Bless Organics 520-0045-1

520-0045-1
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BLESS ORGANICS: CHANNEL OFFERINGS
This case was written by Dr. Harjot Singh, Faculty, LM Thapar School of
Management, Thapar Institute of Engineering & Technology. The case study is
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520-0045-1
BLESS ORGANICS: CHANNEL OFFERINGS

Geetanjali, a first generation entrepreneur, had conceived and promoted a company called Bless
Organics Ltd. Since the company was a start-up, she was playing the role of the CEO, as well
as Head – Marketing & Operations. On February 12, 2019, the day of her marriage
anniversary, she was sitting in the shade of a mango tree in the garden of her home, in the
beautiful city of Chandigarh. A cool gentle breeze and a comfortable temperature added to the
charm. Spring was in the air, and so was music. The musical sounds came from the birds
chirping all around her. Some birds were hopping around in the shade of the tree, pecking at
small crumbs or seeds. In these blissful surroundings, she was feeling as if she had been
showered with God‟s blessings. Such kind of experiences had made her keep the name of the
company she had conceived a few months back as „Bless Organics‟. She felt that she was
indeed blessed, particularly because she had been chosen by God to make organic food
available to the people around. She knew it was indeed the best food for people. However, there
were lots of challenges in this business and she looked forward to overcoming them. The
business had become a part of her life.

Many people around her knew the advantages of organic food. However, organic products had
not caught the fancy of the majority of the population. One reason, of course, was the higher
prices of organic food, as compared to regular food. The price premium was varied between
20% and 100% over similar non-organic products. Another important reason for the low
popularity of organic food was the lack of availability of these products in the marketplace.
People could not go directly to the farms to purchase organic food. They did not know where
such food was available in the market. Even in the few outlets the food was sold, the variety
was limited. The outlet owners also faced problems of a different nature. In case of fruits and
vegetables, shelf life was very limited. The items which could not be sold the same day could
not be easily sold the next day. There was a lot of wastage on that account.
Concept of Organic Products

US Department of Agriculture1 (USDA) certified those foods as organic, which follow federal
guidelines related to soil quality, animal raising practices, pest and weed control, and use of
additives. Organic producers rely on natural substances and biological farming methods to the
fullest extent possible. The nomenclature of organic was given to those products which were
certified to have grown on soil on which prohibited substances were not applied for three years
prior to harvest. Prohibited substances included most synthetic fertilizers and pesticides. In
instances when a grower had to use a synthetic substance to achieve a specific purpose, the
substance was first approved according to criteria that examine its effects on human health and
the environment.
According to the Department for Environment Food & Rural Affairs (DEFRA) 2 of United
Kingdom, “organic agriculture is a systems approach to production that is working towards
environmentally, socially and economically sustainable production. Instead, the agricultural
systems rely on crop rotation, animal and plant manures, some hand weeding and biological
pest control. Organic agriculture is about a way of farming that pays close attention to nature. It
means fewer chemicals on the land such as artificial fertilisers, which can pollute waterways. It
means more wildlife and biodiversity, the absence of veterinary medicines such as antibiotics in
rearing livestock and the avoidance of genetic modification. Organic farming can also offer
benefits for animal welfare, as animals are required to be kept in more natural, free conditions”.
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DEFRA2 further stipulates that organic food is the product of a farming system which avoids
the use of man-made fertilisers; pesticides; growth regulators and livestock feed
additives. Irradiation and the use of genetically modified organisms (GMOs), or products
produced from, or by GMOs, are generally prohibited by organic legislation. For foods to be
labelled as organic, at least 95% of the ingredients must come from organically produced plants
or animals. EU-wide rules require organic foods to be approved by an organic certification
body, which carries out regular inspections to ensure the food meets a strict set of detailed
regulations, relating to production methods and labelling.
According to the National Program for Organic Production run by the Agricultural & Processed
Food Products Export Development Authority3, of the Government of India, organic products
are grown under a system of agriculture without the use of chemical fertilizers and pesticides
with an environmentally and socially responsible approach. This is a method of farming that
works at grass root level preserving the reproductive and regenerative capacity of the soil, good
plant nutrition, and sound soil management, produces nutritious food rich in vitality which has
resistance to diseases.
Product Assortment

