Scope and Application of E-commerce in B2C - Haldiram's

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Scope and Application of E-commerce in B2C - Haldiram's

  1. 1. HALIDRAM’S ANALYSIS This document is an FOR E-COMMERCE analysis of the sweet and namkeen shop haldiram, and how e commerce activity in the company will A Document by: Vishakha Chopra and contribute to its Abhishek Kumar enhancement
  2. 2. 1|Page ContentsExecutive Summary ................................................................................................... 3Market Analysis : HALDIRAM‟S............................................................................... 4 Background……………………………………………………………………………………………….4 Marketing Mix (4P Analysis)………………………………………………………………………6 Products ............................................................................................................. 6 Pricing ................................................................................................................ 7 Place ................................................................................................................... 8 Promotion .......................................................................................................... 8 SWOT Analysis…………………………………………………………………………………………10 Porter‟s Five Forces Model Analysis……………………………………………………………11 1) Threat of Intense Segment Rivalry (Industry Competitors) ........................ 11 2) Threat of New Entrants ................................................................................ 11 3) Threat of Substitute Products ...................................................................... 11 4) Threat of Buyer‟s Growing Bargaining Power .............................................12 5) Threat of Supplier‟s Growing Bargaining Power .........................................12Competitors of Haldiram‟s (in Namkeen Segment) ................................................13 Levels of Competition………………………………………………………………………………. 13 A. Brand Competition ....................................................................................... 13 B. Industry Competition: ..................................................................................14 C. Form Competition: .......................................................................................14 D. Generic competition .....................................................................................14E-commerce Rationale ............................................................................................. 15 1. Easy reach to a fast growing online community ........................................ 15 2. Reduces Costs for Inventory Management ............................................. 15 3. Reaching Global Market ..........................................................................16
  3. 3. 2|Page 4. Monitoring the Consumers‟ Buying Habit and Interest .........................16 5. Reduces Costs To Establish Store Front .................................................16 6. Reduce Advertising Costs ........................................................................16 7. Faster buying/selling procedure, as well as easy to find products. ........16 8. E-commerce serves as an “equalizer” .....................................................16 9. E-commerce makes “mass customization” possible ............................... 17 10. E-commerce allows “network production.” ............................................ 17 11. Reduced costs .......................................................................................... 17 12. Improved customer service ..................................................................... 17E-commerce critique and recommendations ..........................................................19 Site analysis of the company………………………………………………………………………19Recommendations for E-commerce activity : ........................................................ 20 Phase 1: Identify the business opportunity ..................................................... 20 Phase 2: Select the technology infrastructure ................................................. 20 Phase 3: Implement the electronic business solution ..................................... 20 Build Trust and customer loyality : ............................................................21 Provide Added Value ..................................................................................21 Give Customers a Choice ............................................................................21 Transaction Software ..................................................................................21 Site Maintenance ........................................................................................21 Security .......................................................................................................21Conclusion ............................................................................................................... 22References ............................................................................................................... 23
  4. 4. 3|Page Executive SummaryThis project has been taken up to study a B2C (Business to consumer) companywhich does not have practice e-commerce as its major business transaction.Haldirams is one of Indias largest sweets and snacks manufacturers, basedin Delhi, India. Having become a house-hold name already, Haldiram‟s offers anassortment of products, packed sweets and confectionaries being their nicheproducts. The brand boasts of exporting its products to USA and other countrieswith strong Indian diaspora and over the time has opened flagship stores all overthe world including Canada, Australia and several European countries.Haldiram‟s story presents the perfect case of coming of age of a small-timebusiness and adopting to the changing tides of time, having redefined its businessmodel over and over again to keep up with the changing market dynamics andconsumer behaviour. Thus adopting Haldiram‟s for this study seems to be highlysuitable.For this purpose our group has selected Haldiram‟s brand, which is the marketleader of its segment in India, but still does not have a web-page where consumerscan go and make purchase electronically.The methodology used in this study is to make an analysis of the company andthen gradually move on to other aspects such as various benefits and scopes ofimplementation of the e-commerce practices.
