Concept framework

1. (Oct, 2014)
Lotte India Corporation Limited
Lotte Fluffies: Launch Plan

2. Bakery Industry: Market Construct
• Bakery Industry: Segments
o Biscuits, Breads, Other Products (Cakes, Rusks, Pastries, Buns)
• Cakes Market Size: Rs. 1700 Cr, 3 yr CAGR: 8%
o 60% of market unorganized; 77.5% Urban, 22.5% Rural
o Key Branded Players: Britannia (16% MS), Monginis, Elite, Milka, Bisk Farm etc
o 70%+ Business from 6 States - TN, AP, Karnataka, Kerala, Maharashtra, W. Bengal
• Key Competencies:
o Unorganized Players: Freshness
o Organized Players: Hygiene, Quality, Brand Strength, R&D
• Key Growth Drivers:
o Changing Consumer Perceptions, Lifestyles
o Market Premiumization
o Rising Urbanization
o Product Innovation
o Easy Availability
• Emerging Trends:
o Organized Bakery Retailing
o E-Retailing
o Technological Advancements, Improved Packaging Solutions
o Innovation in Ingredients

3. Trend #1: Emergence of Bakery Cafes (QSR Space)
Rising Disposable Incomes,
Growing health-conscious young people willing to try out new products and cuisines,
Growth of consumers in higher and middle income groups,
Increased propensity for eating outside the home,
Increasing time-paucity, Love for snacking, Need to hang out or socialize.
• Bakery Cafes gaining popularity → slowly becoming popular hangout places
o Typical Menu includes Baked Foods (CORE), Beverages (COMPLEMENT)
o Indian, Local Bakeries → Organized, Sit-in Café Formats (ala Restaurants)
o Local Retailers → Hot Breads, French Loaf etc
o International Players: Au Bon Pain, Le Pain Quotidien etc
o Manufacturers → Store Formats e.g. Bisk Farm, Baker Street
o Modern Trade (Chain) → Store-In-Store Formats (Store Brands)
Bakery Cafes, earlier restricted to 5-Star+ Hotels
• Emergence of Newer Product Offerings → In an effort to drive Differentiation
o Premium, Gourmet
o Indulgence/Luxury
o Healthy Foods

4. Emerging Product Concepts

5. Trend # 2: Changing Dessert Scene in India
• Moving beyond Traditional Indian Desserts…
• Growing Health Consciousness
o Low Fat, Sugar Less/Sugar Free Offerings
o Bite sized Desserts
Indian Desserts
International Desserts
Fruit Salads, Ice Creams, Gelatos, Frozen Yogurt/Desserts

6. Trend # 3: Cakes for Gifting/Special Occasions
SPECIAL OCCASIONS:
Wedding
Celebrations
Baby Showers
(For the
would-be mother,
yet-to-be born baby)
Theme Parties/
B’day Parties
Bachelorette
Parties
CAKES
FOR
GIFTING

7. Cupcakes: A Short Note
Carrie Bradshaw and her group of girls
immortalized Magnolia Bakery's
meringue cupcakes in “Sex and the City”
Cupcake Revolution in India
• Single Woman: ‘Independence’, ‘Self Love’
• Teen: ‘Cuteness’
• Adolescent Lover: ‘So Sweet’
• Man in Love: ‘Symbol of Love’
• Distributing cupcakes in school on birthdays
• Corporate Gifting
• Gifting (Valentine’s Day, Mother’s Day)
• Special Occasions
‘Cupcake’ equates
What explains its popularity?
o Not messy, can be stored or carried around without any hassle
o Offers a lot of scope for creativity → Toppings, Decorations, Other Value Additions
o Amongst the ones in love, chocolates/greeting cards → cupcakes symbolize ‘love’

8. Rationale for Launch: External
• ‘Fluffies’ cupcakes → attractive market opportunities
o Trends clearly hold promise for the future
o Brand name fits well with ‘cupcakes’
o Provides enough headroom for marketing creativity
 Route 1: Snack Option
 Route 2: Dessert, post meal
 Route 3: Sign Value