Geetanjali had planned that grocery items would be the flagship products of the company. They
were supposed to contribute around 90% of the revenues. These items were intended to be
sourced mainly from neighboring states, as well as, from states farther away. Manufacturing
units of organic grocery products were mainly based in Himachal Pradesh, Punjab, Rajasthan
and some southern states like Telangana, Kerala and Karnataka. The northern states would be
supplying most of the products to the company. There were some items which would have to be
imported, to complete the product portfolio.
Fruits and vegetables were expected to contribute to only about 10% of the revenue, according
to estimates based on experiences of other companies in different parts of the world. However,
it was necessary to include these items in the product portfolio. These items were necessary to
be included, because market research showed that targeted customers were more concerned
about the presence of pesticides in fruits and vegetables, rather than in grocery products. The
prospective customers‟ perceptions were that there was a greater chance of the pesticides
entering the body through fruits and vegetables, rather than through grocery items. Fruits and
vegetables had a larger exposed surface. Common perception was that it was difficult to wash
the pesticides even after multiple washes.
However, a survey of companies operating in this domain in other parts of the globe showed
that it was more challenging to stock fruits and vegetables due to their limited shelf life, which
was much less as compared to that of grocery items. Whatever could not be sold went waste.
Due to the prices of organic versions of fruits and vegetables being much higher (premium
varied from 20% to 100%) than the non-organic fruits and vegetables, sale of these items was
not expected to be much. However, Geetanjali felt that it was necessary to keep some stock of
fruits and vegetable also, as some customers would otherwise not come to buy the grocery
items. She felt that the customers would look forward to the grocery items as well as the fruits
and vegetables, to be available from a single window. She was sure that her hunch was right.
Many members in her sales and marketing team also supported the idea. She therefore,
proceeded to set up the channel on this basis.
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Distribution Model
Geetanjali had discussed the distribution model with her friend, Anju, who was also acting like
her informal consultant. Anju was an entrepreneur herself, and also an expert in the domain of
home-made cakes. She had started her business of home-made cakes around five years back. At
first, she had started selling the cakes through her friends and other contacts. Then she formed a
small partnership company with her husband, which she named and branded as „Anju‟s home
cakes‟. In the very first year of launch of her business, she had designed her website and an app
through which she sold cakes. She was using social media and digital means like Facebook for
promoting her products.
In the last four years of operations, she had achieved considerable success in branding her
cakes as „Anju‟s home cakes‟. She had aggressively built a channel network through which she
sold her cakes to a much larger number of customers, than she had had been able to sell in the
first year of operations when she was selling directly. She had contacted all major bakery shops
and grocery shops in the city, out of which she had identified twenty shops in the city who kept
her cakes in the shop display in order to sell them over the counter to their clientele. She had
designated these twenty outlets as „cake counters‟, where she was even providing signage
which communicated that „Anju‟s home cakes‟ are available in the outlet. These outlets

