Wafer Warfare

A project aimed at understanding the Indian Wafer Snacks Market with special emphasis on Market Size, Market Structure, Competitors and their Strategies.

Submitted To:Dr. PRASHANT GUPTA

By:ARPITA NAGAR

Introduction to the Indian Wafer Snacks Segment 
The size of the Wafer Snacks Segment in India is estimated to be 4,500 ² 5000 crores 

The market is growing at 30 percent annually  The branded players account for 2,000 crores of the market size  Major branded players include Frito-Lay, Bingo, Haldiram, Balaji, Parle 

Potato Chips and Potato based items account for 85 percent of the total snacks segment. 

As per Nielsen·s Retail Audit, Frito-Lay commands 45% market share, followed by Haldiram at 27% and Bingo at 16% 

The rest is divided between new players such as Smart Chips, regional players such as Balaji and handful of unorganized players

Prominent Brands and their offerings

Frito-lay ITC Parle Snacks Other Players

‡Lays ‡Kurkure ‡Lehar Namkeen, ‡Cheetos ‡Uncle Chipps

‡Bingo

‡Musst Bites & Stix ‡ Smart Chips ‡ Cheeslings

‡Balaji Wafers ‡ Haldiram ‡Yellow Diamond among other local players.

Analyzing Segment Attractiveness (Porter¶s 5 forces) .

thereby discouraging market entry  Veteran players such as Fritolay. new entrants may consider it a profitable venture  As branded players are priced similarly. . the threat of new entrants is moderate. Hence. new players might penetrate by adopting a lower price or by offering more grammage at the same price (Balaji-strategy)  New players with a distinct USP and marketing strategy may find it easier to enter the market (Bingo Strategy)  Unorganized players still account for half of the total wafer segment. well-established distribution and good distributor relations.Industry Attractiveness (Porter¶s 5 forces) Threat of new entry:  As the market is growing at 30 percent annually. Haldiram etc enjoy economies of scale.

entice new consumers. .Industry Attractiveness (Porter¶s 5 forces) Competitive Rivalry  High Competition ² Branded Players involved in cutthroat competition to increase market share. the threat of competitive rivalry is high. find new markets  Low Quality differences among branded players.  Quality difference between branded and unbranded offerings is offset by low price offered by unbranded players  Cost of switching is low as all players have a similar pricing strategy  Brand Loyalty is high for branded players Hence.

 Higher cost of input commodities leads to lower margins.  Veteran players like Fritolay and ITC already have a wellestablished network of suppliers. making the market unattractive for distributors and retailers (in an already low-margin. high-volume market)  Shortage of any input material may also affect production and thereby impact distribution. Their ability to raise input costs is high. ITC·s e-choupal venture permits a steady supply of raw materials at the lowest price. spices and other ingredients. Hence. the bargaining power of suppliers is high. .Industry Attractiveness (Porter¶s 5 forces) Bargaining power of suppliers  Suppliers provide raw materials such as potatoes.

 Ability to substitute is high as brands are priced similarly and distribution problems for one brand promote sales for the other.Industry Attractiveness (Porter¶s 5 forces) Bargaining power of consumers  Frito-Lay enjoys a healthy lead with a 45 percent market share for it·s portfolio of products  Competitor differentiation is in terms of variants and communication. .  Price Sensitivity is high. An increase in the price of Lays may promote a switch to Bingo for most buyers (except for loyalists) Hence. bargaining power of consumers is high.

farsan etc are all substitutes of one another Hence.Industry Attractiveness (Porter¶s 5 forces) Threat of substitutes.  Indian Snack Segment is high-volume. . the threat of substitutes is high. low-involvement driven (thrives on impulse buy)  All snacks are considered to be substitutes of each other Biscuits. banana chips. Wafers and local snacks like Chakli.

. the entry to this market may be profitable. if one can ´Pullµ a bingo or carve out a ´Smartµ Niche ala Smart Chips.Industry Attractiveness (Porter¶s 5 forces) Final Verdict The market is unattractive for players who:  Aim to be a me-too product with no significant differentiation  Do not have a well-established distribution network  Do not have good supplier and dealer relationships However.