9. Key Challenges: Lotte Fluffies
• India has one-third of the world's vegetarians
o Gujarat, Rajasthan, Uttar Pradesh, Delhi, Punjab → Key ‘Veg’ Markets
 Key Consumption Markets → Food FMCG
• Egg-less Cakes, already available in market since 2009 (Britannia)
o Vegetarian mothers feel guilty for denying their children cakes due to egg factor
o Fluffies’ Custard offering is overtly ‘Egg’
• ‘Custard’ ~ Consumer Awareness Poor → Education Required
• Need to check if shelf life claim (~8 months) does not affect key product attributes
o ‘Fluffiness’, ‘Egg Smell’, ‘Taste’, ‘Product Stability’→ Korea to REVERT
• Major Cake markets are Lotte’s strong markets → may work in our favor
• Key Selling Points: (if shelf life claim is VALID)
 Product Hygiene, Convenience, Quality (Standardization)

10. Lotte Chocopie Vs Lotte Fluffies
• Business Cannibalization concerns arise considering: (Ref: AC Nielsen Researches)
o Substitutability of Lotte Chocopie/Fluffies with Biscuits, Cakes
o ‘Chocopie’ not seen as a category of its own; Consumer not sure where to place;
It is therefore imperative that we clearly differentiate Fluffies’ standing Vs Chocopie!
Lotte Chocopie Fluffies
Consumer Need ‘Indulgence’ # 1: ‘Snack for Appeasement’
# 2: ‘Quality Dessert’
# 3: ‘Flaunt & Exhibit’
Rationale:
o Consumer Research clearly highlights ‘Health & Nutrition’ element as being relevant
and important for Fluffies
o Pack graphics for both Lotte Chocopie & Fluffies highlight the difference quite well

11. Concepts

12. Lotte Fluffies: Way Forward
• 3 Concepts shortlisted → to be checked in Research
• Basis feedback, will draw communication plans thereof

13. Lotte Fluffies: Concept #1 (Snack Route)
Consumer Insight:
“I want to feel thoroughly satisfied after eating a snack – both my body and mind must
feel happy”
“Quantity is not important, the snack should have quality filling”
Benefit:
Soft, Delicious Cream filled Cupcakes that:
give you complete satisfaction of having consumed a tasty, yet healthy snack!
Perfect happiness for both body and mind!
Reason to Believe:
Quality Custard Cream Filling inside Soft Custard Cupcakes
Wholesome Goodness of Wheat, Milk & Eggs, packed together in each cupcake!
Other Information:
No MSG, No Artificial Colors, Trans Fat Free
8 Month Shelf Life ~ cakes that stay fresh, fluffy and tasty for long..
Convenient, Hygienic Single Unit Packaging”

14. Lotte Fluffies: Concept # 2 (Dessert Route)
Consumer Insight:
“After my meal, I have to have a dessert; A delicious bite-sized healthy dessert is all
I need – to satisfy my sweet tooth, without the guilt!”
Benefit:
Good things come in small bite-sized packages!
Presenting Lotte Fluffies – Soft, Cream filled Cupcakes that:
deliver the enjoyment of having consumed a full dessert, without weighing you down.
Satisfy that sweet tooth of yours, without the fear of overindulgence!
They only come in convenient , bite sized packages.
Reason to Believe:
Delicious Custard Cream filled Cupcakes in 23g single serves, conveniently packed
Each cupcake you consume, has ~ 100 kcal only
Wholesome Goodness of Wheat, Milk & Eggs, packed together in each cupcake!
Other Information:
No MSG, No Artificial Colors, Trans Fat Free
8 Month Shelf Life ~ cakes that stay fresh, fluffy and tasty for long..

15. Lotte Fluffies: Concept # 3 (‘Sign Value’ Route)
Consumer Insight:
“On special occasions (e.g. Sundays, Birthdays), I like to surprise my family and guests,
serving them unique, delicious, yet healthy treats. After all, they must know only I can
provide something like this.. ”
Benefit:
Soft Cupcakes, with the goodness of wheat, milk and eggs that:
hide a unique, delicious, custard cream surprise inside – with a taste that is guaranteed
to impress!
Reason to Believe:
Unique, Delicious Custard Cream Filling inside Soft Custard Cupcakes
Wholesome Goodness of Wheat + Milk + Eggs in each cupcake
Other Information:
No MSG, No Artificial Colors, Trans Fat Free
8 Month Shelf Life ~ cakes that stay fresh, fluffy and tasty for long..
Convenient, Hygienic Single Unit Packaging