promoted her product actively along with other bakery/grocery products which they sold.
Quality of these cakes was superb and sales of these cakes helped these counters in increasing
the footfall of customers, and hence their overall sales figures. Clientele of these counters were
mainly the bachelors, and families, who took the cakes home for birthday parties, anniversary
celebrations and for other occasions. The „cake counters‟ contributed to nearly 30% of the
business of the company.
Besides the channel network of „cake counters‟, Anju sold the cakes through another kind of
channel which she called the „cake joints‟. The cake joints consisted of eating joints like
restaurants and cafes, student canteens in schools, colleges, universities, and also canteens in
other institutions and hospitals, cinema halls and multiplexes. Here, small sized cakes called
cup-cakes were sold to customers of these joints for spot consumption. The „cake joints‟
contributed to around 40% of the turnover of the company.
Balance 30% of the business came from „party customers‟ who consisted of marriage palaces
and banquet halls. This segment also included the ladies kitty parties, and various clubs in the
city like Lake Club, Chandigarh Club, Rotary Club, Jaycees Club and Lions Club. The „party
business‟ was directly handled by Anju‟s team working from her company premises which
were set up in an extension of her home.
Geetanjali sought Anjus‟s advice on setting up her channel network. The concept of organic
products was new. Geetanjali was not going to make any product herself. She conceived her
role as a supplier and a trader. She had extensive contacts in farms, around Chandigarh, which
were producing organic fruits and vegetables. She also knew she would be able to convince
leading companies producing organic products to give her the distribution rights for
Chandigarh. These companies did not want to invest time and resources in an exclusive outlet
of their own, because they felt the market was not yet ready to give them the volumes required
for viability of their outlet. The market was still in a nascent stage, because of low awareness
levels of the benefits of consuming organic products, and also because of the price differential
between regular and organic products.
Geetanjali chalked out the business model, in consultation with Anju, and her sales and
marketing team. She decided to take the franchisee route for Bless Organics to distribute the
organic products to the prospective customers. The franchisee would run a store called the
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„Blessing Store‟. The minimum covered floor area in the store expected from a business entity
to take up the franchisee was 200 square feet. A minimum investment of 20 lakh in inventory
was required to be made by the franchisee. The franchisee was required to invest 19 lakhs in
the inventory in grocery, and the balance amount in the inventory of fruits and vegetables. It
was decided that the company would set up a few „Blessing Stores‟ initially across the tri-city
area comprising Chandigarh, Mohali and Panchkula in north India, which would be increased
manifold over the next few years. Initial number of franchisees would be decided on the basis
of secondary data and a small survey. Feedback of the sales and marketing team, and also the
franchisees, would determine whether the franchisee model was a suitable model or not, and
would also determine if more franchisees needed to be appointed.
Anju also offered to Geetanjali that she could make the products of her company available in
the twenty outlets called „cake counters‟ which were selling „Anju‟s home cakes‟.
Geetanjali felt that she must discuss the possibilities of channel design with her sales and
marketing team, who were in regular touch with the prospects to find out their requirements.
It was decided after brain-storming that a two-pronged approach of channel design, consisting
of „Blessing Stores‟ and the „cake counters‟ would be most suitable to begin operations.

Channel Design
Her first task in taking the company forward was clear. The focus was going to be on setting a
wide distribution network. Her gut feeling was that she would have to go in for a multipronged
approach for the purpose of designing and setting up the channel. As availability was a key
concern for the customers, she had to design the channel in such a way that the products were
easily available to the customers in close proximity to their homes, where they could buy them
conveniently. The number of outlets should be numerous, Geetanjali felt. It was going to an
intensive distribution design.
She had got designed a website and an app for her company. It was also planned that customers
place orders through social media platforms like WhatsApp, besides having the option of
placing orders through a toll-free phone number. However, Geetanjali knew from her gut feel,
that the customers would not want to buy the products, particularly the fruits and vegetables,
before they could actually „touch and feel‟ them. Available data also indicated that offline sales
constituted a majority of the total sales of organic products in India. The focus, therefore, was
mainly on the brick-and-mortar model (the offline channel) though the company had clearly
taken a decision to follow a hybrid model of distribution.
The sales and marketing team was given the task of surveying the targeted areas where the
franchisees were to be appointed. Chandigarh was the center of the tri-city area. The city was
the oldest of the three cities. The smaller satellite towns around Chandigarh, namely, Mohali
and Panchkula had developed in the 1970s by the respective state governments of Punjab and
Haryana whereas Chandigarh had developed as a planned city just after independence.
Chandigarh was not a part of either the state of Punjab or the state of Haryana. It was
administered by the Central Government of India, and was called a Union Territory.
Literacy rate was also quite high in Chandigarh. Secondary data on literacy was compiled by
the marketing team of the company, as shown in Exhibit 1. Literacy was considered an
indicating variable of the possible level of awareness about the benefits of organic products.
The exhibit shows that literacy rate in Chandigarh was higher than that of Mohali and
Panchkula, though the difference was minor.
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Of course, even many literate persons were not fully convinced about the need to buy organic
products and the benefits they offered. Price differential was a barrier. Clearing the doubts in
the minds of prospective customers regarding the authenticity of organic products was another
challenge faced by this industry.
The sales and marketing team felt that two franchisees each should be appointed in Mohali and
Panchkula. One franchisee could cover Landran, Kharar and Kurali, and another could look
after Zirakpur and Derabassi towns. Four franchisees could be earmarked for the city of
Chandigarh, including the village of Manimajra and Naya Gaon. Chandigarh could be divided
into four territories, namely, north, south, east and west. This would make a total of ten
franchisees to start with.
Identification of prospective channel partners

