Namkeen Industry In India

Management Research [Project]

Submitted By: Sabir

INDEX: Executive Summary…………………………………………………….3 Company Profile………………………………………………………...4 Product idea and Market Opportunity…………………………..............5 Marketing Mix………………………………………………………..…11 Distribution Strategy……………………………………………………12 Cost of material, equipment and labor required………………………...13 Cost of training and development………………………………………16 SWOT Analysis…………………………………………………………16 Time Scale for Implementation…………………………………………19 Marketing Strategy for Implementation………………………………...21 Monitoring and Evaluation……………………………………………...28 Conclusion and recommendations………………………………………29 Bibliography……………………………………………………………..30

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EXECUTIVE SUMMARY: Launching a new product in market is a very difficult task and it requires a lot of sincere efforts as well as analysis to be done of the industry to which that product/service belongs to. This report has made sincere efforts in identifying what all factors are important in launching a new namkeen brand in the Indian market. What are the factors affecting the overall market i.e. the forces shaping it and also the market competitiveness. So this report makes an attempt to identify whether it would be beneficial to launch namkeen or not.

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THE INTERNET INDUSTRY IN AUTOMOBILE SECTOR What is a Internet? The internet is a global based system in which computer networks are interconnected and uses the internet protocol suite to serve the people from worldwide. It is basically a network of networks that includes people from all background business, academic, government network, private network etc of local to global and these all connected through links of copper wires, fiber-optic wires and cables and other technologies. Internet consists of vast information resources and services. It uses the inter-linked hypertext documents of the WWW (World Wide Web) and it has the infrastructure to support electronic mail. It provide numerous of services like online chatting, video on demand, transferring of file, gamming, e-commerce etc.

Internet is inseparable part for all educated people now a day. People from all age group use the internet. All the formal communication is being done through internet. It is progressing in much faster rate in India than any other country in the world. Users of internet can be broadly classified into two categories 1. Business/Academic Purposes – Those who deals in transaction of money or deals in academia. 2. Commercial Purposes – Those who deals in normal purposes like chatting, gaming, entertainment etc. In terms of volumes, sales in the first category are very much higher than in the second category, though less profitable. But in the past few years the growth has been higher in the second category rather than the first one. As such, lately Indian markets are witnessing the trend of branding commodity kind of products. The Namkeen Market: As the ethnic foods category is growing, cash-rich companies make a beeline for a share of the salty snacks market. Around 1,000 snack items are sold in India spanning various tastes, forms, textures, aromas, bases, sizes, shapes and fillings. Some 300 types of savories sell here and the overall snack product market (inclusive of sweetmeats) is estimated at Rs.25,000 crore. The branded salty snacks market (size: 1200 Crores) is 40% of the total market (size: 3000 Crores), it's bustling nevertheless. The branded segment is increasing at the rate of 25% per annum whereas the entire market is increasing at the rate of 7%. In the past 2-3 years the unbranded sector has witnessed a decline of 5% per annum. Indians seem to be snacking on ethnic foods with a vengeance. This is good news for the corporate sector, given that the past few years have seen a perceptible shift towards the branded sector at the cost of the unbranded segment.

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New Product Idea and Market Opportunity Product is the most important part of the marketing mix. It signifies what you are going to sell to the consumer. A comprehensive analysis of the Industry and Our Market Survey has given us a platform on which our product can be built. Our product will be built for the masses, and expansion shall be gradual, to cater to the entire country’s needs. Namkeen is a product, which needs three important things: 1. Taste. 2. Quality. 3. Variation. In the same order of significance we need to provide all three to our consumers. Ours is a Company whose Product shall stand for something every Indian craves for. We are entering a market already dominated by a number of branded and unbranded players. Customers are extremely loyal to the namkeen they consume. So we thought about what would make these customers come to us? Initially housewives in India used to make Namkeen at home, but with changing times this is gradually fading away and people have started thinking that it is easier to buy Namkeen than make it at home. Thus, we came to the conclusion that “Ma ke haathon ka swaad, sehat ke saath” “The Goodness of home-made food, along with Health” This is our Unique Selling Proposition - Telling the Mothers themselves, that our Product can take care of your entire family, without a worry of degrading taste or health.

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“SWAADISHT” SWAADISHT” Swaadisht, which stands for good taste, tells you directly that our product has an exquisite taste which, is the best and unlike any other brand. High quality measures keeping in mind health of the consumer and the materials we use for our product, we have our USP as having the goodness of home made food, which gives you the same quality that you would get from the food that your mother cooks. We have built flavors to suit a diverse market. The Shelf Life of our product is 6-7 Months. Flavors: We shall have three traditional flavors, which is the highest selling till date. But keeping in mind consumers of today who want more than just traditional flavors we have three new flavors, which will cater to their needs and also to teenagers who would like these tastes. 1. 2. 3. 4. 5. 6.

