ITC’s sun feast and biscuit industry pptPresentation Transcript
ITC – CREATING ENDURING VALUE
ITC LTD PROFILE History And Evolution of ITC Ltd ITC was incorporated on August 24, 1910 under the name Imperial Tobacco Company of India Limited The Company was changed from Imperial Tobacco Company of India Limited to India Tobacco Company Limited in 1970 and then to I.T.C. Limited in 1974 In recognition of the Companys multi-business portfolio encompassing a wide range of businesses - Fast Moving Consumer Goods, Hotels, Paperboards & Specialty Papers, Packaging, Agri-Business and Information Technology ITCs Packaging & Printing Business was set up in 1925 In 1975, the Company launched its Hotels business with the acquisition of a hotel in Chennai which was rechristened ITC-Welcomgroup Hotel Chola (now renamed My Fortune, Chennai).
In 1979, ITC entered the Paperboards business by promoting ITC Bhadrachalam Paperboards Limited In 1990, leveraging its agri-sourcing competency, ITC set up the Agri Business Division for export of agri-commodities ITC also entered the Lifestyle Retailing business with the Wills Sport range of international quality relaxed wear for men and women in 2000 ITC launched line of premium range of notebooks under brand Paperkraft in 2002 In 2002, ITC also entered the confectionery and staples segments with the launch of the brands mint-o and Candyman confectionery and Aashirvaad atta (wheat flour) In 2003, ITC witnessed the introduction of Sunfeast as the Company entered the biscuits segment ITC entered the fast growing branded snacks category with Bingo! in 2007 In 2010, ITC launched Sunfeast Yippee! to enter the Indian instant noodles market
VISION Sustain ITCs position as one of Indias most valuable corporationthrough world class performance, creating growing value for the Indian economy andthe Company’s stakeholders MISSION To enhance the wealth generating capability of the enterprise in a globalizing environment, delivering superior andsustainable stakeholder valueCORE VALUES ITCs Core Values are aimed at developing a customer-focused, high-performance organization which creates values for all its stakeholders
BUSINESS PORTFOLIO --- ITC LTD ITC AGRI BUSINESS,LEAF PAPER BOARD, PAPER FMCG HOTELS TOBACCO , AGRI BOARD AND PACKAGING COMMODITIES CIGARETTEPERSONAL CAREPACKEGED FOOD PRODUCTS
PRODUCT MIX OF ITC LTD (FMCG Sector)
TRIPLE BOTTOM LINE PERFORMANCE –(Turnover and profits as on 17TH July 2012 ) Gross Income for the year grew by 14.9% to over Rs. 36,000 crores. Profit before tax increased by 22.4% to over Rs. 8,800 crores while Net Profits grew by 23.6% to over Rs. 6,100 crores. The non-cigarette segment net revenue growing 12-fold from about Rs. 1,360 crores in 1996 to Rs. 16,150 crores today. As a result, 57% of net segment revenue of your Company is now from businesses other than cigarettes Your Company is today acknowledged as one of Indias most valuable corporations. Market capitalisation, which stood at Rs. 5,570 crores in 1996, has multiplied over 35 times to touch Rs. 2 lakh crores. ITCs traditional businesses have touched a turnover of over Rs. 5,500 crores in a relatively short span of time. The topline from this segment is expected to triple over the next 5 to 7 years to a level of Rs. 15,000 crores,
HOW HAS THE FINANCIAL PERFORMANCE OFITC LTD BEEN ?
ACHIEVEMENTS• ITC is the first Indian company and the second in the world to win the prestigious Development Gateway Award• ITC is the first Corporate to receive the Annual FICCI Outstanding Vision Corporate Triple Impact Award in 2007• ITC was conferred the World Business and Development Award 2012 at the historic Rio+20 United Nations Summit which concluded recently• ITC has won the Golden Peacock Awards for Corporate Social Responsibility (Asia) in 2007• The Business Today Award for the Best Managed Company in recognition of its outstanding initiatives in the consumer products segment.• The only Indian FMCG company to have featured in the Forbes 2000 list.
SWOT ANALYSISStrength Weakness Strong Financial Dependency on the tobacco Performance business Products Portfolio Not present in many Distribution Network important sectors Environmental Friendly Local Company Research & Development Socially Responsibility Brand EquityOpportunities Threats Leveraging its brand Competition equity Pressure groups and Right size at the right time Government Policy The unique reach and General threats distribution network of E- choupal: Synergies across businesses and leveraging domain expertise for growth in other sectors
SUNFEAST- AN OVER VIEW Sun"mascot - The brand ambassador reinforcing the positioning of the brand with an essence “Spread theSmile” "Sunfeast" - The umbrella brand name introduced in the Glucose, Marie and Cream segments “Sunfeast” - To be launched nationally in phases in over one million retail outlets across the country.“ “Sunfeast" range of biscuits is competitively priced and would include two new product innovations - Orange flavored Marie and Butterscotch flavored Cream biscuits Product innovation
SUNFEAST RANGE OF BISCUITS CONTD…
PRICING STRATEGY OF ITC LTD (FOOD DIVISION)• The pricing of the ITC food division depends upon the Customers’ demand schedule, the cost function and the competitors’ price.• The pricing of the company is such that it caters to the need of all income groups of people but special provision has been kept for Low and middle income group, and their pricing are competitive with respect to other players like Britannia, Parle and Briskfarm.• The company follows the Going rate pricing that is the price of the product depends upon the competitors price. The firm chooses pricing more or less the same as Market leader.