  5. 5. 4|Page Market Analysis : HALDIRAM’SBACKGROUND In 1937, Ganga BishenAgarwal, (popularly known as Haldiram), opened a small sweet shop in Bikaner, a small district in Rajasthan. Bikaner had a large number of sweet shops selling sweets as well as namkeens. Bhujiasev, a salty snack prepared by Ganga Bishen, was very popular among the residents of Bikaner and was also purchased by tourists coming to Bikaner. In 1941, the name HaldiramsBhujiawala was used for the first time. In 1950, Prabhu Shankar Agarwal (Prabhu), along with his father RameshwarLalAgarwal (son of Ganga Bishen), expanded the business by establishing a small manufacturing unit for sweets and namkeens in Kolkata. The success of this unit motivated Prabhu to upgrade its machinery to improve the quality of its products. As demand for Haldirams products increased, it was decided to scale up the companys manufacturing and distribution activities. In 1970, a large manufacturing unit was set up in Nagpur in the state of Maharashtra (India). In 1983, a retail outlet was set up in New Delhi. The outlet became very popular not only among the Delhiites but also among tourists visiting Delhi. Haldirams was able to achieve significant growth during the 1980s and 1990s. In 1992, a manufacturing unit with a retail outlet attached to it was set up in the outskirts of Delhi. A year later, Haldirams syrups and crushes were successfully launched in the Indian market. In 1995, a restaurant was
  6. 6. 5|Page opened in New Delhi. In 1997, realizing the potential of namkeens, the company set up a manufacturing unit in Delhi exclusively for making namkeens. To add potato products to its existing product portfolio, machinery was imported from the US. Haldirams maintained high quality standards at every stage of the production process. All its food items were prepared and packaged in a very hygienic environment. In the mid 1990s, Haldiram s added bakery items, dairy products, sharbats and ice creams to its portfolio. At the beginning of the 21st century, Haldirams products reached millions of consumers not only in India, but also in several other countries, including the US, Canada, UK, UAE, Australia, New Zealand, Sri Lanka, Nepal, Japan and Thailand. Analysts felt that the growing popularity of Haldirams products could be attributed to its constant focus on all the elements of the marketing mix. An article posted on the APEDAs website - apeda.com quoted some of the companys strengths, "To sustain in the competitive market, Haldirams has endeavored stress on its product quality, packaging, shelf life, competitive price with a special emphasis on consumers satisfaction and its lingering taste is amongst the best available in the world."
  7. 7. 6|PageMARKETING MIX (4P ANALYSIS) Products Pricing Place PromotionProductsHaldirams offered a wide range of products to its customers. The product rangeincluded namkeens, sweets, sharbats, bakery items, dairy products, papad and ice-creams. However, namkeens remained the main focus area for the groupcontributing close to 60% of its total revenues. By specializing in themanufacturing of namkeens, the company seemed to have created a niche market.While the Nagpur unit manufactured 51 different varieties of namkeens, theKolkata unit manufactured 37 and the Delhi unit 25. The raw materials used toprepare namkeens were of best quality and were sourced from all over India.Haldirams sought to customize its products to suit the tastes and preferences ofcustomers from different parts of India. It launched products, which catered to thetastes of people belonging to specific regions. For example, it launchedMurukkus, a South Indian snack, and Chennai Mixture for south Indiancustomers. Similarly, Haldirams launched Bhelpuri, keeping in mind customersresiding in western India. The company offered certain products such asNazarana, Panchratan, and Premium only during the festival season in gift
  8. 8. 7|Pagepacks. These measures helped Haldirams compete effectively in a market that wasflooded with a variety of snack items in different shapes, sizes and flavours.PricingHaldirams offered its products at competitive prices in order to penetrate thehuge unorganized market of namkeens and sweets. The companys pricingstrategy took into consideration the price conscious nature of consumers in India.Haldirams launched namkeens in small packets of 30 grams, priced as low asRs.5. The company also launched namkeens in five different packs with pricesvarying according to their weights. The prices also varied on the basis of the typeof namkeens and the raw materials used to manufacture it. The cost of metallizedpacking also had an impact on the price, especially in the case of snack