Understanding The Market Structure .

aimed at the price-sensitive. Kurkure. less loyal audience. Cheetos and Leher) ‡ ITC·s Bingo (16%) posing a threat to Lays through its direct frontal attack ‡ Balaji and local players such as Yellow diamonds. ‡ Parle Monaco·s Smart Chips which has identified itself a niche of the more health conscious section of the audience by offering them a baked variant of chips. . Also included are unorganized offerings. Uncle Chipps.MARKET STRUCTURE Market Leader Market Challenger Market Follower Market Nicher ‡ Fritolay (45 percent cumulative share consisting of Lays.

Stages in the Lifecycle of the Category .

the company decided to develop flavors with an Indian taste. before Launch. vada pav . Bingo developed a cross-sectional team of 8 individuals who travelled across 14 cities to identify the snacking habits of the Indian Consumer. ‡ Test Marketing ² may be conducted by launching the product in one or two markets initially. Based on this information. . samosas.Lifecycle Stages of the Wafer Segment Product Development Stage This stage is characterized by ‡ No Sales & Profit ‡ Product Testing ² identifying a sample target group to evaluate the potential of the product ‡ Research & Development ² aimed at constantly improving/differentiating the product ‡ Eg. etc were the popular choices among the Indian audience. The team found out that local-tasty snacks like khakra.

‡ FMCG thrives on distribution so the firm must have a wellestablished network in its place. if launched nationally. However.Lifecycle Stages of the Wafer Segment Introduction STAGE ‡ The product is launched in the market. market size. cost of switching. extent of brand loyalty among other factors. In this case. it is advisable to go for multiple SKU·s to off-set price-sensitivity. must be high enough to gain maximum visibility in the early stages. The launch campaign must be such that it doesn·t get lost in the clutter. ‡ The price is set keeping in mind the competitor·s offering. If the product is me-too. a lower price is advisable ‡ Promotional Spends. . either as a single variant or multiple variants. The firm may look at providing addon schemes. single SKU or multiple SKU·s. the price-sensitivity. value deals to dealers and retailers not provided by competitors. Efforts must be made to keep the communication simple and unique. it is advisable to follow the leader in this regard unless there is a significant USP.

‡Example: The sales of Lays multiplied through the introduction of ´Tazoµ ‡ If the product was launched in smaller markets. packaging. In terms of SKUs. . the firm may aim at product improvement. etc. freebies. the firm may consider increasing distribution coverage.Lifecycle Stages of the Wafer Segment Growth ‡ Depending on the success in the growth stage. ‡ The company may introduce newer variants through continuous R&D ‡ The firm may undertake sales promotion such as extra grammage. etc.

the firm may place emphasis on :- Product Modification Re-branding Strategies Distribute in selective profitable areas Exit out of markets where the product doesn·t get the desired sales numbers .Lifecycle Stages of the Wafer Segment Maturity The market becomes saturated. Hence.

the company may focus on profitable brands (cannibalize its weaker brands) ‡ The firm may adopt a permanent sales promotion strategy such as buy one-get one free. If in-case of a multi-brand company. discounted price. more grammage in case of large unsold inventory. .Lifecycle Stages of the Wafer Segment Decline ‡ The Company may withdraw the product from the market.

Marketing Strategy adopted by Frito-lay Frito(The Market Leader) .

Marketing Strategy of Frito-Lay Product Strategy:Frito-Lay's product strategy aims at differentiating among its own brands in terms of product taste. ‡ A salt farsan-like snack aimed is a direct alternative to the offerings of unorganized players. ‡Launched in 1999. Also the inclusion of ¶cheese· as an input material distinct it from other brands. The product differentiation is apparent in terms of design and shape. design. . while ´Magic Masalaµ and ´Lime Masalaµ are aimed at craving the Indian-taste. the brand symbolizes the spirit of India with its Indianized farsan-like flavors. The newly launched ´Desi Beatsµ variants are a direct answer to Bingo·s strategy of launching Indianized flavours. Classic Salt. ‡Launched in 1995 provides variety from other Fritolay offerings such as Cheese Puffs & Masala Balls. Tomato Tangy. packaging and target audience. Lays Kurkure Cheetos Leher Namkeen ‡One of the power brands under Fritolay comes in 5 different flavours. Cream ¶n· Onion are the popular ´westernizedµ variants.

10 and Rs. the two popular choices. come in different SKU·s priced at Rs. Rs. 20.  Recently. however Fritolay launched a Rs. similar to Bingo and Haldiram.Marketing Strategy of Frito-Lay Pricing Strategy  The pricing strategy for Lays is consistent with other competing players.3 SKU for it·s Kurkure brand in a bid to compete more aggressively.  Lays and Kurkure.5. As this market is driven by high-impulsive buyers of snack foods. . there is very little dichotomy in the pricing strategies of all major players.