PRICING STRATEGY FOR SUNFEAST Sunfeast look at a two prolonged strategy:- High margin(High margins in cream variants) High volumes (High volumes from the Marie and Glucose segments) Examples sunfeast glucose (200 gm): 20/- sunfeast marie light (130gm : 10/- Sunfeast dream cream (82): 10/-
DISTRIBUTION OF FOODS PRODUCTS
DISTRIBUTION NETWORK FOR SUNFEAST The company used its existing network of convenience stores: the company’s name for the hole-in-the-wall pan-beedi shops for Sunfeast. The company also looked at grocery stores and other retail formats. The company says the brand is now available in nearly 1.8 million outlets. 14 manufacturing units The company has extended its manufacturing capacity by setting up three new biscuit plants in UP and West Bengal to focus on supply chain management strategy to enhance product freshness, market servicing and margins
PROMOTIONAL STRATEGY Sunfeast school programme: cover 1000 schools across country, to familiarize children with sunfeast brand name and sunfeast mascot Brand ambassador: shahrukh khan & surya (south actor) Official sponsor of WTA tennis championship-sunfeast open Launch of Sachin’s Fit Kit, the first product co-created with brand ambassador Other activities:- On buses, print media , hoardings, TV and radio advertisements
INDIAN BISCUIT INDUSTRY• Indian Biscuits Industry came into limelight after 20th century when the urbanized society called for ready made food products at a tenable cost.• It is assumed as sick-mans diet in earlier days .• Bread and biscuits is the two major product of the bakery industry and covers around 80% of the total bakery market, out of which• Industry size is about 14500 crore• biscuit covers up to 70% of the total production• The organized and unorganized sector of the biscuit• industry is in the proportion of 65% : 35%
INDUSTRY CONSISTS OF Foreign NicheMajor Players Minor Players Emerging Players Players United Biscuits(Bitain) Kraft’s Cadbury Danone (French Surya Biscuits Pvt Oreo food giant) Parle Ltd PepsiCo : "protein- Nubisco Britannia priyaGold rich “ Aliva Unibic (tied up ITC Anmol launched 2009 with Food Bazaar launched Tasty Treat
MAJOR COMPETITORS BRITANIA PARLE PRODUCTS SURYA FOOD AND INDUSTRIES PVT LIMITED AGRO LIMITED LIMITED Established in 1929Established in 1896 the largest selling brand Incorporated90% of Britannia‟s of biscuits in the world 1992Manufacturing andannual revenue of 70% market share in selling of biscuit underRs2,200 crore comes India in the glucose brand “ PRIYAGOLD”from biscuits biscuit category in octoer1993. KeyKEY PRODUCTS: KEY PRODUCTS: products: ClassicTIGER, GOODDAY, Parle-G, Hide and Cream, ButterBORBON, 50- Seek, Krack Bite, Bourbon, Marie50, MARIE Jack, Monaco, Parle Lite, Magic Gold, CNCGOLD, TIME PASS Marie, Milk , Sanack, zig zag, Shakti, Parle 20-20.
AS PER FEDERATION OF BISCUIT MANUFACTURERS’ OFINDIA (FBMI) • Biscuit Industry Market (in crore) 16000 14500 14000 11206 12000 9830• PER CAPITA CONSUMPTION IN 10000 KG 8000 6800 6000 10 10 4000 10 4000 9 2000 8 7.5 0 7 2004-06 2007-08 2008-09 2009-10 2010-11 6 5 4 3 2.1 1.9 2 1 0 India USA UK Japan China
INDIAN BISCUIT MANUFACTURERS’ ASSOCIATION (IBMA ) • Annual production (in lakh metric tonnes) 19.6 20 18.25 17.44 18 16.14 16.57 16 14.29 14 12.54 • Annual growth rate of biscuit 12 11 industry 10 8 6 416% 15% 15% 14% 14% 214% 13% 012% 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 10%10%8%6%4%2%0% 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11
BCG MATRIX: OBJECTIVES• BCG matrix is a tool to determine the future strategic plan for each SBU• SBU can be a company division, a product line or even individual brands• Companies have multiple products and businesses under their umbrella• While preparing the marketing strategy companies need to decide about adding new products or identify products should no longer be retained.• So the first step is to identify the various Strategic Business Units (SBUs) in a company portfolio.