foods. Thecompany revised the prices of its products upwards only when there was a steepincrease in the raw material costs or additional taxes were imposed. The companyalso launched namkeens in five different packs with prices varying according totheir weights. The prices also varied on the basis of the type of namkeens and theraw materials used to manufacture it. The cost of metallized packing also had animpact on the price, especially in the case of snack foods. The company revised theprices of its products upwards only when there was a steep increase in the rawmaterial costs or additional taxes were imposed. Pack Weight Price (In Rs) 30 gms 5 85 gms 10 180-250 gms 18-35 400-500 gms 40-70 1 kg 95-200Generalised pricing of „Namkeens‟
  9. 9. 8|PagePlaceHaldirams developed a strong distribution network to ensure the widest possiblereach for its products in India as well as overseas. From the manufacturing unit,the companys finished goods were passed on to carrying and forwarding (C&F)agents. One Indian unit had 25 C&F agents and 375 distributors while Haldiramhad 35 sole distributors in the international market. The Delhi and Nagpur unitstogether catered to 0.6 million retail outlets in India. C&F agents received acommission of around 5%, while distributors earned margins ranging from 8% to10%.The retail outlets earned margins ranging from 14% to 30%. At the retailoutlet level, margins varied according to the weight of packs sold. Retailers earnedmore margins ranging from 25% to 30% by selling 30 gms pouches (priced atRs.5) compared to the packs of higher weights. Apart from the exclusiveshowrooms owned by Haldirams, the company offered its products through retailoutlets such as supermarkets, sweet shops, provision stores, bakeries and icecream parlours. Haldirams products enjoyed phenomenal goodwill and stockistscompeted with each other to stock its products. Moreover, sweet shops andbakeries stocked Haldirams products despite the fact that their companysproducts were competing with these products. Haldirams also offered its productsthrough the Internet. The company tied up with indiatimes.com, a website ownedby the Times of India group to sell its products over the Internet.Giftstoindia.com,giftssmashhits.com, tohfatoindia.com and channelindia.com enabled peopleresiding abroad to send Haldirams gift packs to specified locations in India.Region-specific websites enabled people to send gifts to specified regions.PromotionHaldirams product promotion had been low key until competition intensified inthe snack foods market. The company tied with Profile Advertising for promotingits products. Consequently, attractive posters, brochures and mailers weredesigned to enhance the visibility of the Haldirams brand. Different varieties ofposters were designed to appeal to the masses.
  10. 10. 9|PageThe punch line for Haldirams products was, Always in good tasteAdvertisements depicting the entire range of Haldirams sweets and namkeenswere published in the print media (magazines and newspapers).These advertisements had captions such as millions of tongues cant go wrongWhat are you waiting for, Diwali? and Keeping your taste buds on their toes. Toincrease the visibility of the Haldirams brand, the company placed its hoardingsin high traffic areas such as train stations and bus stations. Posters were designedfor display on public transport vehicles such as buses, and hoardings, focused onindividual products were developed.Captions such as yeh corn hain (this is corn), chota samosa – big mazaa (smallsamosa – big entertainment), yeh Kashmiri mix khoobjamega (this namkeenitem will gel well) and oozing with taste (for Rasgoolas) promoted individualproducts.For those customers who wanted to know more about Haldirams products,special brochures were designed which described the products and gaveinformation about the ingredients used to make it.Mailers were also sent to loyal customers and important corporate clients as atoken of appreciation for their patronage.Packaging was an important aspect of Haldirams product promotion. Sincenamkeens were impulse purchase items, attractive packaging in different coloursinfluenced purchases. Haldirams used the latest technology (food items werepacked in nitrogen filled pouches) to increase the shelf life of its products.While the normal shelf life of similar products was under a week, the shelf life ofHaldirams products was about six months. The company projected the shelf lifeof its products as its unique selling proposition. Posters highlighting the shelf lifeof its products carried the caption six months on the shelf and six seconds in yourmouth. During festival season, Haldirams products are sold in attractive lookingspecial gift packs.