Aloo Bhujia Moong Dal Bhel Puri Funky Tomato Chilly Cheese Wacky Pudina

SKU’s Each of our Flavors will come in FOUR different sizes: 1. 35gm 2. 80gm 3. 200gm 4. 500gm 1. The 35gm pack is basically for the first time buyers and also the ones who will have it while traveling. Also we will use this size of the pack for our promotion measures. This size will include 40 percent of our output 2. The 80gm pack is for the travelers and for people who can buy it as a substitute to chips and other eatables. This size will include 25 percent of our output

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3. The 200gm pack is also for usage at home for smaller families and for those who consume less. This size will include 20 percent of our output 4. The 500gm pack is for the family, which serves for a long period of time. This size will include 15 percent of our output.

Major players are PepsiCo's Frito Lay-India and Haldiram. Haldiram is the only national player supplying in each of the28 states in India and had a turn over of Rs.492 crore (41.1% Market Share) followed by Frito Lay, which had a turn over of Rs.300 crore (10% Market Share). This clearly shows the market dominance of Haldiram. It is far easier to sell something that the consumer is already accustomed to.

Market Opportunities: The average annual per capita consumption of commercial snacks is just 500g and that by urbanites is 10 times more than that by rural consumers. This may be since most rural houses make these at home or buy from the local vendors that come in the unorganized market. Consumers from Western India are the leading snack consumers, followed by the North. While the domestic ethnic snack foods industry is hugely diverse, has easy access to indigenous technology and involves low entry barriers, standardization of product quality and backward links to testing facilities are at woefully low levels. Naturally, opportunity is screaming from the rooftops. K.P. Sareen, Executive Secretary, All India Food Processors' Association, calls it the third phase of the evolution of the salted snacks market. The first two, he says, dealt with development and nurturing of tastes respectively. The big question is whether branded players will edge past their unbranded counterparts? Brand marketers say they will. Factors like hygiene and quality is steadily bringing about a switch from unorganized to branded namkeens. One will not grow at the cost of the other and that both categories will co-exist. Cottage-industry-level players offer themselves as suppliers to deep-pocketed marketers. The APEDA study states that though backroom operations dominate ethnic snacks, improper labeling, haphazard distribution channels, storage problems and inadequate marketing efforts take their toll. Branded players, with their quality control systems and standardized raw material sourcing in place, can effectively weed out those problems. One differential between branded and unorganized namkeens is that of price (roughly 25 per cent), but that's not a perceptible bottleneck, say marketers.

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An aspect that leads to quick movement of ethnic snacks is the consumption convenience or `consume anywhere-anytime' factor. It can be had with cocktails, at teatime, as props with regular meals like breakfast or as starters with dinner.

Export Potential: Export potential of the category needs to be harnessed in full measure. At present, ethnic Indian snacks cater only to limited mainstream consumers, that too very sporadically. Haldiram leads in this area too being one of the largest exporters of namkeen. The report suggests developing patents and trade name accreditation for traditional snack foods, identifying marketing partners and organizing integrating agencies. EXISTING COMPETITION The Salty snacks market in India is very diverse largely comprising of an unbranded segment which comprises of home made namkeens, mithai shops and loose namkeens. However the branded segment has been increasing rapidly lead by the revolution carried out by market leaders Haldiram Foods and Frito Lay-India. Other major players in the branded market include: 1. Haldiram Foods 2. Frito-Lay India: Its products included Leher Namkeens, Leher Kurkure (snack sticks), Lays (flavored Chips), Cheetos (snack balls), Uncle Chips and Nutyumz (nut snacks). 3. SM Foods: Under two main brands - Peppy and Piknik. Under Peppy, it had sub brands such as Cheese Balls, Ringos, Hi Protein Crispies, Potato Rackets, Hearts, Veggie Treat, Mixtures and Minerette. Under Piknik, it had Protein Pin, Junior and Corn Puffs. 4. Mc Fills-India: Ne time, Ne where, Ne Place etc. Haldiram Foods: Over a period spanning 65 years, the Haldiram's Group (Haldiram's) had emerged as a household name for ready-to-eat snack foods in India. It had come a long way since its relatively humble beginning in 1937 as a small time sweet shop in Bikaner, Rajasthan. In 2001, the turnover of the Haldiram's was Rs.400 Crore. The group had presence not only in India but in several countries all over the world. The company offered a wide variety of traditional Indian sweets and snacks at competitive prices that appealed to people belonging to different age groups. Haldiram's had many 'firsts' to its credit. • It was the first company in India to brand 'namkeens'. • The group also pioneered new ways of packaging namkeens.

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•

Its packaging techniques increased the shelf life of namkeens from less than a week to more than six months.

Since the very beginning, the brand 'Haldiram's' had been renowned for its quality products. The company employed the best available technology in all its manufacturing facilities in India. Namkeens remain the main focus area for the group, contributing close to 60% of its total revenues. Haldiram’s has got 4 firms, based at Delhi, Kolkata, Nagpur and Bikaner (branded as “Bikaji “) These firms are separate entites managed by 4 different brothers, 3 of them (given below) use the same brand name - Haldiram’s. While the Nagpur unit manufactures 51 different varieties of namkeens, the Kolkata unit manufactures 37 and the Delhi unit 25 - This is due to different regional markets, and the varying tastes. The raw materials used to prepare namkeens are of best quality and sourced from all over India. In our interview with the Haldiram’s Marketing Representative at the Mumbai Office, we were informed that Haldiram’s invests in R & D at the rate of churning out 2-3 products every 2 months. This just shows that Haldiram’s has come a long way from being the heavy-weight market leaders, and have now realized the importance and threat of competition. Frito-Lay India: Pepsi entered India, with some of its mega brands in soft drinks and snacks. The snacks division, which was renamed Pepsi Foods and Marketing Company (Today known as Frito-Lay India), mainly had big names like Ruffles (Today present as Lays) and Hostess (Chips), Cheetos (Corn Snacks). For quite sometime none of these brands did well in India. In 1994 Hostess and Cheetos as taken out of the market and the division was left with ruffles which was also not doing very well. The average Indian thinks chips as western junk food whereas namkeen is considered as ideal snacks. Hence in 1995 Pepsi foods started marketing namkeens (made by Bikanervala Foods) under the brand name ‘Lehar’. Today apart from Lehar Kurkure which has been indigenously developed, Frito-Lay brings in internal recipes and oil management practices, besides proprietary seasonings and raw materials, while Bikanervala does the actual manufacturing. Where Frito-Lay edges past the leader is on the sound bytes front. The brand has consistently (24 weeks a year on mainline channels) played up `irresistible' taste through its `control nahi hota' ad pitch. The marketer is now working on flavours suited to South and West India to broad base its reach and to fulfill the category's need for continuous infusion.

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Frito-Lay manufactures its major chunk of snacks in its factories at Channo in Punjab and Ranjandgaon in Pune. These two plants have a combined annual capacity of 17,000 tonnes. About 10 per cent of its products are outsourced from the Rs 50-crore Bikanervala Foods. They have recently set up an 80 crore plant in West Bengal (15,000 tonne capacity) with a view to gain up to 50 percent market share in the North-east region. Since south contributes 32 percent of the Namkeen consumers Lays is also planning to foray into that market to increase its market share from 9 to 30 percent. Frito-Lay India consistently makes profits in the snack foods business for Pepsico India and manufactures leading snack brands like Lays Frito-Lay India, PepsiCo's consistently profit-making snack foods arm, is turning the spotlight on desi snack foods for its Lehar Namkeen brand. While Lay's, the flagship brand of Frito-Lay, remains the leading potato chips brand, the acquired Uncle Chipps is being pushed in smaller towns. Other brands in Frito-Lay's portfolio include Lehar Kurkure and Cheetos. Apart from the above two giants there are many other existing players such as SM foods, Mcfills and other regional players. Other Upcoming Brands & Failures: It is no coincidence that cash-rich biscuit majors, Britannia and Bakeman's, have made a strategic beeline for the salty snacks market (Snaxx in 2000). Bakeman's has begun rolling out namkeens in eastern markets, with a manufacturing base in UP. Though Britannia has rolled out six varieties of namkeens only in Delhi, Calcutta and Chennai, it's making sure it grabs attention. In Delhi, for example, the marketer has been announcing the arrival of its ethnic snacks through outdoor media -- at bus shelters, lamp posts, the works. An ad blitzkrieg is expected three months down the line to coincide with a national launch. The scenario may appear hunky-dory, but success rates are not consistent. As Uncle Chipps Co Ltd (UCCL), found out, Yumkeenz was hardly an experience it would like to see recorded in history. The brand was created in 1996 through a state-of-the-art plant equipped with Dutch machinery. The namkeens included a versatile mix of ingredients, but the brand was snagged on taste, value and quality. That UCCL is part of the Rs 650crore Amrit Banaspati Group Company (with diverse interests in edible oils, milk products and paper) didn't help. Neither did the legacy of Uncle Chipps potato wafers, which till a few years back boasted a 70 per cent share in the potato wafers market. THE Rs 900-crore Mother Dairy Fruit and Vegetable Ltd, a 100 per cent subsidiary of the National Dairy Development Board, has finally entered the snacks segment with the launch of namkeen under the brand name of `Aa Ja Kha Ja'. Interestingly, the company has entered into a tie-up with the Delhi-based Bikanervala Foods to manufacture the namkeens, while Mother Dairy Fruit and Vegetable will do the 10

marketing. The product will be pushed through the `Accha Hai, Sachha Hai!' tagline, which is also the punchline for Safal and will be made available through the Safal and Mother Dairy booths across Delhi. The launch is yet another indicator of the cooperative's aggressive expansion plans.

Marketing Mix: Product Product is the most important part of the marketing mix. It signifies what you are going to sell to the consumer.A comprehensive analysis of the Industry and Our Market Survey has given us a platform on which our product can be built. Our product will be built for the masses, and expansion shall be gradual, to cater to the entire country’s needs. Namkeen is a product, which needs three important things: 1. Taste. 2. Quality. 3. Variation. In the same order of significance we need to provide all three to our consumers. Price Market Penetration Pricing means setting a low price for a new product entering the market in order to be able to persuade buyers to try the new product and to capture a large share of the market. We have chosen this strategy for Namkeen because although the market for branded namkeen is growing at a very fast pace the competitors like Haldiram and Frito Lays are well set with high market shares. Even though the consumers are not very price sensitive they are really taste and quality conscious. Reduction of Rs.2-3 will not induce them to try our product. What we are doing is providing more amount for the same price and in some SKU’s by reducing price also. This will give us a base to penetrate the unbranded segment also. Place Our Plant setup would be in Nasik, outside city limits, Maharashtra keeping in mind the supply of raw materials mainly consisting of agricultural products like potatoes, spices and oil. It would save our transportation cost since materials will be available in close vicinity and also since we are initially launching only in Maharashtra, Goa and few towns and

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cities in other Western States mentioned below, it will make administration easier and closer, also we would be able to set up a firm distribution channel at a lower cost. Promotion Advertisements in the form of both outdoor and print media so that the consumers are informed about our product. Our outdoor campaign will be extensive and will be at all the prime locations in metros towns and other places. They will also be put up at Trains, Stations, Buses and Bus Stops and on the retail outlets itself. Print Ads will be published in leading newspapers and magazines. Branding The branding strategy that our company is following is that of product branding. Here, the company name is not associated with our product ‘Swaadisht’ It has an independent identity The Distribution Strategy: 1. Every District (34 including Raigad, Thane and Mumbai) in Maharashtra would have 1 distributors each and Raigad, Thane, and Mumbai will have 4 each, Goa will have 3 and the 5 cities (Ahmedabad, Jaipur, Indore, Bhopal and Baroda) in other states will have two each (56 distributors). A similar strategy to deploy distributors will be followed in other states as and when we expand. 2. There would be 4 stockists in each district and 8 in Raigad, Thane, and Mumbai, 3 in Goa and 3 each in the 5 cities so that they can reach out to the maximum retailers in their cities and the neighboring areas. (166 stockists) 3. Attempt to reach above 15,000 retailers in the first year. In India, today there are over 5 million retail outlets dispersed all over the country. Organized retailing, which has been now gaining momentum, includes large super market chains/ shopping malls, department Stores and Food Store. While small chain stores called Apna Bazaars and Sahakari Bhandaars, which offer products at reasonable priceshave been fairly popular in the rural areas.

Margins: The Margins would be different for different SKU’s-

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SKU’s

Distributor (56)

Stockist (166)

35 gm 80gm 200 gm 500gm

5% 5% 4% 4%

10% 10% 8% 8%

Retailer 15,000) 28% 22% 20% 17%

(above

Consumers are willing to pay a premium for convenience shopping. Thus, the relative share of grocers dropped. Chemist outlets on the other hand, have been expanding their product range to include high margin FMCG products. Panwallas are also emerging as full-fledged consumer product outlets. With the increasing number of retail outlets, the visibility of the products in the market increases and so does its availability. We would try to make the best of it by tapping these so that we can penetrate further into the market and also increase our sales. Namkeen being a mass product we would ideally want for our products to be virtually at every single retail outlet. Competitors such as Haldiram and Frito lay who have a wide network of distribution chain will have to be matched in order to give them a stiff competition. Grocers, pan stores, General Stores, Food stores will be aggressively aimed at. More shelf space and advertising on the shops will be sought to. Other Methods of DistributionOne of our major methods will be to open our own stores in each of the major cities like Mumbai, Baroda, Nagpur, Pune, Indore, Ahmedabad and Jaipur, by the end of three years. At-least two in each of the cities mentioned above. Once our product is established: 1. To penetrate the entire Indian Market. 2. We would also provide dealership to old age and housewives who can work at home and help establish a good network of our products in their area. 3. Finally we are also looking at exporting in the near future. Cost of Material, Equipment and Labor required: Market Penetration Pricing means setting a low price for a new product entering the market in order to be able to persuade buyers to try the new product and to capture a large share of the market. We have chosen this strategy for Namkeen because although the market for branded namkeen is growing at a very fast pace the competitors like Haldiram and Frito Lays are well set with high market shares. Even though the consumers are not very price sensitive 13

they are really taste and quality conscious. Reduction of Rs.2-3 will not induce them to try our product. What we are doing is providing more amount for the same price and in some SKU’s by reducing price also. This will give us a base to penetrate the unbranded segment also. Our Objective is to break into the shares of LEADERS like Haldiram and Frito Lays and also the unbranded market. By the end of the first year we would ideally like to have a market share of 15% of the branded market. Cost Sheet The initial contribution of capital from the company would be Rs.10, 00,00,000 approx. that would be from personal contribution and partly taken as loans from banks. This initial amount will be invested in buying of land to setup the factory, buying machineries, buying initial raw materials, hiring of workers and personnel setting up a distribution channel and offices in various states and initial promotion and advertisement. The company’s sales target in the first year would be to sell 2,000 tonnes out of the 3000 tonnes produced in the first year throughout Maharashtra and Goa and the other 5 cities.

Particulars

Total

Manufacturing Costs Cost Of Materials Cost Of Labour Power/Fuel Wastage Packaging Research & Development Administrative Costs

Promotion Costs Advertising (Radio,Newspapers,Magazines,Outdoors) Sales Promotion (Air Tight Jars, Free Samples etc.)

Overheads Costs Interest on loans Miscellaneous Expenses 14

Cost Per Kg.

72000000 8000000 4000000 2000000 4000000 2000000 5600000 97600000

36 4 2 1 2 1 2.8 48.8

10000000

5

10000000 20000000

5 10

3000000 1000000

1.5 0.5

4000000 Cost per kg. Cost per 500gm. Margins Profits MRP. Cost per 80gm. Margins Profits MRP.

30.4 14.2 7.4 52

Cost per 200gm. Margins Profits MRP.

12.16 7.36 3.48 23

4.86 3.7 1.44 10

Cost per 35gm. Margins Profits MRP.

2.13 2.15 0.7 5

SKU No. Of units 35gm (40%) 80gm (25%) 200gm (20%) 500gm (15%)

2 60.8

22,857,142

Price (Total) 11,42,85,71 0 6,25,00,000

6,250,000

Profit 1,65,02,85 7 89,75,000

4,60,00,000 2,000,000

28,80,000 2,94,00,000

600,000

Total 3,17,07,142

44,40,000 25,21,85,71 0 (Turn Over)

3,27,97,85 7

We will be producing 40 % as 35gm packs which give us the highest profit margin of about 15 percent on the MRP and are in most demand equal to 3 times the other sizes. Also since we are introducing a new brand it will be easier for consumers to buy our product on a trial basis initially before they get accustomed to our product. In the latter years we will change this composition. We earn a surplus of approx. Rs. 3,27,97,857 after tax it will be Rs. 2,19,74,564 in the first year after covering all our variable costs. In the subsequent years 20 lakh will be used as R7D to develop new products and the surplus which will increase due to economy of scale, experience in the field, better relations with suppliers, workers, 15

employees, distributors etc. and our margins will be added to total surplus to reach our break even point. Every year’s surplus over 1st year’s profit will be allocated to R&D and thus at the end of 5 years our total surplus will be approx. Rs. 10,48,72,820. Thus we will break even at the end of 5 years and will have a surplus of approx. 48,72,820. We can then look into setting up of new facilities or increasing the manufacturing capacity to then enter to new markets and dimensions. Cost of Training and Development: As such not much of the new labor will be required the existing labor could be trained for manufacturing. Once the employees are trained the trained employees can be used to provide training to the new employees which would be termed as the on job training. Only cost which would be incurred in providing the training and purchasing/hiring the new machine. Decision to purchase or hire the machine will depend on the working capital requirements of the company. Initial cost will be high as extensive research and development will be required to generate the higher returns in the future SWOT Analysis: Now that our Product has been finalized, we have analysed the Strengths, Weakness, Opportunities & Threats of our Competitors against us, ‘Swaadisht’. Strengths: Haldiram’s Namkeen: •

It is a Trusted and dominant Market player, supplying the Traditional Namkeen. It has been in Existence since 1937.

•

Whoever you might ask, that person will know - ‘Haldiram’s’ It is a Top of Mind Brand

•

It is the Only National level namkeen brand, available in 28 states of India.

Lay’s Potato chips: •

Strong Brand image.

•

Strong brand awareness - Due to a Brand Ambassador – Saif Ali Khan.

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•

Large Presence and Acceptance by the Youth & in Urban Areas

Swaadisht

:

•

We have an Intangible Product Differentiation, which is the ‘Maa ke Haathon Ka Swaad’ It shall play on the minds of the customer, who is the Housewife, who wants to provide something for the family member.

•

Rather than focusing on a specific taste, we are providing 2 different branches of Tastes, namely, Funky flavors & traditional flavors

Weakness: Haldiram’s Namkeen: •

Customer impression of Haldiram’s having a Higher Price, than the local unbranded and regional players.

•

It is a Family Run Business, it has been made professional for the past few decades; but, the business has now been divided between the 3 brothers, leading to a decline in value of the company, and co-operation between the 3 brothers is difficult.

Lay’s Potato chips: •

The Western Flavors may not appeal to the masses

Swaadisht: •

We are new in the Market, and therefore difficlult to enter the minds of the consumers.

•

Competition from established brands and regional players and therefore will have a difficulty in eating into the Market Share.

Opportunities: Haldiram’s Namkeen: •

They have an opportunity to Improve Promotions, and expand their base, increase the Market Share.

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•

Getting an all new variety of Products that can eat Mkt. Share of Competition, such as Kurkure and Lay’s Potato Chips.

Lay’s Potato chips: •

A chance to develop ethnic Indian Tastes and appeal to masses.

Swaadisht

:

•

Expansion, new manufacturing facilites and emerge as a national supplier.

•

Diversity – into other Indian savories such as Sweets, Papads, etc.

•

New flavors

Threats: Haldiram’s Namkeen: •

New entrants, such as Britannia, Mother Dairy - Brand Equity, etc.

•

Regional players (Expansion) - Garden, Bikajee, expanding their base.

Lay’s Potato chips: •

New entrants , such as Britannia, Mother Dairy - Brand Equity, etc.

•

Regional players (Expansion) - Garden, Bikajee, expanding their base.

Swaadisht

:

•

New entrants , such as Britannia, Mother Dairy - Brand Equity, etc.

•

Regional players (Expansion) - Garden, Bikajee, expanding their base.

•

Existing Players such as Frito Lay India, SM Foods, Haldiram’s

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PORTER’S 5 FORCE MODEL 1. Threat of intense segment Rivalry The threat of competitors is very high because there are only 2 major players in the market namely Haldirams and Frito Lays, but also the unbranded segment, and the regional players. Also the unorganized sector is almost 60% and it poses a big threat too. New product introductions are difficult and also there are advertising battles between various brands. Hence, there is intense inter-segment rivalry. 2. Threat of New Entrants Threat from new entrants is high because the entry barriers are low as there and the poor performing firms can leave the industry as and when they want to. Mother dairy and satnam are the few new entrants as of now. And also local regional players keep coming and going as and when they want to. 3. Threat of Supplier’s growing bargaining power: Threat from suppliers is low because there are many suppliers available. The supply of namkeens is very easily available. 4. Threat of buyer’s growing bargaining power: The buyer’s bargaining power is high because they are split loyals. Buyers are also price conscious and they have a number of options. If the buyers think that one namkeen is more expensive than the other , unless they are brand loyal they ouldnt really be ready to pay a higher price. 5. Threat of substitutes: The threat of substitutes varies from moderate to high depending on each individual’s taste. There are many substitutes to namkeen. The substitutes to namkeen are Indian snacks such as biscuits, bhel, sandwich, dhokla.

Time Scale for Implementation: After carrying out the research and survey it will take around4-5 months to launch the product.Initial cost of launching the product will be high as much investment had to be done on research and development,after that growth phase will be there which will 19

result in maturity phase and after that due to the tough market competition it will enter the decline phase.

 Introduction Stage: In the introduction stage the market for supreme Swaadisht will be low as it is newly introduced in market. It will take a little time initially for the product to get much attention from customers. Strategy used in this stage would be Rapid Penetration where pricing will be moderate and promotional measures will be very high, this is done through advertisements and promotional events and personnel selling. The profits are as good as none as product will just maintain the BEP. 

Growth Stage:

Here the market starts growing. Mass production will be done to enjoy the economies of scale then with reduced direct cost, company will offer discounts to the intermediaries like retailers for pushing them to pull customer to enjoy the more profits. Because of combination of personal selling and mass advertisement the customers started noticing the product and slowly adopting it as it reduced wastage in hands of maid as well household ladies. 

Maturity Stage:

The sales were rapidly increasing and the competition to stand is getting tougher. The profits were high as it very much acceptable in the market also mass production done in various new plants. The competitors had come up with various offers. Also new improved packaging will be adopted to renovate the product. The market share 20

will be is high as well as sales will be high. Profits are also high. Promotions will be kept same. 

Decline Stage: In this stage it will face a stiff completion from other innovative products.

Marketing Strategy for Implementation: MARKET SEGMENTATION Our market is segmented based on the following parameters: 1) Demographic Segmentation: A) Geographic Segmentation: During the initial stages our market will be limited to the boundaries of Maharashtra and Goa and 5 cities across Madhya Pradesh, Rajasthan and Gujarat. The reasons for choosing only these 2 states are: • •

•

•

We are a new company, and therefore, not known nationwide. Different states like Karnataka, Tamil Nadu, Andhra Pradesh, Haryana have varying tastes. To tap these markets we need to invest in R & D and churn out new flavors catering to the needs of these markets. We have also decided that as per our future plans, if we have different plans for different regions of India, Distribution costs, etc. come down, and Economies of Scale increase. The small Market of Maharashtra, can help us fight smaller regional players, and the unbranded segment. This in turn shall help us; establish ourselves as a known company, with a known Brand. Expanding nation-wide becomes simpler with the Brand Equity that shall be created. Our market survey has been in Mumbai, Lonavala and Pune only. This can thus speak for Maharashtra only.

B) Depending upon the different SKU’S varying from 35g - 500g , we shall have different packet sizes for different customers i.e. smaller packets for individuals, the medium sized packets for individuals(for travel etc.) and for nuclear families and larger packets for families.

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2) Behavioral Segmentation: 1.

