Marketing Strategy for ITC Ltd.

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The product category of the project is ‘Wheat Atta’. The project defines the various segmentation variables, identifies the target market, and the positioning of the product. The project analyses the existing micro and the macro environment, SWAT and market for the product category. Further the project analyses the various marketing elements: product, place, packaging, pricing and promotion strategies for the product.

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Marketing Strategy for ITC Ltd.

  1. 1. International Management Institute, Delhi Company: ITC Ltd.Product Category: Wheat Atta Group - 7 Tarun Shukla Ratan Kumar
  2. 2. STORY BOARD • STP Environmental • Marketing Environment Trends • Competitor Analysis Analysis • Strength And Weakness(Internal Analysis) • Market Analysis Strategy • Marketing Situation • Goals And Objectives Formulation • Marketing Strategies • Product Management • PackagingMarketing Elements • Pricing • Placement • Promotion Evaluation And • Financial Analysis Control • Impact On The Profit
  3. 3. THE COMPANYFIRM• Firm- ITC Ltd• Organization structure - Product BasedPRODUCT• Product Category- Wheat Atta• Brand - Aashirvaad• Product type – Convenience Consumer Product Vision: Sustain ITCs position as one of Indias most valuable corporations through world class performance creating growing value for the Indian economy and the Company’s stakeholders. Mission: To enhance the wealth generating capability of the enterprise in a globalize environment, delivering superior and sustainable stakeholder value.
  4. 4. STP POSITIONING Aashirvaad Select - 100% MP Sharbati AttaSegmentation Variable for Wheat Atta: Among the urban Indian homemakers, Aashirvaad is a brand of wheat atta that give you finest quality  Density – Geographic and authentic taste of wheat flour because it is  Income – Demographic made from the choicest MP Sharbati wheat grains  Occupation – Demographic which are heavy on the palm, golden amber in colour and hard in bite.Target Market Aashirvaad Whole Wheat Atta - 0% maida and 100%Demographic Geograp Demographic AttaGroup (Income) hic Group Among the Indian homemakers, Aashirvaad is a Group (Occupation) brand of wheat atta that provides you a superior (Density quality and authentic wheat flour for soft and fluffy ) rotis because it is made from the choicest wheat grains sourced directly from the knowledgeableGlobal Indians Urban Homemakers farmers through e- choupal initiative of ITC.(High IncomeGroup)Strivers (Upper Aashirvaad Atta with Multigrains Among the affluent Indian homemakers, AashirvaadMiddle Income is a brand of improved wheat atta that providesGroup) nourishment for people of all ages by strengtheningSeekers (Middle immunity and body strength because it is anIncome Group) integrated mix of six different grains – wheat, soya, channa, oat, maize & psyllium husk.
  5. 5. Marketing Environment Micro Environment(2012-13) 1.2 1 Aashirvaad AttaBrand Preference 0.8 Shaktibhog 0.6 Pillsbury 0.4 0.2 0 0 0.2 0.4 0.6 0.8 1 Brand Awareness
  6. 6. Micro Environment(2012-13)The Company Trends OpportunitiesFinance Investors confidence in company Expand production performance Raise loans from financial  The company moving towards zero institutions easily debt  Sales have been growing steadily  The manufacturing expenses have grown, profitability has not reduced.Research &  Pressure mounting to push for scale Sharply differentiated productsDevelopment  Key decisions area include of branded atta will be launched.  Which variant atta to promote Focus on Value addition and  How to position the product promotion of existing premium  The pack sizes brands.  Innovative packing.Suppliers  Active participation of farmers in ‘e-  Rolling out e-Choupals V3.0 in choupal’ progress Sense of ownership among farmers New anchor businesses might Small farmers are being treated as be discovered knowledge partners  Creation of more value for self, for the farmer and the network partners
  7. 7. Trends OpportunitiesCompetitors  Competitors compete on Using strong supplier networks price, quality and hold of  Economies of Scale is possible market  Private labels pose a threat to established brands  Margin offered by local brands is much higherCustomer Consumer markets  If ITC pushes to scale in the product category the  Looks for high quality (South input cost will reduce India) or for brand name  They can price their products competitively by  ‘e-Choupal’ helps buy high passing some of the benefits of the reduced cost to quality wheat directly from the the final consumers farmers Reseller market  High volume of sale with respect to other brands  Happy selling ITC brand  Economies of scale is possible  High volume of sale with respect to other brands Threat:  Retailers more inclined  Local wheat atta brands like Rajdhani , keeping stock of local brand Krishnabhog, etc are offering a margin of 15%~20% as compared to margin offered by ITC of 7%.