  11. 11. 10 | P a g e SWOT ANALYSIS • Brand awareness and visibility, market leader of the segement • Variety of products like papads, namkeens, cookies, chips, sweets, sherbets, dry fruits, etc • Trusted for quality and hygiene • Attractive and efficient packagingStrength • Good supply chain ensuring availability of products • Aptly priced for the customers • Loved for its taste • Exported to many countries • High Market share • Availability of brand almost on all the outlets • Consumer proximity to retail outlet. • Sale pushing of other brands • Schemes given to retailer are not enough.Weakness • Less profit of margin of Haldiram product from other brand. • Less advertisement • Increase its reach in India and abroad • Expand the hotel business Increase the number of outletsOpportunity • Agrresively advertise and promote the brand • Introduce healthy snacks like fat free, low calories and baked • Innovate by introducing snacks catering to the youth • Customers are inclined towards western ways, and are notThreat interested in Indian snacks • Indian snacks are considered unhealthy • Increased competition from other brands and local players
  12. 12. 11 | P a g ePORTER’S FIVE FORCES MODELANALYSISPorter‟s five forces determine the intrinsic long-run profit attractiveness of amarket or a market segment. The following is the analysis of this model withrespect to Haldiram‟s:1) Threat of Intense Segment Rivalry (Industry Competitors)Haldiram‟s did not face any intense segment rivalry in the initial stages and sometime after that, but the last few years have seen a lot of players entering thenamkeens/snack food segment. This has led to various new products beingintroduced by all. Variety and higher quality standards have been set & thecompanies are competing with each other to grab a larger market share in thissegment and hence there is evident segment rivalry. The primary and potentialthreat that appears to Haldiram‟s is from the unorganized segment with its lowerpricing and variety in the products.2) Threat of New EntrantsThere is a threat of new entrants especially from the unorganized sector that haslesser quality pressures. The entry and exit barriers are both low leading to stablereturns, therefore big companies may enter this segment looking for a quickprofit.3) Threat of Substitute ProductsThreat of substitute products arises from the ability of the consumer to substitutenamkeensby other things that suit him. For example ice creams, biscuits, bakeryproducts. Like wise and outing for burger and other fast food items may alsosubstitute for namkeens. The players have to monitor prices closely as a fall in theprices of these substitute products may lead to a price cut in the namkeensegmentas well.
  13. 13. 12 | P a g e4) Threat of Buyer’s Growing Bargaining PowerThere‟s no threat of buyers‟ growing bargaining power, as it doesn‟t represent asignificant portion of the buyers‟ cost. The buyers do not seem to be very pricesensitive and nor are they more concentrated (buyers are distributed across a widegeographical region in the country) or organized.5) Threat of Supplier’s Growing Bargaining PowerSuppliers are unorganized and there are a lot of substitutes available to thecompany. Moreover the number of suppliers being large and the size of thesuppliers being very small as compared to the company, the company is in astrong bargaining position. Hence there is no such threat of suppliers‟ growingbargaining power.
  14. 14. 13 | P a g e Competitors of Haldiram’s (in Namkeen Segment)The following are the major competitors of Haldiram‟s: Frito Lays Bikano MTR Unorganized SectorHowever the comparison is restricted to Frito Lays, as this is the closestcompetitor ofHaldiram‟s.LEVELS OF COMPETITIONThis analysis covers all four levels of competition for Haldiram‟s: Brand, Industry, Brand Bikano, Frito Lays, MTR, Lehar, UnorganizedSector Industry Differentiated Oligopoly Form Traditional snacks like Samosa, Kachori, etc.,Burgers, Pizzas, Salty Biscuits, Bakery Items Generic Any product competing for the same of amountconsumer dollarsA. Brand CompetitionBrand Competition includes other companies offering similar products andservices tothe same customers at similar prices. Here, the brand competitionwould be all thecompanies selling Namkeensalong the same lines as Haldiram‟s.Because of thisbrands like Bikano, Frito Lays, etc… and the unorganized sector areconsidered asbrand competitors.
