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Toaz - Info Entire Notes For Parle G Case Study
Toaz - Info Entire Notes For Parle G Case Study
In jan 2004, the company made a first attempt to raise the price of its 100g packet
of 16 biscuits from Rs4 to Rs4.50 as the most of the revenue‟s portion was
contributed by this brand nearly 50%.As result within the span of six month sales
of the 100-gm packets declined by 40% showing the negative consumer reaction.
Again after 4 years the management focused on reducing the weight of the pack in
phase wise. Even the no. of biscuits were reduced from 16 to 15.In addition to
these the company has taken cost-control measures to safeguard the margins by
following ways:
India was the 3rd largest producer of biscuits in the world, the USA and China.
Manufacturing sector mainly consists of two sectors 1)organized &2) Unorganized
.Low- priced varieties ruled in the rural markets which have put up entry barriers
for branded biscuits which are the players mainly in unorganized sector. In the
organized sector, the 5 main categories of biscuits were glucose, marie , sweet,
cream and milk. Glucose was a high-volume low margin biscuit category that
represented 42% of the biscuit market and was accompanied by strong consumer
expectations of low price points. The growth strategy of all biscuit companies was
to secure the migration from the entry-level glucose category to the indulgent
categories. The organized sector produced 1.7 million tons of biscuits per annum
valued at Rs 110 billion in 2008 where this category was growing at average rate
of 15%. A study by Mckinsey Global Institute, released in May‟07, showed that
the income levels of households in India were rising and categorized into 5 types
basing on the individual annual incomes:
Company background:
Consumers:
The most widely used consumer classification system in India was known as socio-
economic classification, which was developed by the market Research society Of
India in the early 80s.In 2005-06 India had 207.1 million households of which
Parle-G had penetrated 96.8 million households, where the penetration rate of
glucose category of the Indian biscuits industry was 84%.The company segmented
its customers for Parle-g into 2 groups i.e., retail and institutional consumers.
Children and mothers comprised the first segment. Children formed 60% of the
target audience for the company where the category of children aging between 5 to
14 years. The second segment consists of the institutional consumers includes
hospitals, factories, rly. Stations, schools, govt. offices and other corporate offices
which received a discount of 3-4 % on bulk purchases.
Competitors:
BIL and ITC Ltd. are the two main competitors for Parle-G in the glucose category
in domestic market in India. Even the Hindustan Unilever a multinational
consumer packaged goods company, had also entered into this category of biscuit
manufacturing.
Every year since 2004, Parle had spent between Rs600 million and Rs 700 million
on advertising and sales promotion, which constitutes 2% of annual revenues. Of
late, the company had begun to reply on celebrity endorsements, a promotions
tactics popular with some of Parle-G„s competitors. Parle was airing commercials
in which Aamir Khan a popular Actor became entangled in humorous situations,
which supported the tagline “G for genius.”
Distribution:
India had 15 million retail outlets spread across the country Parle-G was sold in
2.5 million outlets. It was available in every village with a population of 500
people on a par with pre-paid mobile cards. The company had 8000 wholesalers
who had their own sales force. The company‟s sales organization structure was
based on the geographies and included zonal sales managers, divisional sales
managers, area managers, sales executives and sales officers. The logistics were
handled by depots, which also served as clearing and forwarding agents
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