Vora & Company

Marketing Management -1

ANIRBAN KAR EPGP-12A-022 16/08/2020

SWOT analysis – Vora and Company
Strengths
1. Mr. Vora is very much eager to make
the business success and is ready to
invest money.
2. Mr. Vora’s Family is in business for
several years. This provides him
valuable experience to him
3. Consumer rated the product as better
than competing product and fulfills
criteria for Indian Standards Institution.
4. Company has better processing
equipment. The company has got ISI
certification for its product thus
ensuring quality.
Opportunities
1. Government stopped importation of
packaged cereal.
2. The sales of imported product have
been confined only to medium and
high-income class people.
3. Oatmeal porridge takes very less time
to be prepared. Special appeal to
working women.
4. Oats products liked by many people
with milk and sugar or butter or syrup.
Weakness
1. Mr. Vora didn’t have sales information
of Quaker Oats or Champion oats.
2. Packaging of the product is like
Champion brand
3. Appointed new agents in south India
where consumer base is high for oat
food
4. Monitoring was done over mail only.
5. Agents don’t have warehouses for
storage compared with competitor’s
Champion Oats brand
Threats
1. Competitors might have an edge over
Mr. Vora’s product due to poor
marketing strategy.
2. The company might lead to closure if
the sales of the product keep decreasing
drastically.

Q1) Should Mr. Vora Continue in this business?

We have done the SWOT analysis of the business.

Mr.Vora should continue his business of Blossom Oats as

 The product quality and the taste of Blossom Oats was found to be equal to or better than
competing products.
 Mr.Vora’s Blossom Oats is one of the only two competitors that are serving the market.
 Close to 3 years is an insufficient quantum of time for the business to comment on the viability
of operations. Initially, Champion also took around 3 years to get established in the national
market.
 There are numerous drawbacks (mentioned in Question 2) of the current operating and
marketing model which can be easily rectified.
Q2) What are the major problems faced by Vora and Company?

a) Pricing of Product
Even with hundred percent utilization and considering direct costs, the cost per case of 36 tins is
Rs.59.92/- Adding overhead charges of Rs 12.18 assuming 500 cases of production a month, the total
cost for Mr. Vora for producing the case is Rs 72.10. Mr. Vora is getting only Rs 64 per case while
selling a case. This business model is unviable, and Mr. Vora needs to increase the price for sustaining
his business.

b) Ineffective Distribution network in South India

South Indian provides major market for canned food. Unfortunately, the agency employed by Mr Vora
had no salesman for some time for marketing to retailers. The inexperience of agent can also be
considered as an area of improvement for future business plans.

c) No warehousing by agents/Subagents
The agents only provided ordered quantity from retailers to Mr. Vora’s facility in Lucknow. Mr. Vora
then shipped the goods for delivery only after payment of draft. This can cause large lead time for
procuring materials making retailers less enthusiastic to place orders. The competitor product Champion
oat’s agents stocked the goods in their godowns for delivery thus reducing lead time.

d) No visits to selling agents

Mr Vora only contacts his selling agents via email. He should make personal visits to his salesmen
every few months so that he can push his salesmen for putting more efforts and hearing their grievances
personally. Personal visits will put more effect than mail communication.

Q3) Should Mr. Vora make any changes in decisions concerning

a) Product and packaging

b) Advertisements and promotion
c) Pricing
d) Sales and distribution

A) Product and packaging

 The company must do a comprehensive market research to understand the demands of

various regions.
 The current cost of the packing tin is around 40% of the direct cost incurred. This cost
needs to be brought down by looking into alternative packaging options.
 The packaging has to innovative and differentiable from its competitors like ‘Champion
Oats’. The Copied Tin can shape from Champion oats must be changed to another shape.
Differentiating their packaging will help me notice among other champion oat’s users and
might appeal Champion oat’s users to try their product once.
  The packaging can be done in other measurements rather than only 550 gram packs which
would be able to cater to various segments like larger families depending upon the
consumption.
 Their USP is ‘Quick Cooking’ and it should be highlighted.
 Blossom Quaker oats did not have any innovation on the packaging of the product. The
name Blossom was printed directly on the tin in a bright green background and red letters.
 The image of girl must be replaced by housewife because the product has special appeal to
housewives for its quick cooking ability.
 Other materials for packaging must be explored. Plastic pouches can be considered if they
provide more economical alternative to tin cans.