  8. 8. Macro Environment(2012-13) Trends OpportunityDEMOGRAPHIC Growing Middle Class Target this segment of market Larger numbers of “Educated Youth” will be joining the work force Changing Family System and Lifestyle changes  Women and young family members  Nuclear families becoming a Trend of present involved in the decision making.ECONOMIC Inflation Vs Production of wheat Bumper wheat production this yearENVIRONMENT  Food inflation would go down in the month of Good possibility of similar Trends in Jan-2012 2012-13  Wheat prices to remain constant or decrease FDI in Retail (If it Becomes a Reality in 2012)  Indian retail industry still at a nascent  51% FDI in multi-brand retail stage Limit for single brand raised to 100% from 51%  Increase volume of sales - wider Indian economy faces supply-side constraints distribution channels. Lack of investments in logistics of retail chainsPOLITICAL AND Government reaction Negotiate with the government on theSOCIAL  e-Choupal’s—commodity sourcing directly tax front and bring down the input cost.ENVIRONMENT from farmers might be objected  Higher tax burden on mill atta relative to chakki atta.
  9. 9. SWOT ANALYSIS STRENGTH WEAKNESS-Strong wheat procurement network - E-choupals. -Promotion not convincing enough to overcome-Largest market share in Branded atta market reluctance to try out new variants-Perceived quality is high - Not yet reached the break-even point. Rely on the revenues generated by the cigarette business.- Strong distribution channel-Variant of wheat atta present(select, multigrain, whole wheat)- Strong Cash Flows generated Aashirvaad Atta OPPORTUNITY THREATS-Economies of scale not yet reached. Increasing the - Threat in case of government clamping down onproduction will lead to decrease in cost and companies trading with farmers directly in purview ofcompetitive pricing or higher margins to retailers rising food inflation- Growing working population, thereby opportubity - Allowing FDI in retail -more privateto tap this market -Higher margin offered by local brand. No. increasing-Increase in family income level - opportunity ofpromoting premium variant -Low price points offered by local brands - Slow down in economy
  10. 10. Market Analysis – Estimation for 2012-13 VolumeEstimated Branded Atta 5585450 MTMarket (2011-12)Expected Branded Atta 6707818.25 MTmarket (2012-13) Region wise consumption of Branded atta: Market Share: Market 16 Aashirvaad 8 ShaktiBhog PillsBury 56 20 Others (Source: Changing face of processed food industry in India - Rajat K Baisya)
  11. 11. GOALS AND OBJECTIVES FOR 2012-13 Increasing the market share to 60% from the current 56% in the branded atta market which is at present 10% of the total atta market size by end of financial year 2012-13. Push for scale, i.e. reduction in cost per unit resulting from increased production. Increasing the combined reach of ‘e-choupal’ and ‘Choupal Pradarshan Khet’ to 10 million farmers by 2013. Increasing the brand visibility and customer perceived value of variants such as ‘Aashirvaad atta with Multigrains’ and ‘Aashirvaad select atta’
  12. 12. MARKETING SITUATION (2012-13)S.No. Opportunity Challenge1 Market Size Increase – Marketing Environment •Increase the market share to 60% from described previously current 56% •This is important in order to achieve our objective set for 2012-13. • strengthen the current distribution channel2 Being considered as a responsible company brand • convince the consumers that even we are to attract the socially conscious consumers. into the tobacco product business we are a socially responsible corporate •think about the people at the bottom of pyramid through our various rural initiatives.3 To cater to the segment of customers who have hi- •Keeping our stocks available at all time will lifestyle and prefer to do their purchasing in be our prime motive modern retail outlets like Big Bazaar, More, Reliance •sales from such retail outlet have been Fresh, etc traditionally less.4 Launch sale of Aashirvaad atta through online portal. •Time frame of delivery will pose huge Delivery will be made through existing network. problem especially in the few initial years.5 To concentrate on niche variant like atta with •The sale of this variant of atta has been Multigrains-variant of atta uses psychological pricing traditionally low. •Promotion strategy adopted since now has not reaped much benefit.
