 years
less air – a practice followed by Haldiram – to avoid packets from exploding due to low atmospheric pressure.
Which is your Favourite Brand of Chips ?

Structure of the Industry : The sale of branded chips sold by manufacturers across India is dominated by a
handful of big companies – making up $900m of the segment’s total receipts, according to figures supplied by
Indian ethnic food manufacturer and retailer Haldiram Snacks. The remainder is made of little-known local
potato chip brands and products sold in clear plastic bags, says Gaurav Mahajan, the head of marketing for
Haldiram.

Barriers to Entry : Despite the apparent simplicity of the potato chip, smaller players are likely to struggle to
compete on quality with the major manufacturers as they increase their presence across the country. One reason Preferred Flavour What is the price at which you generally prefer buying a packet of Chips?
is quality control.
Major companies, including Haldiram, engage in contract farming to ensure an uninterrupted supply of special
potato varieties that suit their products.
The cost of setting up a manufacturing facility for potato chips is also a major barrier to entry for smaller
companies, Girish Gupta, CEO of the New Delhi-based Foodies Group of Consultants, says.
 Planogram Design

Row 1- Contains extra pieces of fast moving chips (Lays- Rs. 35 packs, Bingo-Rs. 20 packs) so
that they can be refilled faster by staff once the rows below get empty

Row 2- At eye level of customer. Pack size of Row 2 Lays chips is Rs. 35 pack and is purposely
more than that of row 3 to increase ticket size/ value purchased. It contains fast moving 3
variants of Lays kept on left (based on primary research, fast moving chips kept on left and we
move in the row from left to right). It is followed by Bingo Starters (a new variant of Rs. 20) which
is purposely kept beside fast moving products. It is followed by two chips variants of Bingo (Rs.
20 each).

Row 3- It is also at eye level and has smaller SKU (Rs. 20) of the same 3 variants (as row 2) of
Lays. It is followed by a new variant of Mad Angles (Achaari Masti) and two other Variants of
Bingo Mad angles of Rs. 20 each.

Row 4- This is the row at the eye level of children. It contains chips famous among children like
two variants of Kurkure (Rs. 20), Balaji Wheelos (Rs.10), two variants of Too Yum Karare (Rs. 20)
and Piknik (Rs. 50 pack-1+1 Offer).

Row 5- It contains low margin/ relatively slow selling/ old brands/ different categories of chips. It
has Kurkure Puffcorn, Uncle Chips two variants and two variants of Haldiram chips. Cost of all of
them is Rs. 20 each.

Row 6- It contains chips which are healthy. Based on primary research, people who are looking
for healthy chips will find them anyway and thus, they are placed at bottom. It contains three
variants of Too Yum multigrain chips (Rs. 20 each). The last part has Kurukure solid Masti and
Diamond Chips of Rs. 10 since they are smaller SKU’s and are thus placed at bottom.

Description: The planogram has 6 rows at a distance of 0.35m each. There are two divisions of 1.27 m each. The
SKU width and height are: Row 1-Lays-Rs. 35 pack-6.5*11 inch, Bingo-6.5*9.5 inch, Row 2-Lays (Rs. 20)- 6*9 inch,
Bingo Mad angles- 6.5*9.5 inch and so on.

Assumption: A few savoury snacks are also present in the chips aisle.