  15. 15. 14 | P a g eB. Industry Competition:The namkeensindustry is essentially made up of a few players producing thesameproduct partially differentiated along the lines of quality, styling andservices. Thismeans that the namkeensindustry follows the pattern of„Differentiated Oligopoly‟.C. Form Competition:Form competition essentially means that competitors who produce productsthatsupply the same service. In case of Haldiram‟sNamkeens, it faces stiffcompetitionfrom traditional snacks like samosas, kachorisetc. and others likesalty biscuits,pizzas, burger and bakery items as people tend to substitutenamkeensvery easily with these products.D. Generic competitionGeneric competition essentially includes those companies competing for thesameamount consumer money. In case of Haldiram‟s, it includes all edibleproducts in thesame price range
  16. 16. 15 | P a g e E-commerce Rationale While e-commerce certainly seems to be in vogue and the new way of doing business, its hardly a reason sufficient enough to jump the e-commerce bandwagon. Every organization would rather weigh its options before deciding to adopt e- commerce and will embrace it only if the organization finds it feasible, lucrative and ample profit-making scope.Hence, in this section we discuss several benefits an organisation like Haldiram‟s would be able to reap by adopting e-commerce.1. Easy reach to a fast growing online community Developing economies such as India and other developed economies such as American and European have registered exponential growth of internet user. Majority of these user are from the youngsters and socially upward growing section, which is the cutomer group known for experimenting new products and looking for novelty in the services. Hence in order to harness this new and emerging section of users e-commerce is the perfect tool. Electronic commerce enables people in Third World countries and rural areas to enjoy products and services that otherwise are not available to them2. Reduces Costs for Inventory Management With e-commerce, the suppliers can reduce costs to manage their inventory of goods because they can automate the inventory management using web-based management systems. This method indirectly can save their operational costs. Electronic commerce decreases the cost of creating, processing, distributing, storing, and retrieving paper-based information. For example, by introducing an electronic procurement system, companies can cut the purchasing administrative costs by as much as 85 percent. The daily production involves maintaining, organizing, and accounting for product inventory. Operational benefits are realized when the inventory control processes are made simpler or eliminated and at the same time are able to handle inventory thus ensuring that there will be no large stockpiles of inventory, while simultaneously reducing out of stock situations.
  17. 17. 16 | P a g e3. Reaching Global Market E-commerce allows the suppliers to reach global market segment. In other words, it allows the suppliers to increase their sales meanwhile decrease the investment costs. Electronic commerce expands the marketplace to national and international markets. With minimal capital outlay, a company can easily and quickly locate more customers, the best suppliers, and the most suitable business partners worldwide.4. Monitoring the Consumers’ Buying Habit and Interest The suppliers can monitor the consumers‟ buying habits and interests so that they can tailors their offer suit to consumers‟ needs and keep the on-going relationship with them.5. Reduces Costs To Establish Store Front The overhead costs to build the physical store front may be prevented to the suppliers who use e-commerce as their business operation.6. Reduce Advertising Costs E-commerce can reduce advertising costs because it is easier to update the advertisement using software technology.7. Faster buying/selling procedure, as well as easy to find products.Customers can easily select products from different providers without moving around physically. Electronic commerce provides customers with more choices; they can select Electronic commerce frequently provides customers with less expensive products and services by allowing them to shop in many places and conduct quick comparisons.8. E-commerce serves as an “equalizer” It enables start-up and small- and medium-sized enterprises to reach the global market.
  18. 18. 17 | P a g e9. E-commerce makes “mass customization” possible E-commerce applications in this area include easy-to-use ordering systems that allow customers to choose and order products according to their personal and unique specifications. For instance, a car manufacturing company with an e- commerce strategy allowing for online orders can have new cars built within a few days (instead of the several weeks it currently takes to build a new vehicle) based on customer‟s specifications. This can work more effectively if a company‟s manufacturing process is advanced and integrated into the ordering system.10. E-commerce allows “network production.” This refers to the parceling out of the production process to contractors who are geographically dispersed but who are connected to each other via computer networks. The benefits of network production include: reduction in costs, more strategic target marketing, and the facilitation of selling add-on products, services, and new systems when they are needed. With network production, a company can assign tasks within its non-core competencies to factories all over the world that specialize in such tasks.11. Reduced costs The costs experienced by organizations in their daily business operations from paperwork, paying bills and making products or delivering services are largely reduced due to the automation processes of e-commerce applications. These include operational costs, administrative costs, and transaction costs. Operational benefits are realized when the total costs after e-commerce adoption are lower than the costs of operating the business before adopting e-commerce. Internet is an inexpensive, flexible, and efficient means for businesses to trade and communicate.12. Improved customer service Improved customer service refers to the quality of tasks that an organization performs to increase sales, retain its customers and improve the quality of services provided. A relationship related benefit is perceived if the level of satisfaction the customer (business or individual) experiences from conducting business with the
  19. 19. 18 | P a g eorganization is raised after e-commerce adoption. This in turn increases thecustomer‟s loyalty and purchasing behaviors. The degree to which the perceivedservice meets the customer expectations related to the service quality, that will inturn determine the customers satisfaction reflected in their trusting beliefs.