  13. 13. Marketing Elements Product Management (1/3)• Customer’s buying behaviour : Convenience product• Level of involvement : Low-involvement• Core Product : Atta which is pure and provides more nutrition and taste.• Augmented Product : Easy Availability and brand assurance of ITC Ltd. FEATURES Vs BENEFITS Features Benefits Good quality atta for cooking Healthy and more nutritious supplement to the private labelled atta or that being sold lose in the market. Produced using a high quality process Is hygienically superior to all other (washed grains and clean grinding brands present in the market mills)
  14. 14. Product Management (2/3)• Product-mix/Product Portfolio • FMCG, Paperboards and packaging, Agri- Product Mix Width business, Hotels, Information Technology. • Come under the FMCG category Cigarettes, cigars, Foods, Lifestyle Retailing, Personal Care Product Mix Length Products, Education and Stationery, Safety Matches, Agarbattis. • Categorized under the Foods division of FMCG products. Product Mix Depth The Product Mix Depth is : Aashirvaad whole wheat atta, Aashirvaad select atta, Aashirvaad atta with Multigrains• SKU’s available Brand SKUs Aashirvaad whole wheat atta 500 gms (only in selected markets), 1 kg, 2 kg, 5kg, 10kg Aashirvaad select atta 1 kgs , 5 kgs Aashirvaad atta with Multigrains 5 kgs , 10 kgs
  15. 15. Product Management (3/3)• Company-market fit :• positioned as a respected brand• other products of ITC are catering to the upper-middle segments.• Product-market fit Introduce a new quality product that improves upon Company-product fit : the benefits: 1. ITC has an existing robust procurement and – Baker’s flour should be distribution system (e-choupal procurement system) introduced for a better which enables them to procure good quality wheat nourishment and delight grains. experience with the bakery 2. The technology to produce these two products is products. Adding calcium similar to the technology we already possess and folate (Vit B9) to the atta and milling hard wheat Proposed SKU for Baker’s flour : would help achieve that. As institutional and business buyers prefer to buy in bulk and large quantities, the proposed SKU size is 40 Kg pack
  16. 16. Packaging• Aims to delight the consumer through superior and innovative packaging.• At present packing is PET Poly, with the design showcasing the farming process undertaken in the rural heartland of India in the form of a Madhubani painting.• PET based materials are very expensive and non recyclable and cause pollution.• Jute based packaging materials with protective plastic inside for the new proposed SKU size (for trial) - eco-friendly and recyclable.• Existing SKUs, a provision will be made so that it can also be used as a carry bags – Adding a carry handle• Adding Sealed Zip for customer Aashirvaad Atta Bag with Handle convenience
  17. 17. Place Management (1/2)• ITC has a well placed distribution system which can be used for baker’s flour as well. Distribution Models Model 1 : For large cities, Metros or geographical area with large demand Manufacture C&F Wholesalers Retailer Customer Analysis: Sales are high. Profit margin offered to retailers is low Model 2: Cities Manufacturer C&F Retailer Customer Analysis: As compared to model1, the distribution area is small, so that the C&F follows strategy of minimizing the distribution chain and hence the profits distribution among various components. They prefer ignoring wholesalers and transferring the whole profits to retailers. In return they expect a larger sale of their product by the retailers.
  18. 18. Place Management (2/2) Model 3: For Small towns Manufacture C&F Semi Customer Wholesaler Retailer Analysis : This model is being followed in places where transportation system is not good or the wholesaler’s distribution coverage area is large .One of the retailer keeps stock and distributes to other retailers in the local area at a lower margin. Proposed Distribution System for Business Users Manufacturer Agent/Broker Wholesaler Consumer Online Mode Analysis: The Bakers Flour can be distributed to the business users or institutional users through Agents/Brokers or the User can place his ordercompany’s website
  19. 19. Pricing Strategy (1/2) For Leadership Markets• Currently(56%) - Branded (Aashirvaad is a market leader in the product category ). atta segment. 1. Should retain its present pricing strategy.• Company follows Going 2. Company can use psychological pricing(multi-grain- rate pricing - variant Atta) in niche segment (high profit margin).• Special provision for low and middle income For Growth Markets (Aashirvaad is struggling to groups. increase its market share because of high competition• Competitive Pricing w.r.t. from national and local brands) : players like Pillsbury, 1. Going rate pricing strategy will be effective. Shaktibhog, etc. 2. Propose to decrease the price by 5% in the mid-pack size (major chunk).Go for scale production to reduce per unit variable cost.
