Building the Ice Cream Business in India-- Unilever By: Ajay Singh Bhargab Dhar Debajyoti Ghosh Debnath Ganguly Kushal Gayakwad Joydip Pati Manisha Bajaj Monika Raheja Pallab Ghosh Rajarshi Mitra
Case HISTORY History• HLL launched its international Walls range of ice creams in India in the mid 1990s.• HLL adopted a strategy of acquisitions of ice cream brands and strategic tie ups with Indian groups to evolve its ice cream business.• The case deals with various marketing initiatives introduced by HLL to create interest in the segment and expand the market.
Marketing Strategy of HLLSTRATEGIC ALLIANCES• Early 1990-Unilever entered food business through BBLIL.• BBLIL acquired – kissan (UB Group) & Dollops(Cadbury)• Mid 1990– Alliance Kwality Ice cream Group.• 1995- Acquired marketing and distribution rights of Milkfood 100%.• 1996- BBLIL merged with HLL. All smaller brands were phased out and Kwality Walls emerged as a Mother Brand.
Product portfolioProduct Price (INR) Target SegmentFeast Range 15 Young generation with an attitude!Cornetto Range 20-30 Young adultsMax Range 0.25-5 Solely childrenSundae Range 90+ Family, take-home, 10pm frozen desserts
Consumer Analysis• Consumption of ice cream per head was very low.• Psychological factors.• Ice cream eating at home was confined to special occasions.• Indian palette restricted to three flavors - Vanilla, Chocolate and Butterscotch.
Competitive AdvantageSeeking Competitive AdvantageTwo types of analysis• Industry Analysis – Porter’s Five Forces Model• Comparative Analysis -- Structural and Responsive Advantage
Porter’s 5 Force AnalysisWithin the Industry:Competition is very intense due to low differentiation. Ice creamindustry accounts to around 2000 cr & organized segment is 1000-1100 cr.• Amul• Mother Dairy• Baskin & Robbins• Local competitors
Porter’s 5 Force analysisThreat of new Entrants:• High in the industry• Liberalization and globalization policies made it easier for foreign player to enter the Indian market e.g.. Haagen Dazs and Baskin Robbins
Porter’s 5 Force analysisThreat of Substitute:• Threat of substitute is very high for ice creams in Indian market due to its culture of traditional sweets and desserts.Some of the substitutes are :• Traditional sweets• Home made desserts like Halwa and Kheer• Kulfi or Faludas
Porter’s 5 Force analysisBargaining Power of Buyer:Pretty high• Availability of existing substitute products• Buyer Price sensitivity
Porter’s 5 Force analysisBargaining power of Suppliers: Bargaining power of suppliers is pretty low as manufacturer can easily switch to a different supplier at low cost
Competitor Advantage Comparative AnalysisSpecific advantage of competitors within a given market.Two types:• Structural advantage• Responsive advantage
Comparative Analysis• Structural Advantage– Hll being a parent company is a huge advantage to kwality walls Manufacturing units are located across major cities in India• Responsive Advantage— Strong adaptability to the changing tastes of the consumers (introduction of Foreign Flavors) Unique value
Opportunity & Threat Analysis Opportunities• In the early 2000s, the consumption of ice creams per head in India was very low at 250 ml• In 1997 Gov liberalized the rules for the ice cream industry which resulted in a 15-20 % growth per annum• Huge number of young population which is prevalent in India
Opportunity & Threat AnalysisThreats• Powerful local players in the market (Top n Town very popular in MP & UP, Cream Bell, Metro).• Entry of the foreign brands like BR, McDonalds.• Indian Sweets Market.• Substitute products has a strong hold in the consumer psyche of tier 2 and tier 3 cities.
4 Phase Strategy by HLL• Product innovation (Take home segment and softy cones)• Communication• Activation & Visibility• Distribution
Softy Cones• HLL announced the launch of Softy kiosks for selling softy ice creams in 2000• The product was priced at Rs.5 per cone• HLL pursued a different business model. The company provided the Equipment, Training, Advertising and Quality standards while the franchisee provided the Place and Manpower• Hygienic (No human contact)
Strategic Changes in Softy Biz• Problem: Higher investments 3 lakhs for machine and a high priced mix.• HLL reacted by introducing a softy machine worth Rs.I.5 lakh and products at various price points.• Like a plain softy sold at Rs.7, a softy with a sauce topping sold for Rs.12 and an addition of nuts made the price Rs.17
C Communication-Promotional Strategies• Kwality walls used some excellent promotional strategies to create its brand in the Indian market• They promoted Kwality walls as an umbrella brand and developed different brands under it like Cornetto and Max• Had different advertisement and promotion campaigns to cater to its target market
Promotional Campaigns• May 2001 - Whats on your stick?• Valentines Day (2001)-Cornetto Khao, Jodi Banao• March 2002 to May 2002- Ek Din Ka Raja• 2002- Fridge mein Kwality Walls hai kya• 2003- Max The lion king, Bano Toonstar with Scooby Doo.• 2003( Festive Season) Max Rocket and Max Chakri for kids and Cornetto range and Pista Kulfi for Adults.•
Results-Resource Based View• With superb promotional strategies they were able to create a differentiated product image• EKDR sales touched 1million customers.• They were able to create an intangible resource for sustainable Competitive Advantage i.e. Brand name.• As tangible resources they had a great distribution network and positive cash flows
Superior Distribution• Home delivery systems in Delhi, Chennai, Mumbai and Hyderabad• Strategic tie ups with Pizza Corners• Exclusive parlors & DFO’s (now Swirls)• Colorful ‘Trikes’ with Voltas cooling solutions helped HLL to reach 900 towns by 2001 end and a quarter of sales came from them
Competitive StrategyKwality walls and their main competitor i.e.Amul believes more on a Red Ocean thinkingviz. head on competition with each other andattacking on every price points.
Conclusion• Was able to create a brand through some excellent Promotional Strategies.• Concentrated on quality of their products to retain their brand value.• Were able to create a sustainable cost advantage with low cost freezing units and softy kiosks.• Were able to connect with Indian consumer psyche and gain their affection.
Recommendations• They have to tap the Tier 2 and Tier 3 cities, which has great potential.• Can create a new relatively low priced umbrella brand to tap the rural market.• Promotional campaigns to fight against their Substitutes like Sweets and chocolates.• Can have more Indian flavors in 15- 20 Rs segment.• Introduce “Falooda” Cups.