The sales team started the process of identifying the potential franchisees. The shops selling
grocery and vegetables were the first with which the sales team interacted with. Most of these
shops were not willing to earmark a separate section in their outlet, which fulfilled the
conditions of required floor area to operate as a „Blessing Store‟. Moreover, many of these
shopkeepers were in the later part of their lives, and were not convinced that customers would

buy grocery products at a premium.
It was then decided to look for young and budding entrepreneurs who had access to an
available space having the required floor area. All that was needed was an investment of 20
lakh. The younger entrepreneurs also had more energy and confidence. They also had
innovative ideas of promotion of outlets and products through digital marketing and social
media. The sales team identified twenty such prospects that were screened by Geetanjali and
finally ten prospects were offered the franchise operations.
Launch of operations
The company launched its operations on April 1, 2019, the day marking the start of the new
financial year. A central campaign was launched to promote the company brand. Glow sign
boards mentioning „Blessing Store‟ were put up on all the franchisee outlets the same day.
Leaflets were inserted in all major newspapers of the tri-city, along with a blitzkrieg of digital
campaigns. At launch events organized simultaneously in places like Elante Mall, Sector 17,
other markets of the tri-city, and of course, all the franchisee outlets, samples of the organic
sharbats (non-aerated soft drinks) were offered to the prospective customers. Introductory
discounts in the range of 30-40% to the list prices were offered across all product categories.
As shown in Exhibit IV, decent sales were reported were reported from each franchisee outlet
in the first month, which grew at an average rate of 10 per cent in the month of May. The
introductory discounts continued to be offered in May. However, the quantum of discounts was
reduced to around 20-30%.
The margins for the franchisees were kept in the range of 15-18%, for various items, including
the fruits and vegetables. The sales and marketing team had given a projection to the
franchisees that they would earn a return of around 25% per annum on an investment of 20
lakh which would translate to an income of around 5 lakh per annum, or around 42,000 per
month. The franchisees were given to understand that they would break even in around four
years on the basis of these projections.
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Concern Areas and the Predicament

In the month of June, the quantum of promotional discounts was substantially reduced to
around 5-10%, and this policy was continued in the month of July too. A major dip in sales, of
the order of 20-30% per franchisee, was recorded in the months of June and July, which upset
the calculations of franchisees. The company also became apprehensive about its own
projections. However, the sales and marketing team explained to the franchisees that many
prospective customers were away on vacations in these months and sales would pick up in the
later months. The sales team emphasized that in a worse-case scenario, if sales did not pick up
soon, the franchisees would break even in five years, instead of four years.
In the month of August, discounts across product categories were increased to around 10-20%
of the list price. Geetanjali watched the trend of sales for the first ten days. There seemed to be
no recovery. It seemed that the month of August would again see the kind of sales volume as
witnessed in the months of June and July. It seemed that the downward trend was here to stay.
The feedback from the sales and marketing team was that sales were high in the first two
months because of the high promotional discounts, and also for reasons of curiosity and
novelty. The team felt that the sales dipped in the summer months because of three reasons,
namely, families being away on vacations, decrease in variety of fruits and vegetables, and the