  20. 20. Pricing Strategy (2/2)• Direct one-to-one relationship between price, value and quality-Going rate pricing.• Follows the competitor’s price to offer superior product and thus offer higher customer perceived value.• Higher Quality ------ High Price• Same Price -------- High Customer perceived value. Convenience Pack (1kg and 2Kg Pack) Convenience Pack (1kg Mid Pack (5Kg, 10Kg) and 2Kg Pack) Mid Pack (5Kg, pack. highest selling10Kg)  highest selling pack. Price can be decreased by 5% in 2012(to increase the sale of atta and increase the Price can be decreased by 5% in 2012(to increase sale of Atta and increase market capture in growth markets for this pack atta, price can be decreased by 5% the market capture in growth markets) in 2012 Industrial Pack (20Kg) Industrial Pack people who have large consumption of Atta on a daily basis. bought by (20Kg) bought by people who have large consumption of purchase daily basis. MRP. They can be offered 2~2.5% discount on large atta on a beside the They can be offered 2~2.5% discount on large purchase beside the MRP.
  21. 21. Promotion Strategy SALES PROMOTIONADVERTISEMENTS Objective: Promotion initiatives to increase the brand visibility• Aggressive advertisements in and win customer preference television targeting Indian Methods: housewife. 1. Free 1 kg packs of Aashirvaad can be in regions where the penetration of branded atta is low.• Exclusive Aashirvaad stores . 2. Free packs of Aashirvaad salt to be bundled with Aashirvaad• Tie-up with the Government 1 kg atta packs. to sell Aashirvaad atta at 3. The Company can collaborate with all the fast food retail military canteens at a chains, restaurants A discount coupon for those fast food subsidized rate. chains can be given along with Aashirvaad atta packs. 4. Free samples through distribution at posh public areas such• Informative advertising will as Malls and Multiplexes. be used for our new variant 5. Contest for house wives (Chatur -Grihini) we are launching. Newspapers would be the most effective media targeting Industrial Buyers.• Using scientific evidence as our message execution style.• Magazine Ads.• Persuasive advertising
  22. 22. Website ( )THE GOOD SUGGESTIONS FOR IMPROVEMENT• Emphasis on the Use latest html coding and flash codec – for improved traditional way in which look & Feel. Aashirvaad atta is The health benefits should be highlighted. prepared-purity and Should be publicized as a source for good recipes, so authenticity. that brand equity and loyalty gets built.• Includes BMI Separate pages for all the different variants of atta. calculator, recipes and meal planner. Model for online buying portalTHE BAD• Old fashioned.• Links to Bharatnatyam and Rangoli-irrelevant to the target viewers of Aashirvaad atta’s online website.• Information is cluttered- makes it uninteresting and inadequate.
  23. 23. IMPACT ON PROFIT Cost Implication (In Rs. Cr) Variable Increase InStrategy Fixed Cost Cost/annum sales/annumLaunch of newProduct 10 2 8.64Online selling 1 0.2 1.8PackagingChanges 0.5 negligible 0.9PromotionBudget - 26.66 80Set Up Of New e-choupal 216 2 486
  24. 24. BIBLIOGRAPHY1. http://www.forbes.com/2010/06/30/forbes-india-yogesh-chander- deveshwar-itc- tobacco_4.html2. http://www.itcportal.com/ruraldevp_philosophy/echoupal.htm3. http://articles.economictimes.indiatimes.com/2011-04- 12/news/29409932_1_punjab-mandis-quintal-bumper-wheat-crop4. http://articles.economictimes.indiatimes.com/2011-11- 30/news/30458687_1_retail-chains-foreign-retailers-retail-fdi5. www.mckinsey.com/mgi/reports/pdfs/india/Wheatmilling.pdf6. www.itcportal.com/7. www.shaktibhog.tradeindia.com/8. Changing face of processed food industry in India - Rajat K Baisya9. http://www.aashirvaad.com/products/10. http://www.manildra.com.au/11. http://www.itcabd.com/12. Indian Journal of Marketing May 2011

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