KUMAR FOOD CORPORATION: PRODUCT AND MARKET GROWTH STRATEGIES

Situational analysis:
Kumar Food Corporation is one of the players in the Indian food processing industry. They
specialize in processed foods such as pickles, papads and spices under the brand name Shagun.
Having a strong quality commitment KFC also possesses commendable ties with a few local
companies and micro entrepreneurs. The overall industry has seen support from the
Government’s lenient loan and relief facilities for businesses in this sector with the ulterior aim
of infrastructure development of the food processing industry. Given the situations, now, Mr.
Neeraj Kumar wants to increase the company valuation to 200 Million Rupee.

Industry trends:
1. Increase in disposable income of the people. This meant higher inclination towards
purchasing of ready made or processed foods of their taste.
2. Constant urbanization leads to demand for food products that are easily prepared or can
be consumed.
3. Rising younger generation means a rise of demand for snack items such as pickles,papads
etc
4. Increased numbers of nuclear families indicate a preference towards food items that can
be easily stored,processed and consumed.
- Consumers highlight proper nourishment,availability,form and cost aggressiveness as
their most highlighted factors in terms of consuming processed foods.

Competitor Analysis

EVEREST MDH Pravin Masalewale Catch Spices

Market trendsetter for Market presence for Market presence for Market presence for
45 yrs 88 yrs 58 years 33 years

Over 1000 stockists 1000 stockists 1250 distributors 1600 distributors

400,000 outlets 400,000 outlets 200,000 retailers 200,000 outlets

UK,US, ME, Canada, US, UK, Canada, India & 21 other Huge domestic
 Sinapore, Aus, NZ, Europe, Southeast countries presence along with
East Africa Asia, Japan, UAE, presence in USA,
KSA Canada, West Asia and
Singapore.

Most preferred spice Known for uniform Known for unique Known for purity
brand in India taste & quality aroma and brand
name Suhana which
means pleasant

Challenges :
1. Government initiative (GoI) has given rise to start-ups posing competition.Presence of
global and established local brands in the industry such as Nestle, Everest, Haldiram etc.
2. Consumer based very sensitive towards taste and storage of food items. Consumer tastes
vary across regions and have specific preference in consumption depending on the items.

Problem Identification:
“Developing a strategic fit to increase company valuation”
Shagun is an upcoming brand with a healthy presence in Pune,Maharashtra,Khandesh and
Marathawada. They have to compete with both local and international brands juxtapose to
meeting the choice and preference of their consumers that will ultimately lead to increased
valuation for the company.

Way forawrd: To build a national brand in the processed food sector.

Alternative evaluation: In order to strengthen the brand presence of Shagun we have come to an
understanding that KFC should promote and establish its identity through a nationalistic blend.
In order to have an identity they can either expand geographically and have a presence or add
new products in their current line.

Alternative courses of action:

Courses of Action Effect Pros Cons
 Geographical Long term effect Increasing brand Rise of operational
Expansion presence over expenses in terms of
different establishing new
states,foundation for distribution network
future product line or
category
expansion,helps
understand consumer
buying behavior of
region,increasing
market share

Product Category Long term effect. Increased options for Consumer choice of
expansion consumers in terms of product offering may
product category not match core
competency,existing
probability of product
failure,costly to
launch
product,requires
educating customers

Geographical expansion evaluation:

Expansion type Pros Cons

Domestic Established distribution Established competitors both

network,brand presence, local and international
customer familiarity with
brand,taste and choice has
little variation,government aid
in developing food processing
industry infrastructure.

International Presence in global markets Not cost

effective,international
business barriers,no
knowledge of foreign market
trends and indicators.high risk
of product backfiring

Plan of action/Recommended Solution:

We have chosen geographical expansion in domestic markets as our preferred alternative. This
is because expanding geographically will open up and gain share of potential markets and
establish the foundation for future introductions of any sort of product line.
Our strategic orientation will be of Market development where we introduce existing products to
new markets.

Why not Add a new product category? Because introducing a new product category is a whole
new ballgame. The whole process requires heavy investment in product development, R&D,
sample testing etc. That too with the uncertainty whether the product category aligns with the
existing TG or whether it’ll be welcomed by people or not etc.

Plan of action strategies: In order for KFC to establish Shagun as a national brand we’ve
opted for Market Development strategic orientation. We have identified the following courses of
action for expanding effectively in new domestic markets:

Plan of Action Strategy Advantages Challenges

Extending distribution Increases company and Initial setup and acquisition
channel product’s market of channel members is
presence,creates foundation difficult

New product dimension or
packaging
New pricing strategies
for new product expansion
Gives customer options for Not all products
customers in ways of forms/dimensions will
consumption, helps in perform equally
introducing product
variants,can open up a whole
new market.
Users can easily alter their Sales may become volume
purchases to take advantage oriented depending on the
of the new market pricing, market
Can help develop a new
customer base

Geographical Expansion:

1. Regions preferred for expansion would be the states of Karnataka & Delhi initially.
Rationale: i. Rampant urbanization-Because of rapid urbanization, retail stores & consumer
presence will be high and will be maximum seekers of the products, geographically nearest
regions
ii. Tourism scope-Attraction spots for tourists
iii. Railway stations connectivity-Products are preferred and bought at railway stations in
commendable numbers & so Specific Distributor Teams will supply here as well
Karnataka state will entail Bengaluru, Mysuru, Gokarna and Kundapur city
Delhi state will be comprised of New Delhi, Gharoli, Moradabad and Mandoli city
That is, certain Distributor Teams specially engaged for tourist spots & stations.

2. Set up 2 state wise Regional offices where products will always be supplied &
will also take in distributors to supply in all retail stores & one exclusive Distribution
Team to supply to Modern Trade Retailers
Rationale: Revised distribution model network

3. Pricing strategy-Considering papads & pickles, Pickles in sachets of Rs. 5 & Rs. 10
will be introduced.
-Fewer price of both products catered to rising youth, tourists & students who seek low
price but good quality.
Rationale: i. Rising younger population segment-Because of price consciousness; seeks
low price and so price is a dominant factor to them
ii. Tourism consumption pattern-Tourists prefer food items/snacks that are not strenuous
yet gives them a proper nourishment

4. Product form-Newer product forms for spices & papads will be increased.
-Lower priced packs of spices to be sold as well. Similar to Rs.5 or Rs. 10 Sachet
strategy.
Rationale: i. Rise of nuclear families & disposable income
ii. Nuclear families prefer foods according to their needs &
iii. A greater product form would complement market development
For instance, working moms would rather buy a smaller sized pack of spice rather than
going for a larger one instantly while buying.
Re-strategized Distribution:
The revised distribution channel will introduce Customs and Forwarding Agents (C&F Agents).
The agents will receive products from the manufacturing unit or mother godown. Then, the
product will pass on to the distributors, strategic suppliers and super stockists. The distributor
will be responsible for managing availability of products in his specified regions. Super stockists
will be responsible for supplying the goods to the re-distributors who are in charge of managing
the availability outside the region of the distributors.

Sample for Karnataka Region:

Key Performance Indicators:

From the Sales perspective:

1. Total group Sales: Total volume of sales in specified regions
2. Net profit: Net profit generated from sales
3. Total Revenue collected: Revenue streams generated from sales within the regions

From the perspective of New Supply Chain:

1. Percent of damaged goods: Statistics of goods damaged in regional transits
2. Total Distribution Channel cost: Analysis of costs in maintaining the distribution channel
adopted
3. Inventory stock-out value: Lost income and expense related to sales and internal
performance in inventory

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