withdrawal of promotional discounts.
Incentive Programs
On August 11, 2019, in a meeting of the sales and marketing team with the Head – Marketing
& Operations, the shortfall of revenue relative to the projections with which the company had
started operations, was accessed and various remedial measures were discussed.
One such measure related to appointment of field executives for the franchisees. Each
franchisee would appoint two field executives. The field executives would be on the rolls of the
franchisees, and would be responsible for sales of both the product categories. Each executive
would draw a salary of 10,000 per month. Half of the executive‟s salary would be borne by
the franchisee, and the other half by the company. It was also proposed that the executives
should be given variable incentives as components of compensation, besides the fixed salary. It
was decided that each executive would earn an incentive of 10% of total sales generated in both
the product categories taken together.
The margin structure of the franchisees was also discussed. The existing margins were in the
range of 15-18%. It was decided that their margins should be raised to increase the profitability
of franchisees which should increase their sales and hence the turnover of the company. A slab
rate, as shown in Exhibit V, was finalized.
The Path Ahead

Geetanjali wondered if that the three actions, namely, increasing the margins of the franchisees,
appointing field executives, and devising an incentive structure for the executives, would be
enough. Sales did not pick up in the month of August. Geetanjali, after consultating Anju,
decided to seek feedback from the franchisees too. One member of her sales and marketing
team collated the feedback received from some of the franchisees, and presented before her.
The franchisees were unanimous in expressing that the actions of raising their margins and
appointing field executives were not sufficient. They mentioned that they needed clarity about
the company policies going further. They felt that the company needed to appoint some experts
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in the field of organic products, who would train the franchisees and the field executives. The
experts would also conduct seminars for prospective customers to increase their awareness of
the benefits of consumption of organic products. These experts could also help conduct market
research, and collect feedback from customers. The company also needed to put in place digital
methods of collecting customer feedback which would help know customer voice. The
company needed to increase its responsiveness to the franchisees, the field executives, and of
course, the customers. High responsiveness was needed to collect feedback proactively, and
also to take action on the collated feedback.
The franchisees felt that they needed continued promotional support, and not just during the
initial months of launch, from the company. They demanded a central advertisement campaign
and frequent promotional offers from the company, directed at the customers, as well as the
franchisees and the field executives. The franchisees suggested that three categories of
membership cards, namely, silver, gold and platinum, be offered to the customers exhibiting
progressively increasing levels of purchase from the company.
The franchisees were most vociferous in expressing that the company should make sure that
that the franchisees break even in four years, as promised. They would not compromise on the
returns on their investment. They emphasized that the quality of organic products was the

single most important factor which would ensure continued growth in revenues. They also put
forth a view that company should narrow the price differential of its organic products and other
non-organic products available in the market. They also wanted the company to assure
availability of stocks, particularly that of fast selling items, at all times. They also wanted the
company to tell the field executives to deliver the products to homes of customers. They
wanted that the brand of the company should be promoted as being synonymous with quality
and reliability.
Geetanjali sought Anju‟s guidance, and also had a discussion with her sales and marketing
team.
How should she continue on the path of blessing herself, her business and others who were
connected to the business? How should she manage the expectations of franchisees, and also
the projections of business of her company? How would she ensure that profits would continue
to come for the company as well as the franchisees?
End Notes
1 https://www.usda.gov/media/blog/2012/03/22/organic-label-means, accessed on April 4, 2019
2 https://www.bbcgoodfood.com/howto/guide/organic, accessed on April 4, 2019
3 http://apeda.gov.in/apedawebsite/organic/Organic_Products.htm, accessed on April 4, 2019
4 https://www.census2011.co.in/census/state/chandigarh.html, accessed on April 4, 2019
5 https://www.census2011.co.in/census/district/605-mohali.html, accessed on April 4, 2019
6 https://www.census2011.co.in/census/district/208-panchkula.html, accessed on April 4, 2019
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Exhibit I: Comparison of prices of some organic and regular fruits and vegetables
S. Item Price per Kg of Price per Kg of Price premium of