B) Advertisements and promotion

Blossom did not follow impressive techniques to advertise the projects. Vora spent only 4000 Rs in
advertising and latter even stopped that. Vora should increase his expense on advertising and promotion
works. Having very little competition he could have a major market share in the package oats industry.

Also, Housewives can be used in promotion campaigns as this product has special appeal to that segment
because of fast easy cooking and nonstick properties to cooking pan.

C) Pricing Strategy

As per given table direct costs for producing case (at full capacity) 59.92

Overhead costs assuming full production of 500 tins per month is 1015

Break-even for Mr. Vora –

59.92x + 1015 = 66x (where x = number of boxes to be sold)

x=1015/6

x=167 boxes per month

Break up of Champion Oats:

List price : 93

7.5 % commission to agents : 7

7.5 % commission to retailers : 7

Sale price of Champion Oats : 79

Notes:

1) Champion Oats is providing 14 Rs to wholesale distributors and retailers while Vora is proving 17
Rs per case to them. To make his sales more aggressive, we propose to increase their margin from
17 to 18 Rs

With new pricing, breakeven for cases is

59.92x + 1015 = 65tox

x=1015/5

x~ 203 boxes per month.

203 boxes per month is still far below his manufacturing capacity. We think economies of scale will
provide him opportunity to improve profitability of his venture.

Sales forecast: Current sales is 83 boxes per month

Diagnosis for low sales

1) Unexperienced sales personnel in south Indian market

For many days the agency representing Mr Vora had no dedicated sales personnel. The
inexperience to push quality products at lower price is clearly reflected in the low sales.

2) No warehousing for Blossom oats

Despite higher margin, distributors are not stocking blossom oats products. Rival Champion Oats
products are stocked by its distributors. Blossom oats’ distributors must be pressured to stock
Blossom oats as they are already provided with higher margin.

Year 1st year 2nd year 3rd year

Sales 120 200 250

Plant capacity is 500 boxes per month. Aim of Mr.Vora should be to increase production to around 400 or
80% plant capacity utilization.

Action Plan

1) Whole Sale business model

Since retailers and agents are being offered commission of 9 Rs each as compared to 7 Rs each
provided by Champion, These agents must be pressured to store stocks of Blossom oats like that of
Champion oats to ensure timely delivery to retailers.
Whole sale business model will reduce lead time for retailers.
 2) Personal Sales representative for South Indian market
Till now Mr Vora only used to have email contact with distributors. A dedicated sales
representative must be hired as south India represents a major market for processed foods.

3) Personal visits by Mr Vora to address grievance if any:

Frequent visits by Mr Vora are required to ensure vigilance and discipline towards his selling
agents.

Assumption:
Mr Vora has set up his facility with a capacity of 500 boxes per month. We are assuming that Mr Vora did
his research while commissioning his facility. Plant capacity utilization must reach 80-90% for any
production business to become sustainable.

D) Sales and distribution:

1) Experience professionals in South Indian markets required

The sales personnel are not dedicated and most of them are not experienced in their profession.
More experienced and dedicated sales team has to be deployed. The southern states are the major
business source for Blossom.

2) Frequent Personal Visits:

Mr. Vora has never come to look after any of the activities. Only mail contact is maintained with
his selling agents. More vigilance is required from the management’s side to have effective
distribution.

3) Warehousing by agents of Blossom Oats products

Local agents and subagents do not stock the products in their warehouses and just supply the
number received from retailers to Lucknow facility. Since we are already paying them more as
compared to Champion Oats, Agents must be asked to stock these items to delay their lead time in
providing the items to retailers.