Marketing Strategy of Frito-Lay Promotional strategy  Realizing the direct threat posed by Bingo to its market share. the company also signed on Kareena Kapoor for the ´Desi Beatsµ version of Kurkure.  ´Chai Time Achieversµ ² a Kurkure centric campaign was aimed at the housewives in India. known as ´Kurkure Expressµ to increase brand visibility. the company signed on ambassadors Saif Ali Khan & MS Dhoni. The Idea was to promote heavy audience interaction by sending recipes for new flavours.  ´Chala Change Ka Chakkarµ ² the largest ever brand promotional strategy undertaken by Fritolay aimed at bringing all its flagship brands under one roof.  Other initiatives include posters at unconventional retail points such as cyber cafes and telephone booths. The winning family would then have the opportunity to have their photographs on one million Kurkure packs  Aside from Juhi Chawla. These included Chat Street. Fritolay revamped its· branding strategy for all leading brands. This massive umbrella campaign would allow chosen customers to live the life of a Bollywood Indian celebrity for a day. Indianized versions of Lays were also launched after Bingo·s success with Indian flavours. .  For Lays. a tie-up with South-Western Railways.

. The Company.Marketing Strategy of Frito-Lay DISTRIBUTION STRATEGY  Being first in the market through its acquisition of Uncle Chipps. The brand loyalty enjoyed by Lays was leveraged during the launch of Kurkure. with its manufacturing plants in Punjab and Pune. Cheetos and the recently launched ´Alivaµ  Frito-Lay has a distribution network of 30 CFAs and 2 RDCs who service 800 distributors who sell to 4 lakhs retailers. Fritolay already has a well-established network of distributors and retailers pan-India. aims at investing 20 crores to extend distribution facilities to improve coverage and increase product shelf life by 120 days.  Fritolay boasts of reaching more than 1 million retail outlets countrywide covering 100 towns.

Marketing Strategy adopted by Bingo (The Market Challenger) .

5. 20 . Rs.  The Potato chips segment includes variants like masala. tomato inspired by the snacking habits of the Indian consumer  The offerings under Finger Snacks include the pakoda inspired ¶Live Wires· and Khakra inspired ¶Mad Angles·  These offerings were further differentiated by providing SKU·s at Rs.Marketing Strategy of Bingo Product strategy  Bingo positioned itself as chips with an Indian twist.  The initial offerings were a mix of potato chips and finger snacks.10 and Rs. The 16 flavors introduced at launch were carefully developed through R&D. salted.

it launched a direct frontal attack by introducing similar priced SKU·s. This also facilitated timely supply of raw materials.Marketing Strategy of Bingo Pricing strategy  The main objective for ITC was to compete effectively with players who were already there. .  ITC already enjoyed cost advantage over competitors through its e-choupal initiative. Hence.  ITC·s printing and packaging business also lead to highquality. cost-effective and innovative packaging.

and stand out from the clutter.  The advertising strategy revolved around slapstick humor and irrelevant themes to hold eyeballs.com and Mad Angles Twister Application (Facebook) were other initiatives in online media. the total advertising spend in the initial 6 months were roughly 100 crores.Marketing Strategy of Bingo Promotional strategy  Bingo was strategically launched at the time of world cup to cash in on the popularity of snacks among the cricket lovers of the country. Bingo chose a different route.  ITC booked 10 to 15 spots per channel per day. digital media was heavily used.  While its competitor Fritolay focuses on celebrity endorsements. It didn·t have an ambassador!  As the product is aimed at the youth. 20 spots on radio stations supported by 1000·s of hoardings advertising the product. According to industry estimates. garner attention and interest. . the Bingo National Gaming Championship across 4 cities with more than 25.000 participants  Bingeonbingo. For instance.

Marketing Strategy of Bingo Distribution strategy  ITC already had a well-established distribution network through its cigarette and tobacco-related offerings which was leveraged in case of Bingo. Local betel shops are all being used to distribute Bingo to a wide range of audiences .000 retailers across the country.  Within 6 months. Restaurants and Cafes). the company distributed 4 lakh racks across all retailers to display the brand at all Points-of-sale.50.  Further. Food Bazaar stocking only ITCµs Bingo  HORECA (Hotels. Bingo was available across 2.  A crucial alliance with Future group which lead to all future group retail outlets like Big Bazaar.