No. organic version regular version organic version over
( ) ( ) regular version (%
age)
1 Potatoes 45 30 50
2 Peas 120 60 100
3 Onions 50 30 67
4 Brinjal 60 40 50
5 Cucumbers 90 50 80
6 Mangoes 170 100 70
7 Papayas 100 50 100
8 Oranges 90 50 80
9 Water melon 60 30 100
10 Pomegranate 190 100 90
Source: Compiled by the author

Exhibit II: Comparison of prices of some organic and regular grocery items
S. Item Price per Kg of Price per Kg of Price premium of

No. organic version regular version organic version over

( ) ( ) regular version (%
age)
1 Wheat Flour 50 30 67
2 Rice 160 80 100
3 Moong Dal 195 130 50

4 Grams 140 80 75
5 Jaggery 100 60 67
6 Rose Sharbat 200 120 67
7 Sugar 60 40 50
8 Soyabeans 120 80 50
Exhibit III: Gender-wise literacy rates in Chandigarh, Mohali and Panchkula
S. City Literacy rate in % Literacy rate in Literacy rate in %

No. age (Males) % age age (Average)
(Females)
1 Chandigarh4 89.99 81.19 86.05
2 Mohali5 87.89 79.18 83.80
3 Panchkula6 87.04 75.99 81.88
Source: Census 2011, Government of India
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Exhibit IV: Break-up of Revenues of the ten franchisees (April, 2019)
Franchisee Revenue from grocery Revenue from fruits and

Number items ( , in lakh) vegetables ( , in lakh)
(Fn)
F1 9.2 1.2
F2 8.5 1.7
F3 8 2
F4 8.8 2.1
F5 7.8 1.9
F6 10.5 2.1
F7 9.7 1.9
F8 8.9 1.8
F9 9.8 1.7
F10 10 1.3
Exhibit V: Slabs of the margins finalized for franchisees (August, 2019)

Product Slab 1 Slab 2 Slab 3 (Revenues
Category between 10 and 15
lakh)
Grocery items 15-18% (Revenues 18-20% (Revenues 20-22% (Revenues

up to 5 lakh) between 5 and 10 lakh) between 10 and 20
lakh)
Fruits and 15-18% (Revenues 18-20% (Revenues 20-22% (Revenues
vegetables up to 0.5 lakh) between 0.5 lakh and 1 between 1 lakh and 2
lakh) lakh)
10

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520-0045-1

Personal author copy for Harjot Singh. Downloaded on 7-May-2020.

(c) 2020, LM Thapar School of Management, Thapar Institute of Engineering &

No part of this publication may be copied, stored, transmitted, reproduced, or

Distributed by The Case Centre

BLESS ORGANICS: CHANNEL OFFERINGS

Personal author copy for Harjot Singh. Downloaded on 7-May-2020.

Concept of Organic Products

Personal author copy for Harjot Singh. Downloaded on 7-May-2020.

Personal author copy for Harjot Singh. Downloaded on 7-May-2020.

Personal author copy for Harjot Singh. Downloaded on 7-May-2020.

Identification of prospective channel partners

Personal author copy for Harjot Singh. Downloaded on 7-May-2020.

Concern Areas and the Predicament

Personal author copy for Harjot Singh. Downloaded on 7-May-2020.

The Path Ahead

Personal author copy for Harjot Singh. Downloaded on 7-May-2020.

S. Item Price per Kg of Price per Kg of Price premium of

Personal author copy for Harjot Singh. Downloaded on 7-May-2020.

S. Item Price per Kg of Price per Kg of Price premium of

No. organic version regular version organic version over

3 Moong Dal 195 130 50

Exhibit III: Gender-wise literacy rates in Chandigarh, Mohali and Panchkula

S. City Literacy rate in % Literacy rate in Literacy rate in %

Exhibit IV: Break-up of Revenues of the ten franchisees (April, 2019)

Franchisee Revenue from grocery Revenue from fruits and

Exhibit V: Slabs of the margins finalized for franchisees (August, 2019)

Personal author copy for Harjot Singh. Downloaded on 7-May-2020.

Grocery items 15-18% (Revenues 18-20% (Revenues 20-22% (Revenues

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