  20. 20. 19 | P a g e E-commerce critique and recommendationsSITE ANALYSIS OF THE COMPANYHaldiram‟s has its own web-site which serves as information source for thecompany‟s line of products and other organizational information.
  21. 21. 20 | P a g eRecommendations for E-commerce activity :In the successful implementation of electronic business, many factors areinvolved. The approach of using of an electronic business consists of thefollowing three phases:Phase 1: Identify the business opportunityDetermining where the organization falls in the matrix of electronic business. Useof a matrix can also identify the kinds of technology and business partners, whichcan help the organization to achieve its goals.Phase 2: Select the technology infrastructureDifferent electronic business opportunities demand different technologysolutions. After identifying the business opportunity, the next step is to look forplaces where an organization can capitalize on its existing technologyinfrastructure. For example, a tool that can enable web applications would requirenetwork bandwidth, computer security, and applications to make electronicbusiness a reality.Phase 3: Implement the electronic business solutionThis phase involves complex technology and organization issues. It is important tomake sure that a solution is tightly integrated with other systems and operations.The implementation also needs to have the partners, customers, suppliers, andemployees built into it.
  22. 22. 21 | P a g eIn order to build a successful e-commerce venture followingOBJECTIVES shall be met : Build Trust and customer loyality :To build customer loyalty, an organization must first build trust. The organization should be open, honest, clear, and concise in terms of letting the customer know what it will do or will not do. Provide Added Value: The organization should provide added value, which actually makes the customer‟s demand and expectations Give Customers a Choice: The organizations should make sure that the customers are given enough choices and are allowed to make decisions themselves. Transaction Software:The transaction and payment software must perform correct calculations, especially with respect to taxes and shipping costs. Site Maintenance:The organizations should have enough trained programmers to maintain the web site. Security: Details regarding personal information and data regarding electronic money transactions must be highly secure
  23. 23. 22 | P a g e ConclusionThe ecommerce brings the shopping experience to the consumer‟s home. Bylaunching a B2C ecommerce website, the manufacturers‟ bring the convenienceand comfort of shopping to the consumers thereby increasing their prospectivecustomers. When the manufacturer owns the retailing operations also, it cancreate brand awareness more prominently. By reaching out to new markets themanufacturers can increase their business‟s brand name and about their productline. The e-shopping is accessible from anywhere anytime, thus it proves to be aquick and easy mode of providing information. Manufacturers can provideextensive updated information of their product range through their customizedecommerce website design.Moving to eBusiness can lead to low operational costs for manufacturers. B2Cecommerce website reduces the costs of running their business by less staffing,physical infrastructure, maintenance etc. A B2C ecommerce website is the sureway to leverage the internet for increased efficiency, reduced operating costs, andmaximum return on investment for any manufacturing business. Manufacturerscan directly open a dedicated channel to service the end customers by having anown B2C ecommerce website. This reduces the dependency on retail or channelpartners, leading to costs benefits.An online ecommerce website can help Business in establishing new opportunitiesand relationships with potential customers, business associates. Owning a B2Cecommerce website makes it easier for the manufacturer to target smallerconsumer and niche markets for his products
  24. 24. 23 | P a g e Referenceswww.haldirams.comwww.cii.gov.inhttps://domino.fov.uni-mb.si/proceedings.nsf/www.google.com

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