BCG Market share/Market Growth Matrix RELATIVE MARKET SHARE STARS Question mark generate Have potential to become stars or cash considerable income cows Strategy: Invest more Strategy: Either invest fund for future HIGH more fund for growth growth or disinvestingINDUSTRY GROWTH RATE Cash flow Dog Generate strong cash Generate little profits flow Strategy: Consider Strategy: milk withdrawing profits to finance LOW growth of Stars or Question marks HIGH LOW
ITC BCG MATRIX HIGH MARKET SHARE STARS HIGH MARKET CASH COWS SHARE HIGH MARKET & SHARE HIGH MARKET & GROWTH LOW MARKET Hotels, packaging & GROWTH Paper boards, e-choupal FMCG-CigaretteHIGH LOWGROWTH GROWTH DOGS QUESTION MARKS LOW MARKET LOW MARKET SHARE SHARE & & LOW MARKET HIGH MARKET GROWTH GROWTH ITC infotech FMCG others LOW MARKET SHARE
SUN FEAST BCG MATRIX HIGH MARKET SHARE STARS CASH COWS HIGH MARKET HIGH MARKET SHARE SHARE & & HIGH MARKET LOW MARKET GROWTH GROWTH Sunfeast Dark Fantasy Milky Magic ,Marie Choco Fills and Sun feast Light Original and snack-foods-Bingo orange, Sunfeast „Dual‟ Dream CreamHIGH LOWGROWTH GROWTH DOGS QUESTION MARKS LOW MARKET SHARE LOW MARKET SHARE & & LOW MARKET GROWTH HIGH MARKET GROWTH Sun feast Fit-Kit LOW MARKET SHARE
PORTER’S FIVE FORCES
PORTER’S FIVE FORCES ANALYSIS THREATS OF NEW ENTRANTS Low entry barriers because of Heavy competition from major players THREAT FROM BUYERS SUPPLIERS BARGAININGIn the case of major POWER players bargaining High because of,power of suppliers is Major players dominate the Indian Market. Availability of many very low as they biscuits from dictate the prices. High competition to low, moderate prices capture maximum market share Availability of biscuits The ingredients are from non organized basic commodities Unorganized sector cannot sectorsuch as wheat , sugar compete with major players in the case of Brand Loyalty makes etc. buyers more powerful Advertising in the case of new entries THREAT OF SUBSTITUTES High Growing packaged industry and bread industry Traditional Indian homemade snacks
PORTER’S FIVE FORCES SUN FEAST Bakery Items, Fast foods, Ready-to-eat Premium productsInflation in sugar & Britannia, Parle are increasing in wheat prices market Oreo, PepsiCo
STP OF SUNFEAST Biscuit Segmenting Targeting Positioning Demographic Children between Sunfeast the age group 4-14 Natural goodness of wheat glucose biscuit yrsSunfeast orange Education A very differentiate HousewivesMarie offering Children between theSunfeast Income age group 4-14 yrs Tight and Crispymarielight Geographic Children between theSunfeast orange Smooth and yummy age group 4-14 yrcream cream Children between theSunfeast Age Smooth and age group 4-14 yrButterscotch yummy CreamCream Children betweenSunfeast Lifestyle Smooth and yummy the age group 4-14bourbon cream Cream yr
PRODUCT FOCUS high quality great tasting biscuits With Different Segments Brand Essence "Spread the Smile"
DIVERSIFICATIONIndian rural and agri. market is 70% to other resources in India ,but only 30 %of GDP is from agriculture sector . ITC realized it that their cigarette businesshas a limit future which they wont be able to tap profit and their expansionplans. So diversification was needed in any case, to build a foothold in Indianmarket. FMCG being the fourth largest sector in the field which is expanding at a very fast pace and it has huge potential , along with the benefit that it can be accrued by organizing the existing fragmented market accrued by market leading to concept of „one stop shop‟.Further India being one of the largest economies with the benefit of its vastmarket ,it attracted ITC to the expand its operation in various areas ofhospitality, FMCG ,Greeting cards Branded Apparels etc.
PRICING STRATEGYThere is Two method of Pricing1. Low Margin2. Two-Pronged StrategyEssentially, Parle plays a high volume, low margin game.But Sunfeast look at a two-pronged strategy, High margins in cream variantsand volumes from the Marie and Glucose segments. For instance, cream biscuitsfrom both Sunfeast cost Rs10 for 100 grams. Parle, however, only charges Rs 5 for its cream variants.Except for Hide & Seek, all of Parle products lie in the price range between Rs 4and Rs 6for 100 gram packs.
BRAND PRAMOTIONIn August 2003, a month after Sunfeast launch, the companyundertook a major sampling exercise to promote the product. For twoyears then, the brand did all the usual rounds -- riding behindbuses, blocking television spots, booking that corner space in yourfavorite newspaper and soon.The company says the brand is now available in nearly 1.8million outlets, Welldifferentiated advertisements, some which showed a complete cream world withcream rivers, cream mountains and cream trees, were targeted at kids watchingcartoon channels. In April 2005, Sunfeast launched its major campaign. It signedon Hindi film actor, Shahrukh Khan as its brand ambassador
SUGGESTIONS AND RECOMMENDATION• Sun feast has to give attention towards Advertisement.• Sun feast has to maintain its status by providing more and more facilities.• Sun feast has to develop more variety of biscuit so that the customer could not return in case of lack of choice.• The company should also give emphasis on other gift scheme