Marketing Strategy adopted by SMART CHIPS (The Market NIChER) NIChER) .

Realizing the recent market trend of being more ¶health conscious·. Must Bites & Must Sticks together account for 5-7 percent of the total organized wafer chips segment Product strategy Parle Monaco recently entered the chips segment with its healthy variant called ´Smart Chipsµ. Parle has had a tough time gaining a considerable market share for its snack offerings.Marketing Strategy of Parle¶s Smart Chips Among its competitors. Parle. Highlighting it·s USP of being baked rather than friend. through Smart Chips has carved out its own niche. Smart Chips comes in 4 different flavors: Simply Salted Tangy Tomato Crazy Chat Macho Masala .

handled by Thoughtshop Communications.  Thus. Parle has carved out a small niche for itself aimed at the health conscious snack-lovers. Rs. Distribution strategy  Being a veteran player in the food and snacks segment. with the advent of Smart Chips. it remains to be seen how this product performs in the long run. features Aamir Khan advocating the benefits of baked chips over the fried ones taking a subtle shot at competing brands  The ad highlights the USP of the product in a humorous way without sounding to preachy or serious. 10 for a 50 gm pack Promotional strategy  The ad campaign. .Marketing Strategy of Parle¶s Smart Chips Pricing strategy Similar to competitors. which enables it to stand out from the clutter. This has enabled Parle to distribute Smart Chips effectively. 5 for a 25 gm pack and Rs. reaching millions of retail outlets. However. Parle already has a well-established framework of distribution through its biscuits and other snack offerings. Smart Chips comes in two SKU·s.

Any launch of a new variant/line extension is supported by a 360 degree marketing campaign to create awareness and induce trials.Frito-Lay's Success Mantra ± Right Strategy at the Right Time If you·re not the first in the market. Respond to Competitor·s threats When Bingo started eating into Fritolay·s market share. Lays among others. When Fritolay entered India in 1996 with its brand ´Rufflesµ. post 2000. It has managed to create a distinct image for all its brands ² Kurkure. Taking a cue from its competitor in terms of increased audience interaction and online marketing. it bought out Uncle Chipps for an undisclosed sum. Uncle Chipps enjoyed tremendous success. Consistent Communication Fritolay·s communication is one of its key strengths. Fritolay expored new mediums of advertising which lead to the launch of the massive ´Chala Change Ka Chakkar Campaignµ . the company proactively responded by launching it·s own versions of Indianized flavours spread across all it·s brands. it went head on with Uncle Chipps but still couldn·t gain significant market share. However. thereby wiping out its sole competitor in the branded wafer market. compete head on and if possible acquire the competitor Being first in the market. in 1992.

if done right.Learning¶s from the competitors. helps stand out from clutter and reach the target audience. ‡ If there is no significant product or distribution differentiation. focus on the other 2P·s namely Price and most importantly promotion. it must be communicated in simple and clear terms (Smart Chips) ‡ Innovative advertising and communication. ‡ A well-planned full frontal attack on the leader may sometimes yield fruitful results (Bingo) ‡ A thorough analysis of the leader·s offerings will reveal missed opportunities (Smart Chips) ‡ Once a USP over the leader and other competitors is identified. .

Bingo among other brands 4) http://www.televisionpoint.afaqs.com/news/business/frito-lay-losessnack-mkt-share-to-itcs-bingo_300325.com/support_jan_suplychain.REFERENCES TEXTUAL REFERENCES 1) Marketing Strategy ² Walker.com/news/news-byindustry/cons-products/food/Balaji-Wafers-a-name-to-reckonwith-in-Gujarat-snacks-market/articleshow/5367599. Dr.html?sid=20324 5) http://www.php?i d=1244814371 3) Official Websites of Fritolay.bizdewz.com/parle-monaco-smart-chips-vs-lays-oraliva/ 7) http://www.cms .htm 2) http://www. Balaji.com/perl/news/story.html?sid=25651 8) http://economictimes.com/perl/news/story.indiatimes. Parle.com/news2009/newsfullstory. Mullins. Boyd 2) Marketing Strategy & Plans ² Michael Vaz 3) Class Handouts ² Prof. Amit Rangnekar WEB-BASED REFERENCES 1) http://www.moneycontrol.imagesretail.html 6) http://www.afaqs.

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