Marketing Plan for Saffola Cooking Oil

1. Executive Summary

2. Current Situation and Trends The Indian edible oil sector has many typical characteristics distinctly different from other countries especially those in the western hemisphere. The oil basket available to the consumers has many varieties major domestic oils are: groundnut, mustard/rapeseed, cottonseed, soybean and sunflower. Minor domestic oils are: ricebran, mahua (Madhuca longifolia), sesame, safflower and coconut. Imported oils are mainly palm, soybean and sunflower. About 60-70% of groundnut and mustard oil, and almost 100% of coconut oil is consumed in crude form without refining because of their distinct flavours and aroma. All other oils are marketed only after refining. Market shares of raw oil, refined oil and Vanaspati (partially hydrogenated vegetable oil) are respectively 42%, 43% and 13%. The government has frozen the tariff value on import of oils and the present rate of duty is nil on crude oils and 7.5% on refined oils. This policy has remained unchanged since 2008. Thus, the Indian market is being flooded by imported oil mainly palm, soybean and sunflower. The South American industries for soybean oil and Malaysia/Indonesia for palm oil have discovered India as a dumping ground for their produce. India still has an insatiable appetite for edible oil as the income levels rise. Over the past decade, world class edible oil refineries have been set up in India where superior quality refined oil is produced at a low processing cost. The days of small sized batch refineries of 50 t per day capacities are over. However, the capacity utilisation of Indian refineries is still at a meagre 35% of installed capacity. Refined soybean oil is actively traded on futures exchanges and accounts for their biggest turnovers. Thus, the Indian edible oil situation is going to persistently influence the world demand and supply to a large extent.

The demand for edible oils in India has shown a steady growth at a CAGR of 4.43% over the period from 2001 to 2011. The growth has been driven by improvement in per capita consumption, which in turn is attributable to rising income levels and living standards. However, the current per capita consumption levels of India (at 13.3 Kg/year for 2009-10) are lower than global averages (24 kg/year).

The Indian edible oils market continues to be underpenetrated and given the positive macro and demographic fundamentals it has a favourable demand growth outlook over the medium-to-long term. In terms of volumes, palm oil, soyabean oil and mustard oil are the three largest consumed edible oils in India, with respective shares of 46%, 16% and 14% in total oil consumption in 2010.

Given the high price consciousness and varied taste preferences of Indian consumers, ICRA expects these three oils to continue to account for the bulk of edible oil consumption in the country.

There has been a significant gap between demand and supply of edible oil because of limited availability of oil seeds and shifting of acreage to other crops in the domestic market. This gap has been met through imports, which account for almost 45-50% of the total oil consumption. In H1OY2010-11, edible oil imports were observed to be the lowest in the last three years in view of improvement in domestic oilseed production.

The Indian edible oil industry is highly fragmented, with the presence of a large number ofparticipants in the organised and unorganised sectors. This has resulted in severe competitionand inherently thin profitability margins. Further, the profitability of market participants has also been vulnerable to risks emanating from weak harvests; commodity price volatility and forex movements.

MAJOR PLAYERS Edible Oils National Dairy Development Board (Anand) ITC Agro-Tech (Secunderabad) Marico Industries (Mumbai) Ahmed Mills (Mumbai)

Vanaspathi Hindustan Lever (Mumbai) Wipro (Bangalore) Rasoi (Calcutta) Avi Industries (Mumbai)

3. Perfomance Review
Product

Saffola oil is a superior oil. It is excellent for frying. Due to its mild flavor, it is an all purpose oil. It has no off-flavors when cooking and frying. "Grown without pesticides" means that no pesticides are used on the farm to grow the crop. In addition, pesticides are not used throughout harvesting, processing, and storage of the seed or oil. Saffola's farming methods do not pollute the crop, soil, underground water or the air. In addition, farm workers are not exposed to any pesticides while working with Saffola "grown without pesticides" crops. All Saffola oils come with LoSorb Technology. Food fried in Saffola oils absorbs less oil and thus reduces the consumption of oil in your diet. Saffola oils are Free of trans fats. Saffola oil is present in the market in the following variants: 1. 2. 3. 4. New Saffola Saffola Tasty Saffola Active Saffola Gold

Price Saffola is considered as a premium product. Its price is fixed at a very higher level than its competitors. So there is already a gap for medium price ranged product from Saffola. Saffola has different products to suit different customers. Marico's reasoning is that since Saffola oil commands a premium of 10 to 15 per cent over other edible oil brands, the company should be able to cater to the demand of the all the customer from different purchasing power groups. The company wants to leverage the Saffola brand equity through brand extension. Their Main strategy for price discrimination is to make customer aware that the different price are associated with different products which are suitable for different needs. Place Saffola is using wholesale distributors, Big Malls, Grocery stores etc. as their distribution channels to result in meeting the customer needs effectively and efficiently. They tried to place Saffola initially in High value outlets and gradually after moving to different price categories they increased the reach of the product to general stores. But most of the rural area is still untapped. Promotion In 1993, after a thorough analysis of heart disease patients, Marico decided to position Saffola as Good for your heart and the slogan Healthy Oil for Healthy People. Marico first created fear in the minds of people about the incidence of heart attacks and then presented Saffola as a preventive. Saffola was also prescribed by doctors, as it was low on cholesterol. Marico launched the Saffola Healthy Hearts Foundation (SHHF), to educate consumers about heart care and healthcare. The Foundation provided easy-to-read-and understand consumer information booklets and useful reference material like emergency directories. It also conducted free heart check-up camps that provided ECG, cholesterol, sugar, blood pressure testing besides advice from eminent cardiologists. Saffola was using their key strength which was showing the oil as the healthy oil for people, this is their USP for selling the oil at even premium over the competitors. Even Saffola has gone to the extent of launching the website especially for the health care for the consumers. www.saffolalife.com

SWOT Analysis Strengths

1. Strong positioning as a product for health conscious consumers especially working professionals. 2. Different products provided to cater needs of different category of consumers. 3. Effective promotional activities like launch of a website called www.saffolalife.com .

Weakness
1. Most of the products are into premium category but Indian consumers are health conciuos as well as price sensitive.

Opportunities
1. Entry into rural markets. 2. Introduction of medium/lower price range of products. 3. Introduction of more products having a combination of taste and health benefits.

Threats
1. No switching cost for buyers. 2. Fierce competition from players like Sundrop, Fortune, Dhara, Gold Winner, Gold Drop and Sweekar.