Benefits: It is for users who want the goodness of homemade food in the namkeen along with health and good quality. The small packets shall benefit travelers, e.g. People traveling from home to office, or People who like to have something “to munch” while they are free. The large packets are lower in price and this makes it better for the entire family’s needs.

2.

Loyalty Status: Consumers are generally split loyals and are loyal to 2 or 3 brands at a time. Our customers generally switch between 2-3 Brands or Commodities, e.g. they might buy a packet of Haldiram’s on a certain day, and a large packet from their local Mithai wala.

TARGETING: • • •

•

A namkeen is a mass product. Therefore we are targeting the masses, we are not concentrating on any segment, age group or SEC in particular. Based on the SKU’s, we are targeting the customer who shall be: The Mother/ Housewife (200g – 500g packets) OR An Individual (40g-80g) We are targeting our customers based in Maharashtra and Goa. Based on our expansion plans we will target other states in India. We will also try n tap some of the urban markets of Rajasthan, Madhya Pradesh and Gujarat. Our selection of Traditional and “Funky” Flavors enables us to target: The majority of consumers who like the Indian Traditional Flavors. New users – The Youth – who shall switch to our Products due to our “Funky” Flavors.

POSITIONING: PRODUCT Namkeen

TARGET CUSTOMERS Lovers of homemade food who seek convenience, quality and health.

BENEFITS

VALUE PROPOSITION Health and A healthy snack goodness of with the goodness of homemade food. homemade food at the convenience of the consumer.

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Swaadisht is a healthy snack with the goodness of homemade food. It will be positioned as a snack which has : “ Ma ke haathon ka swaad , sehat ke saath ” PRODUCT DIFFERENTIATION: 1) Our differentiating factor is derived from the following: • •

Through the ages, the Indian namkeen used to be made at home by the housewives. The country evolved, free time to make a namkeen at home started melting away. Also, the mithai shops and later, the branded products made the ‘Mothers’ think that “Why should I make this, when I can purchase it from outside, where I also save my time without compromising on taste and health? ”

Other brands have not yet tapped this factor. Our USP can tap this potential - i.e. to lure the Housewives to buy our product by assuring them of: • •

“ Ma ke haathon ka swaad, sehat ke saath ” “ The Goodness of home-made food, along with Health ”

This shall be our Unique Selling Proposition. 2) “Swaadisht” provides a blend of Traditional flavors and Funky new flavors.

BRANDING THE NAME WAS SELECTED ON THE BASIS OF THE FOLLOWING: • Something that every Indian wants - from his Food. • Hindi - as it is a product for the masses, therefore easily remembered, and not difficult to Pronounce • Written in English - as a Name written in English always plays on the minds of a Consumer. Therefore Brand Name: Swaadisht Brand personality:

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• •

•

He is an obese marwadi seth who lives a traditional life, does not care too much for his health. He is a complete work-a-holic and has fixed office timings, has a typical housewife (she on the other hand, always worries about what he eats) and they have 2 kids. He loves to eat home-made food.

Brand essence:Our brand essence means the core of the brand. Our brand essence would be : “Maa ke haatho ka swaad ….. sehat ke saath” “The Goodness of Homemade food, along with Health.” “Maa ke Haathon” – Assurance of Quality due to trust in Mother’s Cooking. It is an intangible Product Differentiation “Swaad” - stands for taste – that every Indian food lover craves for Our Brand name is also Swaadisht “Sehat ke Saath” - Something that every Indian housewife worries about Sehat of her loved ones. We assure Sehat due to Quality, & hygiene. Brand identity:•

Brand identity is what we want our consumers to identify our brand as.

•

We would want our consumers to identify our brand as a healthy namkeen with the goodness of homemade food which is always convenient to eat.

•

We would want our consumers to identify our namkeen as a homemade product and it is convenient to eat at anytime of the day.

Branding strategy:•

The branding strategy that our company is following is that of product branding. Here, the company name is not associated with our product ‘Swaadisht’.

•

It has an independent identity.

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PROMOTION Advertising:  We are going to give our advertisements in the form of both outdoor and print media so that the consumers are informed about our product. Our outdoor campaign will be extensive and will be at all the prime locations in metros towns and other places. They will also be put up at Trains, Stations, Buses and Bus Stops and on the retail outlets itself. Print Ads will be published in leading newspapers and magazines. 

We are also going to launch a radio advertisement. That will be aired on leading radio channels.

 There will also be fliers, which would be distributed with newspapers and outside retail outlets and railway stations.  Our products would be available with the local baniyas and pan shops to reach out to maximum people. Sales Promotion:  We are going to have various offers on all our products to the distributors, stockists, and retailers and also to consumers.  We will be giving 35gm packets free with the 200gm packs and an airtight jar along with the 500gm pack as an added incentive for the customers.  As far as the retailers are concerned we will be giving then higher margins and at first paying them for the amount of shelf space we use so that they keep our product in their shops at a good location so that all the consumers are able to notice our product and see what its all about. We will also give them incentives for advertising in their shop.  To Stockists and Distributors we are giving higher margins than our competitors and

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All the ads stress on the goodness of homemade food and hence the tagline MAA KE HATHON KA SWAAD SEHAT KE SAATH. It also stresses on the health cum taste factor that our namkeen offers. Basically our namkeen to offer has something that the whole family can have and enjoy.

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Print Ad 1: In this ad we see that the mother is there with her daughter and is putting the namkeen in her daughter’s bag as it is tasty and her daughter will enjoy it and its healthy as well implying that she won’t put on calories. The mother uses the namkeen as a snack for her daughter’s recess where she can enjoy tasty food and still have healthy food. This Ad bears the line MERI BETI KE LIYE Print AD 2: In this AD we see that there is a sports bag and beside that the namkeen is there implying that the mother has put the namkeen into her son’s sports bag so that he can enjoy after he finishes playing. This Ad bears the line MERE BETE KE LIYE. Print Ad 3: In this Ad we see that there is the whole family and we see Swaadisht namkeen and it is also available in 6 flavours out of which some our traditional and some are whacky. Basically, what this Ad is trying to convey is that we have a variety and there is a different flavour for everyone in the family. Print Ad 4: In this Ad what we are trying to convey is that the lady of the house who plays different roles in the form of mother, wife and daughter in law loves the namkeen so much that she is giving it to everyone in the family and she gives it to her husband as well to eat in the office as a healthy snack. Print Ad 5: In this ad we can see that a model is eating Swaadisht namkeen and at the same time is thinking of her mother and her homemade namkeen. What we are trying to say in this ad is that our namkeen is similar to homemade namkeen which is made by housewives.

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Monitoring and Evaluation:

After the planning phase implementation of the plan is equally important otherwise it will just be a plan and can never be transformed into an action. To implement the plan, it is necessary to capture peoples' minds, hearts and spirit. For that that takes planning, diligence, testing, self-correction and collaboration .Implementing means documenting everything that must be done to go from the place that the organization is now to the new practice process or system that is now seen as the "future state." Planning and documentation includes not just listing the action steps but also designing the work that can capture the understanding and interest of the implementers After the implementation phase comes the evaluation phase, in this phase the effectiveness of the proposed plan is measured. Evaluation is used to measure the success or failure of a change. To continuously monitor progress it is necessary to follow the well crafted strategy which is clearly understood by all so that they all can work towards fulfilling the desired goal. Tools such as balanced score card can also be used for this purpose or continuous feedback can be taken from the customers to monitor the quality and progress of the product so that if there are any shortcomings they can be identified and removed for 28

overall customer satisfaction because the cost of retaining the existing customer is far less than making a new customer.

Conclusion: As this is a a product of its own kind so there is lot of hope that this product will work in the Indian market and capture a larger portion of the Indian market within few years of its launching in the market. Also no such entry barriers are there in this field except some environmental regulations imposed by the government so the entry in the market will not be much difficult. Initial cost of launching the product will be more as huge amount will be required in the research and development for the superior quality, but once product will reach its growth stage it will earn a huge profit for the company. So we can say that this product will be huge success within few years of its launch. Recommendations: Launch this product early to gain the first mover advantage. Maintain the quality standards. Timely feedback from the customer about the quality of the product. Proper supply chain management so that the product reaches the end customers easily.  Appropriate promotional strategies.    

Future Plans . . . •

We are a small company with no Brand Equity. We shall break even only after 5 yrs. (approx.). Our future plans are gradual but Big.

•

We will increase the capacity of our Nagpur plant in phases so that it can supply the Western and Central States.

•

We will then set our eyes on the Northern and Eastern States, and set up 2 more manufacturing facilites to cut on transportation Costs.

•

Export of our products, to countries with a significant Indian population, e.g. UAE, USA, etc.

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•

We will venture into the Southern market and rural markets very late, as the southern market has a completely different taste, and the rural markets are hard to crack.

•

New product lines such as, Papads, Sweets, will follow as and when we are sure of such expansion.

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Marketing Management: Strategies and Programs", Guiltinan et al., McGraw Hill/Irwin, 1996 Oliver, R.K., Webber, M.D., 1982, “Supply-chain management: logistics catches up with strategy”, Outlook, Booz, Allen and Hamilton Inc. Reprinted 1992, in Logistics: The Strategic Issues, ed. M Christopher, Chapman Hall, London, pp. 63-75. Rey F.J., Martín-Gil J., Velasco E. et al.(2004) Life Cycle Assessment and external environmental cost analysis of heat pumps, Environmental Engineering Science, vol 21, September 2004, pp 591-605 Schlesinger, L. and Heskett, J. "Customer Satisfaction is rooted in Employee Satisfaction," Harvard Business Review, November–December 1991. The Concept of the Marketing Mix" from the Journal of Advertising Research, June 1964 pp 2-7. Twedt, Dick Warren (1983), 1983 Survey of Marketing Research, Chicago: American Marketing Association

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