Strategic Food Marketing

PARLE - G

Group 2
Ahmadu | Akanksha Bajaj | Himani Anand | Namita | Sakshi Gupta | Shipra Saini | Swapnil Patil

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CURRENT
STRATEGIES

Indian Biscuit Industry

India worlds
third largest biscuit
producer
Biscuit
Manufacturing was
divided into
organized and
unorganized
sectors
Stiff competition
from local players
in rural mkts.

Domestic demand fueled

industry growth
Growth was largely organic
due to limited scope for
consolidation in organized
sector
Organized60% mkt
Unorganized did not have
access to bank credit,
technology and information
systems

Freshly baked biscuits in

unbroken and powder-free
form
Long standing relationships

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Indian Biscuit Industry

Organized sector
comprised of five
categoriesglucose,
marie, sweet, cream and
milk

Glucose High-volume,
low margin category
associated with low price
points (42% mkt
representation)

Sweet, Cream and

MilkIndulgent
categories Premium
prices
Marie was in-between
category used largely at
tea time

Growth strategy was

to secure migration to
indulgent category

A McKinsey study
showed that income
levels of Indian
households were rising
alongside consumption
levels

Organized sector
production was 1.7mn
tons/ annum valued at
110bn. Avg annual
growth rate was 15%.
Low priced categories
grew at higher rate than
premium categories.

The study concluded

that % spending on
discretionary items
would grow dramatically
whereas spending on
basic necessities would
grow more slowly.

Consistent with positive

factors in Indian
economy, premium
categories were moving
into just above the 20
percent range.

Results showed that no.

of consumers in
deprived category would
decline, while aggregate
income levels of middle
class would increase
leading to four fold hike
in aggregate
consumption

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Company Background
Started in 1929 as a manufacturer of candies in Mumbai
Diversified into biscuits in 1939, 40% share
market and 15% of confectionary market in

in biscuit
India

Parle-G, the flagship brand accounted for 50000

tons of production per year out of total production
of 65000 tons
Diverse product portfolio- Marie, Hide & Seek,
Monaco, Cheeslings, Jeffs, Sixer
Follow the customer strategy; Exports 5% of
revenues
Focus on domestic market and retention of Parle Gs
ranking of the largest selling biscuit brand in the world
by tonnage

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Problems Parle Products Flagship

Brand was Facing
Input prices of sugar and wheat flour had been
increasing for 18 months
Margins decreased from 15% to less than 10% of
revenues
Had ramped up its manufacturing capacity by 10
% ; 500m investment
Price elastic demand of biscuits in India ; 49% of
Indian familys budget
Price hike attempt in 2004 failed terribly

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Dilemma to Command a Higher Price

Companies build brand

equity in order to deflect
the focus of customers
from price. Customers
dont mind paying a
premium when a brand
delivers value on a
dimension as perceived
by them
- Marketing manager,
competitor firm

Consumer
perception rooted
in low price,
undermines other
attributes like
quality and taste
Company caught in a
warp of its own
making, equity built
on VFM positioning
Seeking an idea to
overcome the entrenched
VFM perception and
review its marketing
strategy
Looking
out for
ways to
make
customers
loosen up
their
wallets

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Vulnerable for dependence on a

Single Brand
Dependence of
Parle Products on
Parle- G and a
single SKU within
it makes it
vulnerable to
competition
Glucose category
to become more
competitive in
future

Parle- G was contributing

68% of the companys
annual sales revenue,
and the INR 4.00 SKU
was contributing to 50%
of Parle- Gs annual sales
revenues

Customers migrating to
high- end biscuits ;
contribution of Parle- G
to revenues expected to
fall to 50%
Decline in
sales of
Parle- G
would
lead to a
decline in
market
share

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Price rise attempt in January 2004

failed
To offset the rise in cost of raw materials, price was
increased from Rs 4 to Rs 4.5
To test the waters in leading SKU of 100gms
Sales declined by more than 40% during the first 6
months
Rolled back the increase, due to customer price
elasticity
In 2009, came back with a new measure to deal with
rising costs

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Alternate measures undertaken

Focused on reducing the grammage of 100 gm pack
Was done in phases- 100 to 92.5 g in January 2008,
then to 88 g in May 2008 and to 82.5 g in January
2009
Number of biscuits reduced from 16 to 15
Took measures for cost-control
Bought manufacturing centers closer to wholesalers

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Alternate measures undertaken

Consolidated buying and entered into forward
contracts with vendors of raw materials

Wax coated paper was replaced by BOPP paper

There is a general tendency among

consumers everywhere to look for
bargains while shopping for food
categories. That explains the price
elasticity in India in general
- - Pravin Kulkarnii

End
price
decisio
ns
were
central
ized at
the
corpor
ate
ParleG was ofce
priced
at
US$1.
OO a
kg

Refra
ined
from
pricin
g
even
when
there
is no
comp
etitio
n

BIL &
ITC
follo
wed
the
lead
er in
term
s of
price
and
weig
hts

Trade
chann
el
margi
ns
decisi
ons
were
decen
tralize
d

Launc
hed in
1939,
target
ed
Indian
mass
marke
t

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Pricing

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Positioning
In 1980, Parle Gluco to Parle- G, to
differentiate it from competitors
Positioning related o functional benefit
(Health), Consumer perception: Value for
money

New campaign incorporated Strength

with Goodness
In 1990, company started focusing on
kids, Brand identified with word genius
Next campaign focused on the overall
development of kids
Collaboration with governments mid day
meal scheme

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Packaging
1929

2008

Deployed state-ofthe-art machinery

Result: Automatic
printing and
packaging

Replaced waxcoated paper by

BOPP paper
Result: Reduction in
packaging costs

200 ml
8 ml shampoo
shampoo
sachet by HULsachet by HUL 0.5 Rs.

16 ml shampoo
sachet by HUL- 1
Rs.

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Packaging
Advantages of Small packages
Attract non-users, one-time users and new users
Convenient and affordable
Volumes for large companies
Creating demand for low-penetration categories such
as health food
Small packages synergized with the Indian habit of
top-up shopping

Smallest SKU of Parle-G= 16.5g

package(4 biscuits) at 1 Rs. Or
0.023US$

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Advertising &
Promotion
Every year since 2004,
Advertising & Sales
promotion expenditure=
INR 600 million to INR 700
million

Tagline:G for
Genius

Ad spend: Approx. 2% of
annual revenues

Celebrity
endorsement: Aamir
Khan

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Advertising & Promotion

by Competitors

ITC: endorsement by
a cricketer- Sachin
Tendulkar

BIL: Tiger Glucose

biscuits
-Aimed at school
children
-Ad symbolized
strength

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Distribution
2008
Brought manufacturing centers closer to the wholesalers
by franchising production
Result: Reduction in distribution costs

Parle-G was sold in (2.5 out of 15) million retail outlets

across the
country
Available in every village in India
8000 wholesalers who had their own sales force
Sales organization structure based on geographies
Logistics was handled by depots, which also served as
clearing and

 Command higher price, celebrity endorsement

Polycopy
Charging higher price from the urban markets
Reason: More aware about labelling but less price
sensitive
Further grammage reduction by reducing the size of
the biscuit
Do not reduce the size but (thin layer)
Positioned as a source of strength
Served as Refreshments
National rural health mission centers
Primary education schemes by central and state
government

Continue pursuing
the current
strategies
Focus on premium
brands
Differential price
Size of the Biscuit
Association with
other government
initiatives
Tie ups with Rotary
clubs and other
health camps